Reconsidering broadband stimulus

A lot of news media recently picked up a story about the state of Wisconsin declining broadband stimulus funding it had won. But this isn’t a totally unique occurrence. OPASTCO’s new chairman Ron Laudner told me recently that one of his own companies made the same choice.

The state of Wisconsin declined to accept a National Telecommunications and Information Administration grant to upgrade an existing broadband network because of concerns that the state could be responsible for repaying the entire $23 million awarded if numerous requirements were not met. Laudner’s situation was somewhat different, but ultimately his decision also was related to the risk involved.

Laudner won stimulus awards from the Rural Utilities Service for two different companies that he operates. Both awards were made as a combination of a grant and a loan. Laudner accepted the larger of the two awards but declined the other.

One consideration was that the company declining the award had already applied for a conventional loan from the Rural Utilities Service and therefore had to choose between the two funding mechanisms. Laudner opted for the traditional loan, which the company applied for about a year ago. (When I spoke with Laudner a few weeks ago, the loan had not yet been approved but Laudner was confident it would be. The RUS, he said, has been taking longer than usual to approve these loans as a result of its added responsibilities in administering the stimulus program.)

Laudner made the decision to stick with the conventional RUS loan, where that was an option, because the traditional RUS loan program has more flexibility about completion dates. Laudner also believed it would be easier to manage the regular RUS loan process.

Like many small telco executives, Laudner is concerned not only about proposed reforms to the Universal Service and access charge system but also about the uncertainty facing the industry until those issues are resolved.
“Because the industry is so laden with uncertainty and risk, the stimulus program wasn’t as successful as it could have been,” Laudner said. If carriers had had more certainty about how networks would be funded and costs recovered, he said, there “probably would have been more excitement for the [broadband stimulus] program than there was.”