Thursday, April 7, 2011

Breaking: Budgetary Continuing Resolution Will Wipe Out USDA Broadband Loan Program 04/07/2011 San Francisco - Multiple sources are confirming for this publication that enactment into law of the current federal budgetary Continuing Resolution (CR) will wipe out the Broadband Loan Program of the U.S. Department of Agriculture for the present federal fiscal year.
USDA officials recently issued a funding notice and proposed program rule changes with the intent to place up to $700 million in "program level" loans this year. The  Program began in 2002, and was suspended as USDA's Rural Utilities Service (RUS) issued $3.5 billion in loans and grants in its part of the broadband stimulus program. 

This year's effort to restart the Broadband Loan Program, with Agriculture Secretary Tom Vilsack and Rural Development Administrator Jonathan S. Adelstein in the lead, was slated to use unexpended funds authorized by the 2008 Farm Bill.

In the words of an industry alert (below) to Members of Congress issued earlier today by the National Telecommunications Cooperative Association (NTCA), passage of the current CR as now drafted will "remove all available funding for the RUS Rural Broadband Loan Program." 

NTCA Message to Capitol Hill
This morning the NTCA, the trade association representing the rural cooperative independent telephone operating entities across rural America, sent out this message to Capitol Hill staffers in both the House and Senate.

The message urges Members to oppose the presently proposed cut of $39 million in the current CR by giving the substantive reasons to preserve the Program: 

Please oppose further cuts to the Rural Utilities Service (RUS) Broadband Loan Program, which has been critical in helping provide broadband to rural America.  The short-term continuing resolution (H.R. 1363) would rescind $39 million from the RUS Broadband Loan Program in addition to the $29 million removed from the program by the previous continuing resolution a few weeks ago.  This would remove all available funding for the RUS Rural Broadband Loan program.

There can be no question regarding the ongoing essential nature of this program as noted below.

- Broadband is critical to providing access to economic growth, job creation, distance learning, health care, and national security in rural America. 

- RUS Broadband Loan Program projects are funded with loans that must be paid back with interest – creating a win/win situation for rural broadband consumers and taxpayers.

- RUS borrowers have a default rate of less than one percent.

- According to the FCC’s National Broadband Plan, 14 million people in 7 million housing units do not have access to terrestrial broadband capable of download speeds of 4 Mbps, and that such housing units are more common in rural areas.

- Using the National Broadband Map’s Broadband Statistics Report, critics of the RUS Broadband Loan Program point out that 92.8% of rural Americans (99.8% urban) have access to “broadband” download speeds greater than 786 kbps, therefore the loan program is no longer needed.  However, the same report shows that only 86.1% of rural Americans (98.7% urban) have access to speeds greater than 3 mbps and only 55.7% (93.5% urban) have access to speeds greater than 10 mbps, which are minimum download speeds more commonly considered necessary for rural areas to compete in the modern broadband world.

- According to the National Broadband Map’s Broadband Statistics Report, in 55 congressional districts 10% or more of constituents still do not have access to broadband download speeds of greater than 3 mbps.

- Critics of the program point out that the President’s FY 2012 Budget did not include funding for the Broadband Loan Program.  However, this is because adequate carry-over funding from previous years was expected to be available, which will not be the case if further cuts are implemented.  The carry-over balance is the result of USDA’s focus on implementation, over the past two years, of new Farm Bill rules to further improve the program and implement congressional and industry recommendations.  With new interim rules now in effect, RUS announced on March 10, 2011 that the application process for new projects has restarted.

- This program is essential to achieving our nation’s rural broadband goals. 

If this funding rescission for the Rural Broadband Loan Program is approved, investment in rural broadband deployment will be jeopardized. 

Rural Telecom Funding provides a link to our Mailing List for updates on the dynamic realm of changing budgets, program rules, and funding flows for telecom in rural America.
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