Broadband Grant Program Starts with $4 Billion

Of the initial $4 billion, $1.6 billion will be available in grants that NTIA will administer, and $2.4 billion at RUS will be divided between grants and loans, senior administration officials said in a briefing with reporters. Under the Recovery Act, NTIA can administer only grants, while RUS can do both grants and loans. RUS officials said they hoped ultimately to leverage the $2.4 billion allocation into a $9 billion investment by using loans. Projects will be judged on a point system that evaluates broadband speeds, affordability, ability to allow multiple competitors, financial soundness and quickness to begin construction.

Broadband speed is set at a minimum of 768 kbps downstream and 200 kbps upstream, a benchmark developed after considerable consultation with stakeholders, officials said. It is the same as existing FCC rules. “The speed question is clearly a contentious one,” one official said. But policymakers tried to strike a reasonable balance, he said. If speeds were set too high, it could discourage investments in difficult-to-reach rural areas. At the same time, officials did not want to provide funding for projects at speeds that would quickly become obsolete.

Biden spoke about the important role broadband can play in many people’s lives, especially those out of work, developing small businesses or otherwise hurt by the recession. He likened the broadband stimulus plan to national investments in roads and telephone during the 1930’s, also emphasizing that rural America would not be forgotten. “The money is on the way,” said Biden, who was joined at the briefing by Agriculture Secretary Tom Vilsack, Commerce Secretary Gary Locke, FCC Chairman Julius Genachowski, and Rep. Kathy Dahlkemper, D-Pa.

Genachowski, in his first public appearance since being sworn in Monday, was the first to speak to the crowd. Infrastructure, while not very exciting, is of great import for the country’s future, just like canals and highways, he said. Increased broadband can increase education opportunities in ways that seemed impossible not too long ago, Locke said. “Imagine every kid in Erie County able to take a course in any subject he or she is interested in,” said Locke: “This first wave of funding will help create jobs, jumpstart additional investment and provide model projects that can better inform our national broadband strategy.”

A single application can be used to apply for both NTIA and RUS funding, and the agencies will host several workshops around the country to help applicants understand the rules, Vilsack said. NTIA Administrator Larry Strickling attended the event but did not speak or take questions from the press.

The 121-page NOFA outlines application rules, setting definitions for some of the much-debated loan and grant terms. Notably, applicants must adhere to FCC Internet Policy rules and not favor any lawful Internet applications and content over others. Applicants must also publicize network management policies in a “prominent location on the service provider’s web page and provide notice to customers of changes to these policies,” the rules say. Applicants also must provide users the ability to connect to the public Internet directly or indirectly, “so that the project is not an entirely private closed network.”

Public Knowledge praised the “strong” non-discrimination requirements, said President Gigi Sohn. “We are also glad to see strong disclosure requirements for practices or methods carriers might employ to allocate capacity among different applications or providers.” Sohn said the group had concerns about carriers’ ability to offer “so-called ‘managed services’ under the rules. “We are concerned that carriers may use ‘managed services’ to cannibalize content from, and shrink the available network capacity to, the Internet, for customers of the new networks.” In grading applications, Public Knowledge suggested that projects get points deducted if they have an “excessive offering of ‘managed services’ which are not bound by the non-discrimination rules.”

Administration officials said the funds are designed to help areas that lack sufficient broadband access, with guidelines for last-mile and middle-mile projects. The rules define an unserved area as one or more contiguous census blocks where at least 90 percent of households lack access to facilities-based, terrestrial broadband service, either fixed or mobile, at the minimum transmission speed.

One group was disappointed with the rules for last-mile projects. The NOFA “could have gone further to encourage applicants to build high-capacity Last Mile broadband connections” for schools, libraries and health care facilities, said John Windhausen, Coordinator of the Schools, Health and Libraries Broadband Coalition. “We look forward to working closely with these government agencies to ensure that the needs of these anchor institutions are addressed.”

Applications are to be scored “for the extent to which the advertised speed for the network’s highest offered speed tier exceeds the minimum speed requirement for broadband service,” the NOFA said. Projects that can demonstrate an ability to upgrade services “may gain additional consideration,” the document said.

States were pleased that they are accorded a role in screening and prioritizing applications so they meet state needs, said a statement from the National Association of Regulatory Utility Commissioners. “This will allow States, who have the local knowledge and geographic expertise, the opportunity to help target and expedite release of these important funds,” NARUC said.