they brought electricity to the countryside and transformed how people lived on farms and ranches. we're still financing electricity to make sure that our electric grid is affordable and smart, and that it is reliable for everybody in rural america. we have millions of people who are experiencing better electricity because of the old r.e.a. we're also doing water programs and telecommunications programs. we began doing telephone service, financing rural telephone cooperatives. that time, we have transformed the landscape, making sure that world americans have telephone service by financing these small co-ops or companies that come to us for loans. 7 number of grant programs. i used to work for -- we have a number of grant program. i used to work on broadband.

senator harkin was our advocate. we wanted a broadband provider. there is a distance-learning teleprogram that provides loans and grants for rural health care providers and educational institutions, to assure that they're hooked up electronically. we are looking at what we've done and trend is what lessons we can learn. we have a community connect program -- and trying to see what lessons we can learn. we have a community can x program. there are very tiny communities that -- we have a community connect program.

there are very tiny communities. we have been doing this problem -- this program for 60 years. the administration and congress invested $2.5 billion into the rural utilities service for us to get broadband out into the rural parts of the country, which we have a great deal of experience with. >> of that money, how much has been allocated? >> we have awarded about $1,000,000,000.60000002 dollars in loans and grants combined throughout the united states -- $1 billion and $60 million in loans and grants combined a throughout the united states. with accepted the applications for our next round of funding. -- we have accepted the applications for our next round of funding. this will transform raw communities. this will bring broadband -- this will transform rural communities, bringing them

broadband, so that they can grow. people will be able to telecommunicate for the first time -- telecommute for the first time. it will have much better service than they previously bad. -- they will have much better service than they previously had. >> how is it going so far? >> it is going pretty well. there were some issues iwhich resulted in some applicants not getting funding, which they might otherwise have gotten. we just completed receiving it applications and we're now beginning to review them. we learned a lot of lessons from what we did the first time. everything that we put out the first time was an excellent application, but remember that we started with $18 billion and will sit down to just -- >> $18 billion in requests. >> and we whittled that down. we did a lot of joint

applications. the first round were all joint applications. some people wanted to go to commerce, some people wanted to go to agriculture based on what kind of applications they had. there were clear lines as to where people should go during the second round. we have cleared up some of the application issues. sometimes there were not given the opportunities they might have had. >> what might that money be used for if the company get a grant? but it is for infrastructure for building out these networks -- >> it is for infrastructure for building out these networks. it is not for operating expense. before we finance one of these products, we ensure that they can be sustainable, that they have a business plan that works. >> it seems like that is one of sexiest things that r.u.s. as

done for a while, these broad -- has done for a while, these broadband plans. , the people in your agency? -- how many people in your agency? >> we have hundreds of people across the country. >> is is -- is it a strain for an agency that sized to handle a program that is as big as the broadband grant program is? >> it has really pushed our resources. we have risen to the challenge, but it has been a challenge. the usda is 100,000 people. we are just a small percentage of that. we have a great deal of experience. as i said, for 60 years, we have been doing rural telecommunications and we have built up a large portfolio of investments in elector, water, and telecom loans -- in

electric, water, and telecom loans, which the been invested in better -- which have been invested in better quality electric, water, and telecom for rural america. the infrastructure is there for rural development. we know how to do this. we have the experience, but we have never had these kinds of resources. this is an unprecedented load on us. we have hired people temporarily, as we were authorized to do. we have hired an excellent consultant to help us we'd through these. ultimately, we review all of these things before they go out. it is the advantage of the operation. we send our people out before we make an award, and we focus on those applications that we are about to award. we need to know if there is service there.

our people have worked overtime, burning the candle at both ends. we are looking at when we finish this. we'll have a fiscal new year party, because everybody needs a break. >> i want to ask you about bretton woods -- woods, which would provide business to 400 ski chalets or something. there are some questions about that particular grant. can you talk to us about that to answer those questions? panama start by explaining how much -- >> start by explaining how much was granted to this community. >> they were famous for the historic hotel.

a little under $1 million to provide broadband to a place that did not have it. it is a remote part of the united states, more than 50 miles from any urbanized area. it is in the white mountains of new hampshire. it does not get any more world than that. the county that they are in is the highest -- the hardest hit in the economy. it has some of the lowest incomes. the people in that community have been devastated by the paper industry leaving town. one of the paper mills have shut down. it is a strained economy. the only thing that they seek for their future is tourism and second homes. you need to have broadband. if people are going to come there and spend money, give people jobs, the biggest employer is the resort.

they have to have broadband. it is critical to their economic future. our agency is all about world economic development. what are the resources and assets? this is a beautiful part of the country, but. it but. -- but it is remote. they need it broadband to make up for the loss of their paper and timber industries, and replace those jobs with the tourism industry. we think it is a good investment that will benefit the future of northern new hampshire. >> i think the symbolism was something that -- that was one of the times i remember r.u.s. being on the national news. was that a public relations black eye? >> not really. i have not gotten questions from anybody but the outlet that ran the story. it is an important program. we target places that do not

have access that are very remote. this particular part of the area might have some advantages in terms of having a wonderful resort and some ski chalets, but it is also the driver of the economy in the most hard-hit part of northern new hampshire. you can take anything and twisted out of proportion to make it look like something it is not, but if you look underneath the hood, it really meet our mission of serving rural economic development, so that the community can move toward a new economy. but administrators adelstein -- >> administrator adelstein, why is there this limit? >> it is not a limit, but a guideline. we need these funds to get to as many americans as we can, and

benefit the as widely as we can -- benefit them as widely as we can. there is a process for applicants to claim that they have special needs. there may be a native american population with very low incomes or high unemployment. they can explain why they need a larger amount of funding than the $10,000 per household. >> who is the person that it decides that can be changed from $10,000? >> we have a waiver. i would provide a waiver if there is justification. we would look at how it would impact rural economic development and the community. bamut in the first round, were there any waivers? -- >> in the first round, were there any waivers? >> we put that in for the second round.

in the first round, it was not an issue. in the second round, we wanted to make sure we got the funds to as many of these communities as possible. >> what is your estimate when it comes to borrow house of -- rural households without broadband right now? >> we estimate that it is twice as many rural households that do not have broadband as urban. there is an estimate of 5% for urban areas and 10% for rural areas. >> it is it because of availability? but it turns out that broadband adoption is much lower -- >> it turns out that broadband adoption is much lower. twice as many people cannot get broadband in rural areas as urban areas is a factor. you have an older population and

they tend to have less adoption of broadband. have lower incomes, on average, in rural areas -- you have lower incomes, on average, in rural areas. price is an issue. it becomes more of a problem. there are a number of reasons that bulgaria's are behind. you want to get to the places where there is -- that rural areas are behind. you want to get to the places where there is no digital divide. and how do you answer the argument that broadband is available -- >> how do you answer the argument that broadband is available, but people cannot afford it? can get subsidies? does your program allow for subsidization of that cost? >> our program does not. we provide for the infrastructure. the fcc does have a universal servers -- service program that

provides for the cost of broadband service, so that people get a comparable service at comparable prices. >> what is your relationship in working with the fcc? >> they are the expert agency on broadband. we rely on their expertise in the number of ways. we consult with them on their various issues. when it comes to them setting policies, they are an independent agency. the executive branch lets them do what it is that they think is best in their own public interest analysis. >> user of several years as a commissioner -- you served several years as a commissioner at the fcc. has your perspective changed? >> i have fought hard to make sure that rural america is second to none when it comes to broadband. one thing we do have is an incredible amount of data appeared we have all of the

financial data on these firms. -- amount of data. we of all the financial data on these firms. -- we have all of the financial data on these firms. we have access to the pro forma sheet and thece income flow. we know how reliant these companies are on universal service. we know how one phone company, it's another one for the use of its network. -- one phone company compensates another one for the use of its network. we are sharing that information with the fcc. their policies can affect our borrowers in dramatic ways. we're concerned about protecting our portfolio. the taxpayers have over $5 billion in the portfolio to roy communications companies, and we

have a less than 1% -- to borrow -- to rural communication companies, and we have less than 1% default rates. >> the next question. >> alan to ask you about the scope of the program -- i want to ask you about the scope of the program. some would say a big national problem -- some of the carrier's say that -- some carriers say that at&t spends billions on capital expenditures. what difference can this money make relative to the size of the gap? >> there is a big gap. we're committed, over the long haul, to continually addressed it. we're not want to solve all of the -- continually address it.

we're not going to solve all of it. this is one of the pillars. what is needed for rural areas to succeed? they have to have broadband. our commitment does not end when the funds run out. we have existing and ongoing programs. we do nearly $1 billion a year in loans. all of the infrastructure is broadband-capable. we of the community connect program. we recognize -- we have the community cannot program. we recognize the ongoing need. this is a critical element of our commitment to rural communities being sustainable economically, and that people know they have the infrastructure that they need to support business development. >> i should also ask you about

the current program. people had a lot of -- applicant had a lot of trouble in the first round -- applicants at a lot of trouble in the first round. there were a lot of complaints -- applicants had a lot of round.etrouble in the first there were a lot of complaints during the second round. can you talk about that? i know this is a difficult job. >> in thh first round, i got into the dog, and in my first week, we had a melt down -- i got into the job, and in my first week, we have a meltdown. the contractor was not processing things properly. servers were down. people were having trouble. we extended the deadline. i was committed to ensuring we

did not replicate that during the second round. our contractors change how they did business, ensuring that there was adequate capacity. we've had no major technological difficulties in the second round. i am pleased about the results. did we get all the awards out in the first round? in order to do that, we gave people more time to apply, extending the deadline by a couple of weeks, so that everybody had over month. -- over a month. we posted the award by the end of february. everyone had more than a month to know where the first round applicants would be before they had to decide how to make their application work. let them have a lot more time to study the applications -- we let them have a lot more time to study the applications. they had a month -- we put it

out a little earlier than that. people had much more time than they otherwise would have had in order to study our notebook and to know what it was that we were doing. we saw the results in the applications. we saw more completed applications with better data. we gave people six weeks, from january 15 until march 31, to fill these things out -- 45 days. it was much more than the 30 days in the first round. we have really done a good job of getting people more time. january 15, we published it so that everybody could read it. they had a full month to read it. then they had 45 days, between fabric 15 and march 31, to apply -- between february 15 and march 31, to apply.

the first round did not go as well as i hope. that was reflected -- >> you think the second round when much better than the first? -- went much better than the first? >> the applications were streamlined. we learned a great deal and the second round was better. we have some issues. -- we had some issues. >> when can we expect to see the second round awardsmade? -- awards made? how hard is that schedule? >> we have to have all of the funds obligated by september 30. we will start making awards

in july. most of them will be done in large amounts through the middle of july and the middle of august. we will have time to go through the mechanics of the papers getting signed and everything didn't obligated by the september 30 deadline -- everything getting obligated by the september 30 deadline. we need to make sure we get broadband where it needs to be. the demand is greater than the supply. we need to get them signed, sealed, and delivered. >> they have to be in their hands by september 30, or the funds go away? >> there have to be a commitment by the federal government. we do not provide the funding -- there has to be a commitment by the federal government. we did not provide the funding until the project as begun. -- has begun.

did not cut a check up front -- we do not cut a check upfront. we do it as they build out the project. >> once is a big bond -- once the the criticism came from this letter -- one specific criticism came from this letter. they wanted to do this without loans forward. stan now being penalized -- for which they are now being penalized. >> we give awards to cable companies in the first round. one company received a loan grant combination of over $7 million. other cable companies won

awards for doing coax infrastructure. we see all kinds of diversity. our statue does say that we're to give -- our statute does say that we are to give preference -- congress wants to see our portfolio stable -- and so they want us to loan to existing borrowers. most of our applicants in the second round are not our current borrowers. we have seen that in the second round, as we did in the first round. there is no discrimination. >> did the federal court decision on comcast -- some say that it effectively negates and net neutrality. -- negates net neutrality. does that affect your work?

>> we want to make sure these are open networks and the remains steadfastly committed to doing that -- we remain steadfastly committed to doing that. >> how is it different been administrator of r.u.s. than a f.c.c.?oner at the >> this job is a lot harder. rather than being independent, i was a member of a board, deciding policy, but now i run this agency. we do over $13 billion in loans and grants, for all kinds of infrastructure. it is a big job with a lot of responsibility, both managerial

and operational. the policy questions are large, but the management questions loom even larger in terms of my time. we need to have the right resources. i make operational decisions about how to process things, who is going to do what and how to get it done. it is very different from managing a large organization. it is different to be part of the executive branch. i have excellent secretary of agriculture that i work for in thomas vilsack. he is really engaged and involved and the committed to getting broadband out to the rural parts of the country. it is an exciting opportunity to work as part of a team. i enjoy the independence of the fcc, but i like this, too. we have excellent leadership. we were regularly with them to

ensure that they know what we're doing. it is really a treat to be part of that whole executive branch team and seeing how they are dealing with various challenges really expands how look at the whole government. >> do you miss the rough-and- tumble policy-making and arguments over things like net neutrality that went on at the fcc? or is that compensated by the things you're able to do at r.u.s.? >> there were many areas i was not dealing with at the fcc. it is a sweet spot for the r.u.s. it provides the opportunity for our electric borrowers to upgrade their electrical systems to do smart grids, they can help consumers manage their electrical use. i learn all about energy policy. water -- we're getting out over

$4 billion in grants and loans to rural water systems. i'm amazed by the needs of these communities that do not have running water. we're dealing with these crises in the rural america. it is a new set of challenges, both from policy and operational points of view. it is a wonderful opportunity to expand my role in the government, to continue what has been over a twenty-year lifetime of public service now. i started on capitol hill. i always wanted to be part of the executive branch. when president obama was elected, i was thrilled to be made part of that administration. it put the rubber on the road to make sure that they have their basic needs met for electricity, water, and telecommunications. these are the underpinnings of the future viability of not just

rural america, but our national economy. the operational challenges and policy questions -- there is never a bear in -- there is never boring moment where i am today. >> let's bring it around to the rural electrification service. the broadband compete at the same level as electric and water -- does broadband compete at the same level as electric and water? >> i think so. it changed the ability for them to have economic growth. there were highways and railroads. these infrastructure programs have affected where jobs went. broadbent is just as important. -- broadband is just as important. where the railroad did not go for the high we did not go, the city would deteriorate -- or