Posted by Barlow Keener

While visiting Denver’s Museum of Nature and Science this week, President Obama signed the historic “American Recovery and Reinvestment Act.” For the telecom industry, as well as other sectors of the economy, the Recovery Act presents the opportunity for obtaining billions of dollars of grants and loans and delivering jobs and hope to the economy.  For the telecom industry, $7.2 billion in grants, loans, and loan guarantees are targeted for broadband projects in the next 22 months. The opportunities are open to all sectors of the industry, not just service providers: equipment vendors, systems integrators, education entities, and wireless and wireline carriers. To complicate matters, governmental entities – towns, municipalities, public safety agencies, and state governments are permitted by the ACT to compete with private industry for the grant money.

The broadband recovery funds will be distributed by two agencies: the Department of Commerce’s National Telecommunications Industry Agency (NTIA) will handle $4.7 billion and the Department of Agriculture’s Rural Utility Service (RUS) will distribute $2.5 billion. There are a few guiding principals for obtaining the winning bids:

1. Jobs: Grant proposals must deliver jobs – the more the better
2. Spend it now: NTIA funds are for capital expenditures only and the funds must be spent by December 2010
3. Shovel Ready: Projects must be “shovel ready” – that is ready to begin work immediately upon the award of the grant. “Shovel ready” may apply to consulting work, as the Business Insider points out with a Merrill Lynch bridge project.

Another key aspect of the Recovery Act is that NTIA has an obligation to “consult” with the states regarding the broadband projects.  State input will frame NTIA’s requests for proposals.

Following President Obama’s commitment for increased transparency in government, the administration should be providing the same information to all applicants large and small by using agency web sites. For example, the Obama administration created a web site for the bill itself located at Recovery.gov. NTIA and RUS will maintain web sites with current information for all participants. The Recovery Act requires Assistant Secretary of Commerce for Communications and Information to create a “Broadband Technology Opportunities Program.” It is assumed that the program will use the processes established by the existing NTIA “Technical  Opportunities Program” (TOP).  Neither NTIA nor the USDA RUS have updated their web sites to explain the process for the Recovery Act. 

The Recovery Act delegates broadband-related spending in three sections. Title II, entitled the “Broadband Technology Opportunities Program,” authorizes the expenditure of $4.7 billion in grants funding to be awarded by Commerce’s NTIA. The purpose of the competitively awarded NTIA grants is to:

Accelerate broadband deployment in unserved and underserved areas and to strategic institutions that are likely to create jobs or provide significant public benefits.

Thus, proposing grants a) that are in tandem with the needs of the state and “strategic institutions” such as hospitals, schools, or public safety and b) that “create jobs” are the keys to winning the funding.

The Recovery Act’s Title IV (Sec. 6001) sets forth the requirements for the NTIA BTOP grants, specifying eligible entities and suggesting that “timing” and “Requests for Proposals”  are to be presented by NTIA to the public.  These RFPs will clearly require input from each state.  At least “one” grant is mandated to be provided in every state. While eligible entities include non-governmental and non-profit entities, the for-profit companies must be found by NTIA’s “rule” to be “in the public interest.”

In addition, net neutrality obligations are contained in the Recovery Act. Grants provided must be subject to NTIA-determined “non-discrimination and network interconnection obligations” which “at a minimum” must follow the FCC’s non-discrimination policy. Grants may be provided for a wide range of equipment and services including education of broadband subscribers. The Act specifically mandates four categories of expenditures:

• $350 million for the State Broadband Data and Development Grant program for the development of a national broadband inventory map
• $200 million for grants for expanding public computer center capacity
• $250 million for innovative programs to encourage sustainable broadband adoption
• $10 million for audits and oversight of the grants
• $141 million (3% maximum) for administrative costs

Title I of the Recovery Act, entitled “Agriculture, Rural Development, Food and Drug Administration and Related Agencies,” authorizes $2.5 billion in additional loans and loan guarantees (but not grants) for the “Distance Learning, Telemedicine, and Broadband Program.” The $2.5 billion is less than the $2.85 billion requested by the House and more than the $1 billion proposed by the Senate. The loans will be granted and delivered through the RUS loan program. Applicants for the RUS loans are required to be “shovel ready.”  The funds must be used in such a way that 75% “of the area” served that are rural areas without sufficient access to  broadband service that could “facilitate rural economic development.”  Current and prior RUS borrowers will be given priority. It is clear that the agency has broad interpretive authority to determine the identification of these “rural areas.” There are some states that have not been recipients of RUS loans in the past.

Finally, as an added plus for broadband deployment, Title VII of the Recovery Act authorizes the Department of Labor’s Employment Training and Administration, to deliver $250 million in grants for training employees for “high growth and emerging industry sectors.” The Congress’s Conference Report agreement (H 1422) expressly included “training for wireless and broadband deployment” as an eligible activity for high growth training grants. The training grant funds will be provided under the Training and Employment Services’’ for activities under the Workforce Investment Act of 1998.

It is clear that there is a huge amount of funds available for anything related to “broadband.” The next steps for NTIA and RUS are to set up processes for consulting with state governments to determine the scope of the RFPs and to establish deadlines for responding to the RFPs and loan applications.  Stay tuned.