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Final Stimulus Package Includes $7.2 Billion for Broadband Deployment
February 17 , 2009
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Earlier today the President signed into law the American Recovery and Reinvestment Act of 2009 (the “Stimulus Act”). The Stimulus Act includes $7.2 Billion of funding for broadband deployment. Of this total, $2.5 Billion is reserved for grants, loans and loan guarantees for broadband infrastructure, to be administered under the Department of Agriculture’s Rural Utilities Service (“RUS”) program. The remaining $4.7 Billion is designated, in part, for grants for the deployment of broadband infrastructure to provide access to broadband service to consumers residing in unserved areas and improved access to broadband service to consumers residing in underserved areas, to be administered by the National Telecommunications and Information Administration (“NTIA”), a Bureau of the Department of Commerce.
The enactment of the Stimulus Act starts the clock for the Department of Agriculture and NTIA, with assistance from other agencies and the states, to implement the programs and begin awarding funds. Prior to the adoption of implementing rules, it may be difficult to determine which entities or projects will be eligible for broadband support on the basis of the bare-bones provisions of the Stimulus Act itself.
The provisions of the Stimulus Act relating to broadband deployment are described below.
A. The $2.5 Billion RUS Distance Learning, Telemedicine and Broadband Program:
The loans, loan guarantees and grants under the RUS program, to be administered under the Rural Electrification Act of 1936 (the “REA Act”), will be available for “broadband infrastructure in any area of the United States,” provided that at least 75 percent of the area to be served by a project receiving funds must be “in a rural area without sufficient access to high speed broadband service to facilitate rural economic development, as determined by the Secretary of Agriculture.”
Priority for awarding funds is to be given to: (i) project applications for broadband systems that will deliver end users a choice of more than one service provider; and (ii) projects providing service to the largest number of rural residents that do not have access to broadband service. Priority is also given to applications from, or including, borrowers or former borrowers under Title II of the REA Act. Further priority is given to projects where all project elements will be fully funded, that can be completed if the requested funds are provided, and where activities can commence promptly after approval of the application. Finally, no area of a project funded with RUS monies may receive funding to provide broadband service under the Broadband Technology Opportunities Program to be administered by NTIA.
The description of the RUS broadband program is very brief in the Stimulus Act, and key terms such as broadband service, high speed broadband service and rural areas are not defined, and minimum broadband speeds are not specified. Further, the stated criteria for awards could raise some ambiguities. For instance, it may be hard to reconcile giving priority both to projects that give end users a choice of more than one service provider and to projects that reach users with no access to broadband service. Also, the RUS program description is entitled “Distance Learning, Telemedicine and Broadband Program,” but there is no breakdown of the $2.5 Billion allocation among these three categories. Therefore, the Stimulus Act provides substantial authority to the Secretary of Agriculture to define the RUS broadband program. The Secretary of Agriculture must submit a report to the Committees on Appropriations of the House and Senate on planned spending and actual obligations describing the use of the funds within 90 days after enactment of the Stimulus Act, and quarterly reports thereafter until all funds are obligated.
B. The $4.7 Billion Department of Commerce (NTIA) Broadband Technology Opportunities Program:
The Stimulus Act establishes a $4.7 Billion “Broadband Technology Opportunities Program” to be administered by NTIA (in consultation with the Federal Communications Commission (“FCC”)) and with grants serving all parts of the country, including rural, suburban and urban areas. Of the $4.7 Billion total, not less than $4.35 Billion is to be used to provide access to broadband service to unserved areas, to provide improved access to broadband service to underserved areas, to provide broadband support to schools, libraries, medical providers and educational institutions, to improve access to and use of broadband service by public safety agencies, and to stimulate the demand for broadband economic growth and job creation. The remainder (up to $350 Million) may be used to develop and maintain a broadband inventory map. The broadband tax credits from the Senate version of the stimulus bill have been eliminated.
NTIA is permitted to consult with a state (or United States territory or possession) regarding the identification of unserved and underserved areas in the state and the allocation of grant funds for projects relating to that state. NTIA must implement the grant program as expeditiously as possible, ensure that all awards are made before the end of fiscal year 2010 (Oct. 1, 2009-Sept. 30, 2010), seek assurances from grantees that they will substantially complete projects in accordance with project timelines and no later than 2 years after an award, and make reports to specified House and Senate Committees every 90 days.
To be eligible for a grant, the applicant must (among other requirements) be (i) a state or political subdivision thereof, a territory or possession of the United States, a non-profit entity, an Indian tribe or a Native Hawaiian organization, or (ii) any other entity, including a broadband service or infrastructure provider, that NTIA finds by rule (to be established in a technologically neutral manner) to be in the public interest. The applicant must include a demonstration that the project would not have been implemented during the grant period without federal grant assistance. The federal share of any project may not exceed 80 percent, absent a showing of need and petition for a waiver. Applicants must submit an application at the time, in the form and including the information required by NTIA and, following the receipt of a grant, must submit quarterly reports regarding the use of funds and progress of the project.
Competitive grants may be made to: acquire equipment and infrastructure for broadband services; construct and deploy broadband service related infrastructure; ensure broadband service by community anchor institutions; facilitate access to broadband service by low-income, unemployed, aged or “otherwise vulnerable” populations to provide educational and employment opportunities to those members; and construct and deploy broadband facilities that improve public safety broadband communications services.
The separate “wireless deployment grants” in the House version of the stimulus bill have been eliminated, and there are no benchmarks for broadband service speeds. The Committee’s Explanatory Statement, however, states that when defining broadband service, NTIA should take into consideration the technical differences between wireline and wireless broadband networks and the actual speeds that networks are able to deliver to consumers under a variety of circumstances.
NTIA is directed by the Stimulus Act to endeavor to make at least one grant per state and to consider whether an application to deploy infrastructure in an area will increase the affordability of, and subscribership to, service and will provide the greatest broadband speed possible to the greatest population of users in the area. NTIA must also consider whether the applicant will enhance service for health care delivery, education or children to the greatest population of users in the area and whether the applicant is a socially and economically disadvantaged small business concern.
Concurrent with the issuance of the request for proposal for grant applications, NTIA must, in coordination with the FCC, publish the non-discrimination and network interconnection obligations to condition each grant, including, at a minimum, adherence to the principles contained in the FCC’s broadband policy statement. This is less stringent than the language in the House version of the stimulus bill, which would have required “open access,” as defined by the FCC. Within 1 year after the date of enactment of the Stimulus Act, the FCC is to complete a rulemaking to develop a national broadband plan, developing recommendations for achieving the goal of nationally available broadband service for the United States and for promoting broadband adoption nationwide. NTIA is to develop a comprehensive nationwide inventory map of existing broadband service capability and availability in the United States, which map must be accessible to the public no later than 2 years after the enactment of the legislation.
As is the case with the RUS Distance Learning, Telemedicine and Broadband Program, the Stimulus Act is silent as to many aspects of the NTIA Broadband Technology Opportunities Program. For example, absent from the Stimulus Act are definitions of unserved area or underserved area as well as broadband. On these and other matters, NTIA has the authority to prescribe the rules needed to carry out the purposes of the program.
General:
Both the RUS program and the NTIA program should give preference to activities that can be started and completed expeditiously, with a goal of using at least 50 percent of the funds for activities that can be initiated within 120 days of enactment of the Stimulus Act. Recipients should use grant funds in a manner that maximizes job creation and economic benefit. Funds appropriated under the Stimulus Act generally are available until September 30, 2010.
The Department of Agriculture and NTIA must establish rules to define and implement the two programs, and interested parties are expected to make their views known to these agencies during the rulemaking process. In the meantime, potential applicants must be flexible in any business planning that could include program funds.
We would be pleased to respond to any questions regarding these matters or to provide further information about the Stimulus Act as it is implemented.
Title II authorizes loans to persons currently providing or who may provide telephone service in rural areas, to public bodies currently providing telephone service in rural areas and to cooperative, nonprofit, limited dividend or mutual associations for the purpose of financing the improvement, expansion, construction, acquisition and operation of telephone lines, facilities or systems to furnish and improve telephone service in rural areas.
Of the $4.35 Billion, the Stimulus Act earmarks portions for grants to expand public computer center capacity (not less than $200 Million), grants for programs to encourage sustainable adoption of broadband service (not less than $250 Million), funds for audit and oversight of use of funds ($10 Million), and amounts deemed necessary by the Secretary of Commerce (in consultation with the FCC) to be transferred to the FCC to develop a “national broadband plan” and to carry out other FCC program responsibilities (subject to an overall administrative cap of 3 percent or $141 Million). This means that of the $4.7 Billion total, a maximum of roughly $3.7 Billion remains available for grants for the deployment of broadband facilities.
The Joint Explanatory Statement of the Committee of Conference indicates that the Conferees intended that as many entities as possible be eligible to apply for a competitive grant, including wireless carriers, wireline carriers, backhaul providers, satellite carriers, public private partnerships, tower companies or any provider offering to construct last-mile, middle-mile or long haul facilities.
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