Yesterday in Denver, President Obama signed into law the American Recovery and Reinvestment Act of 2009, which has been referred to as the stimulus bill. Links to the final legislation can be accessed here.
Our interpretation of the broadband-related provisions of the Act are provided below.
At a high-level, the Act provides for roughly $7.2B in funding for broadband-related projects. This $7.2B is to be administered by two organizations; the NTIA and USDA/RUS.
The NTIA TOPS (Technology Opportunities) Program
The Technology Opportunities (TOPS) program is administered through the NTIA (under the Assistant Secretary for Communications and Information through the Dept. of Commerce).
$4.7B was allocated to this program. Of that, $350M was carved out for the nationwide “broadband mapping” effort, $200M for expanding public computer centers, $250M for demand generation programs, and $10M for the Dept’s Inspector General to cover auditing costs. So, basically, there’s about $4B available for broadband programs.
The goals of the program are to:
- provide access to broadband service to consumers residing in unserved areas of the United States;
- provide improved access to broadband service to consumers residing in underserved areas of the United States;
- provide broadband education, awareness, training, access, equipment, and support to [schools, libraries, etc.]
- improve access to, and use of, broadband service by public safety agencies; and
- stimulate the demand for broadband, economic growth, and job creation.
There are aggressive timelines laid out for the spending. It states that “The Assistant Secretary shall (1) establish and implement the grant program as expeditiously as practicable; (2) ensure that all awards are made before the end of fiscal year 2010 (which is Sep. 30, 2010). Previous references to spending ½ of the funds by Sep. 30 of 2009 (this year) appear to have been removed. There is a goal for projects that are funded to be complete within two years of the grant award.
It appears that almost any type of entity is eligible. This includes “a State or political subdivision thereof, the District of Columbia, a territory or possession of the United States, an Indian tribe, a nonprofit foundation, corporation, institution, association, any other entity, including a broadband service or infrastructure provider, that the Assistant Secretary finds by rule to be in the public interest.”
There is a matching requirement, but some discretion for it to be waived. “The Federal share of any project may not exceed 80 percent, except that the Assistant Secretary may increase the Federal share of a project above 80 percent if (1) the applicant petitions the Assistant Secretary for a waiver; and (2) the Assistant Secretary determines that the petition demonstrates financial need.”
Funds can be used for a wide range of things. There doesn’t appear to be a restriction on using funds only for “non-recurring” costs. Eligible use include:
- 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 and employment opportunities to members of such populations;
- construct and deploy broadband facilities that improve public safety broadband communications services; and
- undertake such other projects and activities as the Assistant Secretary finds to be consistent with the purposes for which the program is established.
Distribution of funding. It states that the program shall “to the extent practical, award not less than 1 grant in each State.”
There is language referring to adherence to the FCC’s “four principles,” often assumed to be the FCC’s working definition for “network neutrality.”
Finally, it appears that all references in earlier draft to specific technologies (wired or wireless) and speeds (basic 5/1, advanced 45/15 and so on) were removed. It appears that they went with a structure that allowed more discretion for the NTIA to determine these issues based on grant proposals received.
RUS Program
$2.5B was allocated to the Rural Utilities Service (RUS) program, administered through the USDA. This opening language says the $2.5B is directed to “loans and loan guarantees” but later language expands that to include grants as well. A little confusing, but my read is that grants are allowed.
It states that “at least 75 percent of the area to be served by a project receiving funds from such grants, loans or loan guarantees shall be in a rural area without sufficient access to high speed broadband service..” I take this to mean that USDA will have discretion to spend 25% of the $2.5B in areas that are 1) not necessarily rural and/or 2) not necessarily underserved.
The language defines several priorities that will be given to grant applications. The key ones are:
- “applications for broadband systems that will deliver end users a choice of more than one service provider.” I take this to be referring to open access, wholesale business model approaches.
- “projects that provide service to the highest proportion of rural residents that do not have access to broadband service.” Pretty straightforward.
- “project applications from borrowers or former borrowers under title II of the Rural Electrification Act of 1936.” Seems to be giving priority to parties who’ve gone through RUS for funding in the past.
- “activities that can commence promptly following approval.”
No project can receive funds under this RUS program that is also receiving funds under the NTIA/TOPS program. No double-dipping.
There are no references to timelines under which all funds have to be spent for this program, which is different from the NTIA/TOPS program.
Tax credits that were included in earlier drafts appear to have been removed altogether.
A final note. The bill gave the FCC one year to come up with a national broadband strategy/plan.