Broadband in rural areas

The U.S. Treasury has released final rules for the Coronavirus State and Local Fiscal Recovery Fund created in the American Rescue Plan Act (ARPA). The fund has a budget of $350 billion for disbursement to state and local governments, which the state and local governments can use for a variety of purposes, including broadband deployments.

The final rules replace the interim rules established last year and although the new rules are similar to the previous ones, there are some key differences.

Importantly, both the interim and final rules required providers receiving broadband deployment funding to deploy networks supporting speeds of 100 Mbps symmetrical, except in certain circumstances. But the final rules reflect new thinking on how to define areas eligible for broadband deployment funding.

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In the interim rules, areas lacking broadband at speeds of 25 Mbps downstream and 3 Mbps upstream were eligible for funding. But rather than carrying that definition forward to the new rules, Treasury opted to give state and local governments considerable flexibility in defining target areas.

“The final rule expands eligible areas for investment by requiring recipients to invest in projects designed to provide service to households and businesses with an identified need for additional broadband infrastructure investment,” the final rules state.

State and local governments “have flexibility to identify a need for additional broadband infrastructure investment,” according to the rules.

The rules include three examples of how the need might be defined, including “lack of access to a connection that reliably meets or exceeds symmetrical 100 Mbps download and upload speeds, lack of affordable access to broadband service, or lack of reliable broadband service.”

The wording suggests that a state could allow funding to be used to overbuild existing broadband service if the existing service is deemed unaffordable or unreliable.

In evaluating whether an area is eligible, state and local governments may consider factors such as latency, jitter, whether users receive internet service at or above speed thresholds at all hours of the day and whether service is delivered by legacy technology such as copper telephone lines or early versions of cable broadband technology (DOCSIS 2.0 or earlier).

Treasury goes on to clarify that “[h]ouseholds and businesses with an identified need for additional broadband infrastructure investment do not have to be the only ones in the service area served by an eligible broadband infrastructure project.

“Indeed, serving these households and businesses may require a holistic approach that provides service to a wider area, for example, in order to make ongoing service of certain households or businesses within the service area economical.”

Final ARPA Broadband Funding Rules

Other important elements of the final ARPA broadband funding rules:

  • Providers receiving funding must participate in either the FCC Affordable Connectivity Program or “otherwise provide access to a broad-based affordability program to low-income consumers in the proposed service area . . . that provides benefits commensurate with those provided under the ACP.”
  • The new rules retain a guideline from the interim rules that calls for state and local governments to prioritize support for broadband networks “owned, operated by or affiliated with local governments, nonprofits, and cooperatives, given that these networks have less pressure to generate profits and a commitment to serve entire communities.”
  • Funding can be used for middle-mile connectivity, but Treasury encourages state and local governments to focus on projects that will achieve last-mile connections, either by directly funding last-mile connections or by ensuring that middle-mile projects have “commitments in place to support new and/or improved last-mile service.”

The final ARPA broadband funding rules also clarify that funding awarded to a provider through the state and local fund can be used to meet the matching fund requirement in the Infrastructure Investment and Jobs Act, also known as the infrastructure act. That act has a requirement that recipients of certain broadband deployment funding must contribute at least 25% of the project cost from non-federal sources.

Treasury adds that providers that use the ARPA state and local funds to meet the 25% matching requirement are still subject to the requirements of the state and local program.

The full text of the final ARPA state and local broadband funding rules begins on page 294 of the document at this link.

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