Broadband Build-Out: Who Will Run the Show?

Congress is debating which agency should dispense the stimulus package's $8.2 billion for broadband expansion. At issue: how best to serve rural areas

By Arik Hesseldahl

Add broadband to the list of controversial provisions of the $900 billion economic stimulus package being debated in Congress. Included in the legislation are plans to spend $8.2 billion on fast Internet connections around the country, but a political row is shaping up over how that money will be spent and by which agency.

The current version of the bill dictates that the sum be administered by the National Telecommunications & Information Administration, the agency principally responsible for advising President Obama on technology policy.

But an amendment to the bill being proposed by Senator Tom Harkin (D-Iowa) and Senator Sherrod Brown (D-Ohio) would split that funding in half, sending $4.1 billion each to the NTIA and the Rural Utilities Service at the Agriculture Dept. "The change is needed to ensure that rural residents are not left behind as critical broadband services are expanded," says a statement from Harkin's office.

Reaching Rural Communities

Harkin and Brown are concerned that, under the auspices of the NTIA, not enough of the stimulus money would be spent on rural communities. The RUS, on the other hand, has a long history of working with rural communities, the legislators argue. "The Rural Utility Service has as its principal focus the needs of rural areas, where all too many households have no or very limited broadband service," Harkin's statement says.

Harkin has a point. Bringing broadband to rural America has proven a difficult economic nut to crack. In areas where population density is low, large telecom providers are reticent to make multimillion-dollar investments in new infrastructure where it's unlikely they can make a profit. This can leave many consumers and small businesses with no option but more expensive satellite broadband services.

Federal law designates the NTIA, part of the Commerce Dept., as the primary agency that advises the President on how to administer the nation's telecommunications grid. However, the NTIA was largely ignored during the Bush years.

RUS: A Checkered Track Record

But critics of the Harkin-Brown plan say the RUS has a checkered history in redressing the lack of broadband access. "That program has not been able to spend its money each year, and the procedures for getting loans and grants are cumbersome and tilted toward incumbent carriers," says Ben Scott, policy director at Free Press, a nonpartisan technology advocacy group. A spokesman for the RUS didn't return a call seeking comment.

To the extent former President George W. Bush addressed broadband policy, he did it through the RUS, part of the Agriculture Dept.'s Rural Development program, a descendant of a 1930s effort to build electrical and telephone infrastructure in rural areas hit hard by the Dust Bowl. The RUS broadband program was created when Bush signed the 2002 Farm Bill into law. Since inception it has funded 85 loans to the tune of nearly $1.7 billion. A 2007 Agriculture Dept. report said broadband projects funded by the loans were serving 582,000 households in 1,263 communities in 40 states.