Waste Is Seen in Program to Give Internet Access to Rural U.S.

GATE, Colo. — The bank is gone from this once-thriving ranching and farming community on Colorado’s windblown eastern plain, as are the dairies, the hotel and the Union Pacific depot. The post office remains, at the corner of Main Street and First Avenue, the intersection of the town’s two paved streets.

 There is not much that is modern in Agate, except at the 11-student elementary school, which has three high-speed fiber optic Internet connections — more than nearly every school in Denver, 70 miles to the west, and, for that matter, just about any school in the country. And it is something, the school says, that it doesn’t need.

The latest chapter in Agate’s recent broadband boom came thanks to the $4 billion Broadband Technology Opportunities Program, part of the Obama administration’s 2009 economic stimulus effort. The aim of the grant program is to extend high-speed Internet access to parts of the country that had little or none of it because private companies said it was too expensive to build.

“These investments have the potential to reshape our nation,” said Lawrence E. Strickling, an assistant commerce secretary and the administrator of the National Telecommunications and Information Administration, which runs the federal grant program. “We know that Americans who don’t have access to the Internet are increasingly cut off from job opportunities, education resources, health care information and even government services.”

But local phone companies have complained about waste or unfair competition, like using some of the grants to build fiber networks where they already exist — including, in Colorado, in the easily accessible eastern plains that include Agate — rather than where they are most needed, in rural mountain towns.

Nationally, $594 million in spending has been temporarily or permanently halted, 14 percent of the overall program, and the Commerce Department’s inspector general has raised questions about the program’s ability to adequately monitor spending of the more than 230 grants.

In Illinois, for example, a $12 million broadband grant was sanctioned when a subcontractor was caught routing fiber optic cable through neighborhoods where its project engineers lived. A $39 million grant in Arizona was suspended over questionable expenditures on travel, transactions that appeared to involve conflicts of interest and other unbudgeted activities.

Broadband grants in Alabama and Louisiana, totaling $140 million, were terminated over undocumented expenditures and failure to adhere to construction plans and schedules. Four other grants, worth $42 million, returned the money before even getting off the ground.

Here in Agate, two high-speed connections already existed in the school, which had been teaching students from kindergarten through 12th grade. Now the oldest students are fifth graders, and the school says the high-speed fiber optic service is of little use and beyond its means. (It has requested bids for a slower-speed connection to replace it.)

Agate’s third fiber optic connection was among the projects built with funds from a $100 million grant to an education consortium called called Eagle-Net. The grant has been suspended since December, when officials discovered that Eagle-Net had changed nearly all of its plans for wiring the state. Four months earlier, Eagle-Net was warned about questionable spending and lack of budgetary controls, according to Commerce Department documents.

Congress is preparing to take a closer look at the overall program. Representative Cory Gardner, a Colorado Republican whose district includes Agate, said in an interview Monday that the House subcommittee overseeing the grant program was preparing for a hearing into possible program waste.

Eagle-Net says it has tried to work with the rural telecom companies. Gretchen Dirks, a spokeswoman, said several of the rural telephone companies now raising objections supported Eagle-Net’s plans in the beginning.

Ms. Dirks also said Eagle-Net had not been avoiding mountain areas. “The more difficult-to-reach areas of Colorado, due to diverse geographic and weather conditions, have been slated for completion in 2013 since the very beginning of the funding process,” she said.