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Demanding Requirements on NTIA’s BEAD Program May Depress Broadband Participation

What are the downsides of having too many grant requirements?

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Photo of Ross Lieberman by Jericho Casper

KEYSTONE, Colo., June 7, 2022 – Panelists at the Mountain Connect 2022 conference in May warned against putting too many onerous conditions on prospective recipients of billions in federal infrastructure money, arguing some provisions will require further discussion or potential modification or else it will discourage applications.

Industry observers at the conference who studied the notices of funding opportunity for the $42.5-billion Broadband, Equity, Access and Deployment  Program, which was released by the National Telecommunications and Information Administration on May 13, argued that money from the program contains too many strings attached, including environmental, tax and rate regulation implications, for it to be fully viable as an option for service providers.

Steven Coran, chair of law firm Lerman Senter’s broadband, spectrum, utilities and communications infrastructure practice group, said BEAD applicants need to consider the tax implications of the program, as well as the reimbursement structure of the program. In addition, Coran said that planet resilience provisions, including environmental preservation studies, are additional expenses grant recipients should account for.

BEAD applicants need to similarly understand the labor standards required by the NOFO, added Valerie Wimer, vice president of business development at telecom consulting company JSI, because those provisions will also drive-up costs, especially with the current labor market.

“I think that putting too many onerous conditions on recipients is actually not in the public’s interest, and states and NTIA should really take this into account,” said Ross Lieberman, senior vice president of government affairs for cable industry group ACA Connects.

“First, it can depress participation in the program, so you end up having a less competitive grant program. Second, the providers are going to internalize these costs, and it will result in them asking for more money, resulting in less money available to reach the un- and under- served. Finally, providers could end up being in a situation where they are more likely to default after the fact, because they couldn’t properly anticipate what these conditions could mean for a network 20 years in the future.”

Julie Darrington, vice president of consulting at Vantage Point Solutions, added that, “There are significant impacts when you start layering on all of the different costs.

“When you think about the matching requirement, the taxable income, add in letter-of-credit costs, prevailing wages…When you start looking at all those pieces and parts it really impacts the financials,” she said. “From a financial feasibility standpoint, I’m concerned that the profitability and the long-term sustainability of [BEAD funded] networks are going to be tough in many cases, especially in rural areas.”

Concerns expressed about broadband rate regulation

Provisions in the BEAD NOFO require the inclusion of a low-cost broadband option. Some industry groups fear that might lead to regulation of broadband rates.

Yet Lieberman said the NTIA has yet to prescribe how states should rank, or evaluate, applicants based on these requirements.

“I haven’t seen any kind of deployment program with this level of rate regulation,” Lieberman told the audience, largely made up of municipal leaders and representatives of service providers. “This is an area that is not as well defined in the rules yet, and so we’re going to be watching to see how the NTIA and states end up dealing with this.”

Lieberman maintained that BEAD applicants need to consider the revenue that they will be able to generate from their proposed networks, to then determine what they are going to bid for, in order to be able to sustain the network for the life of the program. BEAD applicants first have to consider the cost to deploy a network, but they must then consider the slew of additional costs necessary to comply with grant requirements.

There is some discussion in the BEAD NOFO about the potential for multiple rounds of state funding. The panelists explained that as the grant process gets underway, the rules may ease up, but that shift cannot be expected for at least two to three years.

Funding

Decades-Old Legislation Can Play Supplement to Federal Broadband Infrastructure Money

The Community Reinvestment Act was expanded to include broadband investments in 2016.

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Photo of Jordana Barton-Garcia (far right)

CLEVELAND, June 27, 2022 – A decades-old piece of legislation can play an important and supplemental role to federal grants for broadband infrastructure, said panelists at the Pew Charitable Trust Broadband Access Summit Wednesday.

The Community Reinvestment Act was passed in 1977 to address redlining – the practice of denying financial services to individuals or groups based on where they are located, often along racial or soci-economic lines. The law encourages banks to make community development loans and investments in low- and moderate-income communities, rural, and tribal communities.

The legislation expanded to include investments in broadband infrastructure in 2016, after broadband was deemed an essential community service, said Jordana Barton-Garcia, principal of the social enterprise at Barton-Garcia Advisors. That means that it could play a key role in filling some of the broadband gaps, she said, as the federal government moves to distribute billions to the states under the Infrastructure Investment and Jobs Act.

In response to the pandemic, banks can now qualify to receive CRA credit for broadband deployment activities, said Barton-Garcia. Activities include loans, investments, and services that support digital inclusion or affordability programs.

Banks receive CRA credit for investing in community development projects and are reviewed on their CRA performance every three years. Their scores are open to the general public. If the bank receives a negative rating, it may prevent the bank from opening new branches and the bank will be expected to correct the rating.

Currently, the Federal Reserve is seeking comments on a joint agency proposal to strengthen and modernize CRA regulations.

A report published by the Federal Reserve Bank of Dallas in 2016 laid the groundwork for broadband to be included under the CRA. “Under the CRA, infrastructure investment includes facilitating the construction, expansion, improvement, maintenance or operation of essential infrastructure…  broadband is now a basic infrastructure needed in all communities.”

The CRA also includes workforce development investments, digital literacy projects, and technical assistance for small businesses.

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Funding

Researching the Impact of Digital Equity Funding Starts With Community Collaboration

Understanding the funding impact will ‘begin with the NTIA’s mandate to work with community partners.’

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Photo of Fallon Wilson

CLEVELAND, June 23, 2022 – Formulating research questions and making data readily accessible will contribute to the impact of federal and state digital equity funding, said experts speaking at the Pew Charitable Trusts’ Broadband Access Summit Wednesday.

It is essential to “formulate the research questions with communities” so that researchers will understand what is of interest and importance to the residents and local leaders, said Nicole Marwell from the University of Chicago,

Marwell said it is “critical” for researchers to consider how to “ask questions that bring answers that are more relevant for the community partners and then for [researchers] to try and figure out a way to make that interesting for a research audience.”

“We can demystify research,” said Fallon Wilson of the #BlackTechFutures Research Institute, speaking on how researchers can effectively work with community members. When data looks friendly to local leaders, they can go directly to their state broadband offices and advocate for their specific needs in specific areas.

“The best advocates are the people who advocate for themselves,” said Wilson.

Our role as researchers can play is to make data digestible for the non-academic, said Hernan Galperin of the University of Southern California.

The National Telecommunications and Information Administration requires states to work with community leaders and partners for the funds distributed by the Infrastructure Investment and Jobs Act.

Wilson praised this mandate, saying that understanding the funding impact will “begin with the NTIA’s mandate to work with community partners.”

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Funding

BEAD Program Initiative Should Utilize Analysis of Affordable Connectivity Program Enrollment

Analyzing ACP enrollment can help the BEAD program solve the ‘persisting gap between deployment and subscription.’

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Photo of John Horrigan

WASHINGTON, June 16, 2022 – The National Telecommunications and Information Administration should utilize adoption data from the Affordable Connectivity Program to maximize the effectiveness of its $42.5-billion infrastructure program, according to a broadband adoption expert.

“If the federal government’s investments in broadband connectivity are to be effective, different programmatic pieces must work together,” said John Horrigan, Benton Senior Fellow and expert on technology adoption and digital inclusion, in a blog post Thursday.

Analyzing the enrollment data of the Federal Communications Commission’s ACP can help the Broadband Equity, Access and Deployment program — a $42.5 billion fund for infrastructure to be handed to the states — solve the “persisting gap between deployment and subscription” in three ways, said Horrigan.

First, examining ACP enrollment in zip codes can help target which areas within cities are unaware of ACP. Second, understanding where ACP enrollment is over-performing can “launch productive inquiry into models that may be effective – and replicable.” Third, ACP enrollment findings can help structure community outreach initiatives for digital inclusion.

“The National Telecommunications and Information Administration has emphasized that a key goal of BEAD investments in digital equity,” said Horrigan. “State planners will need all the tools they can find to work toward that goal – and analysis of ACP performance is one such tool.”

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