Friday, March 4, 2011

USDA Opens $25 Million in Community Connect Rural Telecom Funding

$25 Million Issued Despite $17.9 Million Cut; Low 200 Kbps Broadband Definition Kept 03/04/2011 San Francisco - Jonathan Adelstein, Administrator of the Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA) today opened a new round of federal telecom funding for $25 million in available federal grants "to provide broadband access in rural communities currently without broadband service."

The funding is issued via the Community Connect Grant of the agency.

Funds Window Open, Closes May 3
Officially this year's funding round for the Community Connect Grant Program launched with the publication in today's Federal Register (below) of the 6-page set of rules for the opportunity called, in federal parlance, a Notice of Solicitation of Applications (NOSA). 

Audio of the Media Conference
The round closes on May 3. USDA expects to issue all of the currently budgeted $25 million by the end of the current federal fiscal year 2001 (FY 2011), on September 30, 2011. Grants will be issued in minimum per grant allotments of $50,000, up to a maximum of $1.5 million per grant. 
Previously the per-award maximum funding level had been $1 million.

200 Kbps Broadband 'Floor' Left Standing
With 100% of the the Program's current year appropriations on the congressional chopping block, RUS worked to quickly move available funds out via today's announcement. As it did so, one antiquated part of the rules were retained, with potential negative consequences for rural broadband going forward.

RUS let stand the definition for existing broadband services in a rural area -- now only present as a federal definition in this program -- at the paltry level of "200 kilobits/second both in the downstream and upstream directions". 

Administrator Adelstein stressed during today's media call announcing the funding opportunity that the 200 Kbps threshold is very much a floor, and that applicants will be competitively rewarded for delivering higher speeds. "The Agency recognizes that these speeds are not adequate to deliver much needed benefits such as distance learning and telemedicine to communities that are not currently receiving broadband service," states the NOSA.

There is a potential poison pill in the 200 Kbps 'floor' however. "It is fine to call it a floor," said rural telecom funding expert Liz Zucco. "But we must remember that the so-called floor can also be a wall against new funding in the limited areas around the country where Community Connect funds may be sought. All it takes is a small investment in, say, a small 900 Mhz wireless deployment delivering 256 Kbps, and the served area is disqualified for funding under this particular program." Ms. Zucco is CEO of rural grant funding firm MarketSys USA of Canton, GA. The firm is a partner of the corporate parent of 

While the rural funding constituency needs to keep an eye on the low ball standard retained in Community Connect, we believe there is almost no chance that RUS would defeat its own rural broadband goals, and those of the National Broadband Plan, by employing this same 'floor' in any of its other funding opportunities. To do so would be tantamount to turning federal broadband programs into a large incumbent protection scheme.

Grants Only, For Extremely Poor & Extremely Rural
USDA's Community Connect Grant Program was crafted by Congress and by RUS to serve those areas of the nation that are both extremely rural and extremely poor.

"Grants are available to communities in the most rural, economically challenged areas where loans would not be sustainable", stated today's press release from RUS. "Funds may be used to construct, acquire or lease facilities to deploy broadband to residents, businesses and essential community facilities such as police and fire stations, libraries, schools, and health care clinics.
Eligible entities are incorporated organizations, Tribes and tribal organizations, state and local government bodies, for-profit or non-profit cooperatives, private corporations and limited liability corporations. Individuals are not eligible to apply."

Grants in the Program  require a "local match" contribution, must serve a rural area where broadband service does not exist, must provide services to critical communities free of charge for two years, and must offer basic service to all premises within the proposed service area.

The Blue Dog Cut
USDA is able to fund the $25 million in grants this fiscal year despite recent action by the U.S. House to cut the full current year appropriation for the program by $17.9 million. Utah's Blue Dog Democratic Congressman Jim Matheson (D-UT-02) successfully carried the cut proposal through a House floor vote in February. The cut was sustained and ended up as part of the budgetary Current Resolution signed into law by President Obama on March 2nd.   

Farm Bill Broadband Funding Still in Reg Writing
RUS continues to work on agency rules for current Farm Bill appropriations for rural broadband subsidies.  "The Farm Bill rules will be up and running soon," said Adelstein responding to our question. Sources tell us that RUS Broadband Director Ken Kuchno remains at work on updating the regulations for the program.

As we mentioned as the last broadband stimulus program awards were issued, the 'smart money' in the U.S. telecom sector interested in pursuing rural broadband subsidies know to look to Farm Bill appropriations for post-stimulus tranches of funds. Even in an era of federal fiscal cut backs, a bipartisan constituency will remain for RUS broadband programs.

Best Foot Forward
The full cut to the Program was not mentioned either in today's press release from USDA, nor in the remarks of Administrator Adelstein. 

"As President Obama has said, 'Students should graduate from high school prepared for college and a career – no matter who you are or where you come from' – and this program connects school children to educational opportunities via the Internet in some of America's most remote locations," Adelstein said. "It also enhances commerce, public safety, and health care in rural areas that have been overlooked by modern communications technology. Broadband is an important part of the Obama Administration's effort to help rural America 'win the future.'"

Joining Adelstiein on today's call was Aneesh Chopra, Chief Technology Officer, White House Office of Science and Technology Policy (OSTP). Chopra's Office is coordinating the work of several agencies, including FCC, NTIA, and RUS that each have a hand in the National Wireless Initiative of the Obama Administration.

"The industries and jobs of the future will be increasingly reliant upon our ability to move people, goods and information," said Chopra. "So if we want new jobs and businesses here in America, especially in our most rural communities, we've got to have a robust digital infrastructure as supported by investments through programs like Community Connect."

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