March 2010 Archives

Dear Mr. Adelstein,

As a supporter of you personally and a strong believer in the mission of RUS to help rural America get wired, I'm writing you this open letter to express the deep concern I and many others have about how well your agency is fulfilling that mission.

In talking with a wide range of deployers who have dealt with RUS throughout the years, there are a number of specific issues that suggest that your agency needs a comprehensive review and likely reform if it's going to live up to its potential as the lead enabler of rural broadband.

These issues include:

- RUS primarily funds private, profit-maximizing companies
Should taxpayer dollars be used to subsidize private profits for areas that aren't profitable without subsidies? All the experts I've talked to agree that rural broadband won't be solved by profit-maximizing means, so RUS should recognize this reality and adapt its systems to support projects who put community interests over profit.

- RUS primarily funds closed monopolies
Making RUS's focus on private profit-maximizing companies worse is that the majority of the networks it funds are closed monopolies. Given that rural areas in need of RUS support can't support one broadband network, they will never realize the benefits of facilities-based competition. So RUS should explore whether greater emphasis should be placed on supporting the deployment of open networks that can extend the benefits of competition to all Americans.

- RUS funds lots of well-to-do areas
The whole point of RUS is to be a source of capital for projects that can't raise it on their own. And yet a number of projects RUS funds are in areas with high incomes, like the million dollars RUS gave to Bretton Woods Telephone to lay fiber to 400 skiing chalets, only 40 of which house year-round residents. RUS should be supporting the economically disadvantaged, not providing low cost capital to areas that don't need the help and are just looking to save some money on the backs of taxpayers.

- RUS is biased against public projects
Not only does RUS primarily fund private, profit-maximizing companies, but its systems are all biased against public non-profit projects. The application forms ask for information about profits and past revenue when most public projects are new and obviously will never generate a profit. No further evidence is needed of this anti-public project bias than a look at who got funded in the first round of the stimulus, or rather who didn't as almost all of them were private, profit-maximizing companies.

- RUS applications are onerous, requesting unnecessary information
A common theme I've heard from stimulus applicants is that RUS applications require information that's cumbersome to compile and not necessary to review an application. Many have cited that getting vetted by private capital sources requires a lot less paperwork, that a lot of the data RUS requests costs significant money to compile, and that the applications have a tendency to ask for the same information in different ways.

- RUS approval takes too long
This isn't a new criticism, but still one worth pointing out. Some applicants have had to wait years to get approved or denied funding. And that's not surprising given that the average RUS application has grown to a three foot high pile of paper. If private capital markets can vet projects with less information in less time, then why can't government?

- RUS approval length is wildly uneven
Why is it that some projects can get approved in a matter of months while others take years? There appears to be no obvious rhyme or reason to this, which gives the impression of uneven and possibly unfair treatment of applications.

- There has been no review of the success of past borrowers
Other than RUS touting its low default rate, I have not seen any serious analysis of the success of past RUS borrowers. Did they build what they said they'd build with the money they got? Is the network delivering the service it's supposed to at a price that's affordable? Did RUS vet all the past borrowers they gave stimulus dollars to to make sure they can be trusted with more money? These are all questions nobody knows the answers to.

What all of these concerns have led to is a real negativity towards RUS among the very people RUS is intended to inspire and enable. RUS is seen as a classic example of bad government in action, of too much bureaucracy leading to inaction, leaving people to wonder how bad the waste, fraud, and abuse of the system has gotten.

Now, I understand that RUS is in a really tough spot. Their stimulus money was appropriated and the first NOFA written before you were able to be confirmed. And RUS is just coming out of nearly a decade of neglect and abuse under the Bush administration.

But at the same time, I'm also hearing disturbing stories from my sources of corruption within RUS, of GFRs recommending that disgruntled applicants should work with specific consulting firms that have an inside track to RUS approval, and of people within RUS receiving kickbacks and financial promises for special consideration of their applications.

While I don't want to believe that these things are true, it's hard not to question when some projects get approved in months while others take years, when you've got past applicants getting more funding despite a lack of success, and when some of the projects that do get funded don't pass the smell test.

I know what I'm citing here is circumstantial evidence at best and you shouldn't throw around accusations of corruption lightly, but even if there's no truth to them (which I sincerely hope there isn't) it's still important that you realize that this is the perception of RUS among the very people your agency is supposed to be empowering.

Please note that I'm not laying the blame for all of this at your feet. You've been put into an impossible situation and you still have monumental challenges ahead of you.

But I feel it is my civic duty to reach out to you publicly about these issues because of the stakes at play here. There is little love for RUS in Congress. While they support your mission, many have become vocal critics of how the operation is run. As a result what's at stake here is the very future of RUS as an enabler of rural broadband deployment.

If you don't do something to clear the air of these concerns, to show that you're listening and that you're ready to step up and reform whatever parts of RUS need reform, I think it's quite likely that RUS's funding will be cut at some point in the not too distant future. In fact, the dissatisfaction with RUS could grow so much that Congress may take your rural broadband responsibilities away entirely.

That's why I humbly suggest that you seriously consider embarking on a comprehensive review of RUS at your earliest possible convenience. As far as I can tell, this has never been done. At a minimum, I know the national broadband plan barely even mentioned RUS, and Congress has chosen not to provide rigorous oversight of how the BIP program has worked so far.

But at some point someone's going to turn a critical eye towards RUS and bring up all the issues I've listed above. Rather than wait for that to happen to you, I strongly urge for you to get out ahead of this and start your own comprehensive internal review, not as a witch hunt but as a way for you to better understand how your agency is and isn't fulfilling its mission.

Now is not the time to assume that everything's working and that RUS just needs to be made incrementally better at the margins. Maybe that will turn out to be the case and that most of these concerns have no basis. But I don't think you can risk your agency's future on the hope that things are better than they appear from the outside.

Thank you for your consideration and for your dedication to serving our country through public service. I and many others believe that you are absolutely the right man to take on these challenges, and we stand ready to support you as you lead RUS in the coming years.

All the best,
Geoff Daily on behalf of the American people

What Happens When Verizon Stops Deploying FiOS?

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While America still lags the rest of the world in the deployment of high capacity broadband networks, the last few years have seen us improve rather dramatically. The catalyst for this improvement has been Verizon's decision to invest nearly $20 billion in its FiOS full fiber network.

Not only has Verizon singlehandedly pushed the number of homes passed with fiber from less than a million to more than 17 million, they also deserve a lot of credit for being the competitive spur that's led to cable's upgrades to DOCSIS 3.0. In fact, one could argue that if it weren't for Verizon, cable may have dragged its feet on investing in upgrades for at least another few years.

Verizon's FiOS has also helped to both create and reveal pent up demand for fiber. Communities across the country now have FiOS envy, hoping that Verizon deems them worthy of investment.

But now that Verizon's winding down it's first phase of large-scale FiOS deployment, they're giving out clear signals that at least for the immediate future their attention is turning from deploying new networks to focusing on driving subscribers to sign up for the networks they've already invested in.

That creates a bit of a problem for America, though. If Verizon moves to the sidelines when it comes to major investment in next gen networks for any significant amount of time, what impact will that have on America's already underwhelming broadband trajectory?

Will cable companies feel less urgency to upgrade all their networks to DOCSIS 3.0 if they don't have a big company like Verizon creating significant competition with large scale fiber deployment? The reality is that no other broadband technologies offer serious competition to last generation cable, let alone next generation.

What's going to happen to America's growth in average broadband speeds? Will Verizon's push to get more people to sign up for FiOS, and presumably to encourage existing customers to sign up for more bandwidth, be enough to keep us moving up, or will we actually start slowing down? Early signs suggest that we're already moving backwards when it comes to average bandwidth.

Many have cited Verizon's decision to invest in FiOS as legitimizing fiber as a mainstream technology. But what happens if they're not investing any more? While there's tremendous pent up demand among communities to get wired with fiber, there has not be much movement in the way of enabling them to build their own networks. And no new entrants appear ready to step up to carry the ball that Verizon's deciding to put down for the time being.

So where does that leave America? Unfortunately, stuck in neutral.

I don't fault Verizon for their decision, but we can't ignore the ramifications of what it means to the trajectory of our country's broadband future.

Because the reality is that without Verizon, we're going to go from tens of billions being invested in fiber to billions or less. Sure we've got the Google Fiber project, but unless they decide to expand the scope of that project dramatically its impact is going to be limited.

Because of this, I think we need to be seriously considering the following three options:

One, finding ways to incentivize incumbent telephone companies to start investing in fiber.

Two, finding ways to encourage new private entrants to start deploying fiber.

Three, finding ways to enable communities to build their own fiber.

Because if we fail to do these things, then Verizon's decision to pull back on FiOS deployment is going to lower America's broadband trajectory even further than it already is at a time when the rest of the world's leaders are accelerating at a faster pace than ever.

We can not allow this to happen. Our country's digital economic future depends on it.

America's broadband stimulus program continues to get more and more absurd. On March 22nd, NTIA released a list of the status of remaining BTOP applications. On that list were a number of applications still pending, their status unresolved despite having submitted applications seven months ago.

The original timeline of the broadband stimulus program called for three rounds of funding. That got compressed to two rounds, with the first round being significantly smaller than the second. And yet NTIA and RUS still haven't been able to get all their funds allocated in a timely manner.

Now we're hours away from NTIA's deadline for round two applications and days away from RUS's deadline, and yet some first round applicants still don't know there fate.

So what that means is that any still pending applications that get rejected will have no chance to reapply in the second round. What makes this so absurd is that these are the applications that presumably are some of the best of the best as they've made it this far. And yet NTIA and RUS are denying them a fair opportunity to reapply.

I wish I could say that at least this is a limited set of applicants being affected, but we really don't know the scope of it. I've heard of applications still getting rejected as recently as last week, giving them less than two weeks to reapply.

How is this acceptable? How is Congress OK with NTIA and RUS living down to the stereotype that government isn't capable of effectively and efficiently subsidizing broadband?

While I respect that NTIA and RUS faced a massive challenge in trying to process thousands of complex applications, how are they able to sleep at night knowing that they're screwing over dozens if not hundreds of hard working applicants? Do they have no respect for the time, energy, and money applicants have spent jumping through the hoops they created?

This is borderline criminal mismanagement. And it extends beyond just how NTIA and RUS are screwing broadband stimulus finalists. We're also seeing them do things like add answers to the FAQs less than a week before the deadline to apply. It's likely that many people have already applied that won't even be able to address these clarifications in their applications.

What's most galling to me in all of this is that no one seems to be even considering the possibility of putting the brakes on the broadband stimulus. The train has obviously run off the tracks, and yet no one's making any serious effort to get them back on line. Instead we've got RUS and NTIA barreling forward only interested in how can they go faster, Congress ignoring this misdirection entirely, and the American people, who the train is supposed to help, are too desperate for that help to criticize the direction of things vocally lest they piss off the train's conductors.

The broadband stimulus is a national embarrassment. I am ashamed that we've come this far and yet accomplished so little. I'm infuriated that NTIA and RUS think it's OK to mistreat applicants in this way. And I'm despondent over the sense I have that little can be done to right the ship.

But putting all that aside, what I want to know is, how can NTiA and RUS justify applications still being stuck in broadband stimulus purgatory? What's their excuse? How are they going to make things right and fair for these projects?

We can't allow them to get away with not answering these questions. The American people have a right to know what's going on with our tax dollars. Now let's see if NTIA and RUS will step up to explain themselves.

What If Broadband Pricing Was Regulated And Tiered?

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In reading through the national broadband plan and related coverage, discussions around broadband pricing have got me thinking.

First off, there seems to be a problem in some areas that a low cost broadband product isn't offered by incumbent providers. Some people only want to or are only able to pay $20 a month for however much speed that can buy. Yet in some areas broadband starts at $40 a month and can go up from there.

Secondly, there also seems to be an acknowledgement that the existing level of competition in the broadband marketplace hasn't necessarily driven broadband prices lower over time. Instead what's happening is that providers are increasing broadband speed and keeping price the same.

These two realities of broadband pricing led me to think: what if we regulated broadband pricing into clear tiers?

What if we said that broadband providers had to offer service at $20, $40, $60, $80, and $100 a month (or some other combination of tiers).

The idea, then, is to not regulate speed, but rather set these pricing tiers and let broadband providers compete based on the level of service they offer at each tier.

By doing this you'd give consumers a much clearer set of choices as well as a more direct way of judging the value proposition of each service at each pricing tier.

And if we combined this with setting a minimum standard for broadband of say 1Mbps up and down then we could guarantee that all Americans could have access to affordable broadband. We could shift the market rather than subsidizing service at prices that may be artificially high, either because a service is offering more than basic customers need or because their's excess profit built into the pricing.

Now, I know that this is far from a perfect solution. For example, I'm not sure if satellite providers can offer any service at $20. The same is true of fiber providers unless a subscriber signs up for additional services. The reason for this is that there are sunk costs associated with getting people hooked up with new service that need to be recouped for a provider to justify connecting someone.

And I'm sure broadband providers might resist giving up their power over pricing, both for competitive reasons and because the price of offering service doesn't necessarily fit into nice neat tiers that can be made universal across all providers.

But I wanted to put this idea out there as another way we could think about regulating the industry to guarantee low cost service is available and that consumers can clearly judge the value proposition of competing services.

Ideally broadband would be a marketplace where the competitive dynamic is bringing prices down ever further. But if that's not working, then it may be time to consider alternative options.

In the FCC's national broadband plan an assumption is made that competition is a good thing, that having multiple facilities-based competitors unencumbered by government regulation will create a healthy broadband marketplace.

But this article entitled, "Time Warner's 'Surgical' Upgrades Identify Competition Gaps," points out that there's a downside to unfettered, market-driven competition: a concentration of limited resources for deployment in markets where competition exists.

What this article highlights is that Time Warner is only upgrading its networks where true competition exists in the form of Verizon FiOS. This is something that's common across the country: incumbent operators only upgrade to next-gen networks when competition forces their hand to do so.

While some might see this as an example of a healthy market in action, the flip side to this is that by letting the market work on its own we're creating islands of super connectivity while the majority of the country is left without.

It makes more economic sense for a private, profit-maximizing operator with finite resources to concentrate those dollars on deploying to the most lucrative markets. That's why wealthy suburbs are getting DOCSIS 3.0 cable and fiber whereas rural and lower income areas have to get by with last generation cable and DSL.

I'd hoped that the FCC's national broadband plan would at least acknowledge this issue, but so far I have not seen it addressed despite it being the Achilles' heel of market-driven competition policies.

Giving credit where credit's due, the plan does acknowledge that in rural areas without any broadband that the focus should be on getting them wired with one pipe rather than multiple. So at least we've taken a step beyond the idea that facilities-based competition is the cure-all for all our broadband woes.

Even then, though, the plan doesn't address how we can insure all Americans have access to broadband that's ever faster and less expensive when being served by private monopolies. But that brings up a whole host of other issues that I'll address at a later date.

Back to the issue of the downside of competition, earlier this week I wrote about how the FCC failed to include a specific action plan for achieving its signature 100 Squared goal of connecting 100 million homes with actual 100Mbps down and 50Mbps up service.

In that critique I referenced the plan's own observations that only two technologies are capable of delivering these speeds (DOCSIS 3.0 cable and fiber) and that while cable companies may soon serve 90+% of the country with their next-gen networks that there's no guarantee that the market will respond with massive investment in fiber.

Well let's look at this issue through the lens of the issues I'm raising in this post. Even if telephone companies or some new entrants do respond to cable's upgrades, it's almost certain that that deployment is going to be concentrated in the most lucrative areas. It just makes the most economic sense from the perspective of the deployers to do so.

So that means even if market forces do work to spur new investment, the scope of that investment is going to be geographically constrained by profit motives.

In no way, shape, or form am I trying to suggest that this is something bad that must be stopped. Instead I'm shining a light on these issues as America's national broadband plan must have a strategy for how to make sure all Americans can realize the benefits of competition and next-generation networks. We can't afford to sit back and hope the market solves all our problems on its own when there are structural issues preventing it from doing so.

Unfortunately, there aren't any easy answers to these challenges of overly concentrated broadband investments. We can't just say that government subsidies are the answer as then we're potentially disadvantaging those operators who've made the investments in upgrading their networks on their own without taxpayer support. Plus government doesn't seem to have the stomach the foot the entire bill. I'm also not sure what incentives we could put in place that would be fair to everyone while also changing the economic equation enough to get deployers to either invest a lot more or to spread out that investment more evenly across the country.

This is undoubtedly a massive challenge. But it's one that we must face down and find a solution to if we are to achieve the goal of America having the world's best communications infrastructure. Because if we leave things up to the market alone, we're going to end up with islands of superconnectivity while the rest of America lags behind.

The signature goal of the FCC's national broadband plan is its 100 Squared initiative.

That 100 Squared goal is defined in the plan as 100 million homes having access to actual-not-just-advertised service of 100Mbps down and 50Mbps up by 2020.

This is an admirable goal that should set America on a reasonable trajectory, even if it is still lower than the world's broadband leaders, which are already headed towards 1Gbps.

But goals mean nothing without plans to achieve them. So how does the national broadband plan suggest we go about achieving this goal?

For starters the plan acknowledges that there are only two technologies capable of delivering a real 100Mbps down and 50Mbps up, and those are DOCSIS 3.0-enabled cable and fiber.

The plan then concedes that while cable networks appear poised to upgrade to DOCSIS 3.0 across the country, in many communities there's no guarantee that this competitive pressure will be sufficient to spur the incumbent telephone company to invest in fiber.

What this implies is that without something being done to either encourage telephone companies to upgrade to fiber or enable a new entrant to do so instead, the majority of our 100 Squared America will only have access to 100/50 service from a cable monopoly.

So what does the plan recommend we do to help facilitate fiber deployment?

First, they point out the need to make it easier and cheaper to get access to rights of way and poles to ease deployment of new infrastructure.

Second, they call for Congress to override state laws that hinder cities' ability to wire themselves in the absence of sufficient private investment.

And third, they focus on dig-once provisions that would allow fiber and conduit to be deployed more cheaply when roads are being dug up for other reasons.

While each of these proposals have a lot of merit, and each will make it marginally easier to deploy fiber, none are a silver bullet that will enable significantly more deployment than what is currently going on.

What's disappointing about the FCC's plan to achieve their 100 Squared goal is both that they really haven't suggested a concrete action plan and that they've left so many ways that government can spur deployment off the table.

For example, why aren't we offering providers who meet this 100 Squared goal with tax breaks? Tax breaks can both reward providers who are already deploying this kind of infrastructure while also incentivizing new deployments.

Another important issue that goes unaddressed is how the credit crunch is preventing deployers that want to deploy fiber from raising the funds they need to do so. The plan offers no suggestions for how to solve this problem, and in fact doesn't even cite it as a barrier to deployment.

Also relevant is the FCC's decision to avoid dealing with net neutrality in the plan. The problem with this from a deployment perspective is that this regulatory uncertainty can suppress investment in new broadband buildout even further.

And the plan offers nothing in the way to strategies for demand aggregation, which can help providers make a better business case to justify to deployment to a given area.

Also missing from the plan is any detail for how government's going to make sure that 100/50 service is affordable, or how they're going to measure if a broadband provider's delivering an actual 100/50 vs. advertised, or what they're going to do to get homes connected in the absence of providers able or willing to deliver actual 100/50 service, or whether we should only subsidize rural broadband networks capable of delivering 100/50, or as I mentioned earlier whether or not the FCC cares if that 100Mbps future is competitive or a monopoly.

In many ways, the plan's 100 Squared goal raises more questions than answers, especially about why the plan doesn't include more ways to incentivize the deployment of next-gen networks capable of delivering these speeds. And for these reasons, it's hard not to worry that what sounds initially like an aspirational goal is really just wishful thinking, more politics as usual where rhetoric of setting big goals is more important than having real plans to achieve them.

FCC Sets Bold Standards For Universal Broadband

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Yesterday the FCC released America's national broadband plan. While there are many issues worth exploring, I wanted to start my analysis by commending the FCC for establishing bold standards for universal broadband.

In the plan, the FCC states that all Americans should have access to broadband that delivers at least 4Mbps down and 1Mbps up, and that these speeds need to be actual rather than advertised.

The highest goal I've seen set by any other country for universal broadband is 2Mbps, so the FCC has set a high bar for universal broadband.

It's hard to understate how significant a step forward this is for the country.

Prior to the release of this plan broadband was defined as anything faster than 200Kbps. And in debates about how to define broadband, many argued that broadband should stay under 1Mbps rather than breaking into multi-megabit capacity.

The FCC's decision to raise the bar to 4Mbps down and 1Mbps up is a clear rebuke of that mindset. It shows their support for the notion that all Americans need and deserve access to multi-megabit broadband.

I really like the way they based this baseline standard on how the average American uses the Internet today. While it will still mean that some people won't be able to use some Internet applications, it assures that all people will be able to access most of what the Internet has to offer.

It's also revolutionary that they decided to stress "actual" over "advertised" speeds. That means no more free pass for broadband providers with aging, inadequate networks that claim to offer service they can't really deliver.

While there may be other aspects of the plan I find underwhelming, on this front I think we should all be extremely pleased with where they've set America's standards for universal broadband.

The question now becomes, how are they going to back up those standards with a plan to achieve them?

Presumably at a minimum they'll make sure that federal subsidies only go to networks that can deliver at least 4Mbps down and 1Mbps up, and that's a start.

But how will they make sure that everyone gets this level of service? How are they going to deal with networks that claim to offer this capacity but don't really deliver it? In the absence of a qualified provider, who are they going to get to deliver service? Will they prioritize broadband that's quick and cheap to deploy, or broadband that can scale to meet the FCC's larger goals? What can they do to make deployment to the most rural of areas more economical?

Other than a general call to shift the Universal Service Fund's focus to broadband, there's very little in the way of specifics on how they're going to address the questions above.

So while I'm optimistic about the ambitions of this standard for universal broadband, that optimism is very cautious and tempered by my disappointment with how the broadband stimulus has played out to date.

Even though our sights may be set on the right goals, if we can't come up with a comprehensive plan to achieve them then this will just be another exercise in good intentions ruined by government futility.

Tomorrow the FCC will release its national broadband plan. Finally, ten years into the 21st century, America will have a plan for encouraging the deployment, adoption, and utilization of this most crucial of infrastructure.

But how are we to judge the merit of the plan when it's made public? How will we know if as a whole it does enough to help our country realize its full digital potential?

While there are many specific issues that are serious and contentious, there's one thing above all else that the plan must accomplish: making sure that Americans have access to bandwidth that's ever bigger, better, and less expensive.

Bandwidth is what broadband delivers, the capacity to transfer data to be able to use all that the Internet has to offer in the way of content, services, and applications. Think of bandwidth as electricity, and broadband as the electric cables Americans need to their houses to get service.

Just like electricity, consumers need more capacity than their current demand so that as new applications/appliances come online that require more resources to deliver greater utility they can have the ability to use them. Imagine if we had only built an electric grid capable of powering light bulbs.

Just like electricity, consumers must be able to rely on it, they have to be able to count on bandwidth being available when they need it if they're going to optimize their lives to take full advantage of what the Internet has to offer. Imagine what would've happened if electricity never got to the point where we can all assume it's always going to work.

Just like electricity, consumers need to not only be able to afford it, they need the service to become less expensive over time to help enable unfettered growth in demand. Imagine if electricity had never gotten cheaper, had been something that only the rich could afford, it would've stayed a luxury and never became a necessity.

Just like electricity, the way to measure the success of our broadband infrastructure is the trajectory it's on to deliver higher capacity and greater reliability at lower costs.

We can't just think about broadband in terms of getting people connected. How they're connected sets the limits for how much value they can realize from using the networks. The bigger, better, and cheaper bandwidth is, the more users can do with it.

The challenge the national broadband plan faces is that government can't address these issues in the same old ways.

There isn't enough money for government to pay for the buildout of sufficient capacity on its own, so we need to find ways to encourage private investment in broadband.

Government can't continue to just subsidize service for low-income households when what's really needed is to find ways to lower the cost of service over time for everyone.

Because the Internet relies on a wide array of public and private players, and since the government hasn't proven to be nimble regulators of the Internet, there needs to be other solutions for guaranteeing reliability, solutions created in partnership with industry to protect the interests of users and providers.

While some might argue that issues like openness, privacy, adoption, and utilization are more important than bandwidth, to them I say simply: if users don't have access to enough affordable, reliable bandwidth, then they won't be able to do all the wonderful things we know broadband can enable, and then we won't even have the opportunity to tackle the challenges of how to get people online, how to get them using it, and how to protect their interests.

Nothing matters more than improving American access to bandwidth. It's the most fundamental part of our broadband infrastructure. So that's the primary metric by which we should be judging the success of our national broadband plan.

I have to admit, I'm more than a little surprised at how little uproar there's been about NTIA's decision to shift course midstream in round one of the broadband stimulus and not fund any last mile projects.

In the round one NOFA, NTIA talked at length about last mile projects, giving every indication that last mile had at least as good of a chance at getting funding as middle mile.

Yet how many last mile projects have gotten funded? Other than some minor last mile components to middle mile projects, the answer is none. And not one single purely last mile project has been awarded a grant by NTIA.

That's not for a lack of trying, though. I know a ton of projects that applied for NTIA's BTOP Last Mile program. Many saw NTIA as their only hope as they didn't think they could qualify for BIP funding for a variety of programmatic reasons.

Yet after all the applications had come in for round one, NTIA changed its mind. They decided to ignore the first round NOFA and blaze a new trail, one that focused entirely on middle mile and completely ignored last mile projects.

The problem with this isn't that their new trail is necessarily the wrong way to go. I think some compelling arguments have been made that middle mile is a good place for government to focus it's support.

Instead what's troubling is the utter lack of transparency about this decision. It was made behind closed doors, and as far as I know the public was never notified.

Quite frankly, I find how they handled this to be rather disrespectful to first round last mile applicants. A lot of people put a lot of time and energy into applications that because of these decisions were dead on arrival.

Unfortunately, not much can be done to make this right as the second round NTIA NOFA now clearly states their intentions to only fund middle mile, so it's not like last mile BTOP applicants can reapply.

But at a minimum, I think last mile BTOP applicants deserve an apology from Administrator Strickling. While I know the first round NOFA wasn't his fault as it was drafted before he assumed power, it was his decision to abandon it midstream and not tell anyone he was doing so.

By not acknowledging they did this, NTIA is basically saying they don't care about anyone working hard to bring last mile service to the unconnected who saw BTOP as an opportunity to do more for their constituents. It also shows that NTIA doesn't care about respecting the hard work first round last mile applicants put in to applying.

What's so frustrating is that I can't believe that this was done intentionally or maliciously. I know some of the people over at NTIA and they're good people, working hard themselves. More likely is that this is just a detail that slipped through the cracks as they tried to manage an impossible challenge.

But regardless of that, there's still no denying that the decisions they made behind closed doors wasted the time and energy of hundreds of projects, causing thousands and maybe even millions of Americans to become even more disillusioned with the federal government.

Because of this, I think NTIA owes first round last mile BTOP applicants an apology to clear the air, come clean about what they did, so that we can all move on from this with at least some sense that NTIA actually cares about the people it's supposed to be serving.

Why Is RUS Subsidizing Fiber To Skiing Chalets?

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Last night CNN aired a story during the Situation Room highlighting two participants in the first round of the broadband stimulus.

The first was Hiawatha Broadband, a terrific rural broadband deployer in southeastern Minnesota. They interviewed a host of people about how the hardscrabble rural towns Hiawatha was aiming to serve don't have broadband at all, and as a result their public safety is in jeopardy as they have no efficient way to communicate during an emergency. Unfortunately, despite the fact that they're a poster child for the types of communities the broadband stimulus is intended to help, their application was denied.

Then CNN went up to Bretton Woods, NH, where RUS did find a project it deemed worthy of funding, namely building fiber to 400 skiing chalets. I'd been suspicious about this program already, but CNN put an even finer point on it: only 40 of those homes actually have full-time residents.

The piece then finished up with a line from yours truly to the following effect:

"The intent of the stimulus was to connect the unconnected. To give people a primary means for getting online, so they can find jobs, get better educated, access better healthcare. The stimulus is not about getting broadband to skiing chalets as a nice-to-have amenity."

While I said that in an interview before the piece aired, after watching it I'm more convinced then ever that something's screwed up with RUS's priorities.

How is it that they decided it was more important that skiing chalets get fiber over a rural Minnesota town that has no broadband at all?

Making this even more galling is that after the story aired, a colleague of mine who grew up around that area shared that not only is the area RUS decided to subsidize wealthy, but it's surrounded by much more economically challenged communities. So RUS basically gave money so rich people could have better access when they go skiing, while the areas around this enclave are left without any help.

Now, I know it's unfair to blame RUS for not addressing the needs of the communities surrounding Bretton Woods as there may not have been an application submitted for them to fund.

But how can they justify funding a part-time skiing village when so many rural low-income Americans are still without service?

What this highlights is that RUS is a broken system. Their purpose is to be a lender of last resort, providing a source of low-cost capital to fund deployment to areas that can't do it themselves through traditional means.

Instead what RUS has a history of doing is only funding those projects that need the least government support, that are the most able to pay back loans and put up their own money.

This post and that CNN story are not meant to tear down any individual at RUS. But I do hope that together they bring the nation's attention to bear on the fact that there are systemic issues that need to be addressed in RUS if it is going to realize its full potential as a true enabler of rural broadband deployment.

Because when you hear stories like this, and you see how RUS is really only funding private closed monopolies in the first round of the stimulus, you do have to wonder if they're really fulfilling the role that RUS is intended to serve.

For anyone who's observed or experienced firsthand the first round of the broadband stimulus, the issues with how NTIA and RUS have handled things are rampant.

Here are just a few of the questions that I and many others have about how things have gone to date:

- Why haven't any public last mile projects received funding?
- Why are they disadvantaging applicants for Rd 2 that made it to due diligence in Rd 1?
- Why aren't they providing any real feedback to Rd 1 applicants?
- Why did NTIA change the scoring criteria midstream, rendering many applications dead on arrival?

These are some of the major questions that I would think anyone tasked with overseeing the broadband stimulus would care to ask.

Yesterday the House had its quarterly broadband stimulus oversight hearing. So which of these questions did they decide to address publicly?

Only one. Chairman Boucher and Rep. Welch both inquired about whether Rd 1 applicants were getting enough feedback to know what they did wrong and to identify how they can improve their applications for Rd 2.

Administrators Adelstein and Strickling said yes, they were providing enough feedback, and that was the end of it. No follow up questions from Congress. No pressing NTIA and RUS on the fact that they've been rejecting applicants by form letter and refusing to provide any followup insight into why applications got rejected. No questioning how it can be that while NTIA and RUS feel they're giving adequate feedback, no one who's received that feedback feels like they have a real handle on why they were rejected.

What dominated Congressional comments and questions were concerns over government subsidizing competition, that stimulus funds are being used to fund duplicative networks. No fewer than six Representatives, on both sides of the aisle, expressed concerns about this.

It's hard not to interpret this as Congress caring more about protecting the interests of incumbents than about making sure the program's actually working right.

Some who raised this issue may claim that what they're really doing is protecting the interests of unserved Americans, to make sure stimulus funds stay focused on connecting the unconnected. But that's an absurd suggestion as the economics of broadband deployment are horrible if you're only building to unserved areas. You need networks to reach denser areas to balance out the less dense to have a sustainable network.

The one upshot of this emphasis on government-subsidized competition was being inspired watching Strickling fight back to put the interests of communities over those of corporations. In particular, when he was questioned about how the North Georgia project overlaps with areas served by Windstream, he strongly and eloquently argued that just because Windstream was in North Georgia doesn't mean they were actually serving the community's needs.

That's the crazy thing about Congress's emphasis on government-subsidized competition. They seem to think that if an incumbent says they serve an area than it must be served and doesn't need subsidies. But that's just not the case. A big part of the problem America faces is not just that some people can't get any service, it's that many people can only get service that's inadequate, unreliable, and too expensive.

The question shouldn't be, "Is there service?" It should be, "Is there sufficient service to meet the needs of Americans?"

But I digress, what this post is really about is the appalling behavior of Congress as it shirks its stimulus oversight responsibilities.

I find their behavior unacceptable on multiple levels.

For one, I can't believe they don't know about at least some of these problems. Pretty much everyone who's disgruntled about how the first round of the stimulus went has contacted their Congressional representatives to complain. Many have had their elected officials contact NTIA and RUS directly to try and get more information about why they were rejected, only to be denied. So Congress's inaction can't be explained away by ignorance.

So if they know problems exist, why aren't they addressing them? It makes one wonder if Congress doesn't want to admit that the broadband stimulus has had issues. They'd rather keep things quiet so they can continue touting the benefits of federal investments in their communities without having to get their hands dirty. They'd rather plow forward than have anyone question whether the decisions they've made up until this point are right.

But that brings me to the real reason I find their inaction and seeming disinterest so appalling: they're the only ones who can make sure the many issues with the broadband stimulus are addressed and resolved.

We can't count on NTIA and RUS to do this themselves. They've got too much on their plate to spend time reflecting on the past. And they have nothing to gain by admitting their mistakes.

The only people who can shine a light on these issues and affect real change is Congress. And yet they've decided to shirk this responsibility. They've decided that the illusion of oversight is good enough.

I hate to speak so harshly about an institution I respect tremendously, and I'm greatly appreciative that Congress devoted the energy to make the broadband stimulus possible in the first place. But if they really want the broadband stimulus to be a success, to be a catalyst to push America forward, then they have got to stop this milquetoast oversight.

The American people deserve better.

The Benton Plan: A Solution For A Fairer Stimulus

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The venerable Charles Benton has just shared an idea with me for how to level the playing field for the broadband stimulus that I think is flat out brilliant.

It addresses the inequities being heaped on anyone unfortunate enough to make it into due diligence of the stimulus Round I.

As things stand right now, many projects that made it into due diligence still haven't heard if they're going to be awarded funding, and many more didn't get their rejection letter until after the funding window for the Round II NOFA opened in mid-February.

What the current system is doing is punishing anyone who made it to due diligence by giving them less time to rework their application than others who were rejected earlier on.

What Charles suggests in the Benton Plan is that all applicants should have the same amount of time to submit their Round II applications. Accomplishing this can be done simply by extending the deadline for applicants that made it to due diligence to 30 days after they received their rejection letter.

This way instead of some applicants only have two weeks when others had a whole month to apply, everyone can have the same chance at success.

Additionally, if they end up extending the deadline for everyone (which is seeming increasingly likely according to some scuttlebutt I'm hearing) then you can give those that made it to due diligence 45 days or however long after they got rejected to reapply.

The Benton Plan makes perfect sense to me as otherwise if we don't do something to level the playing field than we're essentially disadvantaging some of what should be the very best projects given that they made it to due diligence in the first place.

I hope NTIA and RUS are open to considering new ideas like the Benton Plan as ways to resolve these issues of fairness. Only time will tell.

Something dawned on me over the weekend about the broadband stimulus: public last mile projects had zero chance of receiving funding in Round I.

But how could this be? Wasn't the stimulus supposed to prioritize public projects? Wasn't the stimulus supposed to spur last mile deployment?

While that may have been the intent, due to two key decisions made behind closed doors, public last mile broadband stimulus projects never had a chance.

The first decision that ruled out public last mile projects was NTIA's midstream switch to focus all of its resources on middle mile projects. Hundreds of last mile applicants applied to BTOP thinking they had a chance to get funded, when really their efforts were all wasted.

The second decision that ruled out public last mile projects was RUS not doing anything to better accommodate public projects. Pretty much every aspect of their program favors private companies. As evidence of this all of the projects RUS has funded in the stimulus to date have been private entities.

Put these two decisions together and you can see that public last mile broadband stimulus projects were systemically discriminated against.

But what's so frustrating about this isn't that NTIA and RUS decided not to fund public last mile projects, it's that they never told anyone about these decisions.

If they would have just come out and said, "NTIA's only doing middle mile and RUS is only funding private projects," then I and many others would've been upset, but at least we would've known what was going on and public applicants could've saved themselves a lot of hassle.

Instead NTIA and RUS stood by and allowed hundreds of hard-working Americans to spend countless hours, dollars, and effort putting together stimulus applications that were dead on arrival.

Quite frankly, this is unconscionable. Making it worse is I'm not sure if Strickling and Adelstein even realize what they did. They seem to think that everything's going fine with the stimulus, and that they're making all the right decisions.

But how can that be when the results of their efforts are that no public last mile projects will get funded?

No matter how you cut it, NTIA and RUS screwed public last mile projects, and in so doing disrespected and disappointed the very people they're supposed to be inspiring.

Recently an analogy has sprung to mind describing how the broadband stimulus has run to date that I can't get out of my head. It's that of broadband stimulus applicants as Charlie Browns repeatedly trying to kick the football only to have NTIA and RUS as Lucy move it out of their way at the last second.

There were many ways this process played out with both agencies.

Non-profits and governmental entities thought they actually had a chance at RUS funding, but instead the money's pretty much all going to private for-profit companies.

Public and private providers alike thought that NTIA was going to give out some money to spur last-mile deployment, but they switched midstream and instead have only funded middle mile projects.

There was talk of both NTIA and RUS wanting to work with applicants to make sure the best projects get funded, but instead many great projects were disqualified due to technicalities.

Applicants were encouraged to be creative and that they'd be rewarded for finding ways to leverage multiple funding sources, but instead only the simple projects that applied for one pot of money have gotten funded.

NTIA and RUS have claimed that their goal is to fund the best projects, and yet the rules they implement don't align with best practices for broadband deployment, which may make it hard even for projects that get funding to succeed in the long run.

Over and over again, the broadband stimulus has said one thing but done another, leaving applicants laid out on the ground, dazed, confused, and unsure of what to do next.

And yet here we are again, with the window for Round II funding rapidly closing, these hard-working Americans must decide whether it's worth getting up, dusting themselves off, and giving it another go. Will this be the time that Lucy finally lets them kick it? Or will they futilely end up on the ground in another cloud of dust?

I wish I could confidently say their chances look good, but at this point, NTIA and RUS look like they have a little too much Lucy in them for me to guarantee applicants won't become Charlie Browns all over again.

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