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.

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Comments on “Shocker: Billions In Broadband Subsidies Wasted As Government Turns Blind Eye To Fraud”

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That Anonymous Coward (profile) says:

If only we could force Congress to have nothing better than the worst off of the people in the country.
They are supposed to represent us, and it has become crystal clear that they live in their own little bubbles disconnected from the reality us little people live in.
Imagine how quickly things would get fixed if instead of Congress first, it was the people put first.
You can have nothing better than the little people… as we saw when they figured out their childish shutdown of the government wouldn’t allow them to fly home when it affects them they can move mountains quickly.
Imagine all of the sweeping changes if:
congress got medical via the VA.
congress had to pay for office supplies, gas, parking.
congress had to deal with cable companies without a VIP number and had to decide between going to work or waiting for the 12 hour window where a tech might show up.
congress didn’t get paid if they play chicken with the budget.
If they didn’t get vacations like a majority of working people in this country.

They screw these programs up, deliver nothing of benefit, and then don’t have the courage to hold someone accountable unless they can score some points in the media… rather than doing it because citizens got screwed and the people were more important than a pretty, worthless, program.

Sheogorath (profile) says:

Shocker: Billions In Broadband Subsidies Wasted As Government Turns Blind Eye To Fraud
Let me guess, it’s certain senators/representatives/agencies that find this shocking despite the fact that Techdirt have often reported on cases like this over the years. Corruption like this seems to be standard operating procedure in the US, albeit usually performed by corporations.

Anonymous Coward says:


Ars Technica had an article recently on Sandy, Oregon. They have their own municipal broadband network called SandyNet, paid for with Municipal bonds. It was (or will be) paid back with subscriber funds, and is costing the city nothing.

The cost? 100Mbps is a whopping $40/month, and if you want 1000Mbps, you need to dig deep for $60/month. You can even roll in phone service.

Oh, those rascals have even included service with no contracts and no data caps. How terrible.

Anonymous Coward says:

Lack of executive oversight is a campaign finance issue? Pull the other one...

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.

Setting aside the apparent double-negative of “fix[ing] … reform”, how does that fit with the rest of the problem? You’ll never find a system that prevents a willing buyer (the corporation) and a willing seller (the money-grubbing politician) from constructing a deal, unless you are willing to create a system with massive negative effects on legitimate action.

Instead, we need to focus on a system where one or both parties rationally think that buying influence is not the right solution. If the seller lacks the ability to make good on the implied deal, the buyer will not offer it. Require subsidies like this to be approved by a general vote of the area affected (not the representatives for that area), and require that the official language stipulate real consequences for failure.

Loki says:

Re: Lack of executive oversight is a campaign finance issue? Pull the other one...

As long as you have a society more concerned with what the liKea of Paris Hilton, Kim Kardashian, and Caitlin Jenner are doing than what their political representatives are doing this is the kind of shit they’re going to get.

Garbage in, garbage out.

Justme says:

Simple Truth. .

Every member of congress at this point is nothing but a prostitute. They spend more time on there knee’s begging for the money shot, then actually working on the issues important to there constituents.

And unless your representative is actively working for campaign finance reform then the simple fact is they like being a prostitute, because they have the ability to change it!!

Uriel-238 (profile) says:

Re: Simple Truth. .

I think enough of them either enjoy the acts of campaigning or the luxurious benefits that come with it to not have any interest in campaign reform.

Those remain probably are not in enough force to do anything about it. Occasionally we’ll see efforts shot down. But they probably can’t really do anything to affect change.

On the other hand they’re all still participating in the charade we call government. I’d think those who still have a remaining scruple might quit knowing there’s nothing real to be done there.

Mike Soja (profile) says:

Bode's Unwell

Final paragraph there is just to un-cute to leave un-criticized.

It’s the old chicken/egg idiocy. Which came first? The schemers scheming to buy favor with corrupt government officials? Or corrupt government officials willing to sell citizens’ freedom to the highest bidding schemer?

Bode wants to blame corporate schemers, ignoring the fact that when government (ostensibly at the behest of the great unwashed) takes it upon itself to “regulate” Industry, that it is Industry’s right to petition said government for redress in any and all grievances.

When government injects itself into business, business has the right to respond.

The problem isn’t that business can utilize resources to defend itself against government. The problem is that so many people are of the opinion that government should be attempting to direct the course of private business.

As long as government sticks its nose in private business, private business will attempt to direct which way that nose points. As is its right.

Government’s business is enforcing contracts, not stipulating what those contracts contain.

That One Guy (profile) says:

Re: Government assistance means government involvement

Tell you what, if the telecom industry doesn’t want to deal with regulations, then they are more than welcome to go completely private. No more tax breaks, no more subsidies, no use of public land or property or spectrum unless they want to and can buy it outright, no more legal benefits, none of that.

Oh, and they’ll need to pay back the money they’ve been given over the years by the government, whether directly or by ceding ownership of what the funds bought to the government, just to make sure that they are completely separated from the government and don’t owe it anything.

But hey, after all that they wouldn’t have to deal with any more regulations(right up until they made their service public), I’m sure they’d be all for the trade, right?

Uriel-238 says:

Re: Bode's Unwell

You’re one of those folks who thinks it’s okay for kids to die from rat poison in the sausage if it means sparing the meat industry from regulation, yes?

Because all regulation is a burden to its industries. Right?

And you’re okay with monopolies, and Walmart underselling local businesses to drive them to bankruptcy before taking advantage of the monopoly they’ve created. Yes?

And it’s okay for manufacturers to dump their toxic waste into the local river and screw whoever lives downstream, right?

It’s easier and more profitable (by far) to engage in anti-competitive practices, to create products without concern for the health of the end users, or for the environment, than it is to innovate new technologies that solve these things.

And people really don’t give a shit about the commons when it can benefit them personally to not take care of it.

Hence the need for occasional interference by the state with industry to make sure that the resources that belong to the people are regarded and used with respect. Also that food is actually healthy, and that medicines are what they say they are.

GEMont (profile) says:

Governement Of the Elite, For the Elite.

That folks, is a near perfect example of what can only be called, Fascism in Action.

Members of Big Business, secretly colluding with members of Big Government, to create ways and means of stealing tax-payer’s money, and then covering up the crimes and preventing the public from learning its been robbed – again and again and again.

This is how Fascism efficiently drains a nation of its wealth, without the public becoming aware that its under attack from within.

Either get used to it – cuz it only gets worse, as the crooks in office learn from their mistakes and get better at stealing, obfuscation and disinformation, and thereby gain more control over those remaining aspect of society that block their progress – or do something about it, while you still can.

Remember, fascism will eventually absorb all authoritarian features of your society – government, police, media, courts, business, etc. – and at that point, there is no place left for the public to turn to, in order to stop the process of national dissolution.

Your choice.

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