Stimulus slow to break ground but generating jobs

Nearly six months after the first broadband stimulus awards for infrastructure projects were announced, many award winners have not yet been able to break ground on their projects, although they expect to soon. A key concern is securing the availability of funds, which are administered by either the Rural Utilities Services or the National Telecommunications and Information Agency — and those agencies have been struggling with unprecedented workloads as a result of the stimulus program.

In the mean time, award winners seem to be doing their best to accomplish as much as they can prior to securing funding — including making network engineering plans and, for some companies, undertaking the process of selecting outside construction firms. Some have even hired a few new people, a sign that the stimulus program is already making progress on achieving one of its key goals: job creation.

Connected Planet spoke this week with four award winners, including two whose funds were awarded by the RUS and two that received their awards from the NTIA. The two RUS funding winners had just received funding documents from the agency, which they were in the process of reviewing. After those documents are signed, they still must be processed by the RUS before any funding can be released. The carriers that won their awards from the NTIA were waiting for their environmental studies to be approved before they could receive any funding.

The carriers involved recognize that the RUS and NTIA are overloaded and are reluctant to criticize the agencies. But because the vast majority of stimulus projects require fiber trenching and burial, timing is becoming increasingly critical for carriers in the North, where the ground typically freezes solid before Thanksgiving, halting all digging until around April of the following year.

“We’ve got to be ready to go here in a few weeks,” said Royce Aslakson, CEO and general manager of Reservation Telephone Cooperative, which won RUS funding for a fiber-to-the-home (FTTH) project in unserved areas of western North Dakota and eastern Montana.

The carrier received its funding documents from the RUS last week and expects to review and return them to the RUS soon, but that will begin another waiting process until funds are released. Rather than wait until funds are released to start construction, RTC hopes to use the RUS paperwork to obtain a bridge loan from a bank so it can get started on construction. RTC’s award from the RUS was on a 50/50 grant/loan basis.

RTC already did a lot of work on its project as part of the application process. As Aslakson explained, the company wanted to demonstrate that the project was shovel-ready. “We had a lot of contracts in order when the application went in,” Aslakson said. For example, the company pre-selected Calix as its vendor for FTTH electronics.

RTC recently hired five or six people to support the broadband stimulus project and a separate network upgrade. The company expects to use outside contractors for much of the work on the stimulus project, and Aslakson expects to see additional jobs created at those companies.

The RTC project is expected to take three years to complete. When it’s over, Aslakson expects to have more projects underway for his new people to continue to work on.

Another carrier that already has hired people as a result of receiving broadband stimulus funding is Mid-Atlantic Broadband Cooperative, which operates a fiber backbone network in rural Virginia that is used by numerous service provider members. MBC won a grant from the NTIA to connect 120 schools to its fiber backbone — a move that also will enable service provider members to offer high-speed retail service to businesses in those communities.

While it waits for the NTIA to approve its environmental impact plan, MBC has sent out construction bids for the project, said Tad Deriso, its president and CEO. The company expects to use much of the same equipment that underlies its existing network, which is largely based on products from Infinera. MBC’s construction companies will select fiber for the project based on a specification provided by MBC, Deriso said.

MBC already has hired three new people to work on the project, including a product manager, associate product manager and grant administrator. Deriso also expects to hire at least one or two inspectors for the project. In addition, the project is expected to create at least 75 more jobs — possibly as many as 200 -- at the construction companies that MBC will hire.