The Stimulus Package (ARRA)

Posts relating to the American Recovery and Reinvestment Act

Why NTIA Should Tell NARUC “Thanks, But We Can Manage the Stimulus Spending Just Fine.”

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OK, I get that when you are a trade association you push for your members. But this is silly.

The National Association of Regulatory Utility Commissioners (NARUC) has sent a letter to the National Telecommunications Information Administration (NTIA) and the USDA Rural Utility Service (RUS) explaining how the only, possible conceivable way for them to spend the $7.2 Billion they must spend under the Broadband Stimulus package is to send all the applications to NARUC’s members to evaluate. This way, the poor little overworked NTIA and RUS won’t have to worry their pretty little heads about anything. You can read NARUC’s press release here.

The appeal to administrative convenience is a convention one. And, like most conventional wisdom on the stimulus package — utterly wrong. For a start, Congress actually realized this would take resources. So NTIA can use up to 3% of the money for Administrative costs associated with running the program. The idea that poor little NTIA, forced to focus on the DTV transition and coupon program (which happens in June) can’t possibly manage to process all these applications is rather ridiculous in light of the fact that NTIA can spend Over $150 million on administrative costs. I think you can hire a bunch of real sharp, real experienced grant evaluators for that. Bluntly, such folks will do a heck of a lot better job of evaluating grant proposals than NARUC, as I explain below . . . .

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Can RUS Turn $2.5 Bn to $25 Bn? Loan Gaurantees May Work Better Than Loans or Grants.

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Unsurprisingly, a lot of folks at David Isenberg’s excellent Freedom 2 Connect Conference this past week had a lot of attention focused on the stimulus. Most of the discussion has centered around NTIA’s Broadband Technology Opportunity Program (BTOP) Rather than around the US Department of Agriculture’s Rural Utilities Services (RUS) Program. After all, BTOP has more money ($4.7 bn to RUS’s $2.5 bn) more potentially eligible grantees, and more terms that will need definition.

But the $2.5 Bn for rural broadband is certainly nothing to sneeze at, and because of its more specific focus (rural infrastructure build rather than broader digital inclusion) and narrower set of eligible applicants, it may have greater opportunity to do some very clever things to maximize the impact of its spending. On the one hand, $2.5 Bn is more money than we have ever seen committed by the federal government to building rural broadband access infrastructure. OTOH, it is a pitifully small amount when compared to what most folks think it will take to bring meaningful broadband to rural America. Ideally, therefore, every dollar spent should stimulate more spending in this area.

Enter Geoff Daily at App-Rising, who writes this intriguing piece on how to leverage the wackiness of the financial system to our advantage (for a change). Unlike NTIA, which gives only grants, RUS can give loans and loan guarantees as well as grants. in fact, RUS has traditionally given loans and loan guarantees rather than grants. Geoff thinks this provides a way to turn the RUS $2.5 Bn into $25 bn in actual spending on rural broadband infrastructure. Unfortunately, it runs into a Dilbert-esque paradox. This is such an efficient and effective way for the government to use the money RUS is afraid that Congresscritters and pundits eager to declare the stimulus a failure will point to RUS’ “unspent” loan guarantees as a sign of waste and a failure to “spend” the money.

Fortunately, I think RUS can set up the program in a way that minimizes this risk.

More below . . .

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