Here’s the situation as stated in the Subcommittee memorandum…

More than three years after the American Recovery and Reinvestment Act of 2009 (ARRA) allocated $7.2 billion for broadband grants and loans, the jury is still out whether taxpayers are getting their money’s worth. Despite claims of ARRA projects being “shovel ready,” recipients of 233 National Telecommunications and Information Administration awards worth $4 billion have spent just $1.6 billion of it so far. Less than a dozen of the projects have been completed. Six of the awards worth $124.5 million have been returned or revoked. Recipients of 320 Rural Utility Service Awards worth $2.4 billion have spent $968 million. Five projects have been completed. As of July 2011, $124 million in grants and $35 million in loans have been rescinded or revoked. Allegations also persist that NTIA and RUS funds are not bringing broadband to unserved areas but instead are subsidizing competitors to overbuild privately financed networks.

Here are the numbers:

NTIA
Budgeted $4 billion
Spent $1.6 billion
Revoked $124.5 million
11 projects completed

RUS
Had $2.4 billion
Spent $968 million
Revoked $159 million
5 projects completed

Congress is convening a panel of experts to talk about what’s happening, the panel includes:

• The Honorable Larry Strickling, Assistant Secretary for Communications and Information and Administrator, NTIA
• The Honorable Jonathan Adelstein, Administrator, RUS
• The Honorable Todd Zinser , Inspector General, U.S. Department of Commerce
• Mr. David Gray, Deputy Inspector General, U.S. Department of Agriculture

Causes of Current Problems

Telecompetitor notes that there are some extenuating circumstances that have made finishing projects more difficult…

The telecom industry has cited several factors (not mentioned in the memo) to explain the apparent spending slowness such as an often long approval process for environment impact studies or a shortage of fiber cabling that resulted when the April 2011 tsunami took a key vendor offline. No doubt Strickling and Adelstein will review some of these factors at the hearing.

I’ve heard from folks that both are real issues – but I’ve heard that from projects that are otherwise on track and seemingly making progress. I don’t know that the main concerns here are the projects that are running somewhat behind – but rather the projects that seem to still be hovering around the starting blocks.

Causes of Future Problems

The memo itself outlines another issue that I think may be even bigger moving forward; the FCC has made substantial changes to USF, thereby requiring changes in business plans of many ARRA grant/loan recipients…

More problems may lie ahead. The FCC has recognized the need to reform the USF’s high-cost program for a decade, with proposals in 2008 and a reiteration of that view in the 2010 National Broadband Plan. The RUS nonetheless apparently guaranteed loans under the BIP and its Telecommunications Infrastructure Loan Program on the assumption that applicants would continue to receive the same level of high-cost USF funding for the life of each loan. Now that the Commission is reforming the high-cost program, the RUS has asked loan recipients to revise and resubmit their financial projections to demonstrate sustainability.

It will be interesting to see how the Subcommittee and panel of experts addresses those issues. It’s a byproduct of the funding coming out before the National Broadband Plan – perhaps an unintended consequence but not unforeseeable.

Minnesota Projects Mentioned

Finally, two Minnesota projects were mentioned specifically in the memo. First the Leech Lake Reservation Business Committee in Minnesota declined its $1.7 million grant on the grounds that it would not be able to meet its grant requirements. And the Lake County project…

Nevertheless, industry observers have suggested that the BTOP’s and the BIP’s infrastructure loans and grants have been used to overbuild existing systems rather than extend service to unserved areas. The Government Accountability Office confirmed these suggestions at the Feb. 10, 2011, subcommittee hearing, noting that the NTIA and the RUS had performed “due diligence” with respect to overbuilding but “made a decision to go forward nonetheless” with projects that would overbuild existing facilities. Indeed, the Energy and Commerce Committee’s Subcommittee on Oversight and Investigations is already investigating recently publicized allegations by cable company Mediacom that the Lake County government in Minnesota is not only using $66 million in BIP funding to overbuild Mediacom, but committed fraud by misleading the RUS in its application.

The Lake County project has had its share of ups and downs. (Some might note that disruptions from incumbents may be one reason some projects are running behind.) Last we heard Lake County celebrating new location in Two Harbors. I did notice that their last couple of meetings had been cancelled.

The Subcommittee meeting will be held tomorrow, May 16, 2012, at 10:00 a.m. in room 2123 of the Rayburn House Office Building. I haven’t seen any notice of online broadcast.

The Blandin Foundation’s MIRC (Minnesota Intelligent Rural Communities) project was selected for a similar evaluation for adoption projects. It’s great that the Federal government is taking evaluation a step farther than you might think they would. All of the award recipients have to track a range of items such as jobs, people trained, miles built – the items obviously vary depending on the type of project. This evaluation seems to go that extra step to see if life was made better through the investment – both from a social and economic perspective. It seems like we’ll glean more info that can be used both in and out of the federally funded/supported projects.

Blandin had the evaluators to visit some MIRC sites last fall. (I did a series of posts on our Minnesota tour with the evaluators.) It will be fun to see the results of that visit and learn more about what happened with Anoka County.

According to ComputerWorld…

The Mobility Fund, created in 2011 as part if the FCC’s revamp of telephone subsidies under the Universal Service Fund, will award up to $300 million to mobile providers that bring service to new areas. Winning bidders must deploy either 3G service within two years or 4G service within three years of the award. …

The FCC will award the funds in a reverse auction, in which mobile providers will compete to be the lowest-priced provider to bring service to an area. Bidders will compete both with others that may be seeking support in the same area, but also with carriers bidding for support in other areas.

The FCC on Wednesday released a public notice detailing the procedures for Phase I of the Mobility Fund. The window for filing short-form applications opens on June 27 and closes on July 11. The auction will be a single-round, sealed-bid auction, and the FCC will require that the winning bidders provide coverage to at least 75 percent of the road miles in each census tract for which they win support.

In addition to the Phase I funding, the FCC will also offer an additional $50 million in one-time support to tribal lands and $500 million each year for ongoing support of mobile services.

I think the main purpose of the map is to connect the user to information about their community. You can do a search by zip and find out what’s happening in your area. You can also track information by state, which provides a sort of nice report card on the impact of CTIP in MN. The quick take on info for MN:

• Broadband adoption percentage in MN: 70.6 percent (National average 68%)
• Communities connected via BTOP funding: 3
• Communities planning to be connected via BTOP funding: 12
• Institutions connected via BTOP funding: 1
• Institutions planning to be connected via BTOP funding: 148

Adoption progress in MN due to BTOP funding:

• 14 new public computer centers
• 143 new or improved workstations
• 121 total broadband adoption programs
• 31.2K total new household subscribers
• 22.9K total training hours delivered

Great news! At the Blandin Foundation’s March 23 board meeting, trustees chose to continue the Foundation’s investment in high-speed broadband through 2014. Program and grant-making details of this stage of the Blandin Broadband Initiative are being worked out, and will be available in fall 2012. In the meantime, if you haven’t checked in on the work of the Blandin Foundation Broadband Initiative for a while, go to http://broadband.blandinfoundation.org 

More details will follow soon – but I thought folks would be pleased to get the overview asap.

The article highlights the trials and tribulations with some of the ARRA funded broadband projects…

Eighteen local construction projects won federal grants and loans as part of the Recovery Act of 2009 totaling almost $229 million. They come in all shapes and sizes. Some will be owned by the public, while others will be built and run by small phone companies and electric coops. And they are at various stages of completion. The federal government’s Recovery.gov website lists 14 as less than 50 percent completed, two as more than 50 percent completed and two as not yet started.

Many have proceeded without hitches. But others have faced obstacles like difficulty obtaining building materials, opposition from incumbent providers, cost overruns, frustratingly slow bureaucracies and trouble clearing environmental hurdles.

What’s funny is that the discussion in the article reflects fuzzily one of the sticking points in broadband adoption. It’s happening, but is it fast enough? We’re just talking about deployment here, not speeds. Ironically, another recent article in MPR raised the speed issue asking if wireless in rural areas was an improvement to existing broadband options in rural areas or rather a stop-gap measure that might delay a larger solution. I might ask a similar question here – are we seeing improvements or are we seeing federal funding getting in the way of other investments? I think we’re seeing improvement – at least in the 16 (out of 18) projects that have been started.

It’s true that some projects have run into hiccups – for the reasons listed by reporter Jennifer Vogel. (For a more comprehensive list of what’s happening with projects, you can check out the Minnesota Broadband Task Force Report (Dec 2011); it includes a table that details progress of ll of the projects that received ARRA funding.) Some projects are actually ahead of schedule. (According to the Task Force report, the Southwest Minnesota Broadband Services is ahead of schedule.)

I might not look at whether the glass is half full or half empty with these federally funded projects – but I might celebrate the fact that the glass is filling! Lac qui Parle County (one community listed as waiting for fiber) may be stalled, but they are moving forward – as are most of the other projects mentioned. Federal funding (and I think results of federally funded mapping) has spurred other communities, such as Kanabec, Redwood Falls and Sibley Counties to take a more serious look (and/or strides) towards broadband deployment. The stimulus funding has stimulated broadband projects and an interest in more!

Finally I have to sing the praises of Blandin Foundation-led Minnesota Intelligent Rural Communities (MIRC) project. Yesterday at the Task Force meeting we got to hear about the federally funded project and its impact on one community – Benton County. Here are a handful of their measures of success;

• More than $20,000 in-kind match
• More than 200 businesses assisted
• More than 500 residents assisted

Benton County is just one of 11 participating MIRC communities – and some MIRC activities reach beyond the select demonstration communities. The project is making a difference in the quality of life in the area; it’s also boosting a demand for greater broadband, which will help support deployment efforts, which as the MPR article points out – can be a bumpy ride – but I’d emphasize that it’s a bumpy ride forward.

The greatly expanded effort centers on a new, $250 million financial commitment planned over 5 years. AT&T Aspire will build on that commitment by using technology to connect with students in new and more effective ways, such as with interactive gamification, Web-based content and social media. The company will also tap the innovation engine of the AT&T Foundry to look for fresh or atypical approaches to educational obstacles. Finally, AT&T Aspire will capitalize on the power of personal connections in the form of mentoring, internships and other voluntary efforts that involve many of AT&T’s approximately 260,000 employees.

It looks like a great opportunity both built on some solid funding and a base of four years of work in the field.

Between now and April 18, 2012, AT&T is also encouraging Minnesota organizations to submit applications to pre-qualify for funding through the Local High School Impact Initiative Requests for Proposals (RFPs). AT&T is most interested in funding local programs that have strong, evidence-based practices grounded in the What Works Clearinghouse Dropout Prevention: A Practice Guide and data-driven outcomes demonstrated to improve high school graduation rates. More information on the RFP process is available at www.att.com/education-news (click on the “Aspire Local Impact RFP” option).

They are seeing programs that will be ready to go by next September. They are looking to invest $100,000 to $300,000 for 24 months. And here’s a little bit (from the RFP) on the communities that most interest AT&T…

What Makes a Competitive Program: The 2012 Local Impact RFP features an increased focus on metrics with a preference for programs showing results for those served vs. peer groups; and a stronger emphasis on underserved populations. AT&T is most interested in funding local programs that have strong, evidence based practices and data driven outcomes demonstrated to improve high school graduation rates.

The most competitive Local Impact RFP responses will:

• Deliver measurable, proven interventions,
• Contain elements that demonstrate improvements in high school retention, promotion, and graduation rates,
• Demonstrate the capacity to provide data,
• Provide student-level records to assess the impact intervention(s) on student outcomes.

AT&T will give special consideration to organizations that incorporate social innovation in their programs. AT&T also has a keen interest in the disciplines of science, technology, engineering and math (STEM) and increasing the number of minority and underrepresented students in these field

And here’s the map that tracks:

• FCC Mobility Fund Eligible Areas Already Served by Mobile Networks
• Unserved Areas Not Eligible for FCC Mobility Auction
• Areas Subject to FCC Mobility Fund
• Auction Confirmed to be Unserved

Students and businesses interested in taking part in the SciTechsperience internship program can now complete online applications at MHTA.org. SciTechsperience is Minnesota’s paid internship opportunity for students studying in STEM fields. It is a new MHTA program made possible by funding through the Minnesota Science & Technology Authority.

SciTechsperience is a key economic development initiative aimed at expanding Minnesota’s talented STEM workforce by providing hands-on experience for talented college students. The idea is to keep those students living and working in Minnesota once they graduate in order to strengthen and advance the state’s knowledge-based economy.

Qualified businesses can receive a dollar for dollar match up to 50% of an intern’s wages for a maximum of $2,500. There are other eligibility requirements students and businesses should check out before they apply to take part in the program. You can read them and complete the applications at MHTA’s SciTechsperience program page.

Good luck!

• Bingham Lake,
• Brewster
• Heron Lake
• Jackson
• Lakefield
• Okabena
• Round Lake
• Wilder

The project has been going very well – and even hooked up their first customer in December. So that part of Southwest Minnesota is going strong.

Unfortunately, according to Watch Dog, not all of Southwestern Minnesota is faring as well..

The recipient of a major federal stimulus grant and loan in southwestern Minnesota appears to be having second thoughts about proceeding with a broadband project spread out over three counties. The $15 million project which planned to expand broadband service in 15 communities may be in danger of going into the financial red zone, apparently due at least in part to the escalating costs of fiber optic cable.

Woodstock Telephone Company was approved by the Rural Utilities Service (RUS) to receive a $10.6 million grant and a $4.5 million loan from the American Recovery and Reinvestment Act (ARRA) to expand its fiber network by installing Fiber-to-the-Premise (FTTP) to an additional 3,600 premises in Lyon, Pipestone and Rock counties.

While there’s evidently been no formal announcement, the Minneota city administrator told the Freedom Foundation of Minnesota (FFM) that Woodstock Telephone informed her the company no longer intends to build a key facility in their community to house equipment for the network. FFM calls to Woodstock Telephone had not been returned at the time of this post.

I haven’t spoken to Woodstock, but I spoke to others who also indicated that Woodstock seemed as if it was running into some roadblocks.