WASHINGTON, March 31, 2023 – The Treasury Department announced Tuesday new proposed guidance for compliance obligations for recipients of grant money issued through the American Rescue Plan Act’s State and Local Fiscal Recovery Fund and Capital Projects Fund. 

Recipients of any federal grant must be compliant with a series of laws most commonly referred to as the Uniform Guidance, found in Title 2, Section 200 of the Code of Federal Regulations, or sometimes merely referred to as “Part 200.” The law specifies how recipients should manage federal funds, including the reporting and auditing of those funds. 

However, in response to broadband industry concerns that such obligations would increase program costs, the Treasury issued a proposed new guidance in which recipients of CPF and SLFRF may differ from the Uniform Guidance.  

“Bringing those [Uniform Guidance] rules to reality is challenging and not possible in some cases, at least in the broadband space,” said Brooke Coleman from network engineering consulting company Widelity at a Broadband Breakfast Live Online Event Wednesday. “The guidance will provide additional flexibility for the applicants and for the program to make it more of a reality.” 

Brooke Coleman of Widelity

The proposed guidance specifies different compliance rules applicable to an internet service provider based on whether the ISP is a subrecipient of the award or a contractor. The Uniform Guidance provides guidelines for whether recipients should consider separate entities as contractors or subrecipients. 

“Each recipient should make this determination based on the nature of the broadband program it has established and its relationship with the ISPs,” read the proposed guidance.  

Proposed rule changes 

Under the default Part 200 rules, recipients are required to use program income to offset total allowable costs and reduce the Federal award and non-Federal entity contributions. Program income refers to any income stemming from grant-funded programs and would include any revenue from the end user to the ISP.  

The proposed guidance specifies that any income generated by a subrecipient ISP will not be considered program income. A contracted ISP can also be permitted to retain its income, per the decision of the recipient.   

Furthermore, the guidance states that all subrecipients to awards must follow procurement rules and cost principles. These rules would require that all recipients must first issue a procurement for contracts out to bid before deciding on a contractor.  

Because many recipients have established relationships with their ISPs, this rule could pose problems for procurement and potentially introduce more costs to deployment. The Treasury’s proposed guidance would relieve recipients and subrecipients of a fixed amount of this requirement but would retain the requirement for contracted ISPs. 

Additional rule changes include project property ownership and auditing requirements. 

Under the proposed guidance, ownership of the property may be transferred to the ISP under certain conditions. These conditions include participating in federal subsidizing programs for low-income households, using the property for authorized project scope, and continuing to provide internet connection at the agreed upon speed.  

Audit requirements will also differ under the proposed guidance. Recipients will be required to oversee contractors in place of audits to ensure that the contractors perform in accordance with agreed upon terms. However, subrecipients are still required, as specified in the Uniform Guidance, to submit audits to the Federal Audit Clearinghouse, the government-wide auditor for federal grant programs. 

Experts at a Broadband Breakfast Live Online panel Wednesday are hopeful that the Treasury’s guidance given for the CPF and SLFRF programs sets a precedent for providing further guidance for other federal broadband programs, like the $42.5 billion Broadband Equity Access and Deployment program.  

Comments to the Treasury regarding the proposed guidance may be submitted by April 11. Recipients may not implement Treasury guidance until the rules are finalized. 

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Wednesday, March 29, 2023, 12 Noon ET – Cost-Sharing and Other Compliance Requirements for Broadband Deployment

One key factor in the $42.5 Broadband Equity, Access and Deployment program is the matching requirement: Subgrantees must find matching funds of at least 25 percent of the total project cost. Matching funds can be provided by local governments, utility companies, nonprofit organizations and other entities. In addition, states are required to incentivize higher matches whenever possible. How should state broadband offices approach cost-sharing and other compliance requirements as they prepare for broadband deployment?

Panelists

• Carol Mattey, Principal, Mattey Consulting LLC
• Brooke Coleman, Senior Manager of Business Development, Widelity
• Jorge Fuenzalida, Managing Partner, JLA Advisors
• Drew Clark (moderator), Editor and Publisher, Broadband Breakfast

Carol Mattey, founder of Mattey Consulting LLC, has over 30 years of experience as a senior executive in the U.S. government, consultant and lawyer focusing on communications public policy. From 2010 to 2017, Carol was Deputy Chief of the Wireline Competition Bureau at the Federal Communications Commission, focusing on the FCC’s ongoing initiatives to reform over $9 billion in annual federal spending known as the Universal Service Fund, which supports broadband connectivity for rural areas, schools, libraries, healthcare providers and low-income consumers. She led the development and implementation of the Connect America Fund to extend broadband to unserved areas in the United States. After leaving the FCC in 2017, Ms. Mattey formed a consulting practice that focuses on government funding strategy and execution, public policy advocacy, and regulatory compliance

Brooke Coleman is the Senior Manager of the Business Development division of Widelity’s Compliance Team. Her expertise lies in federal and state grant programs, specializing in broadband programs created by multiple government acts, such as the American Rescue Plan, IIJA, and more. With a background and Master’s Degree in Instructional Practice, her unique perspective aids clients in accessing the money that they need for underserved and unserved communities in need of broadband assistance.

Jorge Fuenzalida is a Managing Partner of JLA Advisors and has more than 25 years of telecommunications experience directing projects for wireless and wireline telecommunications carriers, equipment manufacturers, cable MSOs, and private equity companies in areas of wireless technology, corporate strategy, and wireless solutions. Prior to joining JLA, Jorge was Head of Strategy & Planning for Ericsson’s Digital Services unit in North America, and previously vice president and general manager of inCode Consulting (division of Ericsson Inc.).

Drew Clark (moderator) is CEO of Breakfast Media LLC. He has led the Broadband Breakfast community since 2008. An early proponent of better broadband, better lives, he initially founded the Broadband Census crowdsourcing campaign for broadband data. As Editor and Publisher, Clark presides over the leading media company advocating for higher-capacity internet everywhere through topical, timely and intelligent coverage. Clark also served as head of the Partnership for a Connected Illinois, a state broadband initiative.

Graphic from Adobe Stock used with permission

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DALLAS, March 30, 2023 — Private sector investment continues to play a key role in supporting and shaping digital infrastructure development, as the increasing demand for high-speed connectivity clashes with industry-wide economic challenges, experts said Wednesday at Connected America.

“Despite a possible recession… it doesn’t feel like there is a slowdown in the need for digital infrastructure,” said Jennifer Fritzsche, managing director at Greenhill & Co.

While this infrastructure comes in many different forms, Fritzsche said that she was seeing particularly fast growth in data centers. “There’s been tremendous need for more capital there.”

Fritzsche also emphasized the growing demand and competition for fiber, calling it the “lifeblood” of future networks. “A lot of people are leaning in here, and I think that’s created a more challenging environment in the fiber-to-the-home space,” Fritzsche said.

As several providers aggressively attempt to expand their fiber footprints, some are turning to open access networks. The use of shared infrastructure “opens up an interesting model for competition, but it also makes it very difficult for anybody to really get a good, solid return,” argued David Rottmayer, telecommunications expert and host of the “Let’s Talk Telecom” podcast.

In December, AT&T announced a plan to bring fiber to 1.5 million customer locations outside its existing footprint, utilizing an open access platform. The outcome of this “1.5 million test” may influence other providers to either embrace or avoid similar models, said William Dauska, managing director at Citizens Capital Markets.

In response to the growing popularity of fiber, incumbent telecommunications and cable providers are investing heavily in advertising and sales, said Steve Lee, founder and managing director of Layer 7 Capital.

“Fixed wireless is becoming a real thing,” Lee said. “These carriers are being really focused on 5G as an alternative to FTTH, and I think you’re going to see a lot more of that in the new future.”

Fritzche countered that while fixed wireless may be the “here and now,” the rapid growth of fiber adoption means that major providers will have to be very careful in maintaining the same standard of service for existing wireless customers.

“I tend to think fiber is always the preferred solution, especially as you see the consumption that’s happening,” she said. “I do think there’s a place for fixed wireless, LEOs, satellite, but it’s probably not in the areas that are consuming the most demand.”

Across different types of infrastructure, Rottmayer pointed to high interest rates and government grant programs as two factors potentially hindering private sector investment. The grant programs tend to favor incumbents with an established base, he said, which poses a challenge for startup entities.

WASHINGTON, March 30, 2023 – Internet service provider Altice USA is challenging claims by the state of New York that its fixed broadband maps are inaccurate, according to a company letter to the Federal Communications Commission.

New York was one of the earliest challengers of the accuracy of the Federal Communications Commission’s preliminary broadband data fabric, which includes service provider data and constitutes the foundation of the commission’s broadband availability map. The state, which created its own map in anticipation of having to challenge the federal data, claimed that there were 31,500 missing locations in the first version of the fabric before the map’s preliminary release in November.

On Monday, Altice filed to the FCC a request for confidentiality in anticipation of submitting data it said challenges the state’s contentions. The FCC allows for challenges to its fabric, including allowing the provider to dispute a challenge by providing evidence that it serves or could and is willing to serve the location being contested.

“In response to a bulk challenge filed by the Empire State Development Corporation, Altice is submitting lists of location IDs where the company has previously provided service, where the company currently provides service to an active subscriber, and where the company could and is willing to provide service,” Altice said in its letter to the FCC.

“Altice is also submitting a supporting affidavit that includes information regarding the number of challenged locations that Altice currently serves or formerly served,” it added.

Broadband Breakfast reached out to Altice’s communications representatives about how many locations it’s challenging and did not hear back in time for publishing.

FCC Chairwoman Jessica Rosenworcel said last week the commission added nearly three million locations – one million net new locations – and has “largely completed” the second version of the map fabric. The commission releases updated maps every six months.

The map will be used by the National Telecommunications and Information Administration to deliver to the states the $42.5 billion in broadband infrastructure funds from its Broadband Equity, Access and Deployment program. Fewer underserved locations in a state will mean less BEAD funding.