WASHINGTON-A high percentage of the loans approved for the Rural Broadband Loan Program were awarded for wireless services, said Hilda Gay Legg, administrator of the U.S. Department of Agriculture’s Rural Utilities Service.
“Actually wireless is a very high percentage of those approved,” said Legg, noting that 30 percent of the approved loans and 50 percent of the applications have been for wireless broadband.
Even though the number of loans approved is high, the dollar amount is less, and Legg said that is to be expected.
“The 30 percent of loans approved, is the number of loans approved-not in dollar amounts. Traditionally wireless would be smaller in the actual dollars,” said Legg, noting, “we give loans for both licensed and unlicensed.”
In fiscal year 2003, RUS made $1.4 billion in loans and loan guarantees available to provide broadband service in rural communities with populations of less than 20,000. So far in FY ’04, RUS has awarded $400 million in loans and has $300 million in the queue, said Legg.
Legg said it is RUS’ job to make rural Americans aware of the importance of broadband in their daily lives so they won’t want to settle for dial-up service.
“If we can get our residents hooked on broadband, and I say hooked in a very positive way, they will never want to go back to dial-up,” said Legg.
While the rural broadband program is technology neutral, some wireless carriers have complained that RUS rules restrict its availability to incumbents since RUS will not provide competing loans in the same service area. Legg said this is necessary so the government is not loaning against itself, thus creating a situation where one of the loans might fail.
RUS does not have experience with loan defaults. The telephone loan program, which makes loans to rural telephone companies and cooperatives, has never had a default, said Legg, acknowledging that this is a pretty high bar that might not be met with the Rural Broadband Loan Program.
“There is more risk in this program,” said Legg. “We understand the risk.”
