Telecommunications Law Alert: ARRA Stimulates Broadband Development - But How and When Will Money Be Distributed?
3/6/2009

The American Recovery and Reinvestment Act of 2009 ("ARRA") appropriates an unprecedented $7.2 billion for development of broadband in both unserved and underserved areas. The money is set to be distributed through a yet-to-be-determined system of grants, loans, and guaranteed loans to qualifying entities.

The parameters of the program are very broad and still undefined. The majority of the money - $4.7 billion - will be distributed by the National Telecommunications and Information Administration ("NTIA"), with the Rural Utilities Service ("RUS") distributing the remaining $2.5 billion. NTIA, which sits in the Commerce Department, generally has not had any experience in administering public funds for telecommunications projects, and the role of RUS, which sits in the Department of Agriculture, has generally been to issue limited loans for specific rural projects. These agencies are now charged with working with the FCC to develop guidelines for distribution and analyze applications with the goal of distributing all money by September 30, 2010!

There is already intensive lobbying, as these agencies expect over 800 applications for these funds. Representatives from the NTIA, RUS, and FCC will conduct a public meeting on March 10, 2009 with the goal of developing principles of timing, coordination, and consistency. The meeting will be streamed live at http://www.ntia.doc.gov/broadbandgrants/.

Many important questions remain to be answered, including how "unserved" and "underserved" areas are identified, how funding will be structured, what levels of funding will be given to projects, and what strings will be attached concerning requirements of network interconnection and network neutrality.

We will continue to provide updates on significant developments regarding the timing, administration, and processes for the distribution of this money. In the meantime, here are general answers to frequently asked questions concerning the ARRA's broadband program:

What exactly is being distributed?
$7.2 billion, split between NTIA ($4.7 billion) and RUS ($2.5 billion).

What is the timing?
All awards are supposed to be completed by September 30, 2010, which will be a daunting task.

How is NTIA directed to conduct administration?
NTIA has created a Broadband Technology Opportunities Program ("BTOP"). The NTIA still needs to develop guidelines for the BTOP, with input from the FCC and public. Developments also can be tracked at the NTIA link above.

For what purposes will the NTIA distribute funds?
The goals are to establish access in unserved areas; improve access in underserved areas; create and expand markets by providing broadband education, awareness, training, equipment, and support; and improve access for public safety agencies.

How will the NTIA's $4.7 billion be divided for these purposes?
The NTIA will distribute $3.75 billion for grants; $350 million for broadband inventory mapping; $250 million for programs encouraging adoption of broadband services; $200 million for expanding computer center capacity; $140 million for administration costs; and $10 million for monitoring and auditing.

What types of broadband initiatives might receive funding?
Many different types, including:

• Acquisition of broadband equipment, instrumentation, networking capability, hardware and software, digital network technology, and infrastructure;
• Deployment of broadband services and related infrastructure;
• Ensuring access to broadband service by "community anchor institutions";
• Facilitating access to broadband by low-income, unemployed, aged, and otherwise vulnerable populations to provide educational and employment opportunities;
• Deployment of broadband facilities that improve public safety broadband communications services; and
• Such other matters as are consistent with the purposes behind BTOP.

Who is eligible for funding?
Governments and nonprofits are automatically eligible. Commercial entities also are eligible, without regard to technology deployed, specifically including wireless carriers, wireline carriers, backhaul providers, satellite carriers, public-private partnerships, and tower companies. However, commercial entities must show that their project is in the "public interest" and that at least 20% of the project costs will be funded from other sources. Awards are limited to projects that will be substantially completed within two years of the award and were not otherwise scheduled to have been begun, independent of the stimulus money (although waivers are available).

What factors will be considered when making distributions?
The degree to which projects are shovel-ready and are related to the goals above will be determinative. Other factors may include the area of the population that will be served, proposed broadband speed, whether grants have been awarded within the particular state, and whether the particular state supports the grant.

What strings are attached?
Recipients must adhere, at minimum, to the FCC's broadband policy statement concerning network neutrality. See http://www.fcc.gov/broadband_network_management/#FCC-07-31. Recipients will also be subject to certain oversight and interconnection requirements that have yet to be defined.

How will the RUS $2.5 billion be administered?
RUS money is specifically focused on rural deployment. This money may be used for grants, loans, and loan guarantees for broadband infrastructure consistent with the goals above, provided that 75% of the funding goes to rural areas without sufficient broadband access, as determined by the Secretary of Agriculture. Projects receiving NTIA funding are ineligible for RUS money.

How will the RUS funding interplay with its existing loan programs?
This is uncertain. RUS has existing loan programs under which carriers serving more than 2% of the nation's subscriber lines are ineligible. This ineligibility will continue for RUS loans. RUS has other requirements, but it is still unclear whether and to what extent these requirements will apply to the ARRA money.

What are RUS funding priorities?

• Projects that will offer choices to end users of more than one service provider (underserved areas);
• Projects that provide service to the highest proportion of rural residents without access to broadband (unserved areas);
• Applicants who are borrowers or former borrowers;
• Projects that will be fully funded by the award;
• Projects that can be completed by the award; and
• Projects that can commence promptly upon approval.

Will more money be available?
Maybe. In addition to talk about further stimulus efforts, the framework for the new administration's 2010 budget includes an additional $1.3 billion for distribution by RUS, in addition to the ARRA money.

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