The U.S. Department of Agriculture (USDA) should consider using a reverse auction to award funding for the $600 million USDA E-connectivity pilot, said FCC Commissioner Michael O’Rielly in a letter to Christopher McLean, acting administrator of the USDA Rural Utilities Service (RUS). O’Rielly also urged the USDA to work closely with the FCC to avoid funding areas that already have broadband or that already receive broadband funding from the FCC.

“A cost-effective pilot program would . . . prohibit the overbuilding of or providing duplicative funding to any federal funding recipient,” O’Rielly wrote.

USDA E-connectivity Pilot
The USDA E-connectivity pilot received funding in the federal budget adopted earlier this year, with the goal of bringing broadband to areas lacking “sufficient access.” 

The USDA requested stakeholder input about how that program should be structured and, according to O’Rielly, some stakeholders are advising a “more expansive” definition of broadband focused on the number of competitors in an area. Defining “sufficient access” in that manner would be “a disservice to the . . . American people,” O’Rielly said.

“Congress explicitly focused on the unserved, stipulating that funding should go to areas where households lack access,” he said.

The guidelines established by Congress call for funding to go only to areas where no more than 10% of the population has broadband service available. But the term “area” is vague and how it is defined will be critical, as there is a “significant risk of providers directing funding towards cherry-picked locations within the 90% area, where the cost of providing service is the lowest-cost and highest-return, but broadband is already available,” O’Rielly said.

He also advised the USDA to work with the National Telecommunications and Information Agency (NTIA) to ensure that E-connectivity funding recipients do not duplicate those who received funding through the NTIA as part of the broadband stimulus program.

O’Rielly initially raised concerns about the possibility that the USDA E-connectivity Pilot could duplicate FCC funding back in April. His new letter reiterates those concerns and also suggests the USDA award pilot program funding by using a reverse auction similar to the one that the FCC used to award Connect America Fund II (CAF II) funding.

Another Reverse Auction?
That auction recently concluded, awarding funding for 700,000 homes throughout rural areas of the U.S. But there were numerous areas that received no winning bid, and the USDA could consider looking closely at those areas as potential targets for the E-connectivity Pilot.

It’s important to note, though, that the USDA hopes to differentiate its broadband funding pilot from other federal broadband funding initiatives. Recent comments from a senior USDA official suggest that the agency will look at more than speed, cost and coverage data in awarding funding.

“Our hope is that this will be a drop in the bucket that catalyzes more investment,” said Jannine Miller, senior advisor for rural infrastructure for the USDA, on a recent USDA webcast. She referenced precision agriculture, smart forestry, telehealth and distance learning as examples of how broadband can benefit rural areas, hinting that the USDA might like to hear how a community plans to use broadband, not just how much the community needs broadband.

“We hope the private sector will say ‘I didn’t realize there was a business case there,’” Miller said.

The E-connectivity pilot also will differ from other government broadband funding programs in that it will offer both grants and loans, while FCC and NTIA programs are essentially grant programs.

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