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Congressional Grinch cuts broadband

| December 9, 2004 11:00 PM

By Brent Shrum Western News Reporter

Funding for a local broadband telecommunications project was cut from a federal spending bill passed by Congress late last month and signed by the president this week.

The $5.4 million project had been included in a long list of proposals recommended for funding by the committee handling appropriations for the departments of Commerce, Justice and State in September. The committee recommended an appropriation of more than $285 million for the Economic Development Administration and listed the local broadband project among numerous proposals it urged the EDA to consider.

The project was among a number of telecommunications proposals cut from the final version of the bill, said Kootenai River Development Council director Paul Rumelhart, who discussed the issue with representatives of Sen. Conrad Burns in a telephone conference earlier this week.

³Congress has not determined where they should be funded from,² Rumelhart said.

The committee overseeing EDA funding had problems with the proposals because they are infrastructure-related, and the Veterans Affairs/Housing and Urban Development committee generally deals with infrastructure, Rumelhart said. But VA/HUD sees the projects as telecommunications-oriented, and telecommunications projects are in the realm of the Rural Utilities Service, which falls under the Department of Agriculture¹s Rural Development program, he said.

The problem with the RUS program is that its guidelines don¹t fit rural Montana, Rumelhart said. A 20-percent cash equity requirement is in place for loans, and existing utilities are given a preference in the application process.

³RUS has been in existence since the 1930s, and they want to do business with those that have a good track record,² Rumelhart said.

Burns wants to work with those involved in the local project to gain input on how to revamp the RUS guidelines to unlock some of the $1 billion that is available for broadband projects, Rumelhart said.

Russ Barnes, who sits on the boards of the KRDC and Lincoln County Port Authority as well as the Kootenai River Broadband Cooperative — formed last spring to manage the project — was in Helena Wednesday for a conference on the RUS broadband loan program, Rumelhart said. Burns was scheduled to participate in the conference via video link.

Plans for the broadband network were provided by a feasibility study funded by a $315,000 loan from the city¹s economic development fund. The 1,000-page study was produced by the Spokane-based firm Zero dB and proposed that the community build a fiber optic line to connect to the Bonneville Power Administration¹s system at Libby Dam and lease BPA fiber to Spokane and Kalispell.

The initial cost of building the network is estimated at around $3.5 million, and another $2 million is expected to be needed before the system became cashflow positive in three to five years. The network would show a net profit after eight years, according to the study.

The network hub would be built in Libby and core businesses in the downtown area would be connected during the first phase of the project. In the second phase, services would be extended to outlying residential areas.

The network would eventually provide telephone and video services in addition to data services like internet access.

The network would employ around two dozen people including customer service, clerical, engineering, installation and sales staff.