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Broadband Program Oversight Questioned
USDA Would Manage Rural Internet Funds

By Cecilia Kang
Washington Post Staff Writer
Thursday, February 12, 2009

Congress has targeted more than $6 billion to wire rural America with Internet service as part of the nearly $790 billion stimulus plan. But the bill would place much of those funds in an Agriculture Department program that has been criticized for its past management of grants, raising concerns among some public interest groups.

Under a deal House and Senate leaders negotiated yesterday, about $1.5 billion would fall under the oversight of the USDA's Rural Utilities Service, a program launched in 2002 to connect farming towns to high-speed, or broadband Internet, according to a Senate Commerce Committee aide.

Some public advocacy groups are critical, citing a September 2005 report on an investigation by the USDA's inspector general that found that $236 million, or more than one-quarter, of the program's loans under review "was either not used as intended, not used at all, or did not provide the expected return of service."

The Secretary of Agriculture and some congressional supporters say the program has been changed to address the problems.

According to the report, $45.6 million went to wire several luxury subdivisions near Houston. About $30 million in loans defaulted, and the agency approved another $137 million in loans even when applications weren't completed. A separate report from the inspector general in June found that $430,000 went to a Lubbock, Texas high-speed Internet service provider that used the money for pilot lessons for its president and treasurer.

"There was waste, fraud and abuse that we are concerned about," said Chris Murray, senior counsel at consumer advocacy group Consumers Union.

President Obama has pushed for stimulus funding for broadband Internet in underserved areas to create new jobs while also providing better economic, educational and health-care opportunities.

Critics of the rural utilities service fund said the president's goal could be derailed by lax oversight at the USDA. They argue that the National Telecommunications and Information Administration, the tech-policy making arm of the White House, has expertise in administering large grants and is better suited to deal with wireless, fiber optics and cable modem service.

"Putting broadband funds into the RUS is just a bad idea. You don't see the Federal Communications Commission putting dairy farms near telephone lines. It's just bad policy," said Ben Scott, policy director of public interest group Free Press.

The bulk of the funds, $4.3 billion, would be administered by the NTIA, and Scott said all broadband funds should be consolidated under once agency.

Agriculture Secretary Tom Vilsack said the agency has corrected the operational problems noted in the 2005 inspector general's report. He said his new staff has experience bringing broadband lines to rural areas and should be given a chance to prove their ability to govern such a program. As Iowa governor, Vilsack said he had worked with his new chief of staff, John Norris, to bring broadband access to 90-95 percent of the people in the state.

"It's important for folks to give us an opportunity to prove that past mistakes are in the past and corrected and that we will do a more progressive job to make sure people who need broadband service will get it," Vilsack said in an interview.

A spokesman for the agency's rural utilities program said new rules were put in place last year that clearly defined what is and is not rural.

But some question the ability of the rural utilities service program to quickly get projects off the ground and create jobs.

Since it began 6 years ago, $1.8 billion in loans have been distributed. Of the 68 projects funded, 21 are nearly complete and about half have not begun. An Agriculture spokesman could not confirm whether the rural utilities service program has completed any projects.

Rep. Rick Boucher (D-Va.), chairman of the communications, technology and the Internet subcommittee, defended the program. He pushed for the inclusion of rural communities in his district last year and received an $800,000 grant that will give Tannersville, Va., broadband access and provide 10 desktop computers at a community center for residents to use.

"The grants in my district have been highly effective, low-cost solutions that have worked extraordinarily well," Boucher said. "I don't know why some would fault the program, but from my perspective the program is in a position to deploy with larger funding to get more broadband to more communities and the procedures are well established."

Sen. John D. Rockefeller (D-W.Va.), chairman of the Commerce Committee, however, fought against the expanded role of the rural utilities service program, said his spokeswoman Jamie Smith.

"He has a great deal of confidence in NTIA and believes they are best suited to disseminate the funds properly and ensure that we further the overall goal of achieving a national broadband policy," she said.

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