Stimulus Update: Broadband Program Doesn’t Connect (Part I)

The American Recovery and Reinvestment Act (aka The Stimulus Bill) was supposed to lift the country out of its recession and be an engine for economic growth and job creation.  More than two years and $800 billion later, the taxpayer horror stories are still rolling in (read TPA Senior Fellow Drew Johnson’s blog posting on stimulus funded alligator wrestling here).  Now, we find out that one of the key programs of the stimulus bill has had ZERO success.  According to a December 12, 2011 article in the Daily Caller, “As of the third quarter of 2011, no projects from the federal government’s Broadband Technology Opportunities Program (BTOP) — a technology stimulus program funded by the American Recovery and Reinvestment Act of 2009 (ARRA) — have been completed.”  This revelation comes as no surprise to the many folks who questioned the expenditure when it was first announced.

When Congress passed and the President signed the stimulus bill, $7.2 billion was allocated to expand broadband in the United States. Of that $7.2 billion, Congress included $4.7 billion for the National Telecommunications Information Administration (NTIA) to issue grants under a new Broadband Technology Opportunities Program (Part II of this series will discuss the Rural Utilities Service’s broadband program).  NTIA’s prior experience in broadband grants consisted of $233 million spent through the Technology Opportunities Program from 1994-2004 until it was terminated.

The first warning sign should have been the exponential budget increase for NTIA.  The entire NTIA budget in fiscal year 2009 was $658 million.  The $4.7 billion provided in the stimulus for the BTOP was 624.5 percent greater than that amount.  It would be a daunting task for any agency to see a 600 percent increase in funding and be able to provide adequate oversight.  Add on top of that the Obama administration’s desire to push the money out the doors as quickly as possible to get the money into the economy.  That does not lend itself to any sort of confidence in any meaningful oversight.

The Government Accountability Office (GAO) confirmed the fears of many when it stated in August 2010 that “Both NTIA and RUS face the risk of having insufficient staff and resources to actively monitor BTOP- and BIP-funded projects after September 30, 2010. BTOP and BIP projects must be substantially complete within 2 years of the award date and fully complete within 3 years of the award date. As a result, some projects are not expected to be complete until 2013.”

So, here we are in December, 2011, and no projects have been completed.  It has become expensively clear that with no incentive for profit or efficiency, the federal government should not be involved in broadband deployment.  Private sector companies are spending billions of dollars per year to upgrade broadband accessibility at no cost to the taxpayer.  And, the private sector actually completes projects.