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April 6, 2010 8:02 AM

RUS Stimulus Rules Fail Hiawatha Broadband

I have some sad/disappointing news to report. I've learned that last week Gary Evans of Hiawatha Broadband was forced to send the following letter to the Secretary of Agriculture notifying him that his company would be unable to reapply in the second round of the broadband stimulus.

The reason Hiawatha couldn't reapply was due to an onerous rule in the BIP program through which RUS required all applicants to share the details of all their contracts with all their suppliers. The problem Hiawatha faced is that as a provider of TV service they have a number of contracts with content providers that have strict non-disclosure rules. So by asking them to reveal the details of those contracts, RUS was basically saying that to apply to the second round of the stimulus Hiawatha had to break the law and/or risk the future of their company.

Now, you'd think a rule as onerous as this would've been addressed publicly, and it was. RUS was asked directly about it during a public workshop. Their response was that others had applied with no problem so it can't be that big of a deal. Well that means they're either being ignorant or unfair.

The reason I say this is that if you're a provider who doesn't offer TV service today, then of course this rule isn't a problem for you. Also, there's a chance that some applied anyway, either because they were unaware of these restrictions or because they decided it was more important to go after free government money than to stay in the right on these contracts.

Now, I know there were some workarounds to this problem. At least one provider has their TV service set up as a subsidiary that they were then able to just share the details of the contract between two internal companies, moving the contracts with content providers one step away.

But is that really what we want the stimulus to be about? Forcing deployers to expend effort to adjust how they do business to fit RUS's arbitrary and often misguided rules? Shouldn't we instead be demanding a stimulus program that enables and empowers deployers rather than weighing them down with rules that aren't relevant to the reality of deploying broadband?

What makes this even more upsetting to me is that Hiawatha is one of the best rural broadband deployers in the country. They're a private company but 40% of their shares are owned by local non-profits. They're achieving 70% takerates in some of the communities they serve, even in competitive markets, so they must be doing something right by their customers.

And yet due to this silly rule, they could not apply lest they risked the ongoing viability of their business.

The letter Gary Evans wrote was to the Secretary of Agriculture, Tom Vilsack, and CCed a number of powerful Senators and Representatives. I hope they all take a serious look at what's contained herein as if this doesn't wake them up to the fact that something's not right with the broadband stimulus program when a deployer like Hiawatha is unable to even apply, then I don't know what will.

View Hiawatha Letter Page 1

View Hiawatha Letter Page 2

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