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Feds Mull Oversight for Broadband Stimulus

Government broadband stimulus
As federal agencies move swiftly to begin doling out billions of dollars in grants for new broadband networks, government officials and other stakeholders urged rigorous accountability and monitoring to ensure that the money is used effectively and steers clear of waste and fraud.

The National Telecommunications and Information Administration, the agency within the Commerce Department responsible for the lion's share of the broadband grants, is holding the last of six public meetings today to discuss the grant-making process.

The morning session of Tuesday's meeting focused on compliance and oversight. John Bunting, the audit manager of the NTIA's new Broadband Technology Opportunities Program, sent a clear warning about his intention to guard against waste in the grants.

"My first advice is to plan on audits. There will be audits," Bunting said. "We are very assertive in our audits," he added. "We will not wait until the grant is over to start an audit."

The broadband grants, which total $7.2 billion to be split between NTIA and the Department of Agriculture's Rural Utilities Service, are only a microcosm of the $787 billion economic stimulus package signed into law in February. One of the biggest concerns for opponents of the bill was waste, and panelists at today's meeting stressed the need for clear guidelines from the outset of the grant process to establish measurable criteria that can be used to evaluate broadband projects.

"Selection criteria must be clear rather than fuzzy because otherwise the monitoring will be fuzzy and the accountability will be fuzzy," said Eli Noam, a professor of finance and economics at Columbia Business School.

After today's meeting, the NTIA and RUS will begin finalizing the rules for the application process, which could open as soon as next month.

Noam also recommended that grants be limited to initial capital expenditures so that federal money does not spill over into the day-to-day operational costs of keeping a network running. "We don't want to create permanent dependencies post stimulus," he said.

Several of the panelists emphasized the importance of addressing the supply side of the broadband equation as well as demand. Simply throwing billions of dollars at network build-outs won't be enough to bridge the digital divide, they said, a point underscored by a recent Pew study where one third of non-Internet users said they simply weren't interested in getting online.

"The obvious really bears repeating here: the goal of the broadband section of the recovery act is to get consumers online," said Beth McConnell, executive director of the Media and Democracy Coalition, a consortium of media-advocacy groups.

McConnell recommended that the agencies prioritize grant applications that include plans to "measurably increase adoption," such as guarantees of service rates or "digital inclusion" programs that would deliver hardware, software or computer training to skeptical consumers.

The panelists said that the measurable aspect to such initiatives is critical. They urged the NTIA and RUS to follow up with grant recipients to ensure that they deliver the subscription rates and connection speeds they promised.

"When failures and complaints begin the agency should move in early to assess problems and potential solutions to regain compliance," said Amina Fazlullah, media and telecom counsel for the U.S. Public Interest Research Group.

[cob:Special_Report]Under the statute, the NTIA is required to deliver a quarterly report to Congress on the progress of the grants and to update its Web site with information about the program.

But government Web sites are famous for containing vast troves of information that is poorly organized and difficult to find. Fazlullah called for the agency to ensure that information on the Web is "actually digestible," and recommended regular regional or local press releases, so local media outlets could report on the progress of grants in their area.

Best-laid plans aside, waste, fraud and abuse in the programs are inevitable, particularly with the aggressive pace the agencies are moving to disperse the funds, said Chris Murray, senior counsel for Consumers Union. The challenge, he said, will be to keep the margin of error to a minimum, citing the bank bailouts as a "glaring example" of how accountability can fall by the wayside when the government races to spend a large amount of money very quickly.

"We would encourage NTIA to not be shy in sending early signals that it will not tolerate wasteful behaviors," Murray said.

Bunting, the deputy inspector general at Commerce who will be auditing the grant program, made it clear that his office would be anything but shy.

But with estimates that the number of grants will be well into the thousands, Bunting said that audits will have to be selective and "risk-based," meaning that his office will focus its attention on grant recipients deemed most likely to succumb to waste, fraud and abuse. Startup projects can expect heightened scrutiny, he said, adding that his office will likely look more closely at for-profit initiatives than those run by public agencies or nonprofit groups.