On February 17, 2009, President Obama signed into law the $787 billion economic stimulus package, or the “American Recovery and Reinvestment Act of 2009” (the Act). The Act appropriates $7.2 billion for the deployment of broadband infrastructure and services to unserved areas, underserved areas, and to targeted organizations.
The $7.2 billion for broadband awards consists of two separate programs: one will be administered by the Department of Agriculture and one will be administered by the Department of Commerce. The Department of Agriculture’s Rural Utilities Services (RUS) will oversee $2.5 billion for grants, loans, and loan guarantees. The Department of Commerce’s National Telecommunications and Information Administration (NTIA) will oversee $4.7 billion to create the “Broadband Technology Opportunities Program” that will primarily award competitive grants. Applicants may not receive funding for the same project from both the RUS and the NTIA.
The Act does not contain any minimum threshold speed requirements for broadband services. Also omitted were broadband tax credits. Further, the grants awarded by the NTIA will be conditioned on non-discrimination and network interconnection obligations including, at a minimum, adherence to the principles contained in the Commission’s broadband policy statement (FCC 05-15).
Under the Act the NTIA is required to establish and implement the Broadband Technologies Opportunities Program as “expeditiously as practicable” and to award all grants available under the program by September 30, 2010. The Department of Commerce and the Department of Agriculture are already developing application processes and requirements to administer the programs and are expected to release the details of the application requirements soon.
We have provided the highlights of the Act’s broadband funding programs. The applications for awards will be due in a short time-frame and the funds are certain to be awarded on an expedited basis. If you are interested in applying for an award for a broadband project we urge you to start evaluating your project under the criteria set forth below as soon as possible.
The Department of Agriculture RUS Broadband Program
- $2.5 billion is appropriated to the RUS for “grants, loans, or loan guarantees for broadband infrastructure in any area of the United States” provided that:
- at least 75% of the area to be served by a project must be in a rural area without “sufficient access to high speed broadband service to facilitate rural economic development ” This standard is to be determined by the Secretary of Agriculture.
- The Act requires the RUS to give priority to certain applicants and projects, including:
- project applications that provide service to the highest proportion of rural residents that do not have access to broadband services;
- project applications for broadband systems that will deliver end-users a choice of more than one service provider; and
- project applications from current borrowers or former borrowers under Title II of the Rural Electrification Act, which is a telephone loan program for small and mid-sized rural local exchange carriers.
- Priority must also be given to projects that can be completed with the requested funds and to project applications that demonstrate that the project can commence “promptly” following approval.
- No later than May 18, 2009 the Secretary of Agriculture must report details of its planned spending and actual obligations on the use of these funds.
The Department of Commerce NTIA “Broadband Technology Opportunities Program”
- Program. The NTIA is required to develop a “national broadband service development and expansion program” to:
- provide access to broadband service to consumers residing in unserved areas (the NTIA may consult with states, as necessary, to identify such areas);
- provide improved access to broadband service to customers residing in underserved areas (the NTIA may consult with states, as necessary, to identify such areas);
- provide broadband education, awareness, training and access, equipment and support to organizations such as schools, libraries, medical and healthcare providers; organizations that provide support to low-income or vulnerable populations; and “job creating strategic facilitates”; and
- to improve access to and use of broadband service by public safety agencies.
- Eligibility. To be eligible for a grant under the NTIA program the application must:
- be from an “eligible entity,” which includes nonprofits, foundations, corporations, institutions, associations, and any other entity that is found to be in the public interest;
- be in “such form, and containing such information as the Assistant Secretary might require;”
- provide a detailed explanation of the project “including a showing that the project would not have been implemented during the grant period without Federal grant assistance;”
- demonstrate that the applicant is capable of carrying out the project and in accordance with all laws; and
- contain assurances that the project will be “substantially complete” within 2 years of receiving the award.
- Funding. Unless it meets an exception an application may only request 80% of federal funding for a proposed project.
- Content. Under the Act the NTIA is authorized to award grants to:
- acquire equipment, instrumentation, networking capability, hardware and software, digital network technology, and infrastructure for broadband services;
- construct and deploy broadband service related infrastructure;
- ensure access to broadband service by community anchor institutions;
- facilitate access to broadband service by low-income, unemployed, aged, and otherwise vulnerable populations in order to provide educational opportunities and employment opportunities to members of such populations; and
- improve public safety broadband communications services.
- Approval Criteria. To the “extent practical” the NTIA will:
- award at least one grant in each state;
- consider if the application will “increase the affordability of, and subscribership to, service to the greatest population of users in the area”; and
- consider if the application will “enhance service for health care delivery, education, or children to the greatest population of users in the area.”
- Open Access. NTIA (in coordination with the FCC) must publish “non-discrimination and network interconnection obligations that shall be contractual conditions of grants” and that, at a minimum, “adhere to the principles contained in the FCC’s broadband policy statement (FCC 05-15, adopted August 5, 2005).”
- Agency Obligations. Within one year the FCC is required to create a “national broadband plan” that ensures that every American has access to broadband services and that sets forth benchmarks to meet the FCC’s access and utilization goals. Within two years the NTIA is required to develop a comprehensive nationwide broadband inventory map that is accessible by the public.
The members of the telecommunications group at Dorsey & Whitney LLP will be following the implementation of the funding programs created by the Act closely and can assist you in developing applications for loans or grants. Please contact one of the attorneys listed in the margin for more information.