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Doling Out the Dough: First Phase of Broadband Stimulus Spending Begins

The first step in spending the $7.2 billion in stimulus funds allocated for broadband is to help eligible companies understand who can apply--and how. To that end, the NTIA, the RUS, and the FCC are holding a joint public meeting tomorrow at the offices of the NTIA.

The American Reinvestment and Recovery Act, which was signed into law last month, includes a total of $7.2 billion in stimulus funds for broadband – including $4.7 billion for the National Telecommunication and Information Administration (NTIA)’s Broadband Technology Opportunities Program, and $2.5 billion for the Rural Utilities Service (RUS).

The details of how that money will be allocated, however, could use some clarification.

To help eligible companies understand the procedures, the NTIA, the RUS and the FCC are holding the first of what is expected to be a series of joint public meetings tomorrow, Tuesday, March 10th, at the offices of the NTIA. The meeting agenda can be viewed here [PDF file].

In the meantime, the basic structure of the broadband stimulus is relatively straightforward – and unlike earlier drafts, it includes only grants and no tax credits.

NTIA grants

The NTIA’s Broadband Technology Opportunities Program (BTOP), which receives $4.7 billion in stimulus funds, is designated for deployments in “unserved” and “underserved” areas (with no specific definition of those terms), as well as for “broadband education, awareness, training, access, equipment, and support.” There are no minimum speed requirements or definitions for broadband service.

Still, the purpose of the BTOP grants themselves is clearly defined. They may be used to “acquire equipment, instrumentation, networking capability, hardware and software, digital network technology, and infrastructure for broadband services; construct and deploy broad service-related infrastructure; ensure access to broadband service by community anchor institutions; facilitate access to broadband service by low-income, unemployed, aged, and otherwise vulnerable populations in order to provide educational and employment opportunities to members of such populations; construct and deploy broadband facilities that improve public safety broadband communications services; and undertake such other projects and activities as the Assistant Secretary finds to be consistent with the purposes for which the program is established.”

And of the NTIA’s funds, $200 million is separately designated for public computer centers at community colleges and public libraries, $250 million is allocated to “innovative programs to encourage sustainable adoption of broadband service,” and up to $350 million is for national broadband mapping efforts.

Recipients are required to demonstrate that their project would not be implemented without federal assistance, and must provide a 20 percent match of federal funds—grant funds are limited to 80 percent of a project’s cost unless “the applicant petitions the Assistant Secretary for a waiver, and the Assistant Secretary determines that the petition demonstrates financial need.”

NTIA grant recipients must be either a nonprofit or “any other entity, including a broadband service or infrastructure provider, that the Assistant Secretary finds by rule to be in the public interest.” All funds are to be awarded by the end of fiscal year 2010, and grantees must “substantially complete” projects within two years of the awarding of funds.

RUS grants

The RUS’ $2.5 billion allocation is more specific in its definition of underserved areas—for any project to be funded, 75 percent of the area to be served must be “in a rural area without sufficient access to high-speed broadband service to facilitate rural economic development, as determined by the Secretary of Agriculture.” Projects that receive RUS funds are prohibited from also receiving funds from the NTIA.

Priority in allocation of RUS funds is to be given to projects that will give end-users a choice of service providers, to projects run by former RUS grant recipients, and to projects that “provide service to the highest proportion of rural residents that do not have access to broadband service.” However, the RUS funds have no final deadline for allocation.

And according to Putting the Angels in the Details [PDF file], an analysis of the Act by the nonprofit organization Free Press, existing RUS regulations prohibit grant recipients from using the funds to deploy their own broadband transport facilities. “This restriction greatly reduces the ability of a non-telco incumbent (such as a wireless provider or a cable company) to use grant funds to upgrade their existing facilities to offer broadband services,” the organization notes.

The larger picture

The NTIA and RUS grants are not the only parts of the Act that may impact broadband deployments. An analysis by the Baller Herbst Law Group [PDF file] points out that a range of other provisions may also assist with such efforts. “A significant amount of funding is devoted to improvements for transportation infrastructure, including highways and rail improvements… [which] could enable further improvement to broadband infrastructure through use of associated rights of way and other means,” the writers state, noting that other possible areas of assistance within the Act include public housing, school construction, and electricity grid upgrades.

Looking forward, as industry analyst Craig Settles points out, the real challenge will lie in getting deployments in place as efficiently as possible—because unlike other aspects of the Act, the broadband stimulus isn’t just about putting people to work on the deployments themselves. “The economic benefit of the job creation to build networks is not going to be as significant as the economic benefit of the finished network from new business initiation—home-based business or traditional business—revamping healthcare delivery, and transforming education,” Settles notes.

And in a report entitled The Need for Speed: The Importance of Next-Generation Broadband Networks, the Information Technology and Innovation Foundation notes that it’s also about ensuring that broadband speeds are maximized nationwide. “Beyond the stimulus, public policy needs to also focus on supporting faster broadband speeds for all Americans,” the authors write. “Due to the positive network externalities that next-generation broadband Internet access bestows, proactive policy intervention is justified not just to extend broadband service to the Americans who lack it, but also to investments in networks… that support higher speeds.”

Jeff Goldman is a veteran technology journalist and a frequent contributor to Wi-Fi Planet.