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$10 Billion Treasury Program Makes Available $100 Million+ for Each State – But States Need to Apply For It

Over the past several months, broadband policymakers, advocates, and service providers have focused primarily on two main developments in the world of broadband infrastructure funding:

  1. American Rescue Plan Act (ARPA) funds that are already available to States and local governments through the ARPA State and Local Fiscal Recovery Fund (SLFRF) (ARPA Sections 602 and 603), which may be used for “necessary…broadband infrastructure”; and
  2. The massive broadband funding programs enacted as part of the Infrastructure Investment and Jobs Act (“IIJA”), including the $42.45 billion Broadband Equity and Deployment (BEAD) Program (from which funding is unlikely to be generally available until 2023).

States, local governments, service providers and potential partners should also be aware of the Coronavirus Capital Projects Fund (CPF), another significant broadband infrastructure funding opportunity that seems to have been overshadowed by the other programs above. While States await rules and eligibility determinations for the Infrastructure Act funds, CPF funding may be available in the meantime. Moreover, CPF funding might be suitable for projects that may not otherwise be eligible for funding under the Infrastructure Act: there is no formal requirement that CPF-funded broadband projects serve “unserved” or “underserved” locations, for example (as further discussed below). 

Adopted as Section 604 of ARPA and administered by the Treasury Department, the CPF makes available $10 billion to States, territories, and Tribal governments – not directly to local governments – “to carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency.” Each State is allocated at least $100 million. Note that this is in addition to ARPA SLFRF funds that the State may already have received. 

Unlike the ARPA provision establishing the SLFRF, which enables funds to be used for “necessary… broadband infrastructure,” the CPF statute does not even include the word “broadband.” However, Treasury has made clear that broadband infrastructure is an acceptable use of CPF funds. In fact, Treasury seems to be actively encouraging it, giving more emphasis to broadband than to any other purpose to which the funds may be put: “Treasury is launching the Capital Projects Fund to allow recipients to invest in capital assets that meet communities’ critical needs in the short- and long-term, with a key emphasis on making funding available for broadband infrastructure.”  

100 Mbps symmetrical. A broadband infrastructure project supported with CPF funds must be “designed to deliver service that reliably meets or exceeds symmetrical speeds of 100 Mbps so that communities have future-proof infrastructure to meet their long-term needs.” More to the point, “[r]ecipients are encouraged to prioritize investments in fiber-optic infrastructure where feasible.” As with SLFRF funding, though, if it would be impracticable “because of geography, topography or excessive cost,” a broadband project may provide between 20 Mbps and 100 Mbps upload speeds so long as it is scalable to symmetrical 100 Mbps.

No “unserved”/“underserved” requirement. There is no firm requirement that a CPF-funded broadband project must primarily serve “unserved” or “underserved” locations, but Treasury’s CPF Guidance states that applicants are “encouraged to focus on serving locations without access to reliable wireline speeds of [100/20 Mbps].” State recipients must articulate “why the communities they have identified to be served by Broadband Infrastructure Projects have a critical need for those projects as is related to access, affordability, reliability and/or consistency.” (at p. 4)

“Any available data.” “When determining the communities to be served by Broadband Infrastructure Projects, Recipients may choose to consider any available data including but not limited to documentation of existing broadband internet service performance, federal and/or state collected broadband data, user speed test results, interviews with community members and business owners, reports from community organizations, and any other information they deem relevant.”

Local governments, non-profits, and cooperatives encouraged. As with SLFRF-funded broadband projects, Treasury “encourages Recipients [i.e., States] to prioritize Projects that involve broadband networks owned, operated by or affiliated with local governments, non-profits, and co-operatives—providers with less pressure to generate profits and with a commitment to serving entire communities.” (CPF Guidance, at p. 3)

Affordability. Treasury’s CPF Guidance encourages States to address affordability “as a barrier to full use of the internet when developing their Program Plans for Broadband Infrastructure Projects,” and States are required to consider affordability when selecting broadband infrastructure projects to fund.  States “are also encouraged to consult with the community as part of the process they undertake to consider affordability and are required to publish the description of their process for considering affordability in their project selection process.”
(at p. 4)  

States must submit a “Grant Plan” for CPF funds. Unlike ARPA SLFRF funds, which are automatically provided to States and local governments in accordance with a particular formula, States must submit an application to receive CPF funds. States should have already applied to receive CPF funds generally (the deadline was December 27, 2021). States must then submit a single, detailed Grant Plan proposing how the State will use the funds, along with one or more “Program Plans,” which must be received by September 24, 2022. “For example, a State might file a Grant Plan that indicates that it intends to spend funding on broadband deployment throughout the State, and a Program Plan that provides detailed information on its deployment plan for only some of the counties in the State. Later, it could file Program Plans detailing its deployment plans for other counties in the State.” (CPF Guidance, at p. 15)

State Grant Plans will be reviewed by Treasury, and funds disbursed, on a rolling basis.

Subawards by State Recipients. As noted, CPF funding will be made available only to States, territories, and Tribal governments. Those recipients are expected to award funds to subrecipients, such as other levels or units of government (e.g., municipalities or counties), non-profits, or private entities. 

For additional details on the Coronavirus Capital Projects Fund, please refer to the following Treasury Department publications:

• Treasury Department CPF Website

• CPF Guidance

• CPF FAQ

Part 6 of the Keller and Heckman Infrastructure Act Blog Series

This is our 6th entry in our blog series on the major provisions of the Infrastructure Investment and Jobs Act (“the IIJA” or “the Act”). Previous blog entries examined the $42.45 billion Broadband Equity Access and Deployment (BEAD) Program, the $1 billion Middle Mile grant program, the Act’s support for broadband partnerships,  the Affordable Connectivity Program, and the Act’s key cybersecurity provisions. Today’s post reviews the Act’s provisions aimed at promoting digital equity by increasing broadband adoption and accessibility.

Digital Equity Act Allocates $2.75 Billion for Digital Equity and Inclusion

The Digital Equity Act (“DEA”) (enacted as §§ 60301 – 60307-the IIJA) allocates $2.75 billion to promote digital equity and digital inclusion. The DEA establishes three new grant programs to be administered by the National Telecommunications and Information Administration (“NTIA”): (1) State Digital Equity Planning Grants, (2) State Digital Equity Capacity Grants, and (3) Digital Equity Competitive Grants. Each is briefly summarized below.

Before proceeding, readers should note that NTIA has issued a request for comment on several IIJA broadband programs, including the Digital Equity Planning Grant Program, with comments due February 4, 2022. NTIA intends to release a future request for comment on the State Digital Equity Capacity Grant Program and the Digital Equity Competitive Grant Program.

1. State Digital Equity Planning Grant Program ($60 million)

The State Digital Equity Planning Grant Program allocates $60 million for states and territories to develop “Digital Equity Plans.” The purpose of the program is to ensure that states have the planning capacity to design and support digital equity and inclusion programs. The NTIA will make planning grants available directly to states.

To be eligible for a grant, a state must submit an application in response to the NTIA’s publication of a “Notice of Funding Availability” and designate a plan administrator.[1] The application must include a commitment to develop the state digital equity plan within one year after being awarded the grant.

Among other things, a State Digital Equity Plan must:

  • Identify barriers to digital equity faced by covered populations[2] in the state;
  • Identify measurable objectives for documenting and promoting: (1) the availability, affordability, and access to broadband technology; (2) the online accessibility and inclusivity of public resources; (3) digital literacy; (4) awareness and use of measures to secure an individual’s online privacy and cybersecurity; and (5) the availability and affordability of consumer devices and technical support;
  • Provide an assessment of how the objectives will impact the state’s: (1) economic and workforce development goals; (2) educational goals; (3) health goals; (4) civic and social engagement; and (5) delivery of other essential services; and
  • Provide a description of how the state plans to collaborate with key stakeholders including: (1) community anchor institutions; (2) municipal governments; (3) local educational agencies; (4) nonprofit organizations; (5) organizations that represent people with disabilities, aging individuals, individuals with language barriers or low levels of literacy; (6) the state’s non-federal incarcerated population; (7) civil rights organizations; (8) workforce development programs; and (9) public housing authorities.

2. State Digital Equity Capacity Grant Program ($1.44 billion)

The State Digital Equity Capacity Grant Program allocates $1.44 billion for states and territories to support the implementation of their State Digital Equity Plans.[3] The NTIA will dispense grant funding based on the following criteria:

  • 50% of the total grant amount shall be based on the population of the eligible state in proportion to the total population of all eligible states.
  • 25% of the total grant amount shall be based on the number of individuals in the eligible state who are members of covered populations in proportion to the total number of individuals in all eligible states who are members of covered populations.
  • 25% of the total grant amount shall be based on the comparative lack of availability and adoption of broadband in the eligible state in proportion to the lack of availability and adoption of broadband of all eligible states.

Digital Equity Capacity Grants may be used to:

  • Update or maintain the State Digital Equity Plan (no more than 20% of total).
  • Implement the State Digital Equity Plan (including subcontracting for assistance implementing the plan).
  • Pursue digital inclusion activities consistent with the State Digital Equity Plan.

States will have five years to spend grant awards. The grant funds are meant to supplement, not supplant, other federal or state support for these activities.

3. Digital Equity Competitive Grant Program ($1.25 billion)

The Digital Equity Competitive Grant Program allocates $1.25 billion[4] to support efforts to achieve digital equity, promote digital inclusion activities, and spur greater adoption of broadband among covered populations.

Unlike State Digital Equity Planning Grants and State Digital Equity Capacity Grants, the Competitive Grants are broadly eligible to any political subdivision,  agency, or instrumentality of a state, including an agency responsible for administering adult education and literacy activities; an Indian Tribe, Alaskan Native, or Hawaiian Native organization; or a foundation, corporation, institution, association, or coalition if for a not-for-profit providing services in the state (but is  not a school); a community anchor institution located in the state; a local educational agency; an entity located in the state that carries out a workforce development program; or a partnership of eligible entities.

In reviewing applications, NTIA will consider:

  • Whether the applicant will increase Internet access and broadband adoption among covered populations;
  • Geographic diversity of applicants; and
  • The extent to which an application may duplicate or conflict with another program.

Grants must support at least one of the following:

  • Development and implementation of digital inclusion activities that benefit covered populations.
  • Facilitating the adoption of broadband by covered populations to provide educational and employment opportunities.
  • Implementation of training programs for covered populations that cover basic, advanced, and applied skills—or other workforce development programs.
  • Provision of free or low-cost equipment and networking capabilities to covered populations.
  • Construction, upgrade, or operation of new or existing public access computing centers for covered populations through community anchor institutions.

The federal share of any grant funded project cannot exceed 90%. Grants are to be used over a four year period. Finally, funds are meant to supplement, not supplant other federal or state support for these activities.

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As always, if you require additional information or would like to discuss any aspect of the above, please reach out to any of the attorneys in the KH Telecommunications Practice Group. We also welcome your feedback and questions via KHBroadband@khlaw.com.

(To receive alerts when new blogs are published, please subscribe to the Beyond Telecom Law Blog by entering your email where indicated on the right side of this page, or subscribe to the KH Broadband Digest (an email compendium of broadband news delivered every couple of days)).

[1] The digital equity plan administrator may be a state, political subdivision, agency, or instrumentality of the state; an Indian Tribe, Alaskan Native, or Hawaiian Native organization; or a nonprofit or governmental community support organization located in the state (other than a school).

[2] “Covered populations” include those living in low-income households or rural areas, older adults, veterans, racial or ethnic minorities, and individuals with disabilities, language barriers, or who are incarcerated.

[3] The total funding is $1.44 billion comprised of $240 million in fiscal year 2022 and $300 million per year thereafter for fiscal years 2023-2026.

[4] Total funding is $1.25 billion comprised of $250 million per year in fiscal years 2022-2026.

Part 5 of the Keller and Heckman Infrastructure Act Blog Series

This is the fifth in Keller and Heckman’s series of posts pertaining to the new Infrastructure Investment and Jobs Act (H.R. 3684) (“the IIJA” or “the Act”), which was signed into law on November 15, 2021. Our first few posts examined the $42.45 billion Broadband Equity Access and Deployment Program, the $1 Billion Middle Mile Grant Program, the Act’s support for broadband partnerships, and the Affordable Connectivity Program. This post summarizes some key provisions in the Act that are intended to enhance the cybersecurity of utilities, the energy sector, and state and local governments. The programs and amounts of government funding available to eligible entities are significant, especially for those entities that lack cybersecurity resources due to size or region.

State and Local Government Information Systems

The IIJA appropriates $1 billion to enhance the cybersecurity of state and local government information systems, as follows: $200 million in federal grants for fiscal year (“FY”) 2022; $400 million for FY 2023; $300 million for FY 2024; and $100 million for FY 2025.

Cybersecurity of Electric Utilities

To promote the physical security and cybersecurity of electric utilities (as defined in the Federal Power Act), the IIJA requires the Secretary of Energy to implement a cybersecurity program, in coordination with the Secretary of Homeland Security, and in consultation with the heads of other Federal agencies, state regulatory authorities, industry stakeholders, and the Electric Reliability Organization. The program will include the development of models and methods for assessing physical security and cybersecurity, assistance with threat assessment and cybersecurity training and technical assistance for electric utilities, training to address and mitigate supply chain management risks, advancing the cybersecurity of third party vendors, promoting information sharing within the electric sector, and assisting electric utilities that own defense critical electric infrastructure with engineering reviews. Priority will be given to electric utilities with fewer resources due to size or region.

Rural and Municipal Utility Advanced Cybersecurity Grant and Technical Assistance Program

Significantly, the IIJA appropriates $250 million for FYs 2022 through 2026 for the establishment of a Rural and Municipal Utility Advanced Cybersecurity Grant and Technical Assistance Program for rural electric cooperatives, public utilities, certain investor-owned electric utilities, and other eligible entities to protect against, detect, respond to, and recover from cybersecurity threats. The objectives are to deploy “advanced cybersecurity technologies” for electric utility systems and increase participation in cybersecurity threat information sharing.  Priority for grants and technical assistance will be given to eligible entities that have limited cybersecurity resources, own assets critical to the reliability of the bulk-power system, or own defense critical electric infrastructure (as defined in the Federal Power Act).

Enhanced Grid Security

The IIJA also appropriates $250 million for FYs 2022 through 2026 for implementation of a cybersecurity research, development, and demonstration program for the energy sector to develop “advanced cybersecurity applications and technologies.”

Other notable appropriations include $50 million for FYs 2022 through 2026 for an energy sector Operational Support for Cyber-Resilience Program, and $50 million for FYs 2022 through 2026 for an advanced energy security program to secure energy networks, including electric, natural gas, and oil exploration, transmission and deliver networks.

Energy Cyber Sense Program

The Secretary of Energy, in coordination with the Secretary of Homeland Security and in consultation with the heads of other Federal agencies, is directed to establish a voluntary Energy Cyber Sense program to test the cybersecurity of products and technologies intended for the energy sector, including the bulk-power system, provide technical assistance, and oversee testing.

Advanced Cybersecurity Technology Investment by Public Utilities

The IIJA amends Part II of the Federal Power Act by adding incentives for cybersecurity investments. Within 180 days, the Federal Energy Regulatory Commission (“FERC”) will conduct a study that identifies incentive-based rate treatments for the transmission and sale of electricity to encourage investment in “advanced cybersecurity technology” (as defined in the Federal Power Act) and information sharing by public utilities. Within one year from the conclusion of the study, FERC will establish by rule incentive-based rate treatments for the transmission and sale of electricity by public utilities to encourage investments in advanced cybersecurity technology and expand participation in cybersecurity threat information sharing programs.

Cyber Response and Recovery Act of 2021

The IIJA appropriates $20 million for FY 2022 and each subsequent year until 2028 to a Cyber Response and Recovery Fund. These provisions incorporate the Cyber Response and Recovery Act of 2021, which authorizes the Secretary of the Department of Homeland Security, in consultation with the National Cyber Director, to declare that a “significant incident” has occurred or is likely imminent, and establishes authority to respond to and recover from such an incident. The Cyber Response and Recovery Act also includes directions to several agency heads to implement new programs to bolster cybersecurity capacity at the national, state, and local levels.

***

As always, if you require additional information or would like to discuss any aspect of the above, please reach out to any of the attorneys in the KH Telecommunications Practice Group. We also welcome your feedback and questions via KHBroadband@khlaw.com.

(To receive alerts when new blogs are published, please subscribe to the Beyond Telecom Law Blog by entering your email where indicated on the right side of this page, or subscribe to the KH Broadband Digest (an email compendium of broadband news delivered every couple of days)).

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The Treasury Department has issued its Final Rule regarding the use of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) established under the American Rescue Plan Act (ARPA). The Final Rule significantly expands ARPA recipients’ flexibility to use the funds for broadband infrastructure projects.

Under the Interim Final Rule, eligible broadband infrastructure investments were limited to projects “designed to provide service to unserved or underserved households or businesses, defined as those that lack access to a wireline connection capable of reliably delivering at least minimum speeds of
25 Mbps download and 3 Mbps upload.”  (See March 15, 2021 Blog Post here)

The Final Rule entirely abandons the “unserved or underserved” requirement. “The final rule expands eligible areas for investment by requiring recipients to invest in projects designed to provide service to households and businesses with an identified need for additional broadband infrastructure investment, which would include but not be limited to a lack of broadband service reliably delivering certain speeds.” (at 296, emphasis added). In addition, “examples of need include lack of access to a connection that reliably meets or exceeds symmetrical 100 Mbps download and upload speeds, lack of affordable access to broadband service, or lack of reliable broadband service.” (at 302)

In making a determination of “need,” “recipients may choose to consider any available data, including but not limited to documentation of existing broadband internet service performance, federal and/or state collected broadband data, user speed test results, interviews with community members and business owners, reports from community organizations, and any other information they deem relevant.” (at 338)

Additional notable aspects of the Final Rule:

  • The Final Rule “continues to encourage recipients to prioritize support for broadband networks owned, operated by, or affiliated with local governments, nonprofits, and cooperatives.” (at 298)
  • The Final Rule retains the Interim Rule’s requirement that eligible projects be designed to reliably provide at least 100 Mbps symmetrical service. In areas where it is not practical to do so due to excessive cost or geography or topography of the area to be served, a project may be designed to provide 100/20 Mbps service, scalable to 100 Mbps symmetrical.
  • The Final Rule adds a requirement that ARPA-funded broadband service providers participate in the FCC’s Affordable Connectivity Program or provide access to a commensurate affordability program. (at 308)
  • Nonduplication of support: The Final Rule does not prohibit the use of ARPA funds in areas for which there are already “existing enforceable federal or state funding commitments for reliable service at speeds of at least [100/20 Mbps],” but “recipients must ensure that SLFRF funds are designed to address an identified need for additional broadband investment that is not met by existing federal or state funding commitments.”
  • Cybersecurity: Modernization of cybersecurity for existing and new broadband infrastructure is an eligible use for ARPA broadband infrastructure funds. (at 312)

The effective date of this Final Rule is April 1, 2022.

Part 4 of the Keller and Heckman Infrastructure Act Series

This is our 4th entry on the  major provisions of the Infrastructure Investment and Jobs Act (“the IIJA” or “the Act”), which allocates $65 billion to support various broadband initiatives. We previously examined the $42.45 billion Broadband Equity, Access and Deployment (“BEAD”) Program and the $1 Billion Middle Mile Grant Program, each of which focuses on deploying broadband networks to unserved and underserved areas. This entry reviews the Act’s program aimed at making broadband services more affordable and accessible through a $14 billion subsidy  for low-income households.

Emergency Broadband Benefit Program Renamed and Refunded

Essentially, the  Affordable Connectivity Program (“ACP”) expands and makes permanent the temporary Emergency Broadband Benefit (“EBB”) program created in response to COVID-19.  Under the ACP, participating broadband providers will receive up to $30/month to provide discounted broadband service to low-income households (households on tribal lands and in “high-cost areas” are eligible for up to $75/month). The EBB provided $50/month, but with more stringent end-user qualifications.

Broadband providers can also receive up to $100 per household for the purchase of a connected device from the provider, such as a laptop, tablet or desktop computer. Smartphones do not qualify.

The ACP will be subject to the regulations of the Federal Communications Commission (“FCC”) and administered by the Universal Service Administrative Company (“USAC”). On November 18, 2021, the  FCC issued a Public Notice seeking comments on how to implement the new program requirements. Initial comments were due December 8, 2021, with reply comments due December 28, 2021.

Eligible Broadband Providers

As with the EBB, broadband provider participation in the ACP is voluntary. A “participating provider” is defined as a broadband provider that is either designated as an eligible telecommunications carrier (“ETC”) or a provider that seeks approval from the FCC to participate in the program. As with the EBB, the FCC is proposing to allow ETCs and their affiliates to simply file information with the Universal Service Administrative Company (“USAC”) to participate in the APC; obtain approval to participate in the states where they have secured ETC status.

Similarly, the FCC is proposing that all existing EBB Program providers need not file or resubmit a new application to participate in the ACP; these providers need only resubmit their ACP election notice to USAC. A provider that did not participate in the EBB Program and is not an existing ETC or affiliated with an ETC would need to file with the FCC for approval of an application. In addition, as with the EBB, the FCC is proposing that any eligible broadband provider that maintains an existing low-income program offered as of April 1, 2020, is eligible for automatic approval from the FCC for ACP participation.

Consistent with the EBB Program provider election notice process, new providers must possess registrations for the FCC Registration System (CORES), FCC Registration Number (FRN), Service Provider Identification Number(s) (SPINs), Study Area Codes (SACs), System for Award Management (SAM), Employer Identification Number (EIN), Tax Identification Number (TIN) and/or Dun & Bradstreet DUNS number.

Eligible Households

The FCC is proposing and seeking comment on household eligibility criteria, including the following:

  • Household income is at or below 200% of the Federal Poverty Guidelines for a household of that size (the EBB had been set at 135%);
  • At least one person in the household receives benefits from one of the following federal assistance programs: Medicaid, Supplemental Nutrition Assistance Program, Supplemental Security Income, Federal Public Housing Assistance, or Veterans and Survivors Pension Benefit;
  • At least one person in the household is in the free and reduced-price lunch program or the school breakfast program (including the Community Eligibility Provision);
  • At least one person in the household has received a Federal Pell Grant in the current award year; or
  • The household is eligible for an existing qualified low-income program offered by a broadband service provider

Households participating in the FCC’s Lifeline program may simply opt-in to a plan provided by their current mobile or fixed broadband provider  or  enroll in the ACP.  The FCC is proposing that households that are not currently enrolled in Lifeline  apply for the ACP through the National Lifeline Verifier.

The Act decouples the ACP from COVID-19; households that qualified for the EBB due to a substantial loss of income because of a job loss or furlough since February 29, 2020, or by meeting the eligibility criteria for a participating provider’s COVID-19 program, must apply to qualify for the ACP at the expiration of the 60-day transition period discussed below. Other legacy EBB Program households will not need to reverify their eligibility to continue to receive the ACP benefit after the end of the transition period.

Transition Period from EBB to ACP

End-user enrollments for the ACP begin on December 31, 2021 (the “effective date”). The Act provides for a 60-day transition period for “households that qualified” for the EBB Program before the effective date of the ACP that would otherwise see a reduction in their benefit as a result of the changes made in the revised program. The FCC released an Order on December 8 providing guidance on the transition from the EBB to the ACP. Among other things, the FCC has clarified  that the 60-day transition period for the ACP will start on December 31, 2021 for all households enrolled in the EBB Program as of December 30, 2021. During the transition period, legacy EBB households will continue to receive the $50 EBB subsidy (rather than $30 under ACP) for the 60-day transition period and may transfer their benefit to another participating service provider.

Consumer Choice and Protection

 Under the ACP, providers must allow eligible households to apply their discount to any broadband Internet access plan the provider offers to the public. In addition, the ACP adopts certain consumer protection rules aimed at prohibiting inappropriate upselling (or downselling), extended service contracts, and restrictions on the ability to switch providers or services. Broadband providers participating in the ACP will be required to notify all eligible customers about the program, as well as the FCC’s ACP consumer complaint procedures.

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This entry highlights the current rural broadband funding opportunity presented by the $1.15 billion “ReConnect” program administered by the US Department of Agriculture’s (USDA) Rural Utilities Service (RUS).[1] Under the Funding Opportunity Announcement (FOA) for its third round of Reconnect funding (ReConnect III), the RUS will be awarding loans and grants to construct, improve, or acquire facilities needed to provide broadband service to rural areas. The application filing window opened on November 24, 2021 and closes on February 22, 2022.

Broad Eligibility To Participate

ReConnect III enables funding for a wide variety of recipients, including current broadband services providers, utilities, cooperatives, state and local government entities, and tribal authorities. Public-private partnerships consisting of these entities are also eligible. Notwithstanding this ostensibly broad class of eligible entities, the ReConnect III FOA reflects an explicit preference for cooperatives, state and local government entities, and public-private partnerships as additional points are granted to applications submitted by such entities. (For a public-private partnership to qualify for these additional points, the “applicant” must be a local government, non-profit, or cooperative).

Increased Speed Requirements for Unserved Areas

ReConnect funding is for new broadband facilities to serve unserved rural communities. Significantly, ReConnect III dramatically increases the broadband service speed eligibility threshold in determining whether an area is unserved. Under Reconnect III, an end-user location is not “served” unless fixed residential broadband service is available at a speed of 100 Mbps downstream and 20 Mbps upstream. The higher “served area” threshold should make it easier to identify and create grant application areas that are not riddled with a “swiss cheese” of prior funding initiatives that have far less robust broadband service obligations, such as 25/3 Mbps or even 10/1 Mbps service requirements.

More specifically, a proposed ReConnect III project must meet the following criteria:

  • Lack Sufficient Access to Broadband: At least 90% of households in the proposed funded service area (PFSA)[2] must lack sufficient access to fixed broadband service (100/20 Mbps);
  • Serve All Premises in the PFSA: The proposed network must be capable of providing 100 Mbps symmetrical broadband service to every premises located in the PFSA. According to the FOA, the phrase “capable of delivering 100 Mbps symmetrical service to every premises” means that all premises in the PFSA must be able to receive this service at the same time;
  • Be in a Rural Area: A rural area is any area not located in a city, town, or incorporated area that has a population of greater than 20,000 inhabitants or an urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 inhabitants;[3] and
  • Provide Symmetrical 100 Mbps Service: A ReConnect III award recipient must commit to providing symmetrical 100/100 Mbps service to all locations within a funded area.

Funding Amounts

ReConnect III makes funding available in the form of loans, grants, and loan/grant combinations, as follows:

  • 100 Percent Loan ($200 million available)
    • Maximum amount of a loan request is $50 million.
    • Interest rate on the loan is 2%, with payments on principal and interest deferred for the first three years.
  • 50 Percent Loan/50 Percent Grant Combination ($250 million available)
    • Maximum amount a grant/loan request is $25 million for the loan and $25 million for the grant.
    • Interest rate is the US Treasury rate on debt securities.
  • 100 Percent Grant ($350 million available)
    • Maximum amount of grant request is $25 million.
    • Applicant must provide a 25% matching cash contribution. (Unlike the matching requirement in the IIJA BEAD Program, in-kind matching contributions are not allowed in ReConnect.)
    • Applicant may provide match funding itself, from a third party, or use a loan.
  • 100 Percent Grant For Tribal Governments or Vulnerable Communities
    ($350 million available)

    • Maximum amount is $25 million, or $35 million for projects in Tribal lands with very low population density or high geographic remoteness.
    • No matching requirement.
    • “Socially Vulnerable Community” is a community or area identified in the Center for Disease Control’s Social Vulnerability Index with a score of .75 or higher.[4]

Use of ReConnect Funds

The ReConnect program is for capital construction of broadband networks, and not ongoing service costs. The following additional requirements apply to the use of the funds:

  • Only ReConnect loan funds (not grant funds) may be utilized to acquire existing network facilities, and only up to 40% of the total requested loan amount may be utilized for acquiring existing facilities.
  • The applicant must own the facilities to be funded by the ReConnect award and cannot use funds to lease dark fiber for the operation of the network.
  • Up to 5% of requested funds may be used for application costs.
  • Funding is subject to a 5-year network build out requirement.
  • Funded facilities must be used to provide the broadband service proposed in the application for the composite economic life of the facilities.

Proposed Project Must be Financially Viable and Sustainable

Only projects that the RUS considers to be financially feasible and sustainable will be eligible for an award under ReConnect III.

  • All project costs must be able to be fully funded or accounted for in the application.
  • An eligible project application must demonstrate a positive ending cash balance as reflected in the cash flow statement for each year of the forecast period, and demonstrate positive cash flow from operations by the end of the forecast period.

Application Scoring

ReConnect applications that meet the minimum application requirements are scored on a variety of factors:

  • Population density (Rurality) – 25 points: For applications proposing to serve the least dense rural areas as measured by the population of the area per square mile or if the area is located at least 100 miles from a city with a connectivity population of greater than 50,000.
  • Level of existing service – 25 points: For applications proposing to build in areas that are not receiving service of at least 25/3 Mbps (Note that Federal Communications Commission  data is not the sole or dispositive criteria for determining whether an area is being served).
  • Economic need of the community – 20 points: For applications proposing areas with the greatest economic need measured by the poverty percentage utilizing the US Census Small Area Income and Poverty Estimates.
  • Affordability – 20 points: For applications demonstrating that the broadband prices they will offer are affordable, and that commit to offer at least one low-cost option; applicants “should” also commit to participate in the FCC’s Lifeline Program and the Emergency Broadband Benefit Program.
  • Labor Standards – 20 points: For applications demonstrating that the project will incorporate strong labor standards, including whether workers will be paid wages at or above the prevailing rate.
  • Local governments, non-profits and cooperatives – 15 points: For applications submitted by local governments, non-profits or cooperatives, including projects involving public-private partnerships where the local government, non-profit, or cooperative is the applicant.
  • Socially Vulnerable Communities – 15 points: For applications where at least 75% of the area is comprised of Socially Vulnerable Communities.
  • Net neutrality – 10 points: For applicants that commit to meet “net neutrality” requirements.
  • Wholesale broadband services – 10 points: For applications that commit to offering wholesale broadband services at rates and terms that are reasonable and nondiscriminatory.

While the RUS ReConnect program has rigorous accounting, grant application and security requirements, it represents a significant, near-term rural funding opportunity, and may be well-suited to certain state and local governmental entities, cooperatives, tribal authorities, and broadband providers, as well as public private partnerships.

[1] There has been a great deal of focus on the historic opportunity created by the $65 billion in broadband funding in the Infrastructure Investment and Jobs Act (“IIJA”), but the vast majority of that funding will likely not be available until late 2022 at the earliest.

[2] Unlike some other federal funding programs that utilize census block to determine funding areas, PFSAs for ReConnect are self-defined by the applicant.

[3] Information on non-rural areas and additional service area eligibility requirements are available on the ReConnect Program Service Area Map.

[4] A GIS layer identifying the Socially Vulnerable Communities can be found at https://www.usda.gov/​reconnect.

Part 3 of the Keller and Heckman Infrastructure Act Blog Series

Keller and Heckman’s Telecommunications Practice Group is publishing a series of Blog Posts to explore various provisions of the Infrastructure Investment and Jobs Act (“the IIJA” or “the Act”), which allocates $65 billion to support various types of broadband initiatives. Our introductory post provided an overview of the series. Our first post examined the $42.45 billion Broadband Equity, Access and Deployment (“BEAD”) Program to fund a last-mile broadband development grant program. Our second post covered the $1 Billion Middle Mile Grant Program Opportunity. This post addresses the growing support in federal and state programs, including the IIJA, for broadband partnerships, particularly public-private partnerships.

Background

Broadband networks, like electric power systems a century ago,[1] have increasingly become drivers and enablers of simultaneous progress in just about everything that matters to communities. This includes robust economic development, lifelong educational opportunity, homeland security, public safety, affordable modern healthcare, workforce training and retraining, energy efficiency and security, smart transportation, environmental protection, efficient government service, and much more. As a result, a growing number of initiatives across America have sought to facilitate affordable access to broadband by working with willing incumbents, partnering with new entrants, establishing their own communications networks, or by developing creative new alternatives. For many, broadband partnerships have emerged as their most attractive option; for some, partnerships may be their only feasible option.[2]

Depending on the circumstances, partnerships can significantly improve a broadband project’s prospects for success. Among other things, they can facilitate pooling of resources available to the partners, enable each partner to perform the tasks for which it is best suited, and allow for asymmetric allocation of benefits. For example, a well-crafted partnership can take advantage of a public or cooperative entity’s ability to invest “patient capital” in projects that provide long-term benefits for the community and, at the same time, accommodate a private entity’s need to earn more immediate profits. In some cases, partnerships can also enable the parties to comply with State restrictions on purely public broadband initiatives.

Recognizing the attractiveness of broadband partnerships, Congress and several States have sought to encourage them to help accelerate broadband deployment, adoption, and use. To cite some examples at the federal level, Congress appropriated $300 million in the Consolidated Appropriations Act to be distributed by the National Telecommunications and Information Administration exclusively to P3s.[3] Under the US Department of Agriculture’s ReConnect Program, P3s are not only eligible to receive funding, but the USDA Rural Utilities Service’s scoring criteria awards 15 points to P3s for doing so.[4] In the same vein, the bill that would become the Build Back Better Act, which the House of Representatives passed last Friday, contains a $280 million pilot program for urban P3s.[5]

Broadband partnerships are also increasingly popular at the State level. For example, responding with admirable vision to the COVID-19 pandemic, the Arkansas legislature voted unanimously this year to expand the authority of municipalities to engage in broadband initiatives. Among other things, Arkansas authorized municipalities to fund broadband projects through municipal bonds or special taxes, as long as they “partner, contract, or otherwise affiliate with an entity that is experienced in the operation of the facilities to be acquired or constructed.”[6] A number of other states have funding programs that encourage or limit eligibility to broadband partnerships.[7]

Broadband Partnerships Under the Infrastructure Investment and Jobs Act

The IIJA does not just favor partnerships in broadband matters. It also does so for transportation[8] and cybersecurity.[9] (See, e.g., Section 40121). With respect to broadband, the Act establishes the $42.45 BEAD Program to support qualified broadband projects. The Act defines the term “eligible entity” as “a State,”[10] and it contemplates that States will funnel these funds to eligible “Subgrantees.” That term is broadly defined as “an entity that receives grant funds from an eligible entity to carry out activities under subsection (f).”[11] Elsewhere, however, the Act makes clear that Congress intended partnerships to be among the favored recipients of IIJA funds (with our emphasis added in italics):

Section 60102(h) BROADBAND NETWORK DEPLOYMENT.—

(1) ORDER OF AWARDS; PRIORITY.—

(A) IN GENERAL.—An eligible entity, in awarding subgrants for the deployment of a broadband network using grant funds received under this section, as authorized under subsection (f)(1)—

…
(iii) may not exclude cooperatives, nonprofit organizations, public-private partnerships, private companies, public or private utilities, public utility districts, or local governments from eligibility for such grant funds …

Furthermore, Section 60102(e)(1)(D) requires States to submit 5-year Action Plans in accordance with specifications that the Assistant Secretary (the head of NTIA) is required to develop:

(ii) REQUIREMENTS OF ACTION PLANS. The Assist­ant Secretary shall establish requirements for the 5-year action plan submitted by an eligible entity under clause (i), which may include requirements to—

…
(VI) ascertain how best to serve unserved loca­tions in the eligible entity, whether through the establishment of cooperatives or public-private partnerships;

As Kathryn de Wit, director of the Pew Charitable Trusts’ Broadband Access Initiative, aptly put it in her recent article on the fundamental shifts that the IIJA may spawn,

One thing is certain: The shifts — whether training clinicians on new technology, wiring households to fiber or retraining workers — won’t happen without partnerships. That’s why the timing of the state five-year action plans is so critical. Research from The Pew Charitable Trusts has found that states have already used planning processes to evaluate need, drive stakeholder engagement and map out a plan for achieving broadband expansion goals.

Now is the time for businesses, research organizations, community partners and others to participate in the continuing state planning efforts, helping to shape state strategies for using federal dollars and developing plans that meet the needs of the state and its communities in ways such as sharing information on skills gaps in the labor force, identifying evidence-based solutions for increasing telehealth usage, or elevating how living on a fixed income may influence aging Americans’ ability to access digital resources.[12]

Five or ten years into the future, we may look back on this as “the Age of Partnerships” – viewing that term in its broadest sense. Let’s act now to make that happen.

As always, if you require additional information or would like to discuss any aspect of the above, please reach out to any of the attorneys in the KH Telecommunications Practice Group. We also welcome your feedback and questions via KHBroadband@khlaw.com.

***Next up in the blog series: Cybersecurity Provisions in the IIJA***

(To receive alerts when new blogs are published, please subscribe to the Beyond Telecom Law Blog by entering your email where indicated on the right side of this page, or subscribe to the KH Broadband Digest (an email compendium of broadband news delivered every couple of days)).

[1] J. Baller, “The Essential Role of Consumer-Owned Electric Utilities in Developing the National Information Infrastructure (Nov. 1994), https://tinyurl.com/3arcez52.

[2] Keller and Heckman Partners, “Broadband Partnerships: For Many Communities, A  Good Option at a Good Time,” IMLA Magazine (Sep-Oct 2021), https://tinyurl.com/4umyt5a3; J. Hovis, et al., “The World of Broadband Public-Private Partnerships: A Business Strategy and Legal Guide,” Benton Foundation (May 2017), https://tinyurl.com/5psjsw3e;  J. Hovis, et al, “Public Investment/Private Service: A Shared Risk Partnership Model for the 21st Century, Benton Institute (Oct 2020), https://tinyurl.com/cejddhyp.

[3] NTIA, “Commerce Department’s NTIA Announces $288 Million in Funding Available to States to Build Broadband Infrastructure,” May 19, 2021, https://tinyurl.com/aejt5k7z.

[4] USDA Rural Utility Service, Funding Opportunity Announcement, Oct. 25, 2021, https://tinyurl.com/c8ra38pa (“Local governments, non-profits and cooperatives (15 points). Applications submitted by local governments, non-profits or cooperatives  (including for projects involving public-private partnerships where the local government, non-profit, or  cooperative is the applicant) will be awarded 15 points.”)

[5] House Committee on Energy and Commerce, “Fact Sheet,” (November 2021), https://tinyurl.com/crrp8epf.

[6] J. Baller, “Arkansas State Legislature Significantly Expands Local Broadband Options, February 9, 2021, https://tinyurl.com/4arhtztt.

[7] See, e.g., the Virginia Telecommunications Initiative, https://www.dhcd.virginia.gov/vati; the Maryland Expansion of Existing Broadband Grants Program, https://dhcd.maryland.gov/Broadband/Pages/default.aspx; the Massachusetts Mass Interconnect Program, https://broadband.masstech.org/recovery-plan-programs/mass-internet-connect; and the Georgia Broadband Deployment Initiative, https://www.gacities.com/Resources/Reference-Articles/Resources-to-Serve-Cities-Georgia-Broadband-Deploy.aspx.

[8] See, e.g., Section 11508 of the IIJA.

[9] See, e.g., id., at Section 40121.

[10] Section 60102(a)(1)(F).

[11] Section 60102(a)(1)(F).  The “subsection (f)” in the definition of “subgrantee” refers to Section 60102(f), the provision specifying the permissible uses of the funds appropriated under the Act.

Part 2 of the Keller and Heckman Infrastructure Act Blog Series

Keller and Heckman’s Telecommunications Practice Group is publishing a series of Blog Posts to explore various provisions of the Infrastructure Investment and Jobs Act (“the Act”), which allocates $65 billion to support various types of broadband initiatives. The first substantive post in our series, on November 12, examined the $42.45 billion Broadband Equity, Access and Deployment (“BEAD”) program to fund a last-mile broadband development grant program.

This blog post – Part 2 of our series – dissects a portion of the Act allocating an additional $1 billion for middle mile broadband infrastructure projects (see Div. F, Title IV, “Enabling Middle Mile Broadband Infrastructure”).

Background

Middle mile infrastructure does not provide service directly to end users but is critical for expanding reliable broadband service into unserved and underserved areas. A way to maximize the likelihood of securing federal funding for middle mile projects is to enter into creative partnerships with entities that have existing infrastructure and expertise to provide an end-to-end solution.

The energy sector – utilities, electric cooperatives, oil & gas companies – and public entities could serve as invaluable partners on these projects.

We are not the only ones who think so. Last week, the National Association of Regulatory Utility Commissioners (“NARUC”) issued a Resolution Supporting Energy Company Communications Infrastructure for Broadband Expansion. It encourages, “energy companies to consider sharing wired and wireless ‘middle mile’ communications infrastructure to support expansion of consumer broadband access and, with respect to any wireless networks, coordinate to reduce equipment costs and enable provision of network services to other utilities with overlapping service territories.”

The NARUC Resolution dovetails nicely with the unique requirements of the middle mile program, which encourages partnerships and identifies critical infrastructure companies as desirable partners for several reasons. First, the middle mile program explicitly prioritizes projects that are able to, “leverage existing rights-of-way, assets, and infrastructure to minimize financial, regulatory and permitting challenges.” (emphasis added).  Second, eligible applicants include a virtually unlimited range of public and private entities. In light of the 30% matching requirement (discussed further below), owners of existing infrastructure or rights-of-way that can be used to support network development have an opportunity to provide a meaningful contribution toward a middle mile application.

In the coming months, the National Telecommunications and Information Administration (NTIA) will adopt application rules and procedures providing more specificity and timelines for the middle mile program. For now, though, let’s explore the key statutory provisions:

Program Purpose. The purpose of the middle mile funding program is twofold: (i) to expand and extend infrastructure to reduce the cost of connecting unserved and underserved areas to the backbone of the Internet; and (ii) to promote broadband resiliency through the creation of alternative network connection paths designed to prevent single points of failure on a broadband network. These twin objectives of: (a) enhancing connectivity for last-mile un/underserved networks; and (b) promoting network resiliency, inform the overall structure of the program and its requirements.

Eligibility. Entities eligible to participate in the program include State and local governments, Tribal governments, technology companies, electric utilities, utility cooperatives, public utility districts, telecommunications companies, telecommunications cooperatives, nonprofit foundations, corporations, nonprofit institutions, nonprofit associations, regional planning counsels, Native entities, or economic development authorities.

Partnerships of two or more of these types of entities are also explicitly permitted and encouraged.

Administration. The Program will be administered by NTIA. Unlike the BEAD Program, the middle mile program will not flow through the States; applicants will apply directly to NTIA for funds.

Priority. The Act requires the agency to prioritize projects that: (i) leverage existing rights-of-way, assets, and infrastructure (as noted above); (ii) enable the connection of unserved anchor institutions, including Tribal anchor institutions; (iii) facilitate the development of carrier-neutral interconnection facilities; and, (iv) improve redundancy and resilience while reducing regulatory and permitting barriers.

NTIA also is required to prioritize any project in which the applicant has done two or more of the following:

  • adopted fiscally sustainable middle mile strategies;
  • committed to offering non-discriminatory interconnection to wired and wireless last mile broadband providers and any other party making a bona fide request;
  • identified in the application specific terrestrial and wireless last mile broadband providers that have expressed written interest in interconnecting and demonstrated sustainable business plans or adequate funding;
  • identified supplemental investments or in-kind support (such as waived franchise or permitting fees) that will accelerate the completion of the planned project; and
  • demonstrated that the middle mile infrastructure will benefit national security interests of the United States and the Department of Defense.

Connections to Anchor Institutions. To the extent feasible, an entity that receives a middle mile grant “using fiber optic technology” must ensure the network is capable of providing 1Gbps service to anchor institutions and must offer direct interconnection to anchor institutions located within 1,000 feet of the middle mile facilities.

Interconnection and Nondiscrimination. Middle mile grant recipients that use fiber optic technology must also “offer interconnection in perpetuity, where technically feasible, without exceeding current or reasonably anticipated capacity limitations, on reasonable rates and terms to be negotiated with requesting parties.” The nature of the interconnection must include the ability to connect to the public Internet, as well as physical interconnection for the exchange of traffic.

Determining Need and Expending Funds. Funds should be spent to provide service to unserved and underserved areas and facilitate broadband resiliency and redundancy. In determining whether a particular area is unserved or underserved, the applicant should rely on recent broadband mapping data from: (i) the FCC fixed broadband map; (ii) the State in which the area to be served by the middle mile infrastructure is located; or, (iii) speed and usage surveys of existing broadband service conducted by an eligible entity and demonstrating that more than 25% of respondents display a broadband service speed slower than speeds required for an area to qualify as unserved. It is likely that NTIA’s final rules will permit funds awarded under this program to be used for a host of projects, including laying fiber to expand and extend existing networks, leasing dark fiber, connecting data centers, building wireless microwave backhaul infrastructure and other similar projects.

Matching Funds and Timeline. The amount of a middle mile grant awarded to an eligible entity may not exceed 70% of the total project cost. This is where critical infrastructure companies can contribute to a successful application by providing in-kind assets, including rights-of-way, existing fiber capacity, tower space and radio equipment infrastructure to support the middle mile project. The contribution of existing infrastructure also will help the applicant meet statutory deadlines. A winning applicant must complete its buildout of the middle mile infrastructure within five years of the date the grant is made available.

Notably, unlike the BEAD Program and other broadband-related programs established under the Act, the statute does not task NTIA with promulgating rules or issuing a Notice of Funding Opportunity for the middle mile program within a particular timeframe. While it would seem logical to do so, whether NTIA will attempt to stand up the middle-mile program in a similar timeframe as the BEAD last-mile broadband program is unknown.

As always, if you require additional information or would like to discuss any aspect of the above, please reach out to any of the attorneys in the KH Telecommunications Practice Group. We also welcome your feedback and questions via KHBroadband@khlaw.com.

***Next up in the blog series:  Focusing on Partnerships***

(To receive alerts when new blogs are published, please subscribe to the Beyond Telecom Law Blog by entering your email where indicated on the right side of this page, or subscribe to the KH Broadband Digest (an email compendium of broadband news delivered every couple of days)).

 

 

Part 1 of the Keller and Heckman Infrastructure Act Blog Series

(Coming up next:  The Middle Mile Program)

Among the $65 billion allocated to broadband in the Infrastructure Investment and Jobs Act (“the Act”), $42.45 billion will be used to fund a last-mile broadband development grant program administered by the National Telecommunications and Information Administration (“NTIA”). As noted in our introduction to this blog series, the scale of this investment is unlike anything seen before in US history.

This blog entry begins with a quick review of the basics of the BEAD Program. We then turn to a few discrete topics that may be of particular interest at this early stage, including (1) the central role of the States, (2) the matching requirement, (3) the challenge process, and (4) the broadband DATA map.

1. The Basics

The following is a non-exhaustive, high-level overview of the BEAD Program’s scope and requirements. A more detailed review may be found in our previous blog post on this subject and from a variety of other sources. Note also that NTIA will flesh out the statutory requirements as it develops program rules.

  • $42.45 billion will be available for grants from the federal government (administered by NTIA) to the various States (and the District of Columbia, Puerto Rico, and Territories) — at least $100 million to each. Subgrants may be distributed by States consistent with the Act, and in accordance with a five-year action plan to be developed by the States and approved by NTIA.
  • State subgrants may be used to fund infrastructure:
    • Unserved service projects (80% of locations in the proposal area lack access to reliable 25Mbps/3Mbps)
    • Underserved service projects (80% of locations in the proposal area lack access to reliable 100Mbps/20Mbps service)
    • Community anchor institutions (“CAIs”), such as schools, libraries, and hospitals, lacking access to 1Gbps service
  • Infrastructure funding prioritization: A State “must award funding in a manner that prioritizes unserved service projects.” After certifying to NTIA that it “will ensure coverage” to “all unserved locations” in the State, the State must prioritize underserved service projects. After “prioritizing underserved service projects,” the State may fund eligible CAIs.
  • Projects must provide at least 100Mbps/20Mbps service to be eligible for funding.
  • State subgrant programs cannot exclude “cooperatives, nonprofit organizations, public-private partnerships, private companies, public or private utilities, public utility districts, or local governments.”
  • Entities that have received other federal, state, or local government broadband funding (RDOF, etc.) may receive subgrants under BEAD.
  • In addition to broadband infrastructure, States may use BEAD grants for data collection, broadband mapping, installing Internet infrastructure or providing reduced-cost broadband within a qualifying low-income multifamily residential building, broadband adoption (including provision of devices), and additional uses determined necessary by NTIA.
  • Timing: NTIA has 180 days from the enactment of the Act to issue a Notice of Funding Opportunity (“NOFO”) directed to the States. Assuming President Biden signs the legislation on November 15 as expected, this means the NOFO will likely be published in the May 2022 timeframe. Several layers of State submissions and NTIA processing will follow before funding will be made available to subgrantees, including submission and evaluation of State five-year plans. The process is also dependent on broadband DATA maps being published (as discussed further below). While the Biden Administration may hope to expedite the process for purposes of the 2022 mid-terms, we expect funding will not be awarded to subgrantees and begin flowing until sometime in 2023.

With that general backdrop, we shift focus to several topics that may be of particular interest in the formative stages of the program.

2. Focus on the States

The BEAD Program places the States at the center of the entire program. While NTIA will set the rules and administer the issuance of federal funds to the States, each State will generate a five-year plan, will identify its particular statewide needs, and will ultimately decide where and to whom the funds are directed.

Some States will be better positioned to perform these tasks than others. According to the Fiber Broadband Association, only 26 states currently have formal broadband offices. Others have multi-agency task forces. About 40 have broadband programs of some sort. While we have little doubt that each State will ultimately have the administrative means to participate in the program, the depth, capabilities, and priorities of each State could vary widely.

In any event, the main point of reference over the next year or so for prospective applicants/subgrantees will be upon the policy decisions and rules established by their particular State, rather than the federal government. Under the Act, a State is required to solicit input from eligible entities – including local governments, cooperatives, utilities, partnerships, etc. – as it develops its five-year plan and subgrant program. States must also provide to NTIA a “description of coordination with local governments, along with local and regional broadband planning processes.”

This planning exercise is no small feat, and time is (relatively) short if a State intends to respond promptly to the NTIA NOFO and subsequent filing requirements.

So, for those desiring a voice in how their State uses its portion of the $42 billion in broadband development funds, opportunities should emerge in the very near future. As a preliminary matter, BEAD Program participants should become acquainted with their State broadband coordination office.

3. The Matching Requirement

The BEAD Program requires a 25 percent match (a “non-Federal contribution”) for awarded projects, which may be provided by the State or the subgrantee. (Note, though, that the matching requirement does not apply to projects in high-cost areas, which may encompass a significant proportion of BEAD-funded initiatives.) The match may come from a unit of local government, a utility company, a cooperative, a nonprofit organization, a for-profit company, regional planning or governmental organization, a Federal regional commission or authority, or any combination thereof. This matching requirement is interesting in several respects.

First, like most other federal grant programs (including previous broadband grant programs), the BEAD program generally prohibits the use of federal funds – such as grant funds from other sources – as a component of the match. However, the BEAD program specifically permits the use of federal matching funds if they were provided to a State or subgrantee under any of the several recent COVID-19 relief statutes (including the CARES Act, the Consolidated Appropriations Act of 2021, and the American Rescue Plan Act of 2021 (“ARPA”)). There is no restriction on the type of entity that may provide the match.

Meanwhile, many local and state governments have significant unused funds issued under those Acts, particularly State and Local Fiscal Recovery Funds provided under ARPA. Subject to statutory requirements that funds must be spent by a certain date, a forward-thinking local or State government should consider whether it makes sense to hold some of those funds to put toward a potential match as part of a BEAD Program application. More broadly, the provision of matching funds by a local government could prove to be an important component of a public-private partnership, or of a consortium application.

In addition, it is also worth noting that the Act specifically permits the match to be in the form of an in-kind contribution, for which local governments and utilities of all types could be well-suited to contribute access to rights of way and/or infrastructure such as poles, ducts, and conduits.

4. The Challenge Process

Recent broadband support programs at the federal and state levels have generally included a method by which an incumbent service provider (or others) can object to a particular application on the ground that effective service already exists in the area. From the policymaker perspective, the general idea is that government funds should be directed to where they are needed most and, rightly or wrongly, that federal funds should not support the development of competitive broadband service.

The BEAD Program is no different, except that it leaves the process and the decision entirely up to the States, with only vague guidance as to the method or criteria. The Act provides only that a State “shall ensure a transparent, evidence-based, and expeditious challenge process” under which a challenge can object to the State’s determination that a particular location is eligible for grant funds, “including whether a particular location is served or unserved.”

In short, the BEAD Program challenge process apparently will not occur in response to a particular subgrantee application. Challenges will happen at the State level, and the statute requires that they be resolved before the State allocates funds to subgrantees. (One caveat: the Act enables NTIA to modify the challenge process “as necessary.”)

This process emphasizes the importance of the new national broadband mapping effort. Ideally, the new mapping information will be sufficiently detailed and reliable so that such challenges are uncommon, and for those that do arise, easily resolved.

5. Broadband DATA Maps

Among the various statutory requirements that must be met before NTIA is permitted to approve distribution of BEAD Program funds is the publication of “broadband DATA maps.” This refers to the improved federal broadband mapping initiative commenced under the 2020 Broadband DATA Act, under which the Federal Communications Commission “is required to establish the Broadband Serviceable Location Fabric (a dataset of geocoded information for all broadband service locations, atop which broadband maps are overlaid) as the vehicle for reporting broadband service availability data.”[1]

The implementation of this next-generation broadband map has been challenging so far, as indicated in this September 2021 report from the GAO, and the timing of publication is unclear.

As always, if you require additional information or would like to discuss any aspect of the above, please reach out to any of the attorneys in the KH Telecommunications Practice Group. We also welcome your feedback and questions via KHBroadband@khlaw.com.

***Next up in the blog series:  The Middle Mile Program***

(To receive alerts when new blogs are published, please subscribe to the Beyond Telecom Law Blog by entering your email where indicated on the right side of this page, or subscribe to the KH Broadband Digest (an email compendium of broadband news delivered every couple of days)).

[1] Congress.gov, Summary of S.1822 – 116th Congress (2019-2020) (https://www.congress.gov/bill/116th-congress/senate-bill/1822)

As readers of our Beyond Telecom Law Blog know by now, Congress has just passed the largest broadband infrastructure funding package in US history. After a contentious few months in which its prospects were very much in question, the Infrastructure Investment and Jobs Act (H.R.3684) (the Act) is now heading to President Biden’s desk.

For broadband service providers, broadband users, and broadband advocates of all stripes, it is difficult to overstate the magnitude of this funding infusion and its potential impact in the coming years. The broadband infrastructure grant program alone – with $42.45 billion appropriated – dwarfs all previous US broadband grant programs combined. Approximately $23 billion of additional funding is dedicated to a wide variety of other purposes, including multiple digital equity and broadband affordability initiatives, middle mile investment, and broadband mapping.

Over the coming days, the Telecommunications Practice Group at Keller and Heckman will publish a series of blog posts analyzing various aspects of the Act in depth. Earlier this summer, we published an analysis of the legislation (then in draft form) in which we outlined some of the key broadband provisions, the general mechanics of the programs, and the key timeframes. These points are of course crucial, and our blog series will endeavor to provide at least a high-level understanding of the key provisions in the Act.

Our primary objective, however, will be to provide useful analysis enabling readers to prepare for and take maximum advantage of the opportunity, in addition to highlighting some of the challenges that may complicate this watershed moment. It is our hope that this information will prove useful to current broadband service providers, as well as new initiatives involving local and state government entities, cooperatives, public private partnerships, power utilities, energy companies, and private sector providers.

We currently intend to publish analyses addressing the following topics:

  • Broadband Infrastructure Grants for States (The Broadband Equity, Access & Deployment Program)
  • Middle Mile Funding
  • Focus on Partnerships
  • Cybersecurity
  • The Digital Equity Act and Broadband Affordability Provisions
  • How to Prepare

Finally, we invite your questions and feedback. If a given issue or angle is of particular interest, please feel free to let us know by sending an email to KHBroadband@khlaw.com.

(To receive alerts when new blogs are published, please subscribe to the Beyond Telecom Law Blog by entering your email where indicated on the right side of this page, or subscribe to the KH Broadband Digest (a compendium of broadband news delivered periodically via email)).