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July 14, 2009 2:00 AM

Top Ten Ways The NTIA/RUS NOFA Fails America

It's kind of surreal to know that today NTIA and RUS began accepting applications for broadband stimulus grants and loans. After months of waiting for signs of progress all of a sudden we're entering the next stage of the process started when the ARRA passed in February.

And yet I, like many others, can't help but be disappointed by the many ways in which this effort has already been letting us down, frustrated by the lack of vision to set America back on course to be the Internet's global leader and worried that despite the good intentions expressed in speeches and interviews that the Obama Administration's first opportunity to push forward their broadband agenda is fast becoming a boondoggle.

So what's so wrong with the broadband stimulus? Well, let me count the ways. Here's the top ten (though in no particular order) ways in which the NTIA/RUS NOFA has failed America:

1. It's taken too long to get capital flowing so networks can start deploying.
We've already squandered the opportunity to spur any deployment of broadband in 2009. The stimulus passed in February. There was enough time to get something done this year other than paperwork. But unless the RUS embraces our proposal for creating a fast-track partial loan guarantee program in the next few weeks to apply $500 million of its budget authority to free up $20 billion in private capital, no broadband will be stimulated this year.

2. Now things are moving too fast.
After waiting around for five months with nothing to do but comment and speculate, now everything's been compressed. The NOFA came out the first week of July, less than two weeks ago and they're already starting to accept applications. Now potential applicants have hundreds of pages of guidelines to read through, consider, and address in a matter of weeks. The workshops intended to help advise applicants just started last week and will run through the end of July, putting anyone going to one of the last workshops at a potential disadvantage as they have to get their applications in by Aug 14. And there's been no time to consider whether the NOFA's any good as now everyone has to scramble just to understand and apply to it. I like the suggestion of extending the NOFA deadline 30 days.

3. The workshops are disorganized and pointless.
While I haven't attended one myself, I've heard from others that these workshops are basically just people reading from the website and application. There's no great insight that's being shared so many who attend feel like it's a wasted day. Plus they've been handing out workbooks that weren't available immediately online. So in other words whoever was able to physically be in DC for the first workshop got a leg up on everyone who couldn't.

4. Asking volunteers to vet applications invites fraud.
I first read about NTIA's plans to use volunteers as their first stage of vetting applications from this Craig Settles' article, and since then many others have picked up this thread, asking the simple questions of: Who can we find that's qualified and willing to donate their time? How do we guarantee they're qualified? How do we insure they're not being influenced in some way financially to accept or reject applications? The only way this works is if there are sufficient qualified people able to volunteer their time for free and there are mechanisms in place to weed out and punish attempts to game the system. But I have doubts about every part of that last statement having any chance of being made of substance rather than wishful thinking.

5. Basing the definitions of unserved and underserved on advertised speeds encourages lying.
If I'm a broadband provider and I know that I can potentially derail a government-subsidized project that may be moving into my territory by simply advertising higher speeds, that may be too tempting to pass up. I'm not saying that all broadband providers are evil just that most are self-interested and also that I'm not confident there are sufficient safeguards in place to prevent this practice.

6. Giving incumbents right-of-refusal provides opportunity to falsify information to derail projects.
If there is an incumbent provider anywhere in the service area of an application they'll have 20 days to respond to it. Essentially what this gives them is an opportunity to try and derail the project by "upgrading" their speeds or being less than honest about their service areas, which is something I've heard incumbents are known to do, things like drawing a circle around a central office and claiming service is offered everywhere therein even if it's not. And again, it's not that I think all incumbents are evil, it just seems like we're giving them too many opportunities and incentives to lie and seemingly not doing anything to balance that out with potential punishments for bad actors.

7. Too much emphasis is placed on connecting rural unserved areas and not enough on supporting innovative testbeds.
Every time someone from the Administration talked about the broadband stimulus in the last few months they used the word "testbed" to describe the kinds of projects they wanted to see funded. Alongside that they acknowledged that there's not enough funds to solve the rural broadband problem entirely. So instead the point was supposed to be about funding showcase projects we can learn from to inform future investment decisions. But some of the best testbeds may be in urban or suburban areas, which are essentially ineligible the way the rules are written. Because of this, potentially great testbed showcase projects, like what San Francisco has planned out, will be overlooked to instead focus the stimulus on only deploying broadband where it isn't.

8. The minimum threshold for the definition of broadband is woefully inadequate.
I've spoken out strongly against this before and will continue to do so until we change our mindset towards how much broadband capacity is sufficient. The question to ask isn't "is this enough capacity for today?" It's "is this enough capacity for five to ten years from now?" The reason being is that when you subsidize a broadband network you expect that it will be operational for at least that long. And given the growing demand for bandwidth and the number of new bandwidth-intensive applications being developed, we can not afford to spend precious taxpayer dollars on networks with insufficient capacity. Not only is doing so wasteful as we'll have to go through this whole process of subsidizing deployment all over again in a few years, but it also relegates rural citizens stuck with these inferior networks to the status of second-class digital citizens.

9. The requirements for projects don't reflect the realities of building networks.
One overarching theme I'm hearing from a lot of my deployer/operator friends is how disconnected this NOFA is from the realities of building networks. For example, some projects were originally slated to build out an entire city, but now they're having to be scaled back to only deploy where there isn't already someone offering 768/200Kbps service. Not only does this mean that many people won't receive the benefits of fiber because they have the "privilege" of being stuck with DSL, but it's also the case that the most efficient way to build these networks is all at once vs. piecemeal. So by forcing the builds to break themselves up into pieces that fit the criteria of the NOFA, we're potentially adding cost to the ultimate total of what it'll take to wire every home with fiber.

10. In the end, this NOFA fails America in its lack of vision and aspiration.
In large part this stimulus is business as usual for America's broadband policy, or lack thereof. We're continuing to muck around, shuffling our feet when the rest of the world is racing forward. It's not just that this NOFA isn't aspirational enough, it's that it does seem to be aspiring to anything at all. There's no ultimate goal for what it's setting out to achieve other than getting some people some broadband. And there's seemingly little being done to even use this as a learning experience that we can build from and help guide future investments. It feels like NTIA and RUS just took the safest route, followed the same steps that have failed us in the past, and at best only marginally improved the approach. Because of this I can't help but feel pessimistic about what the ultimate impact of the broadband stimulus will be.

Take for example this comment emailed to me from Ernie Bray of US Metro Net about a project his company has in the works and his outlook on their odds of getting funded based on the rules of this NOFA:

"My current project has me working with the Idaho Commerce Department, Panhandle Area Council and the local governments and EDC's on an initial two county project. We have the support of the Governor, both U.S. Senators, their Congressman, all of the local governments, schools, hospitals, public safety, etc. and have the support of the power companies who have provided all their GIS data to the effort. In addition, we have one of the top engineering firms in the nation (they engineered and supervised all the FiOS builds in Washington and Oregon, plus others and are currently engineering Manhattan for Verizon). I have two MBA's on my team, one who is also a CPA with 25 years in private equity and venture capital, two of the top attorneys in the nation (one is Jim Baller) on the team, modeling tools that have taken thousands of hours over the last six years to develop, and which have been fully vetted over that time. And still it will be a miracle if we can meet their requirements.

That's how bad this whole NOFA is."

Note that including this quote is not an endorsement of Ernie's project. I've actually never met him before. But I felt like it really summed up the feelings many hard-working people like Ernie share.

There are a host of truly shovel-ready, truly innovative, true testbed showcase projects for us to be supporting through this broadband stimulus. But based on how things are looking so far, I can't help but feel like this NOFA is already a massive failure and the money hasn't even gone out the door yet.

If I've missed some way in which you think the NTIA/RUS NOFA has failed America, add it as a comment below. There is some hope in that the rules can change for the second and third rounds of funding. But we need to work hard to identify how they can be improved so that the entire broadband stimulus doesn't end up as good intentions wasted by poor execution.

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Comments (1)

I can't agree with you more....on all 10 points. Why not have a real vision....something like "fiber available to every home by 2020". The greatest failure is the dumbed down definition of broadband. If a primary underlying goal is to create jobs and economic development, does anyone believe you could run a business on their definition of "broadband"? It's like the rest of the world is buying faster and faster dual microprocessor PC's and our gov't is saying "let's not go for the new ones until everybody has a single processor 386 with a 100 megabit hard drive !!"
Seems to be much more about gov't intervention and control than about stimulus, job creation, and sustainable infrastructure for our future.

Posted by Charlie Hill on July 16, 2009 10:39 AM

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