Second Round Of Stimulus Already Headed For Disaster

With the finish line for round one of the broadband stimulus being pushed back even further, I'm already growing increasingly concerned about the fate of the second round.

To review, the NOFA for the first round came out in July. By August it had attracted 2,200 applications. It's now November and the only applications that have been approved are a handful of mapping projects, and the whole of the first round of funding won't be completed until February, six months after the applications were submitted.

The official response for why the timeline for getting money out the door has lengthened is the overwhelming response the program got: 2,200 applications that collectively requested seven times the funds that were made available.

Now, before the first round has had a chance to run its course, NTIA and RUS are asking for suggestions on how they can improve this process for the second round of funding.

So far, the vast majority of the discussion around what needs to be improved in this process relates to one of three things:

1. Eligibility criteria that were too narrow.
2. Applications that were too complicated.
3. Not enough time for applications to be completed.

What no one seems to be acknowledging is that if the only tweaks that are made to this process are incremental steps to allow more people more time to more easily apply, then there's going to be a lot more applications to review in round two. It wouldn't surprise me if the total topped 5,000; I don't think 10,000 is even out of the realm of possibility.

Exasperating this is that NTIA has been quoted as encouraging anyone who doesn't get funding in this round to reapply for the next round. Given that only a quarter of the funds requested in the first round will be filled, that likely means a minimum of 1,650 applications will likely reappear, even though some of them almost certainly aren't deserving of taxpayer dollars.

Now let's revisit the timelines for round two.

The request for comment on how to improve the process is out now and closes next week.

Best-case scenario for getting the next NOFA out would be January, and February's more likely given the holidays and the need to not create uncertainty for projects that haven't been chosen yet by January in terms of if they should be getting their applications for round two ready or not.

It seems likely they'll extend the application period a month so as to allow applicants more time to collect the necessary information, so that leaves the door open until March or April.

Now we need to remember that all the funds must be allocated by September of next year, which is less than half a year from the point the door closes for applications for round two. (As a quick aside, this demonstrates how there was no chance they could've fit a third round into the remaining time, which was likely a driving force behind why they consolidated rounds two and three.)

That's less than half a year to get through a stack of applications that could be towering. Not to mention the related increase in challenges by incumbents to the eligibility of projects based on existing competition (unless they radically change the eligibility rules, which will inexorably lead to another increase in applications).

I do give them the fact that in round one they were having to ramp up from 0 to 60 in terms of the capacity to review these applications, so that will be an advantage for round two as they'll already have momentum. But this will still be a massive challenge to overcome, and the best-case scenario I can see is money not starting to be awarded until July on a rolling basis until September.

Then we need to add on whatever time it'll take for grant awards to translate into checks actually going out the door and into the hands of applicants. That could easily take another couple of months.

So now we're talking about money from the second round not actually getting into people's hands until at least Sept of next year. You know what that means? Another year of opportunity to deploy broadband in northern states will have been wasted. It's hard to start turning dirt when the ground's frozen.

Having been born and raised in Minnesota, and being a true believer in the power of broadband, it's hard not to get aggravated thinking that billions of dollars appropriated to "stimulate" broadband in February 2009 might not turn into actual deployment and job creation in the northern US until spring of 2011.

And given the struggles that have come with trying to process the 2,200 applications of round one expediently, it's hard not to get really worried about what's going to happen when an even larger amount of applications plop on the front doorstep of NTIA and RUS next spring for round two.

The inescapable reality of all this to me is that if we want to have any shot of round two stimulating broadband in any meaningful way in 2010, then we need to be thinking about ways to streamline the approval process that don't just focus on making it easier for more people to apply.

We need to be thinking outside of the box and seeing if there are ways to funnel stimulus dollars to the right projects more efficiently and effectively, both so we can lessen the load on NTIA and RUS and so as to get projects deploying sooner rather than later.

Because otherwise, I can't help but feel like the second round of the stimulus is already headed for disaster before it's really even had a chance to begin.