Friday, April 17, 2009

Recommendations for RUS Broadband Stimulus Programs 04/17/09 (Editor's Note: With this posting, we welcome our colleague Liz Zucco. Liz has deep experience in successfully writing and winning grants and loans for rural carriers, community organizations, and healthcare providers. We welcome her invaluable expertise in the complex realm of federal grantsmanship, program management, and rural broadband. Liz knew rural broadband before rural broadband was cool.)

The Rural Utilities Service (RUS) loan program within the US Department of Agriculture (USDA) has been invaluable in moving funding for rural broadband initiatives out into the field. However, when we examine the loan program and the Community Connect Grant program together, we see that there remain gaps in the methods and availability of funds for rural access. Even with the positive terms of federally backed loans, many times there is just not enough market potential to warrant a loan to serve a particular rural market.

While the Community Connect program provides grants, we believe the program suffers from limitations such as the inability to group together multiple townships to provide for management and operation of a larger system. Such systems scale better and tend to be more sustainable.

With the new $2.5 billion funding soon to be made available for RUS from the American Recovery and Renewal Act of 2009 (ARRA), RUS now has an important opportunity to better leverage its funds via some simple program reforms.

We would like to propose that the RUS consider making the following changes in its grant and loan strategies in order to fulfill the goal of access for all Americans.

1. Provide a loan/grant combination for RUS borrowers to assist them in leveraging their operational costs when they are willing to take the risk of a loan. This will give these good borrowers the chance to extend their footprint with assistance for capital costs, and repay monies borrowed to continue the RUS’ ability to make loans. This is a fair solution, as operators are in many cases struggling to get into the leaner and less populated areas. In many cases operators are forced to drop markets altogether due to the inability to justify capital costs. Yet these same borrowers could support their operational costs if given the opportunity to build into these areas with assistance in the form of a grant.

2. Allow the Community Connect program to encompass more than “one incorporated area”. This would allow entire counties to develop unified broadband initiatives, thus improving operational sustainability and better leveraging the costs of running networks in extremely rural markets. Many towns and hamlets are only but a few thousand people. By combining five or six small towns into one consolidated service area, the costs to build and maintain networks are apportioned over a larger revenue base. The rural service provider thus increases its chances of sustaining the network in a previously unserved region.
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