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Watchdog challenges $535,500 award for broadband development as ‘overlapping’ local effort

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Watchdog challenges $535,500 award for broadband development as ‘overlapping’ local effort

Mar 04, 2024 | 6:45 am ET
By Paul Hammel
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Watchdog challenges $535,500 award for broadband development as ‘overlapping’ local effort
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The U.S. Department of Agriculture announced a new round of funding for rural broadband loans and grants. (John Lamb/Getty Images)

LINCOLN — A state agency is being asked to reconsider its granting of $535,500 to provide high-speed internet service as a duplication of a broadband project already underway in that area.

A formal request for reconsideration, filed recently with the Nebraska Public Service Commission, involves a $535,500 grant approved in January for Pinpoint Communications to expand broadband service to 21 homes just northeast of Beatrice. The funds came from the Nebraska Broadband Bridge Program.

But a broadband provider, Nextlink Internet, which was hired by Gage County to expand high-speed internet in the county, is challenging the grant, saying it duplicates its work and is an inefficient use of taxpayer funds.

‘Overlap’ of funds called a waste

Emily Haxby, a member of the Gage County Board, who alerted the PSC to the duplication, says such an “overlap” is a waste of government grants that are intended to provide broadband to areas that don’t have such high-speed service, or that have substandard service.

Emily Haxby
Emily Haxby, a farmer and a Gage County commissioner. Last year, she used a laptop and help from the state’s public power districts to discover hundreds of “unserved” broadband locations in the state, which led to additional federal funds for Nebraska. (Courtesy of Emily Haxby)

“These are taxpayer dollars,” Haxby said. “That money should be devoted to people who don’t have (internet).”

Haxby, who has challenged state data in the past, questioned how well grants are being screened to assure that they don’t duplicate broadband expansion work that is already underway.

The request for reconsideration, filed in January, has yet to get a ruling from the Nebraska Public Service Commission, which hands out the Broadband Bridge Program grants.

Cullen Robbins, the PSC’s telecommunication department director, said the situation is complicated.

Robbins said there is a formal process to challenge a grant award, which Nextlink failed to file. The PSC relies, in large part, on such challenges to avoid overlapping grant funds, he said.

“We try to make sure that we’re not overlapping funding to build out similar networks to the same location,” Robbins said. “That being said, we rely on the participating companies to be diligent and follow the process in place.”

Robbins, as well as Tom Shoemaker, Pinpoint’s president, said there was a lack of information about the exact scope and timeline of work being done in Gage County. If a project isn’t scheduled to be completed in 18 months, a grant will be awarded, they said.

Gage County ‘unique’

Internet expansion program

The Nebraska Broadband Bridge Program was created by the Legislature in 2021.

It was allocated $20 million to be distributed as grants to telecommunications companies for expansion of broadband service to areas of Nebraska that were currently unserved or underserved by slower internet speeds.

The idea behind such grants is that private companies can’t financially justify expanding high-speed internet service into some rural areas because of the distances and the shortage of potential customers. The grants fill that void.

“In Gage County, we don’t know the timeline,” Robbins said.

Haxby, who led the establishment of the broadband project in Gage County, disputed that and the suggestion the PSC was unaware of a challenge to the grant.

She said she informed the PSC, via phone and email back in September, that the grant overlapped the Nextlink project in Gage County. Haxby also testified before a legislative committee about the overlap, a hearing at which some PSC commissioners were in attendance, she said.

Haxby said she was “shocked” when the grant awards came out in January, awarding money for a “100% overbuild” to Pinpoint.

Shoemaker said he was unaware of the reconsideration filing against Pinpoint’s award until a reporter called last week.

“We generally don’t run into this issue,” he said.

He said that his company, based in Cambridge, has worked in partnership with the City of Beatrice to provide broadband service there and that customers in the area of the contested grant, which is just outside the city, were asking for high-speed internet.

“Our agenda is to serve as many people in rural Nebraska as we can with high-quality broadband,” Shoemaker said.

‘Happy’ to talk to Gage County

He added that he’d be “happy to have a conversation” with Gage County officials about the possible overlap.

Shoemaker said Gage County is unique in that it set up its own broadband expansion project using federal COVID-19 funds via the American Rescue Plan Act, rather than accessing funds through the PSC or the recently created State Broadband Office created by Gov. Jim Pillen.

“It’s a challenge,” he said, to work through the various programs and grant possibilities.

Haxby, meanwhile, said the PSC should have been aware of the work being done in Gage County. The same with Pinpoint, she said, had the company inquired with the county about obtaining right of way to lay its fiber optic cable.

In her recent testimony, Haxby also raised questions about two other grant decisions made by the PSC in her county.

She also pointed out that in the Pinpoint decision, the PSC was granting $535,500 to serve 21 homes, a cost of $25,500 per home, while Nextlink was providing broadband to 950 rural homes in Gage County for $4 million, a cost of $4,210 per home.

“The math does not look good here,” she testified.