Expect Upwards of $29 Billion in Fraud, Waste from Energy Dept. "Stimulus" Spending

When was the last time an infrastructure project--any infrastructure project--really was better because spending was rushed?

Based on rates of fraud already encountered by the Department of Energy, one might expect a 17.5 percent rate of fraud and waste, at minimum, for funds disbursed as part of the "stimulus" spending authorized by the American Recovery and Reinvestment Act.

According to Energy Department Inspector General Gregory Friedman, the $165 billion in stimulus cash to be distributed by the Department so dwarfs the annual Department budget of $27 billion that the resources of the agency for getting the money spent while avoiding fraud and abuse will be sorely tested.

In the last four fiscal years the Department of Energy investigations into misspent federal funds have resulted in about 150 criminal convictions, and fines and recoveries of more than $190 million. This represents a little over 17.5 percent of budget money, and suggests the Energy Department can expect more than $29 billion in waste and fraud just within its slice of the stimulus pie.

Friedman's memo acknowledges that low income home weatherization is the program most at risk for fraud, so if you intend to be working on projects of that nature, expect a lot of extra paperwork and figure your bid overhead accordingly.

http://chicagoconstructionlaw.blogspot.com/

Less Churn is Sorta Good, Sorta Bad

At home entertainment is up, while almost anything outside the home is down, a survey sponsored by the Cable & Telecommunications Association for Marketing suggests.

Industry executives--both telco and cable--have been saying that with housing starts down and housing activity down, so are home moves.

Ironically, that has made it harder to attract new customers, as moving automatically creates a "change event" that opens the door for new providers.

The CTAM survey also suggests there is less appetite for trying new providers. So all those customers who aren't moving, also are less likely to churn. Lower churn is good. But some amount of churn also represents a sales opportunity.

Service providers in the small and medium business space note a roughly similar trend: people are less inclined to take on some amount of additional risk by switching current providers.

Another Take on "Cocooning"

One reason video entertainment services fare relatively well in a recession is that the perceived value of in-home entertainment increases.

http://anxietyindex.com/2009/03/when-spending-money-equals-saving-money/

Global VoIP Growth Slows

Global growth in local VoIP minutes seems to have slowed down a little, say researchers at iLocus. There was a sequential growth of seven percent in local VoIP traffic from the third quarter of 2008 to the fourth quarter of 2008, apparently caused by a decline in the rate of VoIP subscriber growth.

International long distanceVoIP minutes, on the other hand, experienced negative growth quarter over quarter. "This is perhaps due to the overall decline in international long distance traffic in the fourth quarter of 2008, iLocus says. The negative growth also could be due to slight bit of consolidation in the service provider segment, as well. National long distance minutes saw a healthy growth rate owing to the growing use of IP networks by wireless carriers to transport NLD traffic, iLocus says.

In the fourth quarter users consumed 107. 2 billion local minutes, 298.1 billion national long distance minutes and 22.5 billion international long distance minutes.

http://www.ilocus.com/2009/03/voip_minutes_in_4q08_touch_428.html

Don't Assume A Return to Normal

There's a reason for voice, data and video entertainment providers to be obsessive about how their consumers are behaving during the current recession. Presenting a customer with a chance to switch, to change behavior, is dangerous because the changes, once integrated into daily life, can become permanent.

"Don't assume a return to normal," John Quelch, Professor of Business Administration at Harvard Business School, warns. "The longer and deeper the recession, the more likely consumers will adjust their attitudes and behaviors permanently."

"Their coping mechanisms may become ingrained and define a new normal." More than that, the competitive landscape likely will have changed as well. One would expect to see mergers, acquisitions, company failures and launches that mean the post-recession market looks different than the pre-recession market.

That means buyers might be looking at all product offers with new eyes.

http://hbswk.hbs.edu/item/6139.html

FCC Asks for Advice on "Broadband Stimulus" Rules

The Federal Communications Commission is asking for comment on how to distribute broadband funding under the American Recovery and Reinvestment Act of 2009, commonly known as the "broadband stimulus" program.

The FCC has already established a separate docket for parties wishing to comment generally on a rural broadband strategy (GN Docket No. 09-29). The FCC now is seeking comment as part of its consultative role with the National Telecommunications and Information Administration (“NTIA”) and the Department of Agriculture’s Rural Utilities Service (“RUS”), the agencies that actually are charged with disbursing the funds.

The FCC specifically is seeking comment on five core terms and concepts:

The definition of "unserved area;"

The definition of "underserved area;"

The definition of "broadband;"

The non-discrimination obligations that will be contractual conditions of the Broadband Fund Opportunities Program ("BTOP") grants; and

The network interconnection obligation that will be contractual conditions of BTOP grants.

Comments are limited to these five specified items and are due on April 13, 2009 and should be submitted in GN Docket No. 09-40.

The comment period extends to April 13, 2009. That implies that no final rules can be issued by NTIA or RUS until May, since NTIA and RUS staffers will require time to read and digest the new input.

That in turn means the first third of the funds, which by statute must be released before the end of June, will require submission and awards over a roughly two-month period, at best, by agencies which never before have had to process, much less award, so much money in such a short time frame.

For better or worse, that suggests projects in the first round will be weighted to providers with enough "track record" that NTIA and RUS can reduce the risk of making awards to applicants that are not well placed to execute, that may squander the money or that may prove otherwise embarassing when later oversight reveals what actually happened, or didn't happen, with the awarded funds.

And though most observers probably think the funds are supposed to lead to deployment of new facilities, the statute is part of a "stimulus" package that is supposed to create jobs in the near term. That could lead to a situation where projects actually do not create facilities or make better use of facilities but rather mostly can be pitched as projects that create jobs related to those facilities and use of facilities. "Training" or "education," in other words, might play a bigger role than some think.

That isn't necessarily a bad thing if one assumes that a great deal of non-use is related to people not understanding what they can do with broadband and the Internet, or non-use by people who think they understand what they can do, but don't feel too comfortable using computers and software.

Permanent Changes After Recession?

It isn't yet clear how changes in consumer use of communications and entertainment might change on a more-permanent basis once the recession is over. So far, there has been little tangible evidence of significant behavioral change.

About the only measurable change I've been able to find is an increase--by about one percent--of mobile users on prepaid, rather than postpaid, wireless plans.

There might be more-permanent changes in the business market, though, such as wider adoption of open source software.

http://www.hitsearchlimited.com/news/999871/