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Executive Summary and Analysis: USDA, FCC, NTIA Joint Response to Farm Bill Section 6212

Prepared by Ben Fineman on behalf of Merit Network, March 2020

The 2018 Farm Bill included a provision (Section 6212) that the USDA, the FCC, and the NTIA are required to submit a report to congress on “how best to coordinate federally supported broadband programs and activities” toward some specific objectives, including promoting high-quality broadband service that meets the long-term needs of rural residents and businesses. This joint response report is the fulfillment of the Section 6212 requirement.

The report has four main sections: three sections providing details of the broadband programs administered by each agency, and one section describing the collaboration and coordination between the agencies on these programs. This document provides an executive summary and analysis of each individual program, and of the collaboration between agencies.

At a high level: the main current funding programs that are of real interest for Michigan communities are USDA ReConnect and the FCC Rural Digital Opportunity Fund (RDOF or High Cost Fund). Both are designed to advantage shovel-ready projects, and while both programs provide eligibility for non-traditional service providers, both are implemented in a way that makes public-private-partnerships challenging.

In terms of collaboration between the three agencies, this is largely focused around data – all agencies currently depend upon FCC 477 data, and the new Digital Opportunity Data Collection program will be critical for all agencies. The American Broadband Initiative which was intended to facilitate collaboration between all three agencies through the Executive Branch has had little impact of value.

 

USDA Broadband Programs

Rural e-Connectivity Pilot Program (ReConnect)

Perhaps one of the most promising programs for rural communities, ReConnect is a pilot program targeted at expanding broadband infrastructure in areas lacking access to 10 Mbps / 1 Mbps service (excluding satellite and cellular). The initial $600M appropriation was divided equally into three pools: 100% loans, 50/50% loans/grants, and 100% grants. The 100% grants come with a 25% match requirement. The program has been funded with an additional appropriation of $1.105B, with $600M available in 2019.

Eligible entities:

  • Cooperatives, non-profits, or mutual associations
  • For-profit corporations or limited liability companies
  • States, local governments, or any agency, subdivision, instrumentality, or political subdivision thereof
  • A territory or possession of the United States
  • An Indian tribe

Current annual funding available: $600M

Eligibility threshold: 10 Mb download and 1 Mb upload, satellite/cellular excluded, FCC 477 data not required.

Comments: This program offers significant opportunity to communities due to the significant funding and the achievable eligibility threshold. However, application windows are generally short, favoring communities with “shovel ready” projects with studies and pre-engineering underway or completed before the next year’s program details are announced.

Telecommunications Infrastructure Loan Program

This program provides direct cost-of-money loans and guaranteed loans for the construction, maintenance, improvement and expansion of telephone and broadband service in rural communities of 5,000 or less.

Eligible entities:

  • State and local governmental entities
  • Federally Recognized Tribes
  • Non-profits, including Cooperatives, and limited dividend or mutual associations
  • For-profit businesses (must be a corporation or limited liability company)

Current annual funding available: Unspecified

Eligibility threshold: 1 Mb download and 1 Mb upload wireline service.

Comments: Based on the very low eligibility threshold, funds are generally used in areas with no existing telephone service. While state and local government entities are eligible, this program is tailored to telephone companies. Cost of money loans and loan guarantees do not significantly shift the business model to enable capital investment in low population density areas.

Rural Broadband Program

More precisely named the “Rural Broadband Access Loan and Loan Guarantee Program”, this program provides cost-of-money loans for the construction, maintenance, improvement, and expansion of broadband service in rural communities of 20,000 or less. An anticipated funding increase from $25M to $350M may enable the USDA to expand this program to include grants, loan guarantees, and payment assistance, though this has not yet been established.

Eligible entities:

  • Corporation;
  • Limited liability company (LLC);
  • Cooperative or mutual organization;
  • A state or local unit of government
  • Indian tribe or tribal organization

Current annual funding available: None (program currently closed)

Eligibility threshold: 25 Mb download and 3 Mb upload mobile or fixed service.

Comments: While government agencies are eligible for this program, cost of money loans do not significantly shift the business model to enable capital investment in low population density areas, and the consideration of mobile service when determining if an area is served creates a high bar for applications. This could become an interesting program if it is expanded to grants with a greater funding threshold.

Community-Oriented Connectivity Grant Program

This program provides grants with a 15% matching fund requirement for the construction and expansion of broadband service in rural communities of 20,000 or less where broadband service does not currently exist.

Eligible entities:

  • Most State and local governments
  • Federally-recognized Tribes
  • Non-profits
  • For-profit corporations

Current annual funding available: None (program currently closed)

Eligibility threshold: 10 Mb download and 1 Mb upload mobile or fixed service.

Comments: Although grants with 15% match are very appealing, the eligibility threshold’s inclusion of mobile service at 10Mb effectively excludes all of Michigan unless cellular coverage maps are challenged.

Distance Learning and Telemedicine Grant Program (DLT)

The Distance Learning and Telemedicine program provides grants with a 15% matching fund requirement for the equipment needed to deliver telemedicine service and distance learning curriculums benefiting rural communities of 20,000 or less.

Eligible entities:

  • Most State and local governmental entities
  • Federally-recognized Tribes
  • Non-profits
  • For-profit businesses
  • Consortia of eligible entities

Current annual funding available: $71.1M

Eligibility threshold: No bandwidth threshold – any projects related to education or health care using telecommunications in rural communities of 20,000 or less are eligible.

Comments: The limitation of this program to fund projects for education or health care generally precludes projects that include residential service. It is possible that this program could be used to fund middle mile fiber that is later used to provide backhaul for residential service.

 

FCC Broadband Programs

High-Cost Program

An important part of the Universal Service Fund, the High Cost Program has in recent years been primarily reorganized into the Connect America Fund (CAF), with the main program moving forward as the Rural Digital Opportunity Fund (RDOF) which will be executed as a reverse auction.

Eligible entities:

  • Must be “Eligible Telecommunications Carrier”

Current annual funding available: $16B to be awarded in 2020

Eligibility threshold: 25 Mb download and 3 Mb upload, but must use FCC 477 data for round one

Comments: The “Eligible Telecommunications Carrier” status is only available to entities who both own the network and are retail ISPs. This excludes projects that would operate as public-private-partnerships. With $16B being awarded before the end of 2020, this opportunity will favor shovel-ready projects.

Schools and Libraries (E-Rate) Program

The Commission’s E-rate program makes telecommunications and information services more affordable for schools and libraries.

Eligible entities:

  • K-12 Schools
  • Libraries
  • Consortia of schools and/or libraries

Current annual funding available: $3.9B

Eligibility threshold: N/A

Comments: While fiber funded through this program can only be used to connect schools and libraries, this fiber can potentially be used for middle mile in the future to help address residential connectivity. Some districts are also exploring E-rate as a way to fund wireless connectivity for students at home.

Rural Health Care Program

The Commission’s Rural Health Care (RHC) program provides support to rural health care providers, including those on Tribal lands, to fund broadband connectivity to support telemedicine services.

Eligible entities:

  • Health care providers

Current annual funding available: $571M

Eligibility threshold: N/A

Comments: While fiber funded through this program can only be used to connect health care providers, this fiber can potentially be used for middle mile in the future to help address residential connectivity.

Low-Income (Lifeline) Program

The Lifeline program assists low-income consumers by helping to pay for monthly telephone or broadband charges so that telephone or broadband service is more affordable. Lifeline typically provides up to a $7.25 monthly discount on service for eligible low-income subscribers for telephone or internet connectivity, but not both.

Eligible entities:

  • Low income consumers and their telephone or internet service providers

Current annual funding available: $2.25B

Eligibility threshold: Offered service must be at least 10 Mb download and 1 Mb upload, wireline or wireless (150GB data cap allowed).

Comments: This program could help the business models of ISPs in low income areas, especially tribal areas where the subsidy is much higher at $25/month. But, this program does not help with upfront infrastructure costs. At the end of 2020 the non-tribal subsidy decreases to $5.25/month.

NTIA Broadband Programs

Institute for Telecommunication Sciences

The Institute for Telecommunication Sciences (ITS) is the research and engineering arm of NTIA. ITS provides core telecommunications research and engineering services to promote enhanced domestic competition and new technology deployment, advanced telecommunications and information services, and more efficient use of the radio frequency spectrum.

Eligible entities: NA

Current annual funding available: NA

Eligibility threshold: NA

Comments: Not a funding entity.

BroadbandUSA

BroadbandUSA assists state and local leaders during each stage of a broadband infrastructure project and can provide expert guidance to public and private partners.

Eligible entities: NA

Current annual funding available: NA

Eligibility threshold: NA

Comments: Not a funding agency.

National Broadband Availability Map

National Broadband Availability Map (NBAM) is a geographic information system that allows policymakers to compare federal, state, and commercially available data sets. This appears to be primarily FCC 477 data, although the map is no longer publicly available.

Eligible entities: NA

Current annual funding available: NA

Eligibility threshold: NA

Comments: Not a funding agency.

 

Collaboration and Coordination of Federal Broadband Programs

ABI and Section 6214 of 2018 Farm Bill

The American Broadband Initiative is the Trump administration’s “effort to stimulate increased private sector investment in broadband”. It fulfills the requirements established in Section 6214 of the 2018 Farm Bill, which mandated the creation of an interagency working group to “identify, assess, and determine possible actions relating to barriers and opportunities for broadband deployment in rural areas and report to the Executive Office of the President regarding recommendations agencies can take.” The USDA, the NTIA, and the FCC all participate as consulting members in this initiative. The primary outputs of this effort have been granting expedited access to federal land and vertical assets, and streamlined permitting to build infrastructure on federal land. These measures do not significantly change the broadband landscape in Michigan.

Consultation Between USDA and NTIA

Section 6212 directs that USDA consult with NTIA to “assist in the verification of eligibility of the broadband loan and grant programs” it offers and that NTIA should make available its broadband assessment and mapping capabilities. The USDA uses NTIA mapping resources for its broadband grant program applications and award processes.

Consultation Between USDA and the FCC

Section 6212 directs the USDA and FCC consult with each other prior to providing broadband support in order to maximize the scope and benefit of scarce federal resources. The main result of this collaboration is the exclusion of areas that have received grant funding from one program to also receive funding from the other. While reasonable in theory, a result of this in practice has been the exclusion from ReConnect of areas selected for funding under the Connect Area Fund which have either never been built out, or which had their CAF obligations fulfilled with 10Mb cellular service.

USDA, FCC, and NTIA Examine Future Needs and Technical Capabilities of Rural Broadband

Section 6212(c)(1) and Section 6212 (c)(2) mandate that the three agencies collaborate on questions concerning future rural broadband service needs, and on analysis of the technical capabilities of current and future technologies available by performance, suitability, and cost. NTIA gathers input on their topics through collaboration with state and local communities through BroadbandUSA programs. The USDA and the FCC support these goals through the rules of their grant programs (eg prioritization to fund gigabit solutions) and gather input via analysis of past grant recipient performance. The FCC also claims to help via regulation and policy-making, though some steps such as “one touch make ready” have proven helpful, while others such as removing the utility classification of broadband have been demonstrably damaging.

USDA, FCC, and NTIA Data Collection, Exchange and Verification

Section 6212(a)(3)(A-D) urges the agencies to collaborate around broadband data. Currently this is focused around sharing geospatial data, primarily form 477 coverage reports, and grant award areas. The new “Digital Opportunity Data Collection” that will replace form 477 will ostensibly require providers to submit more granular coverage data, and will include a challenge process for incorrect coverage data.

Conclusion

Having three federal agencies working to close the broadband gap at a national level is a positive in terms of resourcing but can be confusing to communities trying to understand where to engage. For the average Michigan community, the bottom line is that the USDA ReConnect program and the FCC Rural Digital Opportunity Fund program provide the biggest near term opportunities, if the community is in a position to take advantage of them. Communities should also be aware of the new mapping efforts under the Digital Opportunity Data Collection program. Current community data collection efforts are not redundant with this new program and may provide valuable input into future data challenge processes.