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Treasury Announces New Compliance Obligations for Broadband Grants

The Treasury announced a proposal to revise broadband grant compliance obligations Tuesday.

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2 months ago

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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. 

Our Broadband Breakfast Live Online events take place on Wednesday at 12 Noon ET. Watch the event on Broadband Breakfast, or REGISTER HERE to join the conversation.

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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As with all Broadband Breakfast Live Online events, the FREE webcasts will take place at 12 Noon ET on Wednesday.

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Teralyn Whipple, who joined Broadband Breakfast in 2022, studied marketing at Brigham Young University. She has reported extensively on broadband infrastructure, investments and deployment. She has also headed marketing campaigns for several small companies.

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Funding

National League of Cities Announces Bootcamps to Support Applicants to Federal Infrastructure Programs

The program instructs applicants on best practices to write winning grant applications.

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3 days ago

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June 1, 2023

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Image by PeopleReady

WASHINGTON, June 1, 2023 – Advocacy group National League of Cities is sponsoring a nationwide program designed to advise cities and towns on how to access federal infrastructure funding. 

The Local Infrastructure Hub program is hosting a grant application bootcamp aimed at assisting small- and mid-sized cities and towns in their grant applications. The bootcamp series will begin in June and will focus on the programs funded through the $65 billion Infrastructure Investment and Jobs Act and the Inflation Reduction Act.  

The camp comes ahead of the National Telecommunications and Information Administration’s allocation by June 30 of the $42.5 billion from its Broadband Equity, Access and Deployment program.

The broadband opportunities bootcamp will introduce cities to the entire ecosystem of federal broadband opportunities and educate them on ways they can engage with the private sector, the NLC said. It will guide them through the process of applying to the Broadband Equity Access and Deployment program, it added. 

Participants will be guided through the process of creating an asset map for their community, executing a community engagement strategy, utilizing data to understand problems, aligning applications with broader federal priorities, and writing winning applications through provided templates.  

Mayors and municipal staff across a wide range of specialties are eligible to participate. Participants will have access to subject-matter experts and individualized coaching sessions. The program will connect applicants with their peers applying to the same programs, the NLC said. 

The free bootcamps will last 3 to 4 months and will require several hours of participation each week per team member. Many city leaders tout the program as being highly successful and influential in their grant application process.  

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Fiber

FCC Commissioner Carr Criticizes BEAD Fiber Priority Ahead of Funding Allocation

The NTIA has acknowledged a clear preference for fiber in its bipartisan infrastructure deployment effort.

Published

4 days ago

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May 31, 2023

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Photo of FCC Commissioner Brendan Carr in Feb 2018 by Gage Skidmore used with permission

WASHINGTON, May 31, 2023 – Brendan Carr, commissioner of the Federal Communications Commission, voiced reservations last week about the fiber preference in the National Telecommunications and Information Administration’s flagship broadband funding program, citing potential time and financial constraints.

The NTIA’s Broadband Equity, Access, and Deployment program, an offspring of the Infrastructure, Investment and Jobs Act, is expected to deliver $42.5 billion to the states by June 30 for infrastructure that needs to be built within a handful of years. Funding priorities under BEAD will be given to “projects designed to provide fiber connectivity directly to the end user,” according to an NTIA document.

“I do think some of the BEAD policies put a bit too much of a thumb on the scale for fiber,” Carr said in an interview with John Foley, managing director of Safer Building Coalitions, at the Wireless Tech and Policy Summit in Washington.

“In the case of fiber, where it could take potentially years to get fiber built out, not to mention significant delta in funding,” said Carr. “It can take anywhere from $40,000 to $60,000 to run a mile of fiber.”

He said fixed wireless access can sometimes provide “robust high-speed service” while still remaining within budget.

Despite the NTIA’s clear acknowledgement of a fiber preference in its infrastructure deployment effort, Carr has long advocated for the use of fiber alternatives in rural regions, where high-speed internet is still a luxury in some parts. In 2022, Carr criticized the FCC for rejecting full grants to satellite broadband service provider Starlink and fixed wireless service provider LTD Broadband from the Rural Digital Opportunity Fund.

“We should be making it easier for unserved communities to get service, not rejecting a proven satellite technology that is delivering robust, high-speed service today,” read the statement. “To be clear, this is a decision that tells families in states across the country that they should just keep waiting on the wrong side of the digital divide even though we have the technology to improve their lives now.”

Among the summit’s panelists, former FCC Commissioner Jonathan Adelstein also raised skepticism that the program’s intended beneficiaries, those living in rural regions, would see any tangible benefits from a fiber priority strategy.

“Policy makers, I don’t think, are always thinking about how actually consumers are living on the ground,” he said. “The thing that isn’t so obvious sometimes is the affordability factor that not everybody can afford to have a fiber connection and a broadband connection over their handset.”

This isn’t the first time telecom experts raised concern about BEAD’s fiber-focused expansion. The Wireless Internet Service Providers Association released a report in February calling fiber-prioritized financing “a bad policy” due to its potential to raise implementation costs and slow down the rollout timeline.

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Funding

Experts Clash Over Whether Reverse Auctions Are Ideal for BEAD Grants

Reverse auctions would stretch funding further.

Published

2 weeks ago

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May 24, 2023

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Photo of Greg Rosston of Stanford Institute for Economic Policy Research

WASHINGTON, May 24, 2023 – States should use a reverse auction process to divvy out money from the National Telecommunications and Information Administration’s Broadband Equity, Access and Deployment program, said experts at an American Enterprise Institute event Wednesday.  

States are given two methods to stretch their funding amounts further, said Scott Wallsten, president of Technology Policy Institute. The first is to decide how they will distribute the money and the second is to determine where to set the extremely high-cost threshold, which will indicate where money can be spent for technology other than fiber.  

Reverse auctions where providers bid on the lowest amount of grant funding needed to fund a program are the solution to efficiently distribute limited funds, which are expected to be delivered to the states by June 30, said Wallsten.  

The Federal Communications Commission’s Rural Digital Opportunity Fund reverse auctions showed that winning bids were nearly half of what cost models estimated, which shows just how much dollars can stretch if done correctly, said Wallsten. 

Not all industry experts agree, however. CEO of DTC Communications Chris Townson said in a panel this month that reverse auctions simply create a race to the bottom without considering quality. “Let’s put our money to the things that really matter,” he said. 

We often underestimate the ability of firms to build out, said Greg Rosston of Stanford Institute for Economic Policy Research Wednesday. Firms will respond to lower bids by finding innovative ways to work more efficiently, he said. Companies have accurate information about program costs and understand the risks, he continued. 

Photo of Greg Rosston during the webinar

“We should take advantage of this by harnessing the power of the markets,” he said, urging states to use reverse auctions to stretch the money further. 

NTIA should give direction on competitive grant requirements

Furthermore, the NTIA should set a framework for what states can do to meet the competitive grant requirement, said Rosston.  

The law specifies that states must have a competitive grant process without explaining what that means, he said. As it stands currently, it is unclear how states will decide how to allocate the money awarded to them in the BEAD program, Rosston continued. There is a lot of opportunity for wasteful spending, he said. 

We do not want 50 states and territories struggling to organize their own competitive grant processes, added Wallsten. 

There is nothing preventing the NTIA from asking the FCC to help the states with reverse auction processes by making the software and rules from RDOF auctions available or even running the auctions for the states, said Rosston. We need to make it easy to have states run their competitive processes as required in the law, he stated. 

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