Fines and penalty

Stakeholders are relieved that the House and Senate passed the debt ceiling bill yesterday evening, averting an impending government shutdown and other dire consequences. The bill calls for certain spending cuts, but according to a research note issued this week by New Street Research analyst Blair Levin, those cuts aren’t expected to have much impact on telecom.

It’s important to note that his analysis was written prior to the bill’s passage and may not reflect any last-minute changes to the bill. However, we have seen no coverage indicating that there were any changes to this part of the bill, and when we checked with Levin this morning, he said he believes the research note is still pertinent.

Debt Bill Telecom Impact

Although the bill includes some clawbacks involving Covid-era relief funding, it would not impact the BEAD rural broadband funding program or the Capital Projects Fund, according to Levin’s analysis.

One Rural Utilities Service fund would cease to exist, however. As Levin explains, “The legislation states that ‘The unobligated balances of amounts made available under the heading ‘’Rural Development Programs—Rural Utilities Service—Distance Learning, Telemedicine, and Broadband Program’… are hereby permanently rescinded.'”

The distance learning and telemedicine program which, according to an RUS web page is now closed, was designed to “helps rural communities use advanced telecommunications technology to connect to each other – and the world – overcoming the effects of remoteness and low population density.”

As Levin notes “this is a small program targeted to rural areas with populations of 20,000 or fewer, with awards ranging from $50,000 to $1 million.” Also, funding doesn’t go directly to service providers, although they ultimately may receive some of the money.

The biggest potential downside of the bill for telecom providers, according to Levin, is that the impact of the Affordable Connectivity Program is unclear. That program covers some of the costs of broadband and devices for low-income households.

The current congressional appropriation for the program is likely to run out in the first half of next year, and subsequent funding was unlikely, even before the wrangling over the potential default, Levin said. That wrangling would appear to make additional program funding even less likely, he argued.

The debt bill telecom note also says that the FCC won’t be strongly impacted by the new legislation. Levin believes that the amount rescinded for that agency relates to COVID-19 telemedicine initiatives and is small.

Joan Engebretson contributed to this report

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