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Background and Issues for Congressional
Oversight of ARRA Broadband Awards
Lennard G. Kruger
Specialist in Science and Technology Policy
April 19, 2011
Congressional Research Service
7-5700
www.crs.gov
R41775
CRS Report for Congress
P
repared for Members and Committees of Congress
c11173008
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Background and Issues for Congressional Oversight of ARRA Broadband Awards
Summary
The American Recovery and Reinvestment Act (ARRA, P.L. 111-5) provided an unprecedented
level of federal funding for broadband projects across the nation. These projects are intended to
expand broadband availability and adoption in unserved and underserved areas, which in turn is
believed to contribute to increased future economic development in those areas.
The ARRA provided nearly $7 billion for broadband grant and loan programs to be administered
by two separate agencies: the National Telecommunications and Information Administration
(NTIA) of the Department of Commerce (DOC) and the Rural Utilities Service (RUS) of the U.S.
Department of Agriculture (USDA). With the ARRA broadband projects awarded and now
moving forward, the focus in Congress has shifted to oversight. Projects are required to be
substantially complete within two years, and fully complete within three years. NTIA and RUS
are monitoring the awards to protect against waste, fraud, and abuse, and to ensure that each
project reaches its promised milestones, goals, and outcomes. A key oversight role will be played
by the Offices of Inspector General in the DOC and the USDA, which will monitor the projects
for waste, fraud, and abuse, and will investigate specific complaints. Both NTIA and RUS have
the authority to reclaim and recover awards (either for cause or in cases where awardees decide
not to pursue the project) and return the deobligated funds to the U.S. Treasury.
The 112th Congress will play an important oversight role. A number of committees, including the
House Committee on Energy and Commerce, the House Committee on Agriculture, the Senate
Committee on Commerce, Science and Transportation, the Senate Committee on Agriculture,
Nutrition, and Forestry, and the House and Senate Appropriations Committees are expected to
monitor the ARRA broadband programs in NTIA and RUS.
To date, the House Subcommittee on Communications and Technology has held two oversight
hearings on the ARRA broadband programs. On April 5, 2011, the Committee on Energy and
Commerce approved a bill, H.R. 1343, which seeks to clarify and reinforce the requirement that
deobligated ARRA broadband funding is returned to the U.S. Treasury. The legislation also sets
forth requirements for how NTIA and RUS must respond to information and recommendations
received from the Office of the Inspector General and the Comptroller General.
As the ARRA broadband projects move forward, the primary issue for the 112th Congress is how
to ensure that the money is being spent wisely and will most effectively provide broadband
service to areas of the nation that need it most, while at the same time minimizing any
unwarranted disruption to private sector broadband deployment. Congress will also be assessing
how the broadband stimulus projects fit into the overall goals of the National Broadband Plan.
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Background and Issues for Congressional Oversight of ARRA Broadband Awards
Contents
Background ................................................................................................................................ 1
Where Is the Money Going?........................................................................................................ 1
Awards by State .................................................................................................................... 2
Awards by Entity Type .......................................................................................................... 2
Awards by Project Type......................................................................................................... 3
Awards by Technology .......................................................................................................... 4
Budgetary Profile.................................................................................................................. 5
What Is the Status of Oversight Activities? .................................................................................. 5
Reporting Requirements........................................................................................................ 6
Transparency ........................................................................................................................ 6
Inspector General Reports ..................................................................................................... 6
Program Evaluation .............................................................................................................. 7
Problems with Particular Awards........................................................................................... 8
Issues for Congress ..................................................................................................................... 9
Congressional Oversight ....................................................................................................... 9
Awards in Project Areas with Existing Broadband Service................................................... 10
Funding for Oversight and Program Administration............................................................. 13
Stimulus Awards and the National Broadband Plan.............................................................. 14
Tables
Table 1. BTOP Awards by Grantee Entity Type............................................................................ 2
Table 2. BIP Infrastructure Awards by Entity Type....................................................................... 3
Table 3. BTOP Awards by Project Type ....................................................................................... 3
Table 4. BIP Awards by Project Type........................................................................................... 4
Table 5. BTOP Infrastructure Awards by Type of Technology ...................................................... 4
Table 6. BIP Infrastructure Awards by Type of Technology.......................................................... 5
Table A-1. State-by-State Distribution of All BTOP, SBDD, and BIP Awards............................. 16
Table A-2. State-by-State Per Capita Distribution of BTOP and BIP Awards ............................. 18
Appendixes
Appendix. ................................................................................................................................. 16
Contacts
Author Contact Information ...................................................................................................... 19
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Background and Issues for Congressional Oversight of ARRA Broadband Awards
Background
Signed into law on February 17, 2009, the American Recovery and Reinvestment Act (ARRA,
P.L. 111-5) provided $7.2 billion for broadband grant and loan programs at the National
Telecommunications and Information Administration (NTIA) of the Department of Commerce
(DOC) and the Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA).1
The ARRA directed broadband grant and loan funding in the following way:
• $4.7 billion2 to NTIA/DOC for a broadband grant program including broadband
infrastructure grants, grants for expanding public computer capacity, and grants
to encourage sustainable adoption of broadband service. The NTIA grant
program is called the Broadband Technology Opportunity Program (BTOP).
• $2.5 billion to RUS/USDA for broadband grants, loans, and loan/grant
combinations. The law stated that 75% of the area to be served by an eligible
project must be a rural area. The RUS broadband grant and loan program is
called the Broadband Initiatives Program (BIP).
Subsequently, P.L. 111-226, signed into law on August 10, 2010, rescinded $302 million of
unobligated BTOP money from NTIA.
There were two rounds of ARRA broadband funding. Both NTIA and RUS evaluated and scored
each application based on the proposed project’s purpose, benefits, viability, budget, and
sustainability. The ARRA mandated that all funding be obligated and awarded by September 30,
2010, and as of October 1, 2010, all ARRA broadband funds were awarded.
BTOP and BIP projects must be substantially completed3 within two years and fully completed
within three years. With the awards phase completed, NTIA and RUS are now focusing on
monitoring and overseeing the progress of the funded projects as they move forward.
Where Is the Money Going?
As of October 1, 2010, all BTOP and BIP awards were announced. In total, NTIA and RUS
announced awards for 553 projects,4 constituting $7.465 billion in federal funding. This included
233 BTOP projects (totaling $3.936 billion) and 320 BIP projects (totaling $3.529 billion5). Of
1 For more detailed information on the ARRA broadband programs, see CRS Report R40436, Broadband
Infrastructure Programs in the American Recovery and Reinvestment Act, by Lennard G. Kruger, and CRS Report
R41164, Distribution of Broadband Stimulus Grants and Loans: Applications and Awards, by Lennard G. Kruger.
2 Of this total, the ARRA directed $350 million to NTIA for funding broadband data gathering and implementation of
the State Broadband Data and Development Grant program. A small portion of this money was allocated to the Federal
Communications Commission (FCC) for the purpose of preparing a National Broadband Plan.
3 “Substantially completed” means that awardees have met 67% of their milestones and received 67% of their funding.
4 This figure does not include BTOP’s State Broadband Data & Development (SBDD) grants (56 awards totaling $293
million to each of the 50 states, territories, and the District of Columbia). SBDD grants fulfill the ARRA’s requirement
that NTIA prepare a national broadband map. SBDD grants also support state efforts to foster efficient and creative use
of broadband.
5 The amount awarded by BIP exceeds the amount appropriated by ARRA because BIP awards consist partially of
(continued...)
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Background and Issues for Congressional Oversight of ARRA Broadband Awards
the $7.465 billion total announced, $6.273 billion was grant funding, and $1.192 billion was loan
funding.
Awards by State
Table A-1 in the Appendix shows a state-by-state breakdown of BTOP and BIP funding, while
Table A-2 shows per capita BTOP and BIP funding by state. Funding is associated with a state
based on the service area covered by the project. For BTOP grants, amounts shown may include
the NTIA-estimated per-state share of any awards that impact multiple states.
Awards by Entity Type
Table 1 and Table 2 show BTOP and BIP awards by the type of entity that received the awards.
Most BTOP awards went to government entities (states and localities) and non-profit
organizations, while a quarter of awards went to for-profit entities. By contrast, the vast majority
of BIP infrastructure awards (90%) went to for-profit corporations or cooperatives (primarily
private telecommunications providers offering last mile rural broadband service).
Table 1. BTOP Awards by Grantee Entity Type
Entity Type
Number of Awards
% of Total Awards
Government 89
38%
Non-Profit 58
25%
For-Profit 55
24%
Higher Education
25
11%
Tribe 6
2%
Total 233
100%
Source: Department of Commerce, National Telecommunications and Information Administration, The
Broadband Technology Opportunities Program: Expanding Broadband Access and Adoption in Communities
Across America, Overview of Grant Awards, December 14, 2010, p. 3, available at http://www.ntia.doc.gov/
reports/2010/NTIA_Report_on_BTOP_12142010.pdf.
(...continued)
loans, which are subsidized by a comparatively smaller amount of budget authority.
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Table 2. BIP Infrastructure Awards by Entity Type
Number of
Total Grant
Total Loan
Total Award
Entity Type
Awards
($millions)
($millions)
($millions)
For-Profit
202 1183 544 1727
Corporation
Cooperative or
65 740 486 1226
Mutual
Public
Entity 13 209 123 332
Non-profit
8 67 20 87
Corporation
Indian
Tribe 9 34 17 51
Total
297 2233 1191 3425
Source: U.S. Department of Agriculture, Rural Utilities Service, December 27, 2010 RUS Quarterly ARRA Report,
p. 5, available at http://www.rurdev.usda.gov/supportdocuments/BIPQuarterlyReport_12-10.pdf.
Awards by Project Type
Table 3 and Table 4 provide breakdowns of BTOP and BIP awards by project type. Most of the
BTOP infrastructure projects were for “middle mile”—that is, a broadband infrastructure project
that does not predominantly provide broadband service to end users or to end-user devices, and
may include interoffice transport, backhaul, Internet connectivity, or special access. In contrast,
most BIP awards were for “last mile” projects, which is any infrastructure project the
predominant purpose of which is to provide broadband access to end users or end-user devices.
Table 3. BTOP Awards by Project Type
Percentage of
Percentage of
Grant
Total
Total Grant
Number of
funding
Number of
Funding
Grants
awarded
Grants
Awarded
Infrastructurea
123
$3.46 billion
53% 88%
Public Computer
66 $201
million
28%
5%
Centers
Sustainable
44 $250.7
million 19% 6%
Broadband
Adoption
Total 233
$3.94
billion
100% 100%
Source: Department of Commerce, National Telecommunications and Information Administration, The
Broadband Technology Opportunities Program: Expanding Broadband Access and Adoption in Communities
Across America, Overview of Grant Awards, December 14, 2010, p. 3, available at http://www.ntia.doc.gov/
reports/2010/NTIA_Report_on_BTOP_12142010.pdf.
a. The Infrastructure projects include seven grants totaling approximately $382 million for projects to deploy
public safety broadband networks.
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Table 4. BIP Awards by Project Type
Number of
Grants
Loans
Total Awards
Projects
($millions)
($millions)
($millions)
Last Mile
285
2142
1110
3253
Middle Mile
12
91
82
173
Satellite
4 100 0 100
Technical
19 3
0 3
Assistance
Total 320
2337
1191
3529
Source: U.S. Department of Agriculture, Broadband Initiatives Program, Awards Report, Advancing Broadband: A
Foundation for Strong Rural Communities, January 2011, p. 2, available at http://www.rurdev.usda.gov/
supportdocuments/RBBreport_V5ForWeb.pdf.
Awards by Technology
Deployment of broadband infrastructure can encompass a number of different types of
technologies, including fiber, wireless, cable modem, DSL, satellite, and others. Table 5 and
Table 6 show the types of technologies that are being deployed by funded BTOP and BIP
infrastructure projects. Most BTOP projects (92%) are either fiber or fiber in tandem with
wireless technology. This reflects the fact that most BTOP projects are middle mile.
Table 5. BTOP Infrastructure Awards by Type of Technology
Number of
Percentage of total
awarded
infrastructure
Technology
projects
projects
Fiber 89
72%
Fiber and Wireless
24
20%
Wireless 10
8%
Total 123
100%
Source: Department of Commerce, National Telecommunications and Information Administration, The
Broadband Technology Opportunities Program: Expanding Broadband Access and Adoption in Communities
Across America, Overview of Grant Awards, December 14, 2010, p. 3, available at http://www.ntia.doc.gov/
reports/2010/NTIA_Report_on_BTOP_12142010.pdf.
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Table 6. BIP Infrastructure Awards by Type of Technology
Number of
Percentage of total
awarded
infrastructure
Technology
projects
projects
Wireline 213
72%
Wireless 51
17%
Wireless/Wireline 33
11%
Total 297
100%
Source: U.S. Department of Agriculture, Broadband Initiatives Program, Awards Report, Advancing Broadband: A
Foundation for Strong Rural Communities, January 2011, p. 4, available at http://www.rurdev.usda.gov/
supportdocuments/RBBreport_V5ForWeb.pdf.
Budgetary Profile
Under the ARRA, a total of $4.4 billion was appropriated to NTIA for BTOP, and $2.5 billion
was appropriated to RUS for BIP. The ARRA specified that all funds for BTOP and BIP were to
be obligated by September 30, 2010.
According to Recovery.gov, the federal website that provides access to ARRA spending, NTIA
has obligated $4.244 billion for BTOP projects (including funding for broadband mapping and
pass-through money to the FCC for the National Broadband Plan), with the remainder being
administrative costs or deobligated funding returned to the U.S. Treasury from returned projects.
Because funded projects receive money incrementally as they reach prescribed milestones, the
total outlay level (money actually paid out) is much lower, only $348 million as of April 8, 2011.
For BIP, the total obligation level is $3.5 billion, which represents $2.37 billion in budget
authority. Administrative costs and deobligated funding returned to the U.S. Treasury compose
the remainder of the $2.5 billion approved by the ARRA.6 The obligation level is higher than the
budget authority because BIP awards consist partially of loans, with loans being subsidized by a
comparatively smaller amount of budget authority. According to Recovery.gov, the total outlay
level for BIP is $63 million as of April 8, 2011.
What Is the Status of Oversight Activities?
With the awards phase completed, the focus now shifts to oversight and monitoring of funded
projects. Projects are required to be substantially complete (67% of milestones reached, 67% of
funding received) within two years, and fully complete within three years. For each project,
federal funds are drawn down incrementally as various milestones are reached (for example,
meeting environmental and historic preservation requirements, resolving rights of way issues,
arriving at various phases of construction, etc.). Recipients and subrecipients are monitored by
agency staff to ensure that project goals, performance, timelines, milestones, budgets, and other
requirements are being met. In cases where NTIA or RUS detects waste, fraud, or abuse, or where
it is determined that the awardee is not fulfilling the terms of the award conditions, the agencies
6 USDA Rural Utilities Service, Broadband Initiatives Program, Quarterly Program Status Report, December 27,
2010, p. 2, available at http://www.rurdev.usda.gov/supportdocuments/BIPQuarterlyReport_12-10.pdf.
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have the authority to take back the funding (deobligate) and return the money to the U.S.
Treasury.
Reporting Requirements
The ARRA directed that all award recipients file quarterly and annual reports with the
corresponding funding agency. Reports provide detailed financial and project deployment
information. NTIA is mandated by ARRA to report every 90 days on the status of BTOP to the
House and Senate Appropriations Committees, the House Committee on Energy and Commerce,
and the Senate Committee on Commerce, Science and Transportation.7 The ARRA required the
Secretary of Agriculture to submit a report to the House and Senate Appropriations Committees
on planned spending and actual obligations, describing the use of ARRA funds for the RUS
broadband programs, not later than 90 days after enactment, and quarterly thereafter until all
funds are obligated.8
Transparency
As directed by the ARRA, NTIA maintains a publically available website which provides, for
each BTOP grant: detailed project descriptions, all quarterly progress reports from the recipient to
NTIA, all official award documentation (including the project application), and environmental
documents.9 By contrast, RUS provides only brief (single paragraph) project summaries for each
award.10 The ARRA did not contain any specific transparency mandates for the BIP/RUS
program.
Inspector General Reports
To date, the Office of Inspector General (OIG) at the Department of Commerce has issued two
reports on BTOP.11 The DOC OIG is currently performing an audit of NTIA’s effectiveness in
monitoring BTOP awards, and is reviewing a complaint filed regarding Motorola’s BayWeb
project (see below, section on problems with particular awards). Future DOC OIG activities
include:
• assessing NTIA’s oversight of the Booz Allen Hamilton contract that supported
BTOP implementation;
• identifying high risk projects to determine whether they are on schedule, on
budget, and will meet program objectives;
• performing specific reviews in response to credible complaints; and
7 BTOP quarterly reports are available at http://www2.ntia.doc.gov/BTOP-Reports. The most recent report was
released on February 28, 2011. The next report is due to be released no later than mid-June 2011.
8 BIP quarterly reports are available at http://www.rurdev.usda.gov/UTP_BIPResources-Docs.html#congress. The most
recent report was released on December 27, 2010.
9 All of this information is available at http://www2.ntia.doc.gov/awards.
10 Available at http://www.rurdev.usda.gov/supportdocuments/Round1and2%20Awardees.pdf.
11 Available at http://www.oig.doc.gov/Pages/Audits-Evaluations.aspx?YearStart=01/01/2010&YearEnd=12/31/2010.
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• reviewing the existence and availability of recipient matching funds.12
According to DOC Inspector General Todd Zinser, the existence and availability of matching
funds is a primary concern. BTOP grants have a 20% matching fund requirement, which comes to
over $1.4 billion. For in-kind (non-cash) contributions towards meeting the matching fund
requirement, the OIG is particularly concerned over the proper valuation of equipment and
services.13
Until 2011, the USDA OIG had not reviewed the BIP program, instead leaving that review to the
Government Accountability Office (GAO).14 OIG has previously reviewed (in 2005 and 2009) the
existing RUS Rural Broadband Access Loan and Loan Guarantee Program, and made a number
of criticisms, primarily that too many loans were made in areas with preexisting broadband
service and in areas that were not sufficiently rural. According to Phyllis Fong, the USDA
Inspector General, the OIG will be again looking at these issues and likely evaluate current RUS
broadband program operations.15
Program Evaluation
There is another question separate from how effectively the broadband awards are being managed
by the agencies and implemented by the recipients: how effective overall are the ARRA
broadband programs in meeting the goals of providing broadband service to unserved and
underserved areas, increasing broadband adoption levels, and generally contributing to the
nation’s economic development? Both NTIA and RUS have released estimates of jobs directly
created, miles of broadband network deployed, number of homes connected, and other
measures.16
Evaluating the overall performance and impact of broadband programs is complex. Not only must
the validity of the agency estimates be assessed; it is also necessary to take into account
broadband deployment that might have occurred without federal funding. Additionally,
calculating the overall economic impact of broadband deployment on a region must account for a
variety of outside factors that may not necessarily be associated with the deployment of
broadband.
12 Testimony of the Honorable Todd J. Zinser, Inspector General, U.S. Department of Commerce, before the House
Subcommittee on Communications and Technology, Committee on Energy and Commerce, February 10, 2011, p. 10-
11, available at http://republicans.energycommerce.house.gov/Media/file/Hearings/Telecom/
021011_ARRA_Broadband/Zinser.pdf.
13 Ibid, p. 11-12.
14 See Statement of Mark L. Goldstein, Director, Physical Infrastructure Issues, Government Accountability Office,
Broadband Programs Awards and Risks to Oversight, before the House Subcommittee on Communications and
Technology, Committee on Energy and Commerce, February 10, 2011, available at
http://republicans.energycommerce.house.gov/Media/file/Hearings/Telecom/021011_ARRA_Broadband/Goldstein.pdf
15 Testimony of Phyllis K. Fong, Inspector General, U.S. Department of Agriculture, before the House Subcommittee
on Communications and Technology, Committee on Energy and Commerce, February 10, 2011, p. 2, available at
http://republicans.energycommerce.house.gov/Media/file/Hearings/Telecom/021011_ARRA_Broadband/Fong.pdf.
16 See The Broadband Technology Opportunities Program: Expanding Broadband Access and Adoption in
Communities Across America, Overview of Grant Awards, p. 19, and Advancing Broadband: A Foundation for Strong
Rural Communities, p. 3-4.
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On September 20, 2010, NTIA awarded a $5 million, four-year contract to Potomac, MD-based
ASR Analytics to measure the impact of BTOP grants on broadband availability and adoption,
and on economic and social conditions in areas served by grantees.17 Funding for the award was
obtained through the Department of Interior’s National Business Center. According to NTIA, the
study “will result in reports and case studies to help inform the government on the economic
impact of BTOP grant funding, as well as identify factors influencing performance and impact
that can be used to inform future private and/or public sector investments.”18
Notwithstanding NTIA and RUS efforts to assess the economic impacts of their programs, it is
likely that policymakers will seek independent evaluations that assess the long-term effects of
ARRA broadband programs on jobs, economic growth, and prosperity.
Problems with Particular Awards
With over 550 broadband awards made, it is to be expected that there will be instances where
recipients may decide to decline or return the award, or where formal complaints may be filed
with the DOC or USDA Inspectors General. The following includes specific instances that have
been publically reported:
• A $50 million BTOP grant to construct the San Francisco Bay Area Wireless
Enhanced Broadband (BayWEB) project is the subject of an inquiry by the
Department of Commerce Office of the Inspector General. The IG will examine
the procedures followed by NTIA in reviewing an initial complaint by the County
of Santa Clara and City of San Jose, and will review the valuation of equipment
provided as matching share by the grantee, in addition to the equipment being
purchased from the grantee as part of the project.19
• A complaint was filed with RUS calling for an investigation and suspension of a
$66.4 million award ($56.4 million loan, $9.9 million grant) to Lake County
Minnesota for construction of the Lake County Fiber Network. The complaint,
filed by Mediacom, alleges that the project lacks the financial viability to repay
the loan, and that Lake County lacks the legal authority to build the network.20
• Leech Lake Reservation Business Committee in Minnesota did not accept its
Public Computer Center award for $1.7 million.21
• The state of Wisconsin returned a $23 million BTOP grant to expand the
BadgerNet Converged Network.22
17 Communications Daily, “BIP Disbursements Totaled $3.5 Billion: Metrics Concerns Expressed,” October 21, 2010.
18 BTOP Quarterly Program Status Report, November 2010, p.7, available at http://ntia.doc.gov/recovery/BTOP/
BTOP_QuarterlyReport_11172010.pdf.
19 Memorandum from Todd Zinser, Department of Commerce Office of the Inspector General to Lawrence Strickling,
Assistant Secretary for Communications and Information, NTIA, Notification of Inquiry Related to Broadband
Technology Opportunities Program Award Made to Motorola, December 17, 2010, reprinted in
StimulatingBroadband.com.
20 Communications Daily, “Minnesota Stimulus Project under Attack,” March 17, 2011.
21 NTIA, BTOP Quarterly Program Status Report, February 2011, p. 1, available at http://www.ntia.doc.gov/recovery/
BTOP/BTOP_QuarterlyReport_Feb_2011.pdf.
22 Rick Barrett, Milwaukee Wisconsin Journal Sentinel, “State Giving Back Stimulus Funds Intended for Broadband
Expansion,” February 15, 2011, available at http://www.jsonline.com/news/statepolitics/116208059.html.
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• Education Networks of America returned its $14.3 million BTOP grant to
construct a fiber network to connect community anchor institutions in Indiana.23
• Lenowisco Planning District, VA, has returned a $20.2 million award to RUS,
and RUS has rescinded the money.24
Issues for Congress
The 112th Congress is expected to play an important oversight role. A number of committees,
including the House Committee on Energy and Commerce, the House Committee on Agriculture,
the Senate Committee on Commerce, Science and Transportation, the Senate Committee on
Agriculture, Nutrition, and Forestry, and the House and Senate Appropriations Committees are
expected to continue to monitor the ARRA broadband programs in NTIA and RUS.
Congressional Oversight
The House Subcommittee on Communications and Technology has held two hearings on BTOP
and BIP, both focusing on program oversight and draft legislation to clarify and reinforce the
requirement that deobligated funding (i.e., funding that is returned by awardees or reclaimed by
the agencies) is returned to the U.S. Treasury. The first hearing, held on February 10, 2011, heard
testimony from the Inspectors General of the Departments of Commerce and Agriculture. The
second hearing, held on April 1, 2011, heard testimony from the Administrators of NTIA and
RUS.
Referring to the fact that a small fraction (5%) of BTOP and BIP obligated funds have as yet been
spent (as outlays), that the OIG of both Commerce and Agriculture plan on investigating
complaints about individual awards as they arise (or have already arisen), and that 13 awards
(totaling $77 million) have already been returned by awardees, Subcommittee Chairman Walden
cited the need for the legislation, stating that “it is logical to expect that issues of fraud, waste,
and abuse will start popping up now that the money is beginning to flow.”25 On April 5, 2011, the
full Committee approved the legislation, introduced by Representative Bass as H.R. 1343, which
contains the following provisions:
• Directs NTIA and RUS to take prompt and appropriate action to terminate for
cause any BTOP or BIP award; cause may include an insufficient level of
performance, wasteful spending, or fraudulent spending;
• Whether reclaimed by the agency for cause, or returned voluntarily by the
awardee, upon terminating an award NTIA or RUS is directed to immediately
23 House Committee on Energy and Commerce, Internal Memorandum, March 30, 2011, available at
http://republicans.energycommerce.house.gov/Media/file/Hearings/Telecom/040111/CTmemo.pdf.
24 Letter from Jonathan Adelstein, Administrator, RUS to Lenowisco Planning District Commission, February 25,
2011, reprinted in StimulatingBroadband.com.
25 Opening Statement of Chairman Greg Walden, Communications and Technology Subcommittee Hearing on H.R. __
, a Bill to Clarify NTIA and RUS Authority to Return Reclaimed Stimulus Funds to the U.S. Treasury, April 1, 2011,
available at http://republicans.energycommerce.house.gov/Media/file/Hearings/Telecom/040111/
WaldenHEARINGOpening.pdf.
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deobligate an amount equivalent to the award, less allowable costs, and return the
money to the U.S. Treasury within 30 days;
• If NTIA or RUS receives information from the OIG of the Department of
Commerce or the U.S. Department of Agriculture, or the Comptroller General of
the United States, pertaining to material noncompliance or improper usage of
award funds, the agencies shall decide within 30 days whether to terminate the
award unless the official providing the information recommends that NTIA or
RUS not make such a determination;
• When NTIA or RUS consider terminating an award, they shall, within three days,
notify Congressional Committees of their determination and any action taken as a
result of the determination, or why no action was necessary; in cases where a
determination is made not to terminate the award, the notification can be made on
a confidential basis.
While RUS and NTIA (as well as Minority Members on the Energy and Committee) support H.R.
1343, they assert that existing statute already requires the agencies to return unused funds to the
U.S. Treasury26 and to take steps against waste, fraud, and abuse. The Energy and Commerce
Committee majority argues that the legislation adds another level of required reporting,
establishes formal timelines for agencies to respond to IG reports, and removes all ambiguity
related to the requirement that agencies return unused funds to the U.S. Treasury. H.R. 1343 was
also referred to the House Committee on Agriculture.
Awards in Project Areas with Existing Broadband Service
One of the ongoing concerns expressed by some Members of Congress is the extent to which
grants and loans have been awarded to projects serving areas that may already have existing
providers offering broadband service.27 While the ARRA statute does not explicitly address the
issue of existing providers, the law does direct RUS and NTIA to favor projects proposing to
serve areas that have limited or no broadband service. For example, the ARRA specified that at
least 75% of the area to be served by a RUS BIP project shall be in a rural area “without sufficient
access to high-speed broadband service to facilitate economic development, as determined by the
Secretary of Agriculture,” and that priority shall be given to “projects that provide service to the
highest proportion of rural residents that do not have access to broadband service.”
Regarding NTIA’s BTOP program, the ARRA stated that the purpose of the program is to
“provide access to broadband service to consumers residing in unserved areas of the United
States” and to “provide improved access to broadband service to consumers residing in
underserved areas of the United States.” At the same time, the ARRA directed NTIA to give
higher consideration to projects that would increase affordability, subscribership, and broadband
speeds to the greatest population of users in the area.
26 According to NTIA Administrator Lawrence Strickling at the April 1 hearing, “NTIA’s authority to make new BTOP
grant awards expired on September 30, 2010, and, to the extent there were any unobligated BTOP funds as of
September 30, those funds expired and became unavailable at that time. Moreover, should any funds be deobligated in
the future, the Pay It Back Act [Title XIII of the Dodd Frank Wall Street Reform and Consumer Protection Act, P.L.
111-203], enacted in July 2010, requires NTIA to return withdrawn or recaptured BTOP or SBDD grant funds to the
Treasury promptly and to return any remaining unobligated balances to the Treasury as of January 1, 2013.
27 Grant Gross, “US Lawmakers Question Use of Broadband Stimulus Funds,” PC World, March 4, 2010.
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Thus, RUS and NTIA had some degree of flexibility in how to implement the grant and loan
programs, and how to define project eligibility with respect to the level of existing broadband
service in proposed project areas. In the first round Notice of Funds Availability (NOFA),28 both
NTIA and RUS used the same definition of unserved and underserved areas. Eligible “unserved
areas” were defined as areas where at least 90% of households lacked access to terrestrial
broadband service. Eligible “underserved areas” for last mile projects were defined as areas in
which at least one of the following factors was met:
• no more than 50% of the households in the proposed funded service area have
access to facilities-based, terrestrial broadband service at greater than the
minimum broadband transmission speed;
• no broadband service provider advertises broadband transmission speeds of at
least 3 megabits per second (Mbps) downstream; or
• the rate of broadband subscribership for the proposed funded service area is 40%
of households or less.
Additionally, a proposed funded service area would qualify as underserved for middle mile
projects if one interconnection point terminated in a proposed funded service area that qualified
as unserved or underserved for last mile projects. For first round BIP projects only, an additional
project category called “Remote Area” was defined as an unserved, rural area 50 miles from the
limits of a non-rural area.
In the second round NOFAs (separate NOFAs were issued by RUS29 and NTIA30 respectively),
the characterization of eligible project areas was altered. BIP projects were required to cover an
area that was at least 75% rural and that did not have high speed access broadband service at the
rate of 5 Mbps (upstream and downstream combined) in at least 50% of its area. Regarding BTOP
projects (which in the second round were exclusively oriented towards large middle mile projects
called Comprehensive Community Infrastructure or CCI), virtually all proposed service areas
were considered eligible, with the understanding that during the application evaluation, factors
such as unserved and underserved areas, remoteness, and delivered speed would be considered.
In order to help assess the level of existing broadband service in proposed BIP and BTOP
projects, RUS and NTIA established a process whereby existing providers were given 30 days to
file a Public Notice Response (PNR) for each broadband infrastructure application received by
the agencies. In the PNR, existing providers had the opportunity to indicate if they were already
providing broadband service in each and any of the service areas within the proposed project area,
and if they believed that the proposed project area did not meet the threshold of being unserved or
underserved. In round one, based on their assessment of the public notice response from the
existing service provider, the agencies could either reclassify the application from “unserved” to
“underserved,” reject the application, or continue to consider the application as it was submitted.
In round two, RUS stated that existing service providers were not required to provide a PNR, but
28 Department of Agriculture and Department of Commerce, “Broadband Initiatives Program; Broadband Technology
Opportunities Program; Notice,” 74 Federal Register 33104-33134, July 9, 2009.
29 Department of Agriculture, Rural Utilities Service, “Broadband Initiatives Program,” 75 Federal Register 3820-
3837, January 22, 2010.
30 Department of Commerce, National Telecommunications and Information Administration, “Broadband Technology
Opportunities Program,” 75 Federal Register 3792-3820, January 22, 2010.
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Background and Issues for Congressional Oversight of ARRA Broadband Awards
they must do so in order for their existing services to be considered when determining the
eligibility of the proposed funded service areas identified in the associated BIP application.
While the presence of a PNR likely indicates that an existing service provider is offering some
level of broadband service somewhere within the proposed project area, it does not necessarily
mean that the area is not unserved or underserved, or that the existing service provider is
providing adequate broadband service in terms of such factors as coverage, affordability, or
speed. On the other hand, the lack of a public notice response does not necessarily indicate the
absence of an existing service provider within the proposed service area; rather an existing
service provider might simply have declined to file a public notice response within the 30-day
period.
Based on the PNR data provided in the BroadbandUSA Applications Database and the Round
Two Application Directory,31 about two-thirds of awarded BIP projects already had some level of
existing broadband service, and three-quarters of the awarded BIP money went to projects with at
least one existing provider somewhere within the project area. Many of the awarded projects
received more than one PNR.
In Round One, BTOP and BIP used the same methodology for collecting PNRs. Of the 48 BTOP
applications that received awards in Round One, 5 had zero PNRs submitted. Thus, 90% of
awarded BTOP infrastructure projects received one or more PNRs in Round One. The high
percentage is not surprising, given that most BTOP infrastructure projects are middle mile
projects (85% of total BTOP infrastructure projects) which cover a significantly larger project
area than last mile projects.
In Round Two, NTIA significantly changed the methodology for collecting PNRs. NTIA posted a
list of 69,880 Census block groups or tracts that each Round Two Comprehensive Community
Infrastructure (CCI) applicant proposed to serve through its project. The posting of this
information initiated a window for existing broadband service providers to submit information
about the broadband services they currently offer in their respective service territories by Census
block group or tract. Census block group or tract numbers are not listed according to specific
applications, and NTIA stated that they would connect challenges from service providers to the
proposed service areas of relevant Round Two CCI applications. In total, 391 existing broadband
providers filed PNRs in Round Two.32
The presence of an existing broadband provider in a project’s proposed service area was one of
many factors RUS and NTIA considered when deciding whether to fund an application. In the
case of some “unserved” areas, it was possible that there could be at least one existing provider
present, and in the case of “underserved areas” it was a certainty that one or more existing
broadband providers would be present in the proposed service area. Thus, PNRs were one, but by
no means the only, tool used by RUS and NTIA to assess the level of existing broadband service
in proposed project areas. Agencies also used available broadband deployment data and analysis
gathered by the FCC, the states, and others.33 Where feasible, RUS also relied on regional USDA
31 Available at http://broadbandusa.sc.egov.usda.gov/.
32 Available at http://www2.ntia.doc.gov/archives#responses.
33 The National Broadband Map—which is based on data gathered by the State Broadband Data and Development
Grant Program—was released on February 17, 2011. Thus, the map and data were not available until after the BTOP
and BIP awards were determined by NTIA and RUS.
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rural development staff to assess the adequacy of broadband service in proposed project areas.
Finally, other factors were considered when assessing the existing broadband service in a
proposed project area—factors such as affordability, quality of service, available download and
upload speeds, and adoption rates.
The issue of providing federal funding to areas and communities with existing providers is
controversial, and has been previously raised with respect to the RUS Rural Broadband Access
Loan and Loan Guarantee Program.34 Broadband awards to areas with preexisting service—that
is, areas where existing companies already provide some level of broadband—have sparked
controversy because award recipients might compete to some extent with other companies
already providing broadband service. On the one hand, one could argue that the federal
government should not be subsidizing competitors for broadband service, particularly in sparsely
populated rural markets which may be able only to support one provider. Furthermore, providing
grants and loans for projects serving communities with preexisting broadband service may divert
assistance from unserved areas that are most in need.
On other hand, many suburban and urban areas currently receive the benefits of competition
among broadband providers—competition which can potentially drive down prices while
improving service and performance. It is therefore appropriate, others have argued, that rural
areas also receive the benefits of competition, which in some areas may not be possible without
federal financial assistance. It is also argued that it may not be economically feasible for
applicants to serve sparsely populated unserved communities unless they are permitted to also
serve more lucrative areas which may already have existing providers. Additionally, it is argued
that middle mile broadband facilities, which are primarily being constructed under BTOP, can in
some cases serve to assist existing providers to more economically serving unserved
communities.
Funding for Oversight and Program Administration
In addition to issuing BTOP and BIP awards, both NTIA and RUS must oversee and administer
those awarded projects as they progress towards completion. In FY2009 and FY2010, NTIA
administration of the BTOP program was funded by the ARRA, which allocated not more than
3% of BTOP funding for administrative costs. With that funding expiring on September 30, 2010,
NTIA sought additional administrative funding in the appropriations process. NTIA argued that
additional appropriations were essential to enable oversight and management of the grants that
had been awarded. In its FY2011 budget proposal, the Administration requested $23.7 million for
NTIA to continue operating its grant management office. The Continuing Appropriations and
Surface Transportation Extension Act, 2011 (P.L. 111-322), which funded the federal government
through March 4, 2011, included a $20 million addition to the NTIA Salaries and Expenses
account which could be used for BTOP oversight. According to the February 2011 BTOP
Quarterly Report, “this authorizes a level of spending by NTIA that is sufficient to administer and
oversee BTOP projects through the end of Fiscal Year 2011.”35 The Department of Defense and
Continuing Appropriations Act, 2011 (P.L. 112-10) included the $20 million addition for the rest
34 See CRS Report RL33816, Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service, by Lennard
G. Kruger
35 BTOP Quarterly Program Status Report, p. 5.
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Background and Issues for Congressional Oversight of ARRA Broadband Awards
of FY2011. In its budget request for FY2012, NTIA is requesting $32 million for BTOP
administration and oversight.
In contrast to NTIA, RUS has not requested additional appropriations to manage the BIP
program. According to GAO, RUS used Recovery Act funds to fully fund a contract extension
with ICF International to provide BIP program support through 2014. Additionally, RUS
extended the term of employment through FY2011 for 25 temporary employees assisting with
BIP project oversight. GAO cautions, however, that “should there be a reduction in RUS’s fiscal
year 2011 budget, the agency will need to assess its impacts and the temporary employment of 25
staff members.”36
Stimulus Awards and the National Broadband Plan
As mandated by the ARRA, the National Broadband Plan (NBP) was released by the FCC on
March 17, 2010. The NBP set a broadband availability goal that “every American should have
affordable access to robust broadband service, and the means and skills to subscribe if they so
choose,” and cited a “broadband availability gap” of 14 million people in the United States living
in 7 million housing units that do not have access to terrestrial broadband infrastructure capable
of download speeds of at least 4 Mbps.37 The FCC has estimated that $24 billion in additional
funding would be necessary to fill what it refers to as the “broadband availability gap.”38
As provided for in the ARRA, BTOP and BIP are one-time only programs, and are but one
component in any strategy to reach ubiquitous nationwide broadband availability. According to
the National Broadband Plan:
BTOP and BIP alone will not be sufficient to close the broadband availability gap. Other
government support is required to complete the task of connecting the nation to ensure that
broadband reaches the highest-cost areas of the country. Closing the broadband availability
gap and connecting the nation will require a substantial commitment by states and the federal
government alike. This commitment must include initial support to cover the capital costs of
building new networks in areas that are unserved today, as well as ongoing support for the
operation of newly built networks in areas where revenues will be insufficient to cover
ongoing costs.39
The other major federal vehicle for funding telecommunications development in rural areas is the
Universal Service Fund (USF).40 Subsidies provided by USF’s Schools and Libraries Program
and Rural Health Care Program are used for a variety of telecommunications services, including
broadband access. While the USF’s High Cost Program does not explicitly fund broadband
infrastructure, subsidies are used, in many cases, to upgrade existing telephone networks.
36 Statement of Mark L. Goldstein, Government Accountability Office, Testimony before the House Subcommittee on
Communications and Technology, Committee on Energy and Commerce, “Broadband Programs Awards and Risks to
Oversight,” February 10, 2011, p. 6-7, available at http://republicans.energycommerce.house.gov/Media/file/Hearings/
Telecom/021011_ARRA_Broadband/Goldstein.pdf.
37 Connecting America: The National Broadband Plan, p. 20.
38 Ibid., p. 136.
39 Ibid., p. 139.
40 For more information on the Universal Service Fund, see CRS Report RL30719, Broadband Internet Access and the
Digital Divide: Federal Assistance Programs, by Lennard G. Kruger and Angele A. Gilroy.
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Background and Issues for Congressional Oversight of ARRA Broadband Awards
The National Broadband Plan has recommended that the Universal Service Fund transition from
voice service to broadband service. The FCC is currently considering a series of USF reforms. In
the 112th Congress, legislation to reform universal service—which could have a significant impact
on the amount of financial assistance available for broadband deployment in rural and
underserved areas—is expected to be considered. For more information on universal service, see
CRS Report RL33979, Universal Service Fund: Background and Options for Reform, by Angele
A. Gilroy.
Another important component of reaching National Broadband Plan goals is encouraging the
continuing and accelerating rollout of wireless broadband. In recent years wireless broadband has
grown faster than any other broadband technology deployment—according to the FCC, the
number of mobile wireless broadband connections has almost tripled since 2008, and as of June
30, 2010, accounted for 46% of all broadband connections and 42% of residential broadband
connections.41
In his 2011 State of the Union Address, President Obama set a goal of enabling entities to provide
wireless broadband to at least 98% of all Americans within five years. Among the ways wireless
broadband could be further deployed to unserved or underserved areas is through broadband
funding programs (such as universal service) and by making additional spectrum available to
providers.42
Finally, there exist other federal programs that provide financial assistance for various aspects of
telecommunications and broadband development.43 These include the Rural Broadband Access
Loan and Loan Guarantee Program and the Community Connect Broadband Grants at RUS,
which prior to enactment of the ARRA, were the only federal programs exclusively dedicated to
deploying broadband infrastructure.44 Both of these programs are ongoing (unlike the ARRA
broadband programs), but on a smaller scale than the BIP program. The Rural Broadband Access
Loan and Loan Guarantee Program (also referred to as the Farm Bill Broadband Loan Program)
was held in abeyance during the BIP application and award period. Pursuant to the 2008 Farm
Bill, interim rules for the loan program were published and a Notice of Solicitation of
Applications was published in the Federal Register on March 14, 2011. Compared to BIP, the
Farm Bill Broadband Loan Program offers less money (expected to be between $300 million and
$400 million in FY2011) and awards only loans, while BIP offered both grants and loans. The
Community Connect Broadband Grants is a markedly smaller program than BIP ($13.4 million in
FY2011) and is available only for projects serving single communities of under 20,000
population that have no existing broadband transmission service.
41 In this case, broadband connection is defined as over 200 kbps in one direction. FCC, Internet Access Services,
Status as of June 30, 2010, March 2011, p. 23-24, available at http://www.fcc.gov/Daily_Releases/Daily_Business/
2011/db0321/DOC-305296A1.pdf.
42 See CRS Report R40674, Spectrum Policy in the Age of Broadband: Issues for Congress , by Linda K. Moore.
43 See CRS Report RL30719, Broadband Internet Access and the Digital Divide: Federal Assistance Programs, by
Lennard G. Kruger and Angele A. Gilroy.
44 See CRS Report RL33816, Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service, by Lennard
G. Kruger.
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Appendix.
Table A-1. State-by-State Distribution of All BTOP, SBDD, and BIP Awards
Total
Amount
of Grants
Number of
and Loans
Awards
($millions)
California 29
444.3
Kentucky 20
315.0
Texas 32
312.8
North Carolina
18
278.6
Oklahoma 27
277.6
Missouri 20
263.5
Michigan 18
245.7
Washington 17
244.3
Minnesota 29
242.3
Illinois
18 239.6
Tennessee 16
233.9
Pennsylvania 13
215.9
National awardsa 7
206.0
Ohio 20
202.4
Louisiana 10
189.8
New Mexico
17
184.5
West Virginia
10
184.3
Vermont 7
174.0
Wisconsin 23
171.4
Georgia 17
170.7
Iowa 20
166.9
New York
20
160.7
Virginia 16
154.5
Colorado 13
146.5
Kansas 14
144.9
Alabama 15
142.5
Alaska 9
138.8
Montana 8
133.4
Arkansas 8
128.5
Mississippi 10
127.3
Florida 13
126.5
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Total
Amount
of Grants
Number of
and Loans
Awards
($millions)
Maryland 6
125.0
Arizona 14
113.0
Connecticut 2
97.6
North Dakota
11
96.1
Massachusetts 9
94.5
American Samoa
2
92.9
Virgin Islands
4
67.5
Nevada 12
66.7
Indiana 10
63.5
New Hampshire
7
54.5
South Dakota
8
53.4
Oregon 15
52.7
New Jersey
3
49.7
Utah 9
48.9
South Carolina
7
45.4
Maine 7
42.6
Puerto Rico
3
41.1
Hawai 5
40.4
Nebraska 6
31.6
Idaho 13
30.5
District of Columbia
4
27.2
Rhode Island
3
24.9
Wyoming 3
14.8
Guam 2
7.5
Delaware 2
5.0
Northern Mariana Islands
2
3.4
Source: NTIA, The Broadband Technology Opportunities Program: Expanding Broadband Access and Adoption in
Communities Across America, Overview of Grant Awards, December 2010, available at http://www.ntia.doc.gov/
reports/2010/NTIA_Report_on_BTOP_12142010.pdf,
Notes: Amounts shown may include the NTIA-estimated per-State share of any awards that impact multiple
states. For BIP grants and loans, multistate awards (except for the satellite grants) have been split and
categorized as separate state-specific awards by RUS. BTOP totals include the $293 million in State Broadband
Data & Development (SBDD) grants distributed to each of the 50 states, five territories, and the District of
Columbia.
a. Four BIP satellite projects, two BTOP Sustainable Broadband Adoption projects, and one BTOP
Comprehensive Community Infrastructure project.
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Table A-2. State-by-State Per Capita
Distribution of BTOP and BIP Awards
Principal state or
Grants + Loans
Population
Federal funding per
project area
Announced ($millions)
(July 1, 2009)
capita ($)
Vermont 174.0
621,760
279.85
Alaska 138.8
698,473
198.72
North Dakota
96.1
646,844
148.57
Montana 133.4
974,989
136.82
West Virginia
184.3
1,819,777
101.28
New Mexico
184.5
2,009,671
91.81
Oklahoma 277.6
3,687,050
75.29
Kentucky 315.0
4,314,113
73.02
South Dakota
53.4
812,383
65.73
Iowa 166.9
3,007,856
55.49
Kansas 144.9
2,818,747
51.41
Minnesota 242.3
5,266,214
46.01
District of Columbia
27.2
599,657
45.36
Arkansas 128.5
2,889,450
44.47
Missouri 263.5
5,987,580
44.01
Mississippi 127.3
2,951,996
43.12
Louisiana 189.8
4,492,076
42.25
New Hampshire
54.5
1,324,575
41.15
Tennessee 233.9
6,296,254
37.15
Washington 244.3
6,664,195
36.66
Maine 42.6
1,318,301
32.31
Hawai 40.4
1,295,178
31.19
Wisconsin 171.4
5,654,774
30.31
Alabama 142.5
4,708,708
30.26
North Carolina
278.6
9,380,884
29.70
Colorado 146.5
5,024,748
29.16
Connecticut 97.6
3,518,288
27.74
Wyoming 14.8
544,270
27.19
Nevada 66.7
2,643,085
25.24
Michigan 245.7
9,969,727
24.64
Rhode Island
24.9
1,053,209
23.64
Maryland 125.0
5,699,478
21.93
Idaho 30.5
1,545,801
19.73
Virginia 154.5
7,882,590
19.60
Illinois
239.6 12,910,409 18.56
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Background and Issues for Congressional Oversight of ARRA Broadband Awards
Principal state or
Grants + Loans
Population
Federal funding per
project area
Announced ($millions)
(July 1, 2009)
capita ($)
Nebraska 31.6
1,796,619
17.59
Utah 48.9
2,784,572
17.56
Ohio 202.4
11,542,645
17.53
Georgia 170.7
9,829,211
17.37
Arizona 113.0
6,595,778
17.13
Pennsylvania 215.9
12,604,767
17.13
Massachusetts 94.5
6,593,587
14.33
Oregon 52.7
3,825,657
13.78
Texas 312.8
24,782,302
12.62
California 444.3
36,961,664
12.02
South Carolina
45.4
4,561,242
9.95
Indiana 63.5
6,423,113
9.89
New York
160.7
19,541,453
8.22
Florida 126.5
18,537,969
6.82
New Jersey
49.7
8,707,739
5.71
Delaware 5.0
885,122
5.65
Source: Compiled and calculated by CRS from The Broadband Technology Opportunities Program: Expanding
Broadband Access and Adoption in Communities Across America, Overview of Grant Awards. Population data is from
National and State Population Estimates, U.S. Census Bureau.
Author Contact Information
Lennard G. Kruger
Specialist in Science and Technology Policy
lkruger@crs.loc.gov, 7-7070
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