[1st-mile-nm] "Wired to fail"

[Steve Ross]

Just to be clear, RUS up until a few years ago had never (technically) lost
money on a loan. Reform of the USF and recession has changed the record,
but not on loans under the stimulus program. Loss rate is far, far below
that for regular banks. I happen to see that as a weakness at RUS, not a
strength.

The biggest issue is that there are a lot of areas and a lot of (mainly
large) carriers that don't see adequate return in improving service in much
of their service areas, have fully depreciated their facilities in those
areas, but won't get out of the way for local carriers, public utilities,
and so forth that are willing to accept a much lower rate of return in
exchange for soft dollars -- economic growth, residents' needs and so
forth. The incumbents claim they face unfair competition from these new
carriers coming in with lower cost of money, even if they built their
systems with cheap money long ago. They churn out press releases, buy a
congressman or six or sixty, take journalists to lunch...

Often, the models suggest they would earn more money by renting space on a
modern new network they didn't have to build (see my Bandwidth Hawk column
in the May-June issue). But competition is a dirty word for them.
Sometimes, rarely, they do get screwed by RUS or someone else when the
rules change (and I have trouble with the proprietary FCC model, BTW).
Those rare screwings become their poster children.

This is how the regulatory game is played, though. Everyone gets subsidies
of one kind or another, either in free or low-cost money or in tax
deductions and good rate deals. The deals change as public policy and
technical imperatives change. There are always going to be some losers and
some winners among the carriers. You want only winners among the populace,
though.



Steve Ross
Editor-at-Large, Broadband Communities Magazine (www.bbcmag.com)
201-456-5933 mobile, 781-284-8810 landline
707-WOW-SSR3 (707-969-7773) Google Voice
editorsteve (Facebook, LinkedIn)
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steve at bbcmag.com
editorsteve at gmail.com


On Thu, Jul 30, 2015 at 3:16 PM, Roger Snodgrass <roger.sno at gmail.com>
wrote:

> Thanks for the feedback on this. Re-reading with the additional context, I
> can see why  Richard and Steve think the author was too hard on RUS. My
> thinking was that providing the additional access was so important,
> something is wrong with a program that gives out such a small fraction of
> its money, and certainly the agency running the program must be
> accountable, even if some or many of the problems lie elsewhere. Maybe some
> part of the money needs to help the applicant develop a workable plan, for
> example. Also, I didn't like the sound of the agency's persistent refusal
> to provide information, which is in my book is a flashing neon admission of
> failure. What good will it do in the future to offer local subsidies if
> they are doomed to fail, regardless of whether it's the granting
> institution or the grantee and local governmen and regulatory pitfalls or
> the monopolizing corporate utilities, causing the problems? The result
> compared to money available is pathetic. Also, there is mention of
> additional work going on in New Mexico. Does anybody know what that refers
> to?
>
> Thanks,
> Roger
>
> On Tue, Jul 28, 2015 at 5:34 PM, Roger Snodgrass <roger.sno at gmail.com>
> wrote:
>
>> I assume this group knows all about this, but just in case:
>>
>>
>> *"Wired to fail: * How a little known agency mishandled several billion
>> dollars of stimulus money trying to expand broadband coverage to rural
>> communities," by Tony Romm: "A POLITICO investigation has found that
>> roughly half of the nearly 300 projects that [the Rural Utilities Service]
>> approved as part of the 2009 Recovery Act have not yet drawn down the full
>> amounts they were awarded. ... If these networks do not draw all their cash
>> by the end of September, they will have to forfeit what remains. In other
>> words, they altogether may squander as much as $277 million in
>> still-untapped federal funds, which can't be spent elsewhere in other
>> neglected rural communities. ...
>>
>> *"[S]cores of rural residents *who should have benefited from better
>> Internet access ... might continue to lack access to the sort of reliable,
>> high-speed service that is common in America's cities. Even RUS admits it's
>> not going to provide better service to the 7 million residents it once
>> touted; instead, the number in the hundreds of thousands."
>> http://politi.co/1SKKGjg
>> <http://go.politicoemail.com/?qs=6899ff94fe0d350b4d966e6a6eef991e804ac2e62a5593e34907f6223d7a0b62>
>>
>>
>> --
>>
>> Roger Snodgrass
>> Twitter @pomotor
>> https://twitter.com/Pomotor
>> home 505-424-8366
>> cell 505-920-3677
>> l\lllllllll/llllll/\llllll\ll
>>
>>
>
>
> --
>
> Roger Snodgrass
> Twitter @pomotor
> https://twitter.com/Pomotor
> home 505-424-8366
> cell 505-920-3677
> l\lllllllll/llllll/\llllll\ll
>
>
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