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FCC Should Not Increase Rural Program Obligations in Light of New Federal Funding: Meeting Notes

Opponents say increasing coverage and speed obligations of the ACAM program may be unnecessary with new federal broadband money.



Photo of FCC commissioners

WASHINGTON, August 4, 2022 – The Federal Communications Commission should withhold expanding funding for a program of the Universal Service Fund because there may be support for broadband infrastructure from other federal funds and state activities, according to responses to the FCC proceeding on revising that program.

The FCC’s Wireline Competition Bureau is seeking comment on enhancing the Alternative Connect America Cost Model program – which funds build-outs to rural and high-cost areas by allowing carriers to recover costs from the USF – by proposing additional funding support in exchange for increasing provider obligations to expand broadband deployment locations at higher internet speeds. It would also use the new Broadband DATA Act maps – which are set to be released by the fall – to determine new deployment obligations.

The new obligations would require speeds of at least 100 Megabits per second download and 20 Mbps upload to 90 percent and at least 25/3 Mbps to the remaining 10 percent of eligible census blocks. In 2019, the commission increased the speed obligation to 25/3, which made at least 106,000 additional rural homes and small businesses eligible for A-CAM funding.

But the proposal is facing some opposition. According to a meeting summary with a legal advisor in Commissioner Brendan Carr’s office published Tuesday, telecom company Windstream reiterated that Congress has created an unprecedented $42.5-billion opportunity to deploy broadband networks in rural areas through the Infrastructure, Investment and Jobs Act and corresponding state broadband programs.

Windstream stressed in the meeting the importance of studying the IIJA’s impact prior to increasing current obligations to fund broadband projects, which it said would impact the stability of the USF.

The FCC is currently studying the future of the USF, whose revenues are derived largely from dwindling voice service revenues. Windstream expressed its support of the commission acting under what Windstream views as the FCC’s authority to expand the USF contribution base to include broadband internet access services, which has been an issue of debate for some time and is being studied by the commission.

NCTA, the internet and television association, in a summary of a meeting held with the legal advisor to Chairwoman Jessica Rosenworcel, added that rather than spend USF resources where they may not be necessary – and may even disrupt state activities already in progress – the commission should pause any new high-cost support through the A-CAM program.

The association added that the FCC should be skeptical of requests to increase support for ongoing maintenance and operations through A-CAM as alternative federal funding may eliminate the need for operational support in many areas.

Comments on the decision to revise A-CAM will be accepted through August 18.

The proposal follows a request in June by Siyeh Communications, which asked for a change in A-CAM because the program allegedly incorrectly determined certain areas to be ineligible by misidentifying those areas being served by an unsubsidized, unaffiliated carrier.

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States and Municipalities Should Move Quickly on Infrastructure Funding, BEAD or Not

Beginning financial planning early and allow time to tweak statutes that may stand in the way of certain funding options.



Photo of Drew Clark (left), Tom Coverick, David Wedick and Vikash Harlalka at Digital Infrastructure Investment by Zoey Howell-Brown.

WASHINGTON, November 20, 2022 – Despite an unprecedented influx of federal broadband funding, states should expeditiously pursue diverse network funding options, said Tom Coverick, managing director at Keybanc Capital Markets, speaking Thursday at Broadband Breakfast’s Digital Infrastructure Investment conference.

Coverick advocated financial strategies that are “nimble, responsive, and quick.” And among other benefits, beginning financial planning early on allows time to tweak statutes that may stand in the way of certain funding options, he argued.

“I don’t think sitting and waiting for one piece (of financing) is the right thing to do,” he said. “I don’t say that people should be hasty, but the reality is it’s always easier to slow things down in the financial world than it is to speed them up,” he added.

David Wedick, chief financial officer of the Maine Connectivity Authority, also spoke to importance of timely action. “Time is money, and the market is changing,” he said.

The two were speaking on a panel moderated by Broadband Breakfast Editor and Publisher Drew Clark, and including Vikash Harlalka, a member of the Communications Services team at New Street Research.

The private sector can offer much more to the broadband industry than just financial support, Wedick argued. “Investment from the private sector is not just going to be in terms of dollars, it’s going to be in terms of resources (such as) the law firm that decides to create a new division around broadband legal work,” he said.

In addition to seeking out private investment, state officials must navigate the federal government’s multitude of broadband-funding efforts, including a $65 billion infusion from the Infrastructure Investment and Jobs Act.

Federal moneys are divided among numerous programs administered by various federal agencies, including the United States Treasury’s Capital Projects Fund, the Department of Agriculture’s ReConnect program, the Federal Communications Commission’s Rural Digital Opportunity Fund, and the National Telecommunications and Information Administration’s Broadband Equity, Access, and Deployment initiative. The BEAD fund will distribute $42.45 billion to the states for deployment and related projects.

Full videos from Digital Infrastructure Investment will be available soon for Broadband Breakfast Club members. Join the waitlist:

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Local Leadership and Coordination Key to Proper Federal Fund Allocation, Conference Hears

Local communities understand their own needs, said Arkansas’s Glen Howie.



Photo of Phil Murphy, senior advisor at the NTIA, at the DII conference Thursday

WASHINGTON, November 17, 2022 – Robust state and local leadership in coordination with federal support initiatives is key to the rollout of the Infrastructure, Investment and Jobs Act’s broadband funding, agreed officials from the National Telecommunications and Information Administration and state broadband offices speaking at Broadband Breakfast’s Digital Infrastructure Investment conference Thursday.

Local communities understand their own needs best, said Glen Howie, director of the Arkansas State Broadband Office. Howie said his state will “go county by county,” encouraging ground-up leadership from the citizens of his state.

“It’s not really about Washington, and it’s not even really about Little Rock, it’s about (local communities),” he said. Before assuming his current position, Howie worked in Louisiana’s broadband office, another state which prioritizes community engagement.

In Maryland, state funding initiatives favor service providers who enjoy community support, said the state’s broadband director, Kenrick Gordon. One Maryland program even allows local jurisdictions to apply in partnership with a preferred provider, he said.

At the federal level, the NTIA is working with states to provide them the resources they need, said Phil Murphy, senior advisor in the Office of the Assistant Secretary at the NTIA. Speakers noted that many state broadband offices are only months old, understaffed, or both.

“We really want to be partners,” he said, “We want to work with (states) through this process and to help them leverage the capabilities that we’ve developed so that we’re all working towards the same goal.”

And beyond the IIJA funding initiatives, Howie said he is working to brighten his state’s future by seeking out technology innovators in many fields, including agriculture, education, and healthcare.

“I’m on the hunt for really cool, innovative things that could be disruptors…in Arkansas,” he said.

The IIJA, which became law one year ago Tuesday,  allocated to broadband infrastructure an unprecedented $65 billion. Congress designated the bulk of these funds – $42.5billion – for the Broadband Equity, Access, and Deployment program, primarily a infrastructure deployment initiative, which will issue grants to the states based on relative need, as shown in the Federal Communications Commission’s national broadband map.

The NTIA administers BEAD funds and is scheduled to announce states’ grants by June 2023. Once states receive funds, they will operate sub-grant programs to allocate funding to individual deployment and related projects.

Beside the BEAD program, the IIJA funded initiatives to promote digital equity and adoption, middle-mile infrastructure, and tribal broadband.

Full videos from Digital Infrastructure Investment will be available soon for Broadband Breakfast Club members. Join the waitlist:

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Senators Push Bill to Make Broadband Grants Non-Taxable By Year-End

Sen. Mark Warner said he is in discussions to push the bill to law this year.



Screenshot of Sen. Jerry Moran, R-Kan.

WASHINGTON, November 16, 2022 – Sen. Mark Warner, D-Va., said Wednesday that he is pushing to become law this year a bill that would shield from taxes federal broadband funds to maximize the amounts going to builds.

“I’m engaged real-time in conversations with the finance committee and others to see if we could get this included (in) the end-of-the-year package,” he explained at the 2022 US Telecom Broadband Investment Forum.

Warner and Senator Jerry Moran, R-Kan., on Wednesday touted the Broadband Grant Tax Treatment Act, which was introduced by the senators in September. Each emphasized the importance of maximizing the reach of federal broadband funding.

Tax-exempt funding programs would include middle-mile grants, the Digital Equity Competitive Grant Program, and the Broadband Equity, Access, and Deployment program. The BEAD program will distribute $42.45 billion – about two thirds of the IIJA’s broadband funds – to the states.

“One way (to get broadband funds to unserved areas) is to make sure that the money is not returned to the Treasury because of a tax on the grants,” argued Moran. “Taxing the grants would limit the effectiveness of the deployment programs. This would mean fewer people would receive broadband services in our state and around the country, and it would reduce the chances that rural America finally gets the service that it needs.

“Forcing broadband providers to pay back a portion of their broadband-deployment funds just lacks common sense,” he added.

To prevent federally-funded overbuilding – in which money goes to areas that already have adequate infrastructure – Moran advocated robust congressional oversight. Congress should use its power of the purse to promote executive agency accountability, he argued.

Moran also called for close coordination between the FCC, the National Telecommunications and Information Administration, and the Rural Utilities Service, three leading administers of federal broadband funding.

In August, US Telecom and fellow trade organization NCTA – The Internet & Television Association argued for federal protections against overbuilding in comments submitted to the Federal Communications Commission.

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