Report: Broadband Stimulus Plan Stumbles

Politico Study Says Rural Initiative Fails to Deliver

In what could be an industry-wide “I-told-you-so” moment, the federal Rural Utilities Service much-ballyhooed rural broadband initiative appears to have stumbled badly, with about half of the projects funded through the program failing to fully draw the money available to them and a large number of existing projects facing a looming deadline to either spend the money allotted or forfeit it forever, according to a Politico report.

In a sweeping investigation, “Wired to Fail,” Politico found what cable operators have been saying for years – the RUS broadband program is inefficient and has done little to spread high-speed Internet service to the small, rural communities that need it.

Several prominent figures in the cable community tweeted links to the Politico piece, including National Cable & Telecommunications Association CEO Michael Powell; American Cable Association vice president of communicatons Ted Hearn; and Mediacom Communications vice president of legal and public affairs Tom Larsen.

According to Politico, about half of the 300 projects that RUS has approved as part of the American Recovery & Reinvestment Act of 2009 have not yet drawn on the full amounts awarded. Also, according to the Politic report, all of the infrastructure projects funded by the program were to be completed by June 30, but the RUS has declined to say whether they’ve been finished. About 40 projects funded by the program never were started in the first place – bringing into question RUS’ screening practices.  

For the projects that are still underway an even bigger deadline looms – if they don’t draw on all their available funds by Sept, 30 they risk forfeiting the balance, meaning that about $277 million in funding will be wasted. According to Politico, that money cannot be used in other neglected rural communities.

Cable operators have complained for years that the federal broadband initiatives were merely funding overbuilds of their existing territories, not extending service to so-called underserved communities. In its investigation, Politico found 64 communities near large cities that received loans and grants because they were easier to build – their proximity to denser areas with more people and higher demand for service made it easier to recover costs.

According to Politico, it’s not going to get any better. Even the RUS admits that it is not going to provide better broadband service to the 7 million rural households it once claimed. Instead, the number will be in the hundreds of thousands.