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Matt Larsen runs a large wisp in Nebraska that reaches into Wyoming as well. A post from Matt to my arch econ list shows what some of us back est see as the gravy train nature of the USDA awards

Today, the USDA announced $103 million in funding for 23 broadband projects in unserved and underserved communities. I cannot comment on the funding need for all of these projects, but I would like to focus on one that I am at least partially familiar with. As I scrolled down the list of recipients, I nearly fell out of my seat to find that Hemingford Cooperative Telephone Company was awarded an Infrastructure Loan for $10,280,000.

Folks that are not familiar with Western Nebraska might think that this looks perfectly normal, but in reality this stinks to high heaven of typical RLEC (Rural Local Exchange Carrier) politics. To put this loan award into perspective, that is $10,352 in loan proceeds for every man, woman and child in the entire town of Hemingford - or $27,560 for every household in Hemingford. But here is the punch line - the entire Hemingford Telephone Cooperative service area ALREADY HAS BROADBAND! Hemingford Telephone has been offering DSL across their entire service area - including the rural areas outside of Hemingford - for several years. Of all the towns in Nebraska, Hemingford is the LAST ONE that could possibly need any kind of broadband subsidy! [COOK Report note: the link above brings the requester to a page that says welcome to Hemingford Telephone’s Streaming Video Server. Referenced is Mobius Communications the local DSL supplier since apparently 2003 the data on which Google shows a link to the original page. According to Matt the infrastructure money is to subsidize Mobius to acquire bandwidth to compete against local wisps who lack access to Washington DC supplied capital.] Matt continues:

This is a perfect illustration of why I find the broadband loan and subsidy programs so abhorrent. In addition to the low interest infrastructure loans that HCTC receives, they also get access to USF subsidies. Is it any surprise that they also have a wholly owned, unregulated subsidiary (Mobius Communications) that competes with other providers outside of the HCTC service area? Or that they have 30+ people on staff between the two companies and a newly rebuilt central office? It takes a lot of people to fill out that government paperwork and keep two sets of books for the two companies!

I get especially frustrated by loan awards like this one because I have operated two ISPs that have had to compete directly with Mobius and did not have access to any federal grant or loan programs. The USDA Broadband and Loan programs are essentially only available to RLECs. When I made inquiries into the programs several years ago, I found that they would only loan to a single recipient in a region so that they were not funding competing projects. Guess who already had loans and grants in my region? Why HCTC of course! At the height of the dialup Internet days, I was paying $3000/month worth of USF fees - and that money was going into a program that was then subsidizing HCTC, which was sharing employees and resources with Mobius, which was then competing with my dialup service. That $3000/month was going right out of my bank account and into their pockets.

Even after the dialup days, I have still had to compete with HCTC. They used their government money to win an auction for 700mhz spectrum and are using it to deliver wireless broadband service in a big chunk of Western Nebraska. While my operation and the other five WISPs in Western Nebraska have to share unlicensed spectrum and fund our own operations, Mobius has licensed spectrum and a government subsidized wireline network to feed all of their towers. It is a great deal - for everyone except the taxpayers and the other providers that have to deal with this subsidized monster from the little town of Hemingford.

I kind of wonder what kind of broadband the people of Hemingford are going to get for $27,000 per household? Unfortunately, there is no information about what will be deployed, but for $27 large per person it must be pretty sweet! I’m pretty sure that I could deploy 12meg broadband to end users in and around Hemingford using fixed terrestrial wireless for about $10,000.

Last week at an Ag Issues event for Senator Johanns, I made the point that the USDA Broadband programs and USF should be the first programs on the chopping block when it comes to balancing the budget. I didn’t think that I would get my point made quite so quickly!

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