NOFA I First Wave: Sign of things to come?

With both NTIA and RUS having blown each and every stated [and leaked] deadline for disbursing ARRA funds, one is still left to wonder where they will spend the bulk of their cash.

To date, they've funded state mapping projects, a few computer centers, and a handful of relatively small infrastructure projects. Is much to be made of what they've funded so far? Alternate theories:

1. No. The projects funded to date are more "public" in nature because they sent the political message the administration was looking for, on the only day this program will get much publicity. In the end, even this administration will realize that government ownership and control of broadband infrastructure (the "public private partnership" model) invites disaster and waste, and they will begin funding more financially viable projects. WHY THIS THEORY IS RIGHT: PPPs are only as good as the people who run them, and without exposure to real world market forces and business risks they will be undermanaged, will fail, and will eventually be bought at fire sale prices by the big carriers. Government doesn't run telecom networks, and there are good reasons for that. This administration is not peopled with stupid, pie in the sky thinkers, and they realize the bulk of the funds need to be dedicated to flexible, upgradeable, modern networks that maximize passings. WHY THIS THEORY IS WRONG: There is absolutely nothing in the administration's conduct to suggest they understand any of this. Both NTIA and RUS leadership continue to stress the value of public private partnerships, seem to be in love with "community broadband" and seem more interested in the false value created by "leveraging" their funds with private matching funds. The reasons this focus is ill-conceived is a subject for another day.

2. Yes. What can be gleaned from the first round of grants/loans is that the focus will be on funding "middle mile" projects in areas where incumbent resistance is low, and everyone agrees are remote. The administration does not want to be seen as providing a leg up for any serious market competitors so they will confine the bestowal of their largesse to small, inoffensive projects. WHY THIS THEORY IS RIGHT: Scoreboard. Look at the projects that have been funded. They spend too much money building what are essentially charity projects that will struggle to break even despite the Feds fronting all of the capex. They're the sort of projects that could generate consensus at a Grateful Dead afterparty, but don't look much like any successful infrastructure model I've ever seen. Why should we think future grants will be any different? WHY THIS THEORY IS WRONG: The administration is under intense pressure to actually accomplish something with all this money. They pride themselves on spending money wisely, and they're not going to want a cataclysmic failure featured on 60 Minutes. A $7.1 Billion dollar flameout is not going to get those poll numbers up, and it's not going to help friendly governors get re-elected.

My gut feeling is that most of this money will end up in the hands of ventures controlled by government entitities and rural ILECs. Both of these uses will be catastrophic wastes of money because they have no real opportunity for growth. No private enterprise wants to purchase telecom infrastructure from the government, and as budget pressures worsen the pressures to mismanage will intensify, either through cutting funds for network maintenance, price hikes, or unwillingess to invest in first-class management. I hope I'm wrong, but we seem to be on the road toward massive, ineffective waste.