House Republicans Take New Aim at Broadband Subsidies
Oversight Subcommittee Investigating Mediacom Overbuild Claims against
Lake County, Minn.
By: John Eggerton
Multichannel News
Feb 25 2013 - 3:55pm
http://www.multichannel.com/distribution/house-republicans-take-new-aim-broadband-subsidies/141903
House Republicans were not big fans of the Obama Administration's
broadband stimulus grants and loans, and a new Congress has not changed
anything. That includes an ongoing investigation into overbuilding
claims levied by Mediacom, according to committee staffers.
According to the majority staff memo for the Feb. 27 oversight hearing
on broadband stimulus funding, the Energy and Commerce Oversight and
Investigations subcommittee is currently investigating allegations by
Mediacom that the Lake County (Minn.) government is using $66 million to
overbuild Mediacom, and was able to do so by submitting inaccurate
information. A representative of the project was not available for
comment at presstime.
"The Mediacom allegations were already the subject of a complaint in
2011, to the Department of Agriculture, which resulted in an Inspector
General investigation," said Jeffrey Roiland, projexct manager for teh
Lake Connections broadband project. "The results of the IG investigation
did not agree with the complaint."
Of course, Republicans were critical in general of the American Recovery
and Reinvestment Act of 2009, but the House Communications Subcommittee
leadership, which is holding an oversight hearing on the funding this
week, was particularly focused on the chances for overbuilding, waste,
fraud and abuse in the $7 billion program.
The memo takes aim in the first paragraph. "Advocates of the law said it
needed to be rushed through Congress to infuse money into the troubled
economy and that the funding would go to shovel-ready projects," said
the memo, proceeding to suggest the shovels instead had been notable for
their relative scarcity. "[O]nly 60% of the broadband funds have been
put to use so far even though all $7 billion was awarded by September
30, 2010," they point out. "And of the 553 projects funded, only 58 are
finished or in the finishing stages, even though all were originally
supposed to be completed by Sept. 30, 2013."
Cable operators' principal concern with the Broadband Technology
Opportunities Program subsidies and grants/loans, which are overseen by
the National Telecommunications and Information Administration and the
Agriculture Department's Rural Utilities Service, is that they are being
used to subsidize overbuilds to existing broadband service, a point the
Republican staffers make in teeing up the hearing. "[M]any carriers have
complained that awardees have used BTOP and BIP grants and loans to
overbuild existing systems rather than extend service to unserved
areas," they wrote.
The staffers also invoke the $100.6 million EagleNet project in
Colorado, among others, which has been suspended for "performance reasons."
The staffers say overbuilding is problematic for a number of reasons,
including that it funds second and third helpings of broadband in some
markets while leaving empty plates in others, or even in the same
market; that it subjects private companies -- like incumbent cable
broadband providers -- to unfair, government subsidized competition; and
puts the government - taxpayer -- dollar at risk since the subsidized
carrier has to compete with an established one.
The staff also suggests the subsidies might be a waste of taxpayer
money. "At a time when government is considering cutting meat inspectors
and FAA traffic controllers to address the federal spending problem,"
the memo concludes, "we might do well to re-examine in the future
whether we should be trying to replicate private-sector broadband
investment with public money."
"Ensuring projects meet their milestones and protecting taxpayer funds
is of paramount importance to NTIA," said NTIA chief Larry Strickling in
a blog posting last week. "Our staff performs extensive and diligent
oversight and provides technical assistance to our recipients tailored
to their needs. This oversight involves a significant level of effort,
and requires our staff to sometimes take tough enforcement action to
protect taxpayer funds."
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George Antunes Voice (713) 743-3923
Associate Professor Fax (713) 743-3927
Political Science Mail: antunes at uh dot edu
University of Houston
Houston, TX 77204-3011
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