By AMY SCHATZ
WASHINGTON -- Now that money from the $787 billion economic stimulus is starting to flow, the jockeying for control over some of those funds is heating up.
State officials argue that they often know best how to divvy up the portion of stimulus funds earmarked for competitive projects. That has put the Obama administration in the middle of a tug-of-war between the states and some consumer advocates who want to keep more control of stimulus grants at the federal level.
![[boost for broadband]](http://s.wsj.net/public/resources/images/NA-AX067A_STATE_NS_20090414180417.gif)
This tension can been seen as the administration wrestles with how to hand out $7 billion allocated in the stimulus package for expanding broadband services.
Officials from 38 states have told the administration they should have a big say in allocating broadband stimulus money. State regulators want the Obama administration to give them time to rank broadband projects in their areas. And they're asking for stimulus funds to hire a few full-time employees to review the applications.
"States have intimate knowledge of their communications environment, geography and demographics, along with every incentive to make certain the money is not wasted and is properly targeted," said regulators from 38 states in a recent letter to the administration.
Some smaller Internet providers favor state involvement in picking projects, because they're concerned it may be too costly to compete for grants on their own. Steve Mossbrook, president of Wyoming.com, a wireless Internet service provider who serves about 10,000 customers, said about 80% of his costs come from leasing access to local Internet lines, which are owned by larger phone companies. "I'm trying desperately to encourage the state to take a leadership role and build some [Internet] backbone systems for Wyoming," he said.
But some consumer groups want the administration to retain tighter control over broadband funds. They worry that otherwise the money could end up going to the most politically connected locals and not advance goals such as reaching Americans with no high-speed Internet access in mountainous areas, or providing cheaper access for low-income city dwellers.
"We're not saying leave [state officials] out entirely," said Art Brodsky, communications director of Public Knowledge, a Washington, D.C., Internet advocacy group. "What you want is an efficient, uniform program. That would be done to the best uniformity and efficiency by one agency."
Billions in stimulus money have already been handed out through existing programs like Medicaid, Community Development Block Grants and highway-funding mechanisms.
Now, the challenge for federal agencies will be handing out the stimulus funds based on competitive proposals, not familiar formulas or programs. Congress didn't spell out details about how the government would pick winners of these grants.
"During our public meetings, various stakeholders gave us very valuable but divergent views about how we should deal with these issues," Mark Seifert, a former congressional staffer who has been put in charge of the Commerce Department's broadband stimulus program, said recently to Congress.
Right now, Mr. Seifert is running the $4.7 billion broadband program at the Commerce Department's National Telecommunications and Information Administration, and will offer the staff's recommendations to new Commerce Secretary Gary Locke on how to structure the program in a few weeks. Those critical decisions on the criteria required of applicants will likely be made before the NTIA's new head, Larry Strickling, is confirmed.
"We have to figure out what's best to meet the statute's goals, what's best to get the stimulus dollars out in a quick, effective way," Mr. Seifert said in an interview. "We're still in the 'let's look and see what everyone says' stage."
Some states are running ahead of Washington in assessing their broadband needs, and say they should have a major say in how federal broadband money is spent in their states. At least nine states have funded maps showing how much high-speed Internet service is available.
California officials have created a map of where broadband service is available and at what speeds. They've also committed more than $15 million in grants to bring high-speed Internet service to communities that lack it.
"I know my state best," said Rachelle Chong, a member of the state's Public Utilities Commission and a former Federal Communications Commission commissioner. "The worst scenario is having one little federal agency reviewing thousands of applications from around the country."
