Study Finds Broadband Stimulus Funds Were "Wasted"

A new economic analysis of federal government broadband stimulus projects awarded by the Department of Agriculture’s Rural Utilities Service concludes that the program’s funding of duplicative broadband networks has resulted in an extremely high cost to reach a small number of unserved households.

The study shows that the RUS’ history of funding duplicative service has continued under its Broadband Initiatives Program and that the current program is not a cost-effective means of achieving universal broadband availability. 

The study examined three large BIP subsidy awards which total $231.7 million, or about seven percent of the total BIP $3.5 billion combined loan and grant program:

• $101.2 million in western Kansas
• $66.4 million for Lake and St. Louis counties in northeastern Minnesota 
• $64.1 million to cover a portion of Gallatin County in southwest Montana. 

The study was commissioned by the National Cable Telecommunications Association and prepared by Jeffrey Eisenach and Kevin Caves of Navigant Economics of Washington, D.C.

The American Recovery and Reinvestment Act (ARRA) included $7.2 billion to subsidize broadband deployment – $4.7 billion to the National Telecommunications and Information Administration (NTIA) and $2.5 billion to RUS. The NTIA and RUS programs funded by ARRA make up the largest federal subsidies ever provided for broadband construction in the U.S.

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