House Holds Broadband Stimulus Oversight Hearing

The House Commerce Committee's Subcommittee on Communications and Technology, chaired by Rep Greg Walden (R-OR), held an oversight hearing on broadband spending allocated under the American Recovery and Reinvestment Act (ARRA). Members of the Subcommittee heard from the Government Accountability Office and Inspectors General from the Departments of Agriculture and Commerce to address concerns over potential waste, fraud, and abuse. During the hearing, members also discussed draft legislation aimed at improving accountability and returning unused or reclaimed funds to the US Treasury.

Republicans generally see the broadband stimulus as government money that was handed out with insufficient oversight and with a shotgun approach that could wound the economy and discourage investment. Democrats view it as a necessary long-term stimulus to the broadband-centric economy by insuring affordable access to broadband to everyone. Both sides seemed to agree that to fund billions of dollars in broadband infrastructure and education programs would need ongoing oversight to make sure the projects were giving the public bang for their increasingly precious buck. But Republicans and Democrats remained divided over whether the government should be overbuilding existing service; how unserved vs. underserved should be defined; whether unspent money was turned over to the treasury or potentially recycled into other grants/loans, and how well, or poorly, the National Telecommunications & Information Administration and AG's Rural Utilities Service were overseeing their perspective broadband stimulus programs.

“With today’s hearing we begin exercising our important oversight role regarding the approximately $7 billion in taxpayer money the ARRA allocated to the NTIA and the RUS for broadband grants and loans,” said Chairman Walden. “We will be interested to see the results, and hopefully to learn from the things that work, and the things that don't. With a $1.48 trillion deficit this year and the enormous deficits predicted for the rest of the decade, we have a responsibility to cut costs. I look forward to working with our members and incorporating our witnesses’ suggestions to craft a bill that provides proper oversight and returns unused or reclaimed money to the Treasury.”

Department of Commerce Inspector General Todd Zinser explained that the Broadband Technology Opportunities Program administered by the National Telecommunications and Information Administration "represents the largest and most complex grant program NTIA has ever overseen. The grant awards went to a diverse group of recipients, and conditions surround the awards themselves vary widely.” Zinser continued, “The potential for fraud, waste, and abuse will increase substantially over the next 5 years as spending by BTOP grant recipients rises.”

Department of Agriculture IG Phyllis Fong expressed a number of concerns with the RUS program, including that it did not have final regulations in place to implement the program and had not given the staff enough guidance on decision making. The bottom line from both IGs was that, while the agencies were doing their best with a herculean task, there were opportunities for waste, fraud and abuse that would need ongoing oversight and money from Congress to do it.

President and CEO of Eagle Communications Gary Shorman appeared before the Subcommittee to share how the stimulus program directly impacted his small communications company. “Facing a government-subsidized competitor creates tremendous difficulties for small companies like Eagle and puts our continued viability at risk,” said Shorman. “We have invested over $20 million in private capital in the last 5 years alone to bring cutting-edge broadband to our communities. Using scarce federal resources to undermine that investment by skewing the playing field is wrong. It threatens the jobs of our 277 employees who live in the very communities the award was intended to benefit, offsetting new jobs created by the project, and undermines one broadband provider in the area to benefit another.” Shorman concluded his testimony by asking the Subcommittee to consider legislation that would require wasteful funding to be returned to the Treasury so it can be used for other, more pressing and needed services.