The short window to file applications for Federal broadband stimulus grants and loans has had state governments and agencies scrambling to complete and file applications. The tight time frame has also led Missouri Governor Jay Nixon, as well as his counterparts in Colorado and New Mexico, to hire outside law firms with expertise in matters broadband, to help complete the applications in time and raise the likelihood of them being successful.
The deadline for filing applications for the first round of the NTIA’s Broadband Technology Opportunities Program and Rural Utilities Service’s Broadband Initiatives Program passed on August 20. Missouri filed BTOP and BIP applications totaling $140 million.
State governors and agencies are playing a central role in cobbling together public and private sector organizations to partner in projects and programs that meet BTOP and BIP criteria, and some are looking to outside law firms to help increase the likelihood that their applications will be approved.
Some state lawmakers are questioning the efficacy of doing so, however, as well as the way in which the whole process is taking place. In July, Missouri Governor Jay Nixon hired the Baller Herbst Law Group using a no bid contract to assist the state develop and complete its broadband stimulus program grant and loan applications, paying the firm $495 an hour to do so.
In less than two months, Baller’s billings quickly surpassed an initial soft cap of $50,000 on expenses. A new cap was quickly agreed with a $100,000 limit, according to a St. Louis Post-Dispatch report.
State senators such as Brad Lager would prefer the state spend the money and time to better study the situation and propose the best possible plan. Lager told the legislature that it was “insane” to go around laying cable without first studying where it’s really needed first, according to the news report.
“We take the time to hire a consultant on a no-bid contract, but we don’t take the time to have a plan first?” Lager asked. “We as a state need to take a more thoughtful approach here,” he was quoted as saying.
“Because of the short deadline and the expertise needed to put together these broadband grants, we thought it was necessary to get somebody with their technical expertise,” spokesman Jack Cardetti responded in defense of the governor and the executive branch’s actions.
Stimulus funding for broadband questioned
Group's map shows possible duplication of current cable lines.
Missouri's telecommunications industry and some Republican state senators are raising questions about Gov. Jay Nixon's plans to expand broadband Internet access to rural parts of the state.
In mid-August, Nixon endorsed a proposal by Marshfield-based Sho-Me Power to apply for $142.3 million in federal stimulus money to lay 2,500 miles of new fiber-optic cable and build 200 new wireless towers to improve access.
But the plan aims to address what's known as the "middle mile" in broadband networks.
That's the infrastructure pipeline for delivering Internet access, but not the connection to people's homes and businesses, which is known as the "last mile."
If approved, Nixon has pledged to kick in $25.2 million in matching state funds already appropriated by the legislature for this purpose. Sho-Me Power has pledged to invest $8.375 million in the project through its broadband fiber company, Sho-Me Technologies.
"Missouri already has a very robust rural broadband network," said Ric Telthorst, president of the Missouri Telecommunications Industry Association.
Telthorst testified Wednesday before a joint House and Senate committee charged with overseeing stimulus spending.
He displayed a map of the state with red lines zig-zagging to towns big and small to represent where existing fiber-optic cable approximately is located. Many of the lines ran along paths Sho-Me Power proposes to lay new cable, primarily paid for by federal tax dollars.
Telthorst said his association fears Sho-Me may duplicate current fiber routes, creating a new network of taxpayer-subsidized competition for the state's existing broadband companies.
"As I look at this, we're building more 'middle mile,' " Sen. Brad Lager, R-Savannah, said. "I think we're completely abdicating building the 'last mile.'"
Lager said he would prefer to see the state spend a few million dollars to first study whether Missouri needs more "middle mile" or "last mile" fiber cable to improve Internet connections in rural communities.
"If we don't have a comprehensive plan going forward, I'm fighting any funding (request) every step of the way," said Lager, who represents a rural 16-county district in northwest Missouri.
For proprietary reasons, the telecom industry's map did not include AT&T's 11,000 miles of fiber, Telthorst said.
Telthorst followed testimony by Paul Wilson, director of the Transform Missouri Project — an arm of the governor's office coordinating stimulus projects in the state.
"The goal is to make a transformative impact in the number of people with access to affordable high-speed Internet," Wilson told the committee.
During the hearing, Wilson could not immediately answer Lager's question about what the federal government deems an "affordable" price per month for Internet access.
Missouri is competing for a share of the $7 billion appropriated by Congress for expanding high-speed Internet access in the $787 billion stimulus bill, Wilson said.
Wilson said the state received 66 applications for the broadband initiative. Sho-Me Technologies was picked, in part, because of its existing network in southwest Missouri, Wilson said.
The company also offered 12 of every 60 strands of fiber in every new cable laid for state use to communicate among schools, prisons, state offices and law enforcement agencies.
Wilson said every county seat would have high-speed Internet access under the governor's plan, which would expand the percentage of Missourians with access to broadband from 79.7 percent to 91.5 percent.
"It would be a huge step forward for the state," he said.
Under the proposal, state government also would have access to 25 percent of the tower space. Having exclusive rights to the fiber-optic cable and towers could save the state millions of dollars each year that is spent renting broadband access, Wilson said.
The federal government likely will award the broadband grants sometime after late November, Wilson said.
Sen. Eric Schmitt, R-Glendale, expressed concern that the state would be infringing on the private marketplace.
Wilson said the Nixon administration has no intention of getting into the high-speed Internet business, but the telecommunications industry isn't so sure.
"Using a state network to undercut private carriers or subsidize the operations of particular carriers would only reduce the incentive that the private sector has to continue to deploy broadband," Telthorst told the committee. "And it could result in the loss of private sector jobs. That's just not the way public funds ought to be spent."
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