Friday, June 12, 2009

USDA Releases Broadband Guidelines: Strong Hints at NOFA Terms

An Exclusive Breaking News Report from StimulatingBroadband.com


StimulatingBroadband.com 06/12/09 BostonIn a short 2 page document issued internally to its field offices 3 days ago, on June 9, the Rural Utilities Service of the US Department of Agriculture (RUS) has given several important hints at the structure and substance of the all-important federal broadband funding guidelines expected by July 1.

Critically, in one key area of procedural information, the document contradicts officially stated public information from both RUS and the National Information and Telecommunications Administration (NTIA) previously reported here at StimulatingBroadband.com.

The document, released to this publication late in the day yesterday, June 11, by a federal employee in advance of its posting on the RUS website is available here.

In defining the "Strategy" of the $2.5 billion broadband program to be administered by RUS, the document states, "RUS will offer grants, direct loans and loan / grant combo." This confirms verbal information received by StimulatingBroadband.com from a RUS representative within the past week that the agency is attempting to gain the greatest leverage possible via the combination of grants and loans to the same applicants, where possible.

Policy Points Affirmed
"We are now clearly seeing strong indications of what RUS will be setting down in its first NOFA, due out by the first of July," commented our colleague Liz Zucco, President of rural telecom grant consultancy MarketSYS USA of Canton, Georgia. Ms. Zucco refers to the much anticipated Notice(s) of Funding Availability which will be promulgated by NTIA and RUS, reportedly prior to July 1.

Four brief points appearing on page 2 of the document frame key policy issues, each of which is clearly spelled out in the language of the American Recovery and Reinvestment Act of 2009 (ARRA). This language is often overlooked by observers focused on the NTIA's $4.7 billion funding program within the Act (Title VI), rather than that of RUS, at $ 2.5 billion (Title I).

Using direct phrases form the Act, RUS states that application selection "priority shall be given to: Projects that will deliver end users a choice of more than one service provider; Projects that provide service to the highest proportion of rural residents that do not have access to broadband service; Projects from current and former RUS Title II borrows; Projects that can commence immediately upon approval."

Rural Telecom's Continuing Legacy



We continue to hear of new entrant service providers misreading the ultimate importance of this clear and direct language in the ARRA -- language that favors incumbent RUS telecom loan recipients.

As the Act enunciates in its Title I provisions, Rural Utilities Service, Distance Learning, Telemedicine and Broadband Program, "...priority shall be given for project applications from borrowers or former borrowers under title II of the Rural Electrification Act of 1936 and for project applications that include such borrowers or former borrowers."

The Rural Electrification Act (REA) is the New Deal program celebrated for bringing public power to rural America. Title II of REA
was added by Congress in 1949 to similarly bring voice telephony to rural communities. RUS telecom program procedures, practices, and regulations have been built-up over a 60 year period. As we reported back in March, the rural interest voting bloc in Congress demanded that RUS receive dedicated broadband funding in ARRA, just as it added broadband appropriations to the 2008 Farm Bill. RUS programs for housing, water, wastewater, and telecom remain a fundamental part of rural America today -- economic developmental programs familiar to every state and municipal official representing our less densely populated regions.

It is simply not possible that the Obama Administration could eviscerate 60 years of accumulated federal regulations for rural telecom, even if it desired to. Much of those regulations were crafted to protect the rural telephone cooperatives, and thinly capitalized investor owned rural carriers, from competition. The corpus of those regulations will now enable new federal broadband funds to flow to these same rural providers, many of which are "borrowers or former borrowers" of REA telecom funds.

Back to a Joint / Unified Set of Rules
The only surprise we see in the document of June 9th is this statement: "By early summer 2009, RUS and NTIA will publish a joint Notice of Funding Availability (NOFA) in the Federal Register seeking applications for assistance." The concept of a joint NOFA, of one document issued by both NTIA and RUS to launch the first funding round for broadband stimulus monies, has been previously denied by authorized and separate statements made to StimulatingBroadband.com by public affairs personnel of both agencies.

In a story dated May 8, we quoted NTIA Spokesperson Mark Tolbert saying, "There will be separate NOFAs. To my knowledge, NTIA and RUS will each issue their own NOFA." In our story of May 19th, following over a week of working with various USDA personnel to confirm the concept of 'separate but simultaneously issued' NOFAs, USDA Rural Development Spokesman Jay Fletcher stated that each agency would issue a separate NOFA.

Who Cares?
Who cares, other than K Street lawyer-lobbyists and mavens of the most mind numbing of federal regulatory details, whether the agencies issue either joint or separate Notices rounds?

Prospective grant and loan applicants need to care, as they plan their strategies, and set their schedules for competitive application filings. Theoretically, separately issued NOFAs could mean that the pledge, made by both agencies, to inform applicants simultaneously of grant and loan guidelines could slip over time, particularly in the successive 2 funding rounds. Thus, applicants could be required to frame application strategies while waiting for one agency's information to be issued.

Conversely, a jointly issued single NOFA covering both agencies means that rural service providers will be less able to look at RUS programs and regulations as strategic pure plays. Under this scenario, coordination between rural operators seeking RUS funds, and regional non-rural providers and coalitions will become much more of a competitive necessity for both.

StimulatingBroadband.com has inquires into NTIA and RUS asking for clarification regarding the joint vs. separate NOFA issuance question.

Lastly, the document states "A series of workshops will be held jointly with NTIA across the United States in July 2009. These workshops will explain the program to prospective applicants including the program requirements and how to apply."

Our Take:
We believe the Obama Administration continues to work mightily to see that both NTIA and RUS issue their NOFAs simultaneously, in order to give maximum information, and decision making flexibility, to applicants.

It could very well be that the Administration -- and it is a group of policy makers in the Executive Office of the President making the strategic policy decisions -- has recently decided that the interests of programmatic coordination require a joint NOFA. We read other auguries that suggest why that may be so.

For now, we remain convinced of one of the central verities of the entire broadband stimulus undertaking: Federal programs for rural telecom subsidies, first erected as America moved from FDR's New Deal to Harry Truman's Fair Deal, will not be dismantled by a Democratic Congress or President.

Service providers that see opportunities in the emerging broadband future for rural America are well advised to become very knowledgeable very quickly about the programmatic and regulatory accomplishments that have come to define rural telecom since that era.



USDA-RUS ARRA Broadband Investment Program Released 06-09-09                                                                                           



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