Federal auditors tasked with reviewing a much-criticized statewide broadband Internet project funded with $100.6 million in federal stimulus money have a host of additional issues to examine during a scheduled audit of the project now underway.
The audit of Eagle-Net’s operations is one of six similar examinations being conducted by the Department of Commerce’s Office of the Inspector General, said Clark Reid, the office’s legislative and external affairs officer. The office announced it would perform the audits, which are meant to assess the grantees’ performance and the National Telecommunications and Information Administration’s monitoring of grantees, in December.
The NTIA oversees $4.7 billion in grant money awarded under the Broadband Technology Opportunities Program established by the American Recovery and Reinvestment Act of 2009.
Several federal legislators including Rep. Scott Tipton, R-Cortez, applauded news that the inspector general’s office would be taking a closer look at the Eagle-Net project. In a letter sent last week to Inspector General Todd Zinser, Tipton, Rep. Cory Gardner and Rep. Greg Walden, chairman of the House Committee on Energy and Commerce’s Subcommittee on Communications and Technology, requested that auditors additionally examine changes between Eagle-Net’s current work and what was laid out in the initial grant application, the status of the project’s expenditures and the schedule for future build-out.
Reid said the issues raised in the legislators’ letter will be included in the auditing process.
Eagle-Net is resuming work after the NTIA lifted a five-month suspension of the project that was imposed because Eagle-Net changed its build-out plans without the required approvals.
After the suspension, Eagle-Net scaled down the project’s goals, and it announced it would connect only 100 school districts with broadband by the end of 2013 rather than the more than 200 schools and community anchor institutions the project initially was slated to reach. Eagle-Net’s plan to build a fiber-optic connection to Silverton in 2014 depends on receiving a grant extension from the NTIA.
But new budget numbers cited by Eagle-Net President Mike Ryan have government leaders doubting that even the scaled-down version can be completed. In a meeting with the Southwest Colorado Council of Governments earlier this month, Ryan said the project has $7.8 million in remaining grant money that will cover the costs to connect 29 school districts on the Western Slope, including Mancos, Dove Creek, Cortez and Silverton.
Yet cost estimates sought by the Southwest Colorado Council of Governments suggest that just the fiber build to Silverton will run about $8 million, said Susan Hakanson, the council’s administrator.
Ryan refused to give a cost estimate for the construction to Silverton.
Archuleta County officials also remained skeptical of Eagle-Net’s promises after the Pagosa Springs School District was dropped from the project’s list of priority school districts.
Pagosa Springs schools, along with 67 other school districts, are in the project’s “medium time frame” of about two years and will require outside money to complete, Ryan said.
In response, Archuleta County Attorney Todd Starr asked, “So if you get additional funding, we might be one of communities that receive your attention within the next two years, but if you do not get additional funding, we should not look to Eagle-Net for broadband?”
“You could be negative and say that,” Ryan responded, “but I would say when we get additional money, we will build that area out.”
This month, Eagle-Net made the first move to solicit an outside company to manage and operate the network’s day-to-day operations and chip in an additional $8 million investment to the project.
Eagle-Net would own the network, but the operator would be responsible for almost everything else, including network monitoring, field operations, customer care, sales, marketing, billing and network expansion. The two entities would enter into a revenue-sharing partnership.
Local government leaders are wary of the arrangement because it could mean underserved areas could get ignored again if they aren’t profitable for a private company.
Despite their hesitations, Ryan urged local government leaders to give their continued support to Eagle-Net’s project.
“The only way I can bring in additional dollars is through your support, your positive letters that come in and give us support about Eagle-Net,” Ryan said. “What I would love from you guys is to continue to see support.”