The Missouri General Assembly closed out its regular session on May 13, 2022 (Friday the 13th). The General Assembly committed unprecedented amounts of new public investment in high-speed internet infrastructure. Yet, the amounts provided were substantially less than what the Governor proposed last fall and did not address some of the key objectives identified in his budget proposal. Aside from the appropriation, limited progress was made on other fronts as well, and these are discussed in more detail below.
The ARPA Broadband Appropriation
Much of the General Assembly’s work this session centered on the Governor’s American Rescue Plan Act (ARPA) spending proposals – a key component of which was spending for Broadband. Using federal money provided by ARPA, the Governor proposed a multipronged approach that included infrastructure funding (broadband access), adoption (digital skills training) and affordability. In this regard, the Governor’s proposal mirrored the approach of the Infrastructure Investment and Jobs Act (the IIJA) enacted by Congress last year and described in an earlier blog.
As shown in the following table, while the General Assembly provided funds for internet access, it did not approve funding for the Governor’s adoption or affordability proposals. Administration of the new grant funding program (as well as development of a 5-year plan to apply for and secure more federal funding from the IIJA programs) will be provided by Department of Economic Development’s Broadband Office (DED), which received $10 million of additional funding this session.
|Governor Parson’s Proposal (Missouri Department of Economic Development (DED)
|General Assembly Appropriation
|$250 Million — Competitive Grant Program for locations lacking fixed wired or wireline service of at least 100 Mbps/20Mbps
|“Digital Literacy” (Adoption/Digital Skills)
|$30 Million – Competitive Grants to Nonprofit and Educational Organizations
|Affordability (Assistance for broadband subscription cost )
|$30 Million – Would funds an additional $10 per month benefit to households eligible for the $30 per month benefit provided as part of the IIJA’s Affordable Connectivity Program
|Pole Replacement (supports fiber on pole deployment)
|$0* *Pole replacement costs could be funded through broadband infrastructure grant program
|New Cell Towers for Wireless Access
There are a couple of observations that seem relevant here:
- First, while the amount of money appropriated for broadband infrastructure far exceeds previous funding, it will not be enough to provide broadband to every location in Missouri that needs one.
The Governor’s proposal was expected to be enough to connect approximately 75,000 households in the state. However, in a webinar presentation last month DED noted that a recently completed gap analysis showed that nearly 500,000 locations in Missouri lack broadband service at speeds of 100/20 Mbps (the new standard for “underserved” locations). The cost to connect those locations was estimated at a little less than $2 billion, whether wireless or wired technologies are used to provide service.
That said, the goal of funding universal broadband access across Missouri seems to be well within reach. The $285 million appropriated by the General Assembly this session is money the federal government provided to the state through the ARPA last year. An additional $1.3 billion (the second installment of State and Local Fiscal Recovery Funds (SLFRF)) will be deposited with the state later this year. This money also can be used to fund broadband and other infrastructure needs. Thereafter, Missouri is eligible to receive a sizable portion of the $42.5 billion available to states to fund broadband infrastructure as part of the IIJA. Finally, of course, assuming a public-private partnership model is used to provide broadband access, no one thinks that the federal and state governments will need to finance the entire cost of building out broadband to all underserved locations, as the private sector can fund the investment as well.
In other words, over the next several years, there appears to be an opportunity to access enough federal money to construct the infrastructure needed to close Missouri’s digital divide. However, this will require continued support from the General Assembly to appropriate the federal money. ARPA money left unspent by the end of 2026 must be returned to the United States Treasury. IIJA funding will be allotted to states based on need and funded only after submission and approval of a five-year plan designed to provide access to all unserved locations in the state. Thankfully, in this session the General Assembly began this process by appropriating money to DED this session from ARPA funds to develop this five-year plan, so that Missouri can fully participate in the IIJA funding programs both for access and adoption over the next several years.
- Second, the General Assembly’s decision to “zero-out” the Governor’s proposed appropriation for internet adoption is somewhat puzzling. One could make the case that $30 million was not the right amount – that it was too much – or that the need for adoption programs could be deferred to a later date and paid for out of future IIJA grants, and did not need to be included in this year’s appropriations.
It may be simply that the proposal suffered from “misbranding”– the decision to call it “Digital Literacy.” One would think most folks don’t like being referred to as “illiterate” – even if it’s “digitally” illiterate, and that term doesn’t really do a very good job of describing what the money was intended to pay for – or why it was needed in the first place.
Likely what was lost in the debate was an appreciation that the public benefit of broadband access, what justifies the investment of hundreds of millions of public dollars for broadband infrastructure, comes only when all individuals throughout the state can actually use that resource in ways that make a positive impact on public health, education and economic opportunity. This would include visiting their doctor online (telehealth); starting an in-home, internet-based business; reversing population declines in rural communities and saving commuting time and expense through telecommuting; obtaining an advanced degree or skill online from a university or junior college; monitoring crops in the field, reducing fertilizer and production input costs through precision agriculture; accessing online federal, state and local government services; and otherwise using high-speed internet in ways that make business, government and other institutions more efficient and effective.
In short, to fully realize the public benefit of broadband that justifies the unprecedented public investment in broadband infrastructure, there is a need to move beyond smart phones and recreation-centered internet-based applications (things like texting, social media, YouTube videos, online gaming etc.) and to provide everyone – not just the “tech-savvy” with the training and skills needed to effectively use this new resource. While certainly most everyone believes these goals and programs are worthwhile and necessary, the private sector has limited motivation (and expertise) to provide them. This was the rationale of an internet adoption program that would use nonprofit, local government, and educational organizations to develop the skills-based resources designed to further these objectives. Hopefully, as the need for these resources becomes more evident, funding for adoption programs will be included in future appropriations so that communities receiving public funding for internet access will have the means to fully realize the benefit of this new resource.
Senate Bill 820
Aside from the appropriations bills, significant – but more incremental progress was made through passage of Senate Bill 820. This legislation incorporated several of the proposals from the work of the House Special Interim Committee on Broadband Development chaired by Representative Louis Riggs.
Among the changes, was a proposal supported by the DED, that incorporated a badly needed update to the definition of areas that lack access to adequate broadband service (underserved areas). This definition is important because it is used to identify broadband infrastructure projects that can be financed by Community Development Districts, Neighborhood Improvement Districts, and Broadband Infrastructure Improvement Districts, as well as describing locations that can qualify for direct grant funding administered by DED.
Assuming SB 820 is signed by the Governor later this summer and becomes law, underserved areas will be defined to include areas lacking fixed wired or wireless service equal to 100 Mbps download and 20 Mbps – a substantial increase from the old standard (25/3 Mbps). This new standard is the same as that contained in the Infrastructure Investment and Jobs Act (the IIJA). SB 820 also permanently ties the definition to future increases in the speeds necessary to qualify internet service as “broadband” as changed by Federal Communications Commission – the FCC – from time to time. By raising the standard used today, many more projects will qualify for funding and can use existing financing district legislation today, and by tying the definition to future increases implemented by the FCC, the statute will continue to be a useful tool in the future as new technologies such as virtual reality and artificial intelligence require even faster internet connections.
SB 820 also includes a new Vertical Real Estate Act (new §8.475) to expressly authorize any political subdivision to erect wireless telecommunication towers and related ground-based equipment and to enter into public private partnerships for the same purpose. Finally, the new law adds several provisions designed to enable DED to better enforce and administer state broadband infrastructure grants in the cases where the recipient has failed to construct the promised infrastructure.