Project to Connect Schools and Impoverished Rural Areas Derailed by Delays, Strategic Changes

Over the last six months or so, a situation unfolded in Louisiana that culminated last week with the termination of an $80.6m BTOP broadband stimulus grant. In the aftermath, Governor Bobby Jindal’s (R-LA) administration is catching much of the blame, but a deeper look at this saga shows that the project has struggled to meet its deadlines and goals since the grant was awarded in 2010.

First, some background information: The Louisiana Broadband Alliance (LBA) project, led by the State of Louisiana Board of Regents was a collaboration of 6 state agencies (Louisiana Department of Education, Louisiana Department of Health and Hospitals, Louisiana Educational Television Authority, Louisiana Geographic Information Center, and Louisiana State University Agricultural Center’s Delta Rural Development Center). The LBA project was awarded a federal grant for $80.6m to construct over 900 miles of fiber to provide service to a 3,488 square mile area that included “12 impoverished parishes targeted by the state’s Louisiana Delta Initiative” (according to the NTIA’s profile of the project).  The project would provide 10 Mbps – 1 Gbps broadband service to libraries, hospitals, schools and anchor institutions in underserved rural areas to “promote education, research, and healthcare delivery in some of Louisiana’s neediest areas.” The open network would include 38 points of interconnection and serve several Native American communities.

On October 26, 2011, the Louisiana Broadband Alliance project was terminated by the NTIA – this was the largest BTOP grant termination to date.

What possibly went so terribly wrong? Well, for starters, the project suffered ongoing delays and several significant changes in direction and oversight. According to StimulatingBroadband.com, “the Louisiana termination resulted from delays in the environmental engineering phase of the project, and from the absence ‘of a strong deployment plan in place’ a full year after the funding award of March 2010.” Furthermore, the “pattern of schedule delays, uncertainties and contingencies demonstrate a lack of management ability and control by Louisiana to get this project built on schedule and on budget.”

Basically, the project was suffering from delays and a fuzzy vision from early in the process.  Then, earlier this year, the state assumed control over the project and proceeded to propose significant changes.  This was where the real trouble started. Instead of building the fiber network from scratch, as was a key ingredient in the original proposal (and possibly why the grant was so substantial), the state changed course and proposed to “purchase indefeasible rights-of-use (IRUs) from local providers,” according to an October 27 press release by Senator Mary Landrieu (D-LA). StimulatingBroadband.com explained, “Under the stimulus package legislation, the rules of NTIA for BTOP, funds are to be expended for the capital construction of large networks and the telecom equipment to operate them. Funds may not be expended under the program for operating costs, like those included in carrier line rental” (emphasis added).  

StimulatingBroadband.com wrote that Governor Jindal’s Administration essentially “attempted to convert grant funded state owned last mile fiber connections slated for scores of community anchor institutions (CAIs) to investor-owned carrier circuits to be installed by existing broadband providers.” I can’t help but wonder—didn’t the Administration know that this proposal was a violation of the terms of the grant? Apparently the Administration figured that purchasing IRUs would help overcome delays, so maybe their head was in the right place… But wouldn’t it be difficult to justify keeping $80.6m for the purpose of constructing a fiber network when they weren’t actually going to construct a fiber network?

The letter explaining the termination from NOAA Grants Management Division Director Arlene Simpson Porter illustrates that the project team had received plenty of warnings and opportunities to “take corrective action” going back to early 2011. NTIA conducted a site visit in March 2011 and determined that the project was already 9 months behind schedule; and at a follow-up site visit in July, “NTIA staff learned of additional impediments threatening the implementation of the project.”

At that time, Louisiana proposed its course-correction plan of purchasing IRUs instead of constructing the network. NTIA gave the state several more opportunities to explain the new strategy, but NTIA found that the response “did not provide sufficient detail, such as a comprehensive implementation schedule or an adequate business plan.” Louisiana had a final chance to get its affairs in order in October, but NTIA again found that the response was inadequate and insufficient.

Reactions to the news about the grant termination have largely placed the blame on the Jindal Administration. StimulatingBroadband.com spoke with Assistant U.S. Commerce Secretary Lawrence E. Strickling, who reportedly said that NTIA “did all it could to save the large broadband stimulus network project in Louisiana.” Strickling also explained that “NTIA is vigorously overseeing broadband grant projects to ensure they are completed on time, on budget, and deliver the promised benefits to the communities they serve.” A press release by Senator Landrieu expressed frustration with the Jindal Administration: “Despite receiving the green light for more than $80 million in federal funds, the State fumbled the ball;” and “This is yet another missed opportunity to improve the lives of Louisiana residents, particularly rural Louisianans who are often left out of such initiatives.”

What will be the impact of this decision? Surely, the anchor institutions and unserved communities in rural Louisiana who were expecting to be connected to the LBA fiber backbone will suffer as a result of the grant termination, but will private companies step in and build fiber to these unserved locations? Apparently, the funds will be returned to the U.S. Treasury, so there won’t be any opportunity for other worthy organizations to utilize the funds for a similar objective.

What lessons can be learned from this unfortunate situation, particularly for the RLECs who have received federal broadband grants? Clearly, it is probably not a good idea to fall significantly behind schedule, and an even worse idea to drastically change the deployment strategy in order to overcompensate for delays. While processing this story, I kept thinking of the political quotation, “Don’t change horses in midstream.” It also appears, from my perspective anyway, as though the management team made a number of “Project Management 101” faux pas, and possibly fell victim to an unclear strategic direction, especially when the decision was made to abandon plans to construct the fiber network organically.

Unfortunately, delays cannot always be avoided or overcome (especially in a project of this scale and scope), and in at least one case a BTOP-funded project has been halted because the funding from the government has actually been delayed (The ILEC Advisor: More Rural Broadband Loans Announced as Past Recipients Wait on Funds)…So, what do you think – did the NTIA make the right decision to revoke the grant, or should the state have been given more time to course-correct?