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NYS Comptroller audit reveals Empire State Development failed to provide 'broadband for all' with its $735M program

Cuomo, Hochul and Empire State Development promised broadband for all after a 2015 program used $735M of taxpayer dollars to connect the state.

BUFFALO, N.Y. — A new audit released by New York State Comptroller Thomas DiNapoli’s office confirmed what 2 On Your Side had been reporting and challenging for years – that the “Broadband for All” program didn’t connect all of New York as it intended. 

The report, released on July 1, monitored the “New NY Broadband Program” between January 2016 and March 2021 and concluded that Empire State Development “fell short of achieving its goal of statewide broadband availability.” 

In a statement to WGRZ, a spokesperson for Empire State Development challenged the findings of the Comptroller's audit:

“When established in 2016, the $500-million New NY Broadband Program was the largest and most ambitious broadband program in the nation. Since then, the program has connected New Yorkers to nearly $730 million in public/private broadband investment through 126 projects and more than 21,000 miles of fiber deployment. We are extremely proud of extending wired broadband to approximately 177,000 homes and businesses since 2016, covering nearly 98% of the state today, which was confirmed by the newly released PSC broadband maps. It is important to note: the last areas of the state that lack wired broadband internet are in areas where internet providers did not bid or where deployment was prohibitively high. 

The ConnectALL initiative will take it from here and expand on the tremendous successes of the New NY Broadband Program, work to close the deployment gap in remaining underserved and unserved areas, and tackle issues of equity, affordability, and competition in rural and urban communities across the state.”

Initially announced in 2015, the promotion of the initiative really kicked into high gear in 2016 when then-Governor Cuomo made three stops across the state in one day to promote it. 

On August 3, 2016, Cuomo traveled to Buffalo, Hudson, and Potsdam to boast about the goal of providing broadband for all. 

“We're going to go from like 99% that doesn't have high-speed internet today, to 100% having it in two years,” Cuomo said in Hudson, NY. “Which is going to be an amazing transformation.”

In Buffalo, the Governor continued to make bold claims.

“The state is spending $500 million to subsidize the coverage so we get it to every household, all across the state, we get it done by 2018.”

Rounding out the trip, Cuomo claimed the state would do the impossible. 

“We want 100% coverage in two years, which when we started, everybody said it is an impossible goal,” Cuomo said in Potsdam. “We're going to do it.”

The state didn’t, at least not to the level of the promises that were made. 

While the audit by DiNapoli does highlight some progress, the report also shines light on a program marred by mismanagement. 

“What we've often commented about Empire State Development on many of their initiatives and projects is that they're very good, historically, on the front end with an announcement or sometimes a ribbon cutting of the front end,” said Comptroller DiNapoli. 

“But a couple of years down the road, which is what we think our role is to look at what the actual results are, very often they fall short.”

2 On Your Side pressed DiNapoli for specifics of the mismanagement.

"There wasn't the right kind of management and oversight of the program and of the contracts," DiNapoli said. 

The press release for the audit mentions mismanagement, but the audit itself actually applauds ESD's efforts, stating in part:

"BPO etablished adequate internal controls to effectively monitor and manage the program."

We asked the comptroller for clarification.  

One of the key findings in the report is that over half of the 126 projects experienced delays. 

In March 2021, 2 On Your Side spoke to then Assistant Vice President at Empire State Development Scott Rasmussen, the person at ESD leading the broadband program office, about the status of projects. 

“I think about 14 or so projects of our 126 projects statewide are still in some form of active construction,” Rasmussen said. “Most of those are set to complete in the coming months.”

In the 16 months between that interview with Rasmussen and the release of the Report, only five projects were finished, leaving nine still incomplete – far from the 2018 goals set forth by Cuomo.

Rasmussen stepped down from his role at ESD in early June. 

Governor Kathy Hochul also made hefty promises while on the promotional tour for the broadband for all program. 

In a January 2015 event in Lake Placid, Hochul made a bold promise to businesses desperate for broadband in the North Country. 

“On January 1, 2019, the end of the next four years, you will see that every business in this community and in the state is connected.”

One year later, at a broadband event held at SUNY New Paltz, Hochul boasted about the work Empire State Development was doing. 

“Vice President of ESD, Jeff Nordhaus, their entire broadband team and what they're doing for the state of New York, will go down in history is nothing short of transformative,” Hochul said. “And you will say I was there.”

According to the audit, Ulster County, home of SUNY New Paltz, only received 2 “broadband for all” awards totaling just over $1.5M and connecting a little over 2,250 households. A deeper dive of the data reveals that only 348 Ulster Co. households received actual high-speed internet from the program, and the remaining 1,910 received satellite service. 

Another finding in the DiNapoli report was that over 30% of the “broadband for all” recipients, 78,690 households, were only offered satellite internet – which by ESD’s own definition, doesn’t provide adequate service. 

“So even though there were some of the connections made, it's not with the high-speed technology that really people need to utilize today,” DiNapoli said. “So I think it was a combination of just not setting the right targets, not setting the right goals, not doing the right follow-up, not always using the right technology.”

Looking forward, Governor Hochul has established an even more ambitious goal than her predecessor, by promising to tap into federal funds to finish connecting New York. 

“Putting $1 billion into connecting more New Yorkers with high-speed internet,” Hochul said at the state of the state in early 2022. 

Hochul established the “ConnectAll” program, a rebranding of the ESP “broadband program office.” 

The same state agency that DiNapoli’s office says didn’t properly manage $735M is now seeking $1B from the federal government.

2 On Your Side asked DiNapoli if ESD is equipped to handle such a project if his report indicated they made mistakes in the first one. 

“We don't want to waste the resources that Washington is devoting to this,” DiNapoli said. “So with new leadership across the board in state government, and the elected positions new leadership at ESD, I hope that they will learn from past mistakes.”

Several states have broadband offices that aren’t tied to economic development initiatives, mainly because many states consider broadband access a utility, albeit the federal government does not. WGRZ asked DiNapoli if one of the recommendations should have been that the state establish an actual Office of Broadband, rather than funnel it through ESD, which his office continuously pings for mismanagement. 

“It's an interesting question,” DiNapoli said “We didn’t look at that particular idea, it might be one for us to consider, especially if the more recent efforts fall short as well."

Earlier in June, prior to the report being released, Scott Rasmussen stepped down from his position at Empire State Development. 

In Western New York, the second-largest “broadband for all” project remains unfinished. Armstrong Communications received over $83M state dollars to connect the southern tier portion of WNY. 

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