Shocker: Billions In Broadband Subsidies Wasted As Government Turns Blind Eye To Fraud

from the dysfunction-junction dept

As we've covered at length, the United States' 2010 National Broadband Plan was a bit of a dud. It paid a lot of lip service to improving broadband competition but was hollow to its core, using politically-safe rhetoric and easily-obtainable goals to help pretend the government had a plan to fix the nation's uncompetitive broadband duopoly. But while the NBP was a show pony, the companion plan to use $7.5 billion of the Recovery Act stimulus fund to shore up last and middle mile networks was supposed to have been notably more productive.

Or not.

Of that $7.5 billion (out of the Act's $840 billion total), $3.5 billion was set aside to help improve broadband connectivity in the nation's harder to reach areas. The funds were managed by the USDA's Rural Utilities Service (RUS), who then doled out the funds as needed to those who applied with sensible business models. But a recent report by Politico suggests that the program has what you might call a spotty success record:

"A POLITICO investigation has found that roughly half of the nearly 300 projects RUS approved as part of the 2009 Recovery Act have not yet drawn down the full amounts they were awarded. All RUS-funded infrastructure projects were supposed to have completed construction by the end of June, but the agency has declined to say whether these rural networks have been completed. More than 40 of the projects RUS initially approved never got started at all, raising questions about how RUS screened its applicants and made its decisions in the first place."

If these programs don't pull their full awarded amount by September, the awards are forfeited, and can't be used by areas that would have otherwise benefited. Of course if you've followed the broadband industry at all over the years, you might recall that these broadband gaps aren't supposed to exist in the first place. We've thrown billions upon billions in tax cuts and subsidies at incumbent companies like AT&T and Verizon over a generation, and the result has fairly consistently been broken promises, zero accountability, and a government that repeatedly makes it clear they're ok with that.

And just like these programs of old, the RUS broadband effort threw money around without actually knowing where it was going:

"We are left with a program that spent $3 billion,” Mark Goldstein, an investigator at the Government Accountability Office, told POLITICO, “and we really don’t know what became of it."

And here's the kicker: the Politico report doesn't even highlight some of the worst fraud seen in the program. Earlier this year we noted how West Virginia was the poster child for this program's dysfunction, with Verizon, Cisco and Frontier convincing the state to spend millions in broadband subsidies on over-powered, unused routers, redundant, useless consultants, and "upgrades" that appear to have benefited nobody. The state then buried a consultant's report highlighting how companies and state leaders engaged in systemic, statewide fraud on the taxpayer dime. Nothing much has happened since.

While the continued failures of broadband subsidies will be used as an example that broadband subsidies don't work, they're more an example of how we're utterly unwilling to fix campaign finance reform. Spending and tracking this money shouldn't have been all that hard; we just aren't willing to clean up a political system beholden to unaccountable giants before throwing billions of dollars into its angry maw. Meanwhile, when you have armies of politicians consistently and proudly running on the platform that government can never work, the fruit of this labor can't be all that much of a surprise.

Filed Under: boondoggle, broadband, oversight, recovery act, rural broadband, rural utilities service, rus, stimulus, usda