If Broadband Ain’t Broken, Don’t Fix it With Overbuilding

By John Stephenson

The old adage that goes “if it ain’t broke, don’t fix it” appears to be giving way to “if it ain’t broke, build two (or more) of ‘em.”

The New York Times recently ran a story that supports this new adage, chronicling some examples of waste found in the Broadband Technology Opportunities Program (BTOP), a $4 billion federal program created by the 2009 economic stimulus bill that aims to connect rural Americans to broadband by financing telecommunications infrastructure projects like fiber optic cables.

Although the program was established around the noble goal of bringing broadband to more residents in rural America, BTOP is increasingly rife with examples of overbuilding in communities with existing service that waste taxpayer dollars and compete unfairly with the private sector. Consider the example of the town of Agate, Colorado, which the Times highlights:

“There is not much that is modern in Agate, except at the 11-student elementary school, which has three high-speed fiber optic Internet connections — more than nearly every school in Denver, 70 miles to the west, and, for that matter, just about any school in the country. And it is something, the school says, that it doesn’t need.”

Despite existing fiber optic broadband service, Agate’s third fiber connection was built with funds from a $100 million BTOP grant to an education consortium called called EAGLE-Net. But in December 2012, officials with the National Telecommunications and Information Administration (NTIA), the U.S. government agency responsible for administering the funds, suspended the grant after it was discovered that EAGLE-Net changed nearly all of its plans for wiring the state, just four months after officials warned the consortium it lacked appropriate budget safeguards and transparency.

Sadly, EAGLE-Net is not the only questionable grantee. The Times notes that $594 million in BTOP grants nationwide have been suspended, which is 14% of the overall program. Moreover, the Inspector General for the U.S. Department of Commerce has questioned whether it is even possible to adequately monitor and evaluate the more than 230 grants made under BTOP. For example, $140 million in grants in Alabama and Louisiana were terminated following revelations about undocumented expenditures and missed construction deadlines.

For its part, EAGLE-Net says that it is, in fact, focusing on rural areas without access and that it has had challenges getting started. According to EAGLE-Net’s Gretchen Dirks, “We are building an open access network so that all schools have the opportunity to connect to one another to share resources and have a reliable, efficient network to provide services such as online testing to meet the upcoming Colorado Department of Education standardized testing requirement changes.” NTIA officials also defend the BTOP program and are ready with examples of success.

But Congress has expressed concerns about the reported examples of waste. On Wednesday, the U.S. House Communications and Technology Subcommittee held a hearing that included testimony from NTIA officials in support of the program and private broadband providers from Colorado critical of EAGLE-Net.

Some state legislators are also concerned about the reports of waste and overbuilding. Colorado State Senator Greg Brophy is quoted in the Times’ article saying, “Here you have a quasi-governmental agency that has free federal money and is spending it to provide the exact same service that is already there, competing against companies that are borrowing federally backed money.” Colorado’s state legislative audit committee also recently held a hearing on EAGLE-Net, where state legislators asked pointed questions about EAGLE-Net. “You talk about your history of transparency, but we’re not quite sure how much we’ve spent, we’re not quite sure how much is operational, we’re not quite sure how many customers we have,” said Sen. Owen Hill of Colorado Springs. “Do you share my concern?”

Although there is a great deal of success in getting Americans connected to broadband, some people and areas remain without access. Clearly, this is a policy challenge to address. The question is, how can we provide broadband without wasting taxpayer dollars? Rather than simply throw money at the problem, risking waste from overbuilding broadband, it makes more sense to take a closer look at the real reasons why people remain disconnected and focus instead on removing or lowering the regulatory, tax, and cost barriers to broadband deployment and adoption. That’s what really fixes it.