Telecom industry players across the board want the federal government to relax the restrictions on sales of assets paid for with broadband stimulus grant money. That was the word from companies and associations in public comments recommending how to change the rules for the second stage of funding, to be conducted by the National Telecommunications and Industry Association (NTIA) and Rural Utilities Service (RUS).
Under the yet-to-be-awarded first round, broadband facilities built with government money cannot be leased or sold unless the feds say it’s OK – and even then, that can’t happen for at least 10 years. Plus, the buyer or renter must agree to fulfill terms laid out in the stimulus requirements, and the transaction must be part of the original funds application and project proposal.
The 10-year clause is especially onerous, commenters say, and should be eased for the second funding bout. They also want it applied to the first.
Qwest Communications International Inc. (Q) may have stated the matter best: “It is unreasonable to expect a private sector entity to foresee very possible merger, divestiture or asset sale opportunity that may present itself” over 10 years, the Denver-based RBOC wrote in its filing.
To lighten the load, Qwest proposes waiving certain waiting periods established by the NTIA and RUS regarding some disclosure conditions. That gives stimulus recipients more flexibility to take circumstances as they come, the company said.
Qwest noted, though, that safeguards to bar speculators from using stimulus money to “flip” broadband properties – similar to what happened during the 2003-2007 housing bubble – must remain intact.
Yes, the feds need to make sure that broadband stimulus recipients aren’t just looking to make a profit, XO Communications (XOHO.OB), a Virginia-headquartered CLEC, agreed. But, awardees “should be able to transfer the asset at any time where it is clear that the motivation for the transfer is not to simply flip the asset for immediate gain.”
The service provider wants the NTIA and RUS to permit such transactions when they’re not a significant part of the overall stimulus-funded properties, or that make up less than 25 percent of the entire value. That, XO said, “would balance the interests of the federal government with the natural dynamic of the telecommunications market.”
Other firms said much the same.
The NTIA and RUS should be allowed to maintain oversight of stimulus-funded projects, said equipment maker Alcatel-Lucent; if problems arise, then the agencies should be able to “instruct the grantee to sell the property and pay compensation for the federal participation in the project according to current fair market value of the property.”
