New Treasury Rules on Broadband Funding Give Local Governments Flexibility on Spending

November 4, 2021 – The U.S. Department of Treasury, tasked with writing the rules on how state and local governments can spend various federal relief funds made available for broadband expansion by the American Rescue Plan, recently released the guidelines [pdf] governing the Capital Projects Fund, a $10 billion pot of money available to states, territories, and Tribal governments [pdf] to confront the need for improved Internet connectivity exposed during the pandemic.

Compared to when Treasury released rules governing the State and Local Fiscal Recovery Funds earlier this year, this go ‘round brought cheers instead of jeers from community broadband advocates, as we are seeing federal broadband policy break new ground.

The flexibility the Capital Projects Fund gives state and local governments to decide how to spend the relief funds is what broadband advocates are most excited about. CPF applicants are able to use the money in creative ways to respond to critical needs in their community laid bare by the Covid-19 pandemic, as long as the resulting project directly enables remote work, education, and health monitoring.

The Treasury’s guidance for CPF [pdf] takes a holistic approach, as it not only invests in deploying broadband infrastructure, it directly addresses affordability and digital literacy, which are barriers to broadband adoption long-overlooked by federal broadband programs. In addition, the new rules include language to ensure that projects that use CPF funds take local needs into consideration, including requirements to survey communities to determine what exactly is an “affordable” price point for monthly Internet service, requirements to simultaneously invest in infrastructure and digital skills training, and requirements to consider how projects can bolster workforce training and development.

The CPF rules give applicants clear authority to decide what is deemed to be “affordable, reliable, and unserved” in their respective communities. The program also expands the definition of “unserved” to take into account whether Internet service in a region is affordable. If existing high-speed Internet service in a community is found to not be affordable, that will now be considered sufficient to declare that particular area as being “unserved.”

Other gems contained in the guidelines include: a new emphasis put on funding scalable fiber optic infrastructure, elevating investment in historically disadvantaged communities, and prioritizing investment in infrastructure owned or co-owned by local municipalities, nonprofits, and cooperatives — “providers with less pressure to generate profits and with a commitment to serving entire communities,” states the Treasury guidelines [pdf].

Turning the page on federal broadband programs

Unique to this program is the focus on determining where affordability is a barrier to broadband adoption and an emphasis on the importance of providing 100 Megabits per second symmetrical speeds, reports CTC Technology & Energy.

CPF guidelines direct applicants to incorporate plans to address affordability into their project proposals in new ways. Recipients of the funding are required to report pricing data as part of an ongoing effort to monitor costs to subscribers. The guidelines require recipients of CPF funding to participate in federal broadband subsidy programs, such as the current Emergency Broadband Benefit program, or subsequent federal programs that subsidize the cost of monthly Internet access. Furthermore, recipients are encouraged to “include at least one low-cost option offered at speeds that are sufficient for a household with multiple users to simultaneously telework and engage in remote learning.”

Additionally, under the new CPF rules, Treasury requires eligible projects to go beyond delivering connection speeds the federal government has required in the past, stressing the importance of funding projects that will deliver 100 Mbps symmetrical speeds and encouraging recipients to invest funds in fiber infrastructure where feasible, “as such advanced technology better supports future needs.” The guidelines recognize the need for more robust upload speeds, evident by Treasury’s updated definition of an unserved area — “one that cannot receive affordable, reliable, fixed wireline service of at least 100/20 Mbps.” The guidelines also encourage CPF recipients to prioritize investing in projects that will result in last-mile connections.

Another highlight of the Capital Projects Fund is that the program is designed to help restore a sense of community connectedness in an age of social distancing. To that end, the Treasury’s guidelines place an emphasis on funding applications aiming to construct and connect community education centers, and other anchor institutions, which can tailor initiatives and programs to respond to unique community needs. The CPF guidelines list multiple possibilities applicants constructing multi-purpose community facilities should consider utilizing the funding for, including:

• career counseling services that provide community members with the knowledge needed to engage in work, including digital literacy training programs
• activities to acquire knowledge and skills undertaken as part of a person’s participation in school, an academic program, extracurricular program, social-emotional development program for students or youths, internship, or professional development program
• projects to construct or improve full-service community schools that provide a comprehensive academic program to their students and adult education in the community at large
• projects that provide health monitoring and a broader range of services including health education classes

To hear more about the potential to use CPF funds to address digital inclusion, listen to Episode 14 of our bonus podcast series, “Why NC Broadband Matters.”

Not Making the Same Mistakes Twice

It’s encouraging to see that the Treasury Department was responsive to fixing what its first round of rules missed. The rules Treasury released in May of 2021 governing aid sent directly to local governments under the Local Fiscal Recovery Fund instructed recipients to focus broadband investments on unserved areas, defined rigidly under that program as areas that do not have 25/3 Mbps service reliably available.

A strict reading of those rules would significantly limit the ability of non-rural communities to invest in needed broadband networks by prioritizing broadband investment only in rural areas. Those rules would essentially leave out more densely populated cities, which are often served by incumbent providers offering speeds above 25/3 Mbps, but who have few affordable and reliable options for Internet service. The previous Treasury rules also did not prioritize funding community broadband networks.

After those rules were released, municipal leaders across the country rallied to call attention to the limiting language governing the Local and State Fiscal Recovery Funds. That led Treasury officials to release a FAQ clarifying and broadening the rules a bit, and helped nudge Treasury officials toward creating the improved guidelines governing the Capital Projects Fund.

Application process now underway

States, territories, freely associated states, and Tribal governments [pdf] are eligible to apply for CPF aid, which will be issued in the form of block grants. Although local governments are ineligible to be direct recipients of these grants, states are encouraged to allocate portions of their award to local governments, nonprofits, and co-ops.

The deadline for states, territories, and freely associated states to submit an application and grant plan through the Treasury Submission Portal is December 27, 2021. For Tribal governments, the application also serves as their grant plan. The deadline for Tribal governments to request funding through the Treasury Submission Portal is June 1, 2022.

Described as a “60-second process” by Senior Broadband Policy Advisor for the U.S. Treasury, Jeffrey Sural, during a recent National Digital Inclusion Alliance webinar, submitting the initial application requires applicants to indicate their desired award amount, summarize how the funds will be allocated, designate an authorized representative or point-of-contact, and sign a grant agreement.

There are multiple eligible uses of CPF funding, but the program’s guidelines categorize acceptable uses of the funds into three main categories: Broadband Infrastructure Projects, Digital Connectivity Technology Projects, and Multi-Purpose Community Facility Projects.

• Broadband Infrastructure Projects are those which will result in the construction and deployment of broadband infrastructure.
• Digital Connectivity Technology Projects are projects facilitating the purchase or installation of devices like laptops, desktops and tablets.
• Multi-Purpose Community Facility Projects are projects to construct community education centers or anchor institutions which provide the public with access to computers with high-speed Internet service.

States will have access to a total of $9.8 billion of the Capital Projects Fund, with $100 million set aside for Tribes, and another $100 million earmarked for freely associated states. Each U.S. state will likely create their own program to suballocate CPF funds to local applicants. The results and impact of the program created by each state will likely vary. See allocations available to each state here.

Editor’s Note: This piece was authored by Jericho Casper, a reporter for the Institute for Local Self Reliance’s Community Broadband Network Initiative. Originally appearing at MuniNetworks.org on November 2, 2021, the piece is republished with permission.