With recent funding for broadband being directed to individual states, how does each state stack up in it’s ability to efficiently utilize those funds?
The Infrastructure and Investment and Jobs Act (the Act) has finally become law! Signed by the President on Monday, November 15, it is widely touted as the most consequential piece of infrastructure legislation in a generation. Now comes the complicated part: implementing the provisions of this 1039-page Act.
For months, folks have heard the “$65 billion for broadband” sound bite, listed along with billions more for roads, bridges, rail, mass transit, electric, water, sewer, and other infrastructure needs. Since it’s now law, it’s time to “unpack” the various components of the broadband-related provisions of the Act and to begin thinking about what all of this will mean for state and local government and private internet service providers over the next decade.
Here is the breakdown for the various components of the $65 billion dedicated to high-speed internet access, affordability and adoption:
| Item | Primary Focus | Amount (billions $) | Act Sections |
| New Infrastructure (BEAD) | Access | 42.45 | §§60101-60105 |
| Broadband Affordable Connectivity Fund | Affordability | 14.20 | §§60501-60506 |
| Digital Equity Act of 2021 | Adoption | 2.75 | §§60301-60307 |
| Rural Broadband — USDA RUS | Access | 2.0 | Division J, Title I |
| Tribal Lands | Access & Adoption | 2.0 | §60201 |
| Middle-Mile Infrastructure | Access | 1.0 | §60401 |
| Private Activity Bonds for Broadband Infrastructure | Access | 0.6 | §80401 |
| Total | 65.00 |
Each broad category listed above will have different procedural requirements and timelines for implementation.
New Infrastructure “DATA” leads to “BEAD” (§§60101-60105)
It wouldn’t be a new federal law without a bunch of new acronyms, and this Act certainly has more than its fair share! Most of the broadband funding will be distributed to states and territories as part of a new “Broadband Equity, Access, and Deployment” (BEAD) Program. BEAD and many of the other new provisions of the Act are expected to be administered by the Department of Commerce’s National Telecommunications and Information Agency (the NTIA). NTIA hosts the BroadbandUSA website and is currently administering a number of broadband infrastructure grant programs funded under the Consolidated Appropriations Act of 2021.
The BEAD Program appropriates up to $42.45 billion to plan and build high speed fixed internet service in “unserved and underserved locations.” The Act defines an unserved location as one that lacks reliable internet service at speeds of at least 25 megabits per second (Mbps) download and 3 Mbps upload (25/3 Service) and underserved locations as those that lack reliable internet service of at least 100 Mbps download and 20 Mbps (100/20 Service). For a project area to qualify and be eligible for funding, at least 80% of the locations must be unserved or underserved.
Both definitions also require that the new services are sufficient to support real-time interactive activities by reducing the “latency” of the connection. Latency is the delay in transmitting data to and from the user over the internet, and activities such as telecommuting, running cloud-based applications and streaming video games require low latency times as well as relatively high data transfer rates. As a practical matter, this requirement likely eliminates funding for high-earth orbit satellite service as a technology that can be funded, but not new low earth-orbit satellite technologies such as “Starlink.”
A significant condition for distributing this money will be the publication of new DATA maps by the Federal Communication Commission (FCC). These maps will identify unserved and underserved locations throughout the United States that will be eligible for funding under the BEAD Program. The Act seems to assume that these maps, that Congress required the FCC to create in the Broadband DATA Act last year, will be available within the next year or so, but no deadlines are established for their release.
The BEAD Program contemplates that money will be distributed to each state, and that the states in turn will apply those funds in accordance with an approved comprehensive plan. The process should begin within 180 days when NTIA’s publishes a notice of funding opportunity (a “NOFO”). The NOFO will formally request state participation in the BEAD Program, outline the process, and detail requirements that states will need to follow to obtain funds. This procedure will be complex; it involves submission by each state of a letter of intent to participate in the Program, a Preliminary Plan, and a Final Plan. The Act provides funding to NTIA to administer the Program and to provide states technical assistance.
A minimum of $5.1 billion ($100 million to each state and, collectively, all U.S. territories and possessions) is set aside to ensure that every state gets something, but the balance of the funds will be distributed based on a formula that takes into account each state’s percentage of unserved, underserved, and high-cost locations located within their borders. States will learn how much money will be available to them (based on the state’s relative percentage of unserved and underserved locations) once the DATA maps are complete. The process provides for periodic installment payments to states during each stage of the approval process to help states finance the cost of developing their comprehensive plan.
The Act lays out in some detail the procedure for obtaining funds, and to cover them all in detail is far beyond the scope of this blog. However, here are some highlights.
If any State decides not to participate in the BEAD Program, or fails to satisfy the requirements for participation in the BEAD Program, a local government or region within the state can apply for and receive funding.
If all of this strikes you as a time-consuming and complex process, you are reading things correctly, and it’s important to keep in mind that while the Act represents a “once in a generation” commitment to infrastructure investment, it’s likely to take the better part of a “generation” to plan, construct and deploy over 40 billion dollars’ worth of broadband infrastructure.
Broadband Affordability – The Affordable Connectivity Fund Replaces the EBB Program §§60501-60506
Broadband “access” is of little use if the service provided isn’t affordable. The Act appropriates $14.2 billion to fund a revised version of the Emergency Broadband Benefit (EBB) program. The EBB was originally funded at $3.2 billion as part of the Consolidated Appropriations Act of 2021, and it provided a $50 per month benefit for high-speed internet service to qualifying households, along with a one-time payment toward equipment to access the internet (capped at $100). The new Affordable Connectivity Fund caps the qualifying individual household benefit at $30 a month. This $30 per month benefit can be used to pay for whatever level of internet service the household desires. The idea is to give qualifying households the option of selecting a faster internet service (and paying more) if that is needed to meet their needs. The Act also contains directives and rules designed to enhance consumer awareness and curb perceived abuses that limit eligibility to the new Affordable Connectivity Fund.
Broadband Adoption – The State Digital Equity Capacity Grant Program §§60301-60307
The Act creates a new grant program within the Commerce Department called the State Digital Equity Capacity Grant Program. This program is funded with $2.75 billion and is expected to be administered by NTIA. The funds will be distributed to an entity appointed by the governor of each participating state pursuant to that state’s “Digital Equity Plan.” To receive a grant under this program, the state’s Digital Equity Plan must satisfy criteria designed to increase the availability and use of broadband applications and internet-based technology. The state’s plan can address issues of digital literacy, cybersecurity and privacy, access to affordability programs, workforce development, education and health outcomes, and civic and social engagement. In developing and administering the state’s Digital Equity Plan, the state is expected to work in partnership with state agencies, local government, and nonprofit entities.
Rural Utilities Service—Distance Learning, Telemedicine, and Broadband Programs Division J, Title I
The Act provides an additional $2 billion of funding for the Distance Learning, Telemedicine, and Broadband Program administered by the USDA. This appropriation is for the current fiscal year ending September 30, 2022, and funds will be available until spent. The new appropriation is for unserved areas (50% or more of locations having service at speeds less than 25/3 Mbps). To the extent possible the Act requires that projects receiving funds under this program be capable of providing at least 100/20 Service. The Act permits funds granted or loaned under the program to be used to pay for attachment fees and pole replacement costs incurred by electric cooperatives, so that fiberoptic cable or other wireline infrastructure can be co-located on the utility poles. Other provisions waive the requirement for local matching funds to qualify under the USDA program for areas with persistent high levels of poverty.
Tribal Lands §60201
The Act provides an additional $2 billion of funding broadband on Tribal Lands under the existing Tribal Broadband Connectivity Program established by Consolidated Appropriations Act of 2021 and administered by NTIA. In addition, the Act makes some technical amendments to the program to provide more realistic deadlines for expenditure of funds and completion of projects. Funds provided under the Tribal Broadband Connectivity Program can be used for planning, infrastructure, and adoption on Tribal lands.
Middle Mile Funding §60401
The expansion of internet service in unserved and underserved areas has been impeded in part by the lack of affordable and reliable connection points to carriers that transport data from a local internet service provider’s endpoint to the internet “backbone” – a location that transports data across the nation and around the world. This portion of the internet is generally referred to as “middle mile” infrastructure.
The Act attempts to address this issue by establishing a new program, also expected to be administered by NTIA, that will make up to $1 billion of grants to fund middle mile infrastructure. Grants will be awarded under the program based on a competitive process that prioritizes areas in greatest need of middle mile connection and will include areas in need of connection options and alternative data routes in the case of failure of an existing primary middle mile connection. Telecommunications companies, technology companies, electric utilities, and utility cooperatives are all eligible to participate in the program. Grant recipients will be required to offer service on a nondiscriminatory basis to all ISPs in the area covered by the award.
Private Activity Bonds for Broadband Infrastructure §80401
The interest on tax-exempt bonds (bonds and other forms of state and local government debt) is generally exempt from income tax, and these bonds have been used to finance public, and some privately-owned projects. Because investors do not pay income tax on interest received on the bonds, they are willing to accept a lower interest rate, and this reduces the overall cost of financing a capital project. One category of tax-exempt bonds is a “private activity bond” and they have been used to provide tax-exempt financing for certain capital costs for specific types of projects that will be owned and operated by private companies.
The Act adds a new category of tax-exempt private activity bonds for broadband infrastructure projects.
Generally, these bonds must finance capital investment for projects in unserved areas and there are numerous technical restrictions applicable to the use of the borrowed funds. Private activity bonds must be issued by a state or local government and the overall amount of private activity bonds issued by a state is limited. This means that private activity bonds must receive an allocation of a state’s overall limit (its annual private activity “bond volume cap”). In Missouri the Department of Economic Development is responsible for allocating the state’s bond volume cap to particular projects.
Digital Connectivity: Are We There Yet?
At least some of the accolades that have accompanied final passage of the Act are warranted. Even in the “post-COVID” era, spending a trillion dollars (a thousand, thousand, million dollars) still should get our attention. It is a lot of money, but most would agree, much of our nation’s infrastructure is badly in need of expansion and upgrade. Of course, the fact that Congress was able to “do something” – particularly something of this size — with help from both political parties is a unique achievement these days.
However, it’s important to keep things in perspective. If your family or business does not have access to adequate high-speed internet service now, passage of the Act won’t mean you’ll have it next week, next month, or even quite likely next year. The BEAD Program will take many months to initiate, and many years (think five to ten years) to fully implement. Other programs, such as the Affordable Connectivity Fund, additional funding for the Rural Utility Service, and some of the other adoption grant programs, may be funded more quickly, particularly if the responsible federal agencies quickly publish a Notice of Funding Opportunity, and act promptly to approve and distribute the funds.
So, while we certainly do seem to be on the road to “digital connectivity,” there likely are many more miles to travel before we arrive at that destination.
Today marks a historic moment for all Americans with the passing of the Bipartisan Infrastructure Deal, that includes an enormous $65B investment for broadband deployment in unserved and underserved areas and adoption by in-need consumers.
One aim of the new Infrastructure Investment and Jobs Act is to ensure that every American has access to reliable high-speed internet service. Here we begin a multi-part series looking at the major broadband-related provisions of the legislation. First up: over $42 billion for broadband deployment grants to the states. We look at why new broadband maps are so critical to these efforts, what the grants can be used for, the process for states to receive the support, and a timeline moving forward.
The Federal Communications Commission today announced that it will commit over $421 million in the latest round of Emergency Connectivity
Fund announcements, bringing total program commitments to over $3.05 billion. The funding is supporting schools and libraries in all 50 states, Guam, Puerto Rico, the U.S. Virgin Islands, and the District of Columbia. The funding can be used to support off-campus learning, such as nightly homework and virtual learning, as schools and libraries continue to respond to the ongoing COVID-19 pandemic.
We’ve written earlier about the use of American Rescue Plan Act (ARPA) Funds to pay for broadband infrastructure projects. Besides the cryptic language in the statute (necessary broadband infrastructure) we noted two helpful additional sources published by the U.S. Treasury Department — the “Interim Final Rule” effective May 17, 2021, and a series of answers to Frequently Asked Questions about the statute and the Interim Final Rule (the FAQs).
But some pointed to the “Interim” label on these rule – cautioning that the guidance was not final and implying that local governments relying on them might find themselves in a box if the “final” guidance that eventually is issued by the Treasury (a new or updated rule) somehow turned out to be materially different from what is in Interim Final Rule. The concern was that the Federal government might attempt to recoup money from the local government based on the theory that it was improperly spent under new “final” rule, even though it appeared to be permitted under the Interim Final Rule.
Undoubtedly, this has led some local governments to reconsider spending ARPA funds it had on hand, because the Treasury Department recently addressed this very concern directly in an undated “explanation” posted on its website.
The Treasury explanation begins by referring to the guidance already given and noting that ARPA funds were provided to local governments with the expectation that they would be spent promptly to remedy issues caused or made evident by the COVID pandemic. The explanation then cautions everyone not to expect to see a new final rule anytime soon, because the Treasury is now considering almost 1000 separate public comments it received to the Interim Final Rule published this spring.
Given this situation, the explanation goes on to state the following:
“Until Treasury adopts a final rule, and the final rule becomes effective, the Interim Final Rule is, and will remain, binding and effective. This means that recipients can and should rely on the Interim Final Rule to determine whether uses of funds are eligible under this program. Treasury encourages recipients to use funds to meet needs in their communities.
Funds used in a manner consistent with the Interim Final Rule while the Interim Final Rule is effective will not be subject to recoupment.”
What about the FAQs? Again, the explanation is helpful:
“Finally, recipients may also consider FAQs issued by Treasury to help assess whether a project or service would be an eligible use of Coronavirus State and Local Fiscal Recovery Funds.”
So where does that leave local county commissions, city councils, and boards of aldermen? Well obviously, they can and should consult with their professional advisors for advice in special cases, but clearly the language used in the explanation leaves little doubt that Treasury wants to encourage state and local governments to use and rely on the guidance it has already provided, and not to delay spending ARPA funds for fear that “final” rules may provide something different.
The Federal Communications Commission today announced that it is committing $1,159,681,350.34 for 2,471 schools, 205 libraries, and 26 consortia that applied for support from the $7.17 billion Emergency Connectivity Fund Program. Combined with the first funding wave, students, school staff and library patrons in all 50 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands will receive access to the devices and broadband connectivity they need to support their off-premises educational needs.
Starting Today, Schools and Libraries Will Have 15 Days to Apply for Emergency Connectivity Fund Support
During a press conference at the Missouri State Fair hosted by the Missouri Farm Bureau, Governor Mike Parson announced plans to deploy more than $400 million in American Rescue Plan Act (ARPA) funds to increase broadband internet access, adoption, and assistance statewide
By Marc McCarty
Memories are short. As I write this in mid-August, the focus is on the bipartisan Infrastructure Investment and Jobs Act (the IIJA) that passed the Senate on August 10th. That Bill has made headlines in part because it promises to make $65 billion available for broadband infrastructure and adoption. Even though it still faces additional hurdles and an uncertain future, the IIJA has captured the limelight, and many seem to have forgotten about another piece of funding legislation – the American Rescue Plan Act (“the ARPA”).
Signed into law on March 11, 2021, the ARPA also provided billions of dollars — both to states and local governments (counties, cities, and towns) throughout the United States — that can be used to pay for critical infrastructure needs, among them: broadband infrastructure. Unlike the IIJA, which in its current form will fund investment in broadband infrastructure over several years pursuant to a long-term strategic plan developed by each state, money appropriated under the ARPA is available to local government (and to the State) now, and could complement the longer-term strategy for investment in broadband infrastructure contemplated by the pending IIJA legislation.
The Missouri State Treasurer’s Website contains a comprehensive set of documents and general information related to ARPA funding. This Blog focuses on the use of money appropriated to “local government” — which includes Missouri counties, metropolitan cities (cities with populations greater than 50,000) and other cities, towns, and villages across the State for broadband infrastructure. While not specifically covered here, these same rules generally would apply to the more than $1.3 billion appropriated directly to the Missouri State government by ARPA as well.
The relevant language in ARPA permits counties, metropolitan cities and other cities, towns and villages to use the appropriated funds for several specific purposes including – “to make necessary investments in water, sewer or broadband infrastructure.” These funds must be encumbered by December 31, 2024 and spent no later than December 31, 2026.
Obviously, this is a “big deal” for cash-strapped local governments. It is almost as if the Federal government suddenly deposited money in their checking account, but of course, like anything that seems too good to be true, questions quickly arose about what conditions and limits were placed on the “withdrawal” of that money, particularly broadband — since broadband has only recently been recognized to be “infrastructure.” Certain uses, such as funding public pension shortfalls or using the funds appropriated to reduce or offset taxes are prohibited by the statute itself, but there were other uncertainties that needed further clarification.
For many local government-decision makers who want to use ARPA money to bring better internet service to their community, these questions could be summarized as follows:
Thankfully, many of those uncertainties have been resolved through publication of an Interim Final Rule by the United States Treasury Department on May 17, 2021 and the answers to Frequently Asked Questions (FAQs) published by the Treasury Department that were last updated in late July.
The Interim Final Rule defines broadband to include any internet service capable of downloading and uploading data at speeds of at least 100 megabits per second (100/100 Mbps). In areas where construction of internet infrastructure capable of delivering service at those speeds is not practical, the Interim Final Rule allows funding for networks capable of providing service at speeds of at least 100 Mbps download and 20 Mbps upload (100/20 Mbps), so long as the network can be scaled up to 100/100 Mbps service or higher at a later date.
To put this in perspective, internet service at this level is between 4 to over 30 times faster than the FCC’s current definition of “broadband“. The Interim Final Rule requires that broadband infrastructure projects be targeted to serve areas that are “unserved or underserved,” which is defined as an area lacking consistent wired internet service at speeds of at least 25 Mbps download and 3 Mbps upload (25/3 Mbps).
The Interim Final Rule generally defines a “necessary” investment for broadband to include those designed to provide adequate service to locations where it is unlikely that the investment could be made using only private sources of funds. By way of a practical example, the Interim Final Rule says that the service offered must be sufficient to allow multiple members of a household to work and attend school online at the same time. To avoid duplication of internet service, the preamble to the Interim Final Rule encourages local governments to avoid investing in locations that have existing agreements to build reliable wired internet service at 100/20 Mbps or higher — but only if that service will be in place by December 31, 2024.
The Treasury Department FAQs provide some answers to many other practical issues a local government may face as they determine whether a particular use of funds is an “investment” in broadband infrastructure. In general, the FAQs appear to give local government substantial latitude to structure practical uses of ARPA funds. For example, local government may elect to transfer funds to a special purpose unit or agency of government or to a nonprofit organization or for-profit business, so long as that entity uses the funds for necessary broadband infrastructure. (FAQ 1.3 and 1.8). In addition, ARPA money may be used to fund loans to individuals, NGOs, or business — if the loan proceeds are used for broadband infrastructure (FAQ 4.11).
Unlike some other federal grant programs, so long as the objective of the local government is to prioritize broadband infrastructure to reach unserved or underserved locations, ARPA funds can also be used to improve service in other locations in the project area that already are “adequately served” (that is — locations able to connect through a wired internet service consistently and reliably at speeds of 25/3 Mbps). (FAQ 6.8 and 6.9).
In addition, the FAQs give the local governments wide latitude to determine if a particular area is unserved or underserved, and they need not accept download/upload speeds advertised by ISPs operating in the area if other available data does not support those claims. Instead, local government decision-makers “…may choose to consider any available data, including but not limited to documentation of existing service performance, federal and/or state-collected broadband data, user speed test results, interviews with residents and business owners, and any other information they deem relevant.” (FAQ 6.11)
In evaluating this information, local government also can consider whether the service is available at all hours of the day, and other factors that can affect the performance of internet applications such as latency or jitter, or the fact that the service is being delivered by outdated technologies such as DSL over copper or earlier versions of cable internet. (FAQ 6.11). The FAQs also clarify that funded projects may include “mid-mile” infrastructure — connecting ISPs rather than individual and business end users. (FAQ 6.10).
Finally, the FAQs broadly define investments in broadband infrastructure to include “pre-project development” expenses — expenses that are tied to a broadband project or reasonable expected to lead to a broadband project. This would include among other things, costs such as community planning, engineering, mapping, evaluation of needs and technologies, etc., so long as those expenses were incurred as part of a process intended to result in a broadband infrastructure project. (FAQ 6.12).
Obviously, a blog of this length can’t cover all questions that have been addressed already related to the use of ARPA to fund broadband infrastructure, and additional guidance almost certainly will be needed for special situations. However, the guidance now available does provide an excellent start for local government leaders and their advisors, and hopefully we will soon see some of those appropriated funds being spent on broadband infrastructure planning and construction projects.
August 16, 2021
[1] The information provided is not intended as legal advice and is offered for general informational purposes only based on information believed current as of the date written. Local government decision-makers are encouraged to seek advice from their legal advisors for answers to any specific questions related to the use of ARPA funds.