Bandwidth Hawk: Getting Your Share of the Broadband Funding Feast

The federal government earmarked more than $20 billion for broadband deployments and subsidies. Another $100 billion is possible – enough to finish deployment of great broadband nationwide.

Billions of dollars are already on the table to support broadband deployments and to help customers pay their broadband bills. The money comes after COVID-19 exposed the need for remote work, health care, education, entertainment and shopping. In addition to federal and state funds, money also flows from private sources, interest rates are low, and new technologies make designing, building and monetizing broadband networks faster and easier than ever. The U.S. finally appears to be on the cusp of making broadband access available everywhere.

However, not all the money is exclusively for broadband. Federal agencies are still sorting out rules for disbursing funds and providing data that prospective deployers need for their planning. Lawmakers are still arguing about priorities. The largest national carriers are still formulating their own responses.

The federal largess looks like this:

  • More than $7 billion in user subsidies and deployer funding from the December 2020 COVID-19 stimulus law (H.R. 133, the Consolidated Appropriations Act for 2021). The law set aside another $1.3 billion for the National Telecommunications and Information Association for use in tribal areas and for historically Black colleges, plus more for the FCC’s telehealth and other pressing “lockdown” needs.
  • About $10 billion more in the $1.9 trillion COVID-19 stimulus law signed March 11 is directly earmarked for broadband. But roughly $300 billion in other infrastructure funding for cities and states is broadband-eligible. Treasury released guidance May 10 on how the money can be distributed (https://home.treasury.gov/system/files/136/SLFRP-Fact-Sheet-FINAL1-508A.pdf).
  • $100 billion is specifically earmarked for broadband in the Democrats’ pending infrastructure bill; the Republican version calls for $65 billion.
  • About $1 billion is available in the third round of the ReConnect program, which provides rural broadband grants from the Rural Utilities Service of USDA. It should start accepting applications as this issue goes to press.
  • New 10-year operating subsidies for rural deployers from RDOF at the FCC total about $9 billion, on top of $6.5 billion awarded earlier this year.
  • Almost $2 billion will help replace supposedly insecure Huawei and ZTE broadband equipment from China.
  • Many states have funding initiatives, including Vermont ($100-plus million), Texas (a possible $500 million on top of $200 million), and similar or smaller amounts in Colorado, Kentucky, Iowa, Minnesota, South Dakota, Tennessee and more.

Some of the announced money in some states comes from the federal funding, but add it all up, and it appears that user subsidies, loans and outright grants should provide at least $100 billion for broadband over the next few years, ending eight years from now. That should unlock at least another $100 billion in private investments – enough to finish the task of wiring the country with a minimum of 100 Mbps broadband – mainly fiber-supplemented with point-to-point wireless and low-Earth-orbit satellite service.

Not a Done Deal

The biggest chunks of new funding exclusively for broadband come in President Biden’s infrastructure bill, which is pending (see more on p.66). But what about that $300 billion for local projects in the recovery bill passed in February? There are three particularly odd issues in the way. The first is that many states want to cut taxes and use the federal money to replace their own revenue rather than create new projects. The law itself forbids this, but 20 states have sued to remove the prohibition.

Others would rather not see money from existing laws used for roads and bridges – at least not before more study on need after COVID-19 and on global warming impacts – and argue that the new infrastructure bill, if it passes, would cover that anyway. At first glance, this could leave more money to support broadband deployment – but broadband is due for its own earmarked funding in the infrastructure bill, too.

Some Detailed Advice for Applicants

In a web presentation for the Fiber Broadband Association, Mark Mrla, director of strategy operations at Finley Engineering, detailed the many steps necessary to obtain and document community support for broadband. A good package, he says, typically includes:

  • Expected speed improvements and number of potential customers passed.
  • The amount of eligible costs requested – less is usually better as deployers compete with each other and community needs, and some states will try to cap what they will provide to 50 percent of total costs.
  • Community participation – letters of support often are important, but sometimes details on partnerships with other stakeholders are better.
  • Project readiness – complete plans trump concepts every time.
  • Project sustainability – technically and financially.
  • Economic impact on the community – identify businesses, farms, etc. that benefit.
  • Population and job changes with and without the deployment.
  • Help for expanding broadband adoption with such things as training, tech support and assistance for low-income users.

Mrla also says applicants should be aware that price caps are already in place in New York and are being considered in other states and by Congress; they can affect project feasibility.

He says applicants should note that many states worry about too many grants going to one area. Some also prefer that funding comes from more than just the applicant and the state because they see partnerships as tangible evidence of community support. This often means potential deployers should ask stakeholders, “If broadband is important to you, how much will you help?” It also can lead to multiyear projects in which potential awardees say they want to do a certain large area over many years but explicitly segment the project into multiple phases with a projected price tag for each.

Older funding mechanisms discouraged or banned double dipping – between FCC and USDA funding, for example. But new funding is often more flexible, especially about combining state and federal support.

Some states emphasize badly served areas, others unserved areas. Generally, states prefer adding to overall broadband infrastructure, over purpose-built projects such as smart farms or networks for students.

Mrla advises sending letters to any provider that covers the area, so it can challenge a proposed grant effort upfront. “The best response is that they have set a formal plan to build in an area anyway,” he says.

Existing small deployers are not having any problems raising money from commercial sources for digital divide deployments in many cities. Rural is trickier. The Biden administration is pushing the stimulus law and the pending infrastructure bill as jobs-creation efforts. Anything that funds broadband and new construction tends to increase well-paying, often unionized, jobs.

For broadband specifically, how do potential deployers of new or improved networks get the attention of public officials and other stakeholders? Some issues are delicate (see sidebar). How might broadband activists get existing small, underfunded and underperforming deployers to pay attention? Not by calling them underperforming! Play up new opportunities. Hint that existing providers may be leaving the field open to competitors. Debunk the idea that broadband traffic will fall as the economy reopens. Traffic is still rising, although the rate has slowed.

A long list of other stakeholders (schools, hospitals, public safety, shopkeepers, restaurants, performance venues, housing, other businesses, media) could leverage broadband if someone would use the money to provide it. One New York City deployer says he’s been lining up bicycling enthusiasts because broadband helps minimize an issue bikers face as they try to reserve more road space for their needs: that bikers often don’t ride in bad weather. But for many, broadband rather than car or subway, could substitute on bad weather days.

Licensing and construction have been slowly simplifying since the last summer of the Obama administration. Obama and Trump both pushed changes in existing federal rules.

In 2019, the FCC promised a more useful mapping system by fall 2020 to flag poorly served areas, but S.1822, the Broadband DATA Act authorizing funding for that, did not appear until March 2020, and the money – $65 million – was not appropriated until December. The new multiagency system is not likely to appear before next year, says Jean Kiddoo, who runs the project at the FCC.

Summit Modeling Workshop

Most state and federal programs use financial models based on Broadband Communities’ proven – and free – versions at www.bbcmag.com/tools-and-resources/ftth-financial-analyzers. Dive deeply into how they work, and leave with a complete set of models, documentation and training materials. Our “multi-neighborhood” model is particularly useful for projects split into multiyear phases and deployments that use different technologies for different geographic sections of the project. All free, as an add-on to our first live Summit in more than a year, in Houston this September.

The bipartisan Accelerating Rural Broadband Deployment Act, S.1113, formally forces federal agencies to quickly identify and transparently license access to existing infrastructure, such as bridges and highways, free or for reasonable fees.

The current draft of the infrastructure bill requires existing internet providers to “clearly disclose” their pricing (as broadband companies owned by local governments already are required to do), and to remove state obstacles that prevent municipally owned providers and co-ops from competing with private companies.

I have repeatedly documented, in studies that go back to 2014, that the 20 states with the most draconian restrictions have lost jobs and rural population three or four times faster than states that have no restrictions – even though the “restriction” states are growing faster overall. But I have never known a large carrier that understands its own pricing structure in enough detail to formally disclose it. The whole set of issues is likely to end up in court anyway.

There are also peculiarities in various state broadband plans. New York state, for instance, ordered that poor families get basic service (25/3 Mbps unless lower speeds are all that is available) for $15 to a maximum of $20 a month. That may be a disincentive for existing carriers to extend into low-income neighborhoods once federal COVID-19 subsidies for that purpose are exhausted. The idea came from former Google CEO Eric Schmidt. About 7 million New Yorkers (a third of the state’s population) who currently qualify for government assistance would have access to cheaper internet.

Peculiarities or not, though, there’s far too much money around for deployers to ignore. Incumbents or new competitors will win – and so will the country.

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