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Some Broadband Stimulus Winners Are Rejecting Funds
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August 16, 2010

Some Broadband Stimulus Winners Are Rejecting Funds

By Paula Bernier, Executive Editor, IP Communications Magazines

After going through the arduous process of applying for broadband stimulus funds from the federal government, some organizations apparently have decided to leave the money on the table.

That’s the word from Kevin Morgan (News - Alert) of ADTRAN, a network equipment supplier that has played a leading role in helping educate service providers and others about the broadband stimulus program.

“I do know some customers that were initially awarded money have decided that they’re not going to take it, for a variety of reasons,” says Morgan. “A lot of it had to do with the way the terms were – just not very favorable in terms of … reporting structures and other things.”

Rules around dividends seem to be one key reason why some are thinking twice about taking broadband stimulus monies, he says. Apparently, the government wants to have some input into this process, at least in some cases.

“The concept is this: If I’m the government and I’m giving out money, I don’t want the shareholders of a company to benefit just because I’m passing them money, and there’s a chance that a company could then just take it and pass it on to the shareholders in terms of dividend,” says Morgan. “So there’s language in the contracts to try to prevent that from happening.”

Morgan says he’s heard of three or four broadband stimulus award winners that ultimately decided against taking the money, and talk about three or four others that may do the same. He declined to provide the names of these organizations. (NTCA (News - Alert) hasn’t yet return TMCnet’s calls for comment on this today.)

So, one might logically ask, didn’t these organizations know what the rules were for all this at the onset of the broadband stimulus effort?

“The requirements for qualifying for the applicants were very clear,” explains Morgan. “When you get the award though, you basically start the negotiation process….” And each negotiation is unique.

That said, the federal government agencies involved in the broadband stimulus could potentially adjust their rules or requirements on this front. Morgan notes that the government showed a fair amount of flexibility earlier in the broadband stimulus program, when it adjusted its second round NOFA rules in response to industry input.

Edited by Stefania Viscusi

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