GAO: Broadband Stimulus Vulnerable to Waste, Fraud, Abuse

GAO: Broadband Stimulus Vulnerable to Waste, Fraud, Abuse
December 28, 2009

The rush to allocate $7.2 billion in broadband stimulus grants by September 2010 has the Government Accountability Office (GAO) warning of potential “waste, fraud, and abuse.”

The agencies assigned by Congress to vet requests for broadband stimulus funding and oversee project deployment—the National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS)—lack the experience, manpower, and data necessary to implement the program properly, the GAO’s report to Congress said.

Navigating Without a Map
The report points out that in addition to facing an intensely aggressive timeline and overwhelming volume of applications, the agencies are directed to begin allocating funds long before they have mapped where those funds are needed. 

David Williams, vice president for policy at Washington, DC-based Citizens Against Government Waste, said the report “has us absolutely baffled.

“It makes no sense,” Williams said. “They need to create a national broadband map to determine where high-speed Internet access is needed and where the money needs to go.  But they’re just going to shovel the money out the door before they do that.”

James Gattuso, senior research fellow for regulatory policy at The Heritage Foundation in Washington, DC, says this “is a classic ‘ready, fire, aim’ situation.”

“The whole plan is backwards,” Gattuso said. “These agencies are unprepared and inexperienced for this magnitude of work. The fact that they don’t know who should get the money and can’t monitor them once they get it adds cause for worry.”

Private Investment Preferred
Gattuso says taxpayer money should not be used for “broadband stimulus” at all, because the private sector already provides what the market dictates.

“Broadband has been getting out to where it is wanted via private sector incentives,” Gattuso said. “In fact, this public money may serve to discourage further private investment in broadband. A lot of applicants are municipalities who want to revive old broadband plans that have been shown to be white elephants that undercut private efforts.”

Steven Titch, a policy analyst at Los Angeles-based Reason Foundation, says provisions in the stimulus program increase the likelihood funds will be funneled into projects lacking long-term sustainability, and the strings attached to the money could do more harm than good.

“Such policies, no matter how politically correct, have a negative impact on a service provider’s ability to differentiate themselves competitively, partner effectively with content providers, or offer proprietary technological advantages they might have for consumers,” he added.

Derided as Slush Fund
Williams says the broadband stimulus program is nothing but a slush fund, as if “the bank manager left the vault open and everyone’s helping themselves to the money.”

In October, Williams and Citizens Against Government Waste sent a letter to the NTIA identifying 23 fund applications totaling $550 million they argued should be rejected. One application claims Delaware has 397,104 underserved households and 395,323 unserved homes.

There are only about 300,000 homes in the entire state.

Brien Farley (brien.farley@gmail.com) writes from Genesee, Wisconsin.

For more information …

“Recovery Act: Agencies Are Addressing Broadband Program Challenges, but Actions Are Needed to Improve Implementation," November 2009: http://www.heartland.org/custom/semod_policybot/pdf/26622.pdf