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June 28, 2019 by Tom Cohen

Government Money for Broadband

 

Government funding is critical to drive broadband deployments to unserved areas and to schools, libraries, and rural healthcare institutions. Each year, the FCC awards about $7 billion in support for various programs related to broadband builds and operations. As for the RUS, it focuses on supporting capital expenditures through a variety of loan, loan guarantee, and grant programs. In addition to the RUS broadband grant program, last year Congress created the ReConnect pilot program and provided $600 million in new broadband funding. Yet, even as these programs are working to support broadband deployments, policymakers are constantly seeking to refine and, in some instances, expand them. Here are some of the broadband funding issues on the table right now.

Infrastructure Funding – House Energy and Commerce Committee Chairman Pallone has reintroduced legislation (the LIFT Act, HR 2741) that would support a number of infrastructure programs. The broadband provisions would provide $40 billion over 10 years to support deployments largely in unserved areas and in some instances to community anchor institutions. Funding would be awarded by reverse auction primarily by the FCC but also by states. The House Energy and Commerce Committee recently held a hearing on the bill, but whether or not it moves through Congress will depend on whether there is a bipartisan agreement on infrastructure legislation and whether they can find a source of funding for the program.

RUS Funding – Every year, Congress appropriates funding for the RUS broadband programs. The House just passed its 2020 appropriations legislation, which provides $50 million in broadband grant funding, $75 million for Distance Learning and Telemedicine grants and an additional $55 million for the ReConnect program. The Senate will act next.

FCC Universal Service Fund Cap – While each of the FCC’s individual universal service programs has a cap or targeted budget, the FCC is now proposing to adopt an overall cap for all the programs “to determine the most efficient and responsible use of these federal funds.” The Republican Commissioners supported initiating this proceeding, but it was strongly opposed by the Democratic Commissioners – and it is strongly opposed by entities that participate in these programs, as well as by consumer groups. Comments will be received in July and August. Right now, it is far from clear whether the FCC will act on its proposal or on some version of it.

Texas Rural Carrier Petition – Several incumbent rural telephone carriers that participate in the FCC’s E-rate and high cost programs filed a petition with the FCC in May raising concerns about the E-rate program providing duplicative support to region-based consortia groups that want to build Wide Area Networks (WAN special construction projects) to connect all schools in a region. The petition raises two major concerns with these WAN projects. First, the rural carriers explain that many schools already have fiber connectivity – including through the E-rate program. Second, the rural carriers submit that because these projects cover an entire region with many schools, they attract only a limited number of providers (bidders) and thus bidding does not drive prices to their lowest levels. The rural carriers ask the FCC to initiate a rulemaking to adopt the following solution – Entities applying for E-rate funding for new fiber builds (special construction) should (1) post the application, (2) allow a 60 day challenge process where existing providers can demonstrate they have fiber connectivity, and (3) negotiate to lease fiber from an existing provider unless the existing provider is unwilling to negotiate in good faith to lease the fiber at reasonable market-based prices. Comments on the petition are due on Monday, July 1 and reply comments on Tuesday, July 16.

Finally, as discussed in prior posts, the FCC later this summer should begin work on the new Rural Digital Opportunity Fund, which follows on the existing CAF Phase II Cost Model program. Because this new program will provide about $20 billion over 10 years, it will draw intense interest, and we will report on it when the proposed rules are released.

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