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Stimulus Package Includes between $5.65 and 9 Billion for Broadband Deployment

February 4 , 2009
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On January 28, 2009, the House passed a Bill (the “Stimulus Bill”) that includes $5.65 Billion of funding for wireless and broadband deployment. Of this total, $2.825 Billion is to be administered under the Department of Agriculture’s Rural Utilities Service (“RUS”) program and is reserved for grants, loans and loan guarantees for “open access” broadband infrastructure in rural areas without sufficient access to high speed broadband service. Key terms such as “broadband service,” “high speed broadband service” and “rural areas” are not defined in the Stimulus Bill.

The remaining $2.825 Billion is designated for grants for the deployment of wireless and broadband infrastructure in rural, suburban and urban unserved and underserved areas and is to be administered by the National Telecommunications and Information Administration (“NTIA”), a Bureau of the Department of Commerce. Of the NTIA funds, $1 Billion is designated to deploy wireless voice service to unserved areas or advanced wireless broadband service (3 mps down-stream/1 mps upstream) to underserved areas. The remaining $1.825 Billion is designated to deploy basic broadband service (5 mps downstream/1 mps upstream) to unserved areas or advanced broadband service (45 mps downstream/15 mps upstream) to underserved areas. The terms “unserved area” and “underserved area” are to be defined by the Federal Communications Commission (“FCC”). Grantees must operate their networks on an “open access” basis. NTIA is directed to endeavor to make at least one grant per state, to give substantial weight to the state-identified priority areas and to promote public safety, emergency response, health care delivery and education.

Fifty percent of the funds under both the RUS and NTIA programs must be awarded not later than September 30, 2009, with priority given to activities that can commence promptly. No area of a project funded with RUS monies may receive funding under the NTIA broadband deployment grant program. Up to 20 percent of the funds provided to NTIA and RUS may be transferred between the two programs.

A draft Senate version of the Stimulus Bill (S. 336/1) includes $9 Billion of funds for grants for infrastructure to provide access to broadband service to unserved areas and improved access to broadband service to underserved areas and to support medical providers, educational institutions, public safety agencies and job creation. The entire program is to be administered by NTIA, in consultation with the FCC and, with respect to rural areas, the Secretary of Agriculture. Fifty percent of the funds must be used to support projects in rural communities, which in part may be transferred to the Department of Agriculture for administration under the RUS. Absent from the draft Senate Stimulus Bill are definitions of basic or advanced broadband services. Each state may assist in the identification of unserved and underserved areas and the allocation of grant funds for projects relating to that state. NTIA must ensure that all awards are made before September 30, 2010 and seek assurances from grantees that they will substantially complete projects no later than 2 years after an award.

As a result of the Stimulus Bill, it is expected that substantial sums of money may become available to at least some service providers and support companies for broadband build-out. Unfortunately, at present, even the most fundamental terms of the plans under both versions of the Stimulus Bill lack definition and direction.

The President is pushing to get the Stimulus Bill finalized and enacted no later than February 16, 2009, which will start the clock for further reports and other actions by relevant federal agencies and the states to develop the particulars of the programs and begin awarding funds. It is anticipated that the Senate will vote on its version of the Stimulus Bill this week.

We would be pleased to respond to any questions or to provide further information about the Stimulus Bill as it is finalized and implemented.