Federal Broadband Funding Report: These Agencies Are Funding Internet for All

Benton Institute for Broadband & Society

Friday, June 2, 2023

Weekly Digest

Federal Broadband Funding Report:

These Agencies Are Funding Internet for All

 You’re reading the Benton Institute for Broadband & Society’s Weekly Digest, a recap of the biggest (or most overlooked) broadband stories of the week. The digest is delivered via e-mail each Friday.

Round-Up for the Week of May 30 - June 2, 2023

Kevin Taglang

On May 8, 2023, the National Telecommunications and Information Administration's Office of Internet Connectivity and Growth released its second annual report on federal broadband funding. The report summarizes and analyzes fiscal year 2021 (FY21) data collected from across the federal government, including the Federal Communications Commission's Universal Service Fund (USF) programs. Over a dozen agencies provided NTIA data for the report. Here we look at what one might call the "Big Four" broadband funders in the federal government: the Department of Commerce, the Federal Communications Commission, the Department of Treasury, and the Department of Agriculture. (We'll take a look at additional broadband funders next week.)

Department of Agriculture

The U.S. Department of Agriculture (USDA) provides leadership on food, agriculture, natural resources, rural development, nutrition, and related issues based on public policy, the best available science, and effective management. USDA reported on five broadband-specific programs with $1.4 billion appropriated, $426.3 million obligated, and $270.5 million outlayed in FY21.

Appropriated: An agency is provided budget authority and can incur obligations for specified purposes.

Obligated: An agency has a legal liability to disburse obligated funds.

Outlayed: An agency paid out federal money.

USDA’s Rural Housing Service (RHS) offers funding through a variety of programs to build or improve housing and essential community facilities in rural areas.  RHS administers the Community Facilities Direct Loan and Grants Program, which offers direct loans, loan guarantees and grants to construct, expand, or improve essential public services and facilities in communities across rural America, including those that provide health care, education, public safety, and public services. The program includes broadband as an eligible expense when developing these facilities. RUS also provides funding for infrastructure or infrastructure improvements to rural communities, including telecommunications services.

In 2021, USDA increased its year-over-year broadband-specific outlays by 27 percent, funding $270.5 million in the fiscal year. During the same period, its total appropriated funding was over $4.2 billion.

The RUS Telecommunications Program primarily focuses on broadband infrastructure deployment and expanding distance learning and telemedicine adoption.

The ReConnect Loan and Grant Program provides loans and grants to construct, improve, or acquire facilities and equipment needed to provide broadband service in eligible rural areas. In August 2021, USDA announced several investments to spur broadband connectivity in rural communities.

  • In rural Arizona, USDA provided a grant of $14.8 million to deploy a fiber-to-the-premises network. The funded service area includes 5,547 households, 22,645 people, 142 businesses, a school, a health care facility and six farms spread over 59 square miles.
  • In Virginia the department granted $14.1 million for a fiber-to-the-premises network in a service area that includes 37 educational facilities, three health care facilities, 14 essential community facilities, 4,139 households, 13,886 people, 193 businesses, and 65 farms spread over 65 square miles.
  • Georgia received $10.6 million to deploy a fiber-to-the-premises network in an area that includes 6,665 households, 18,789 people, 25 educational facilities, 17 essential community facilities, 10 health care facilities, 573 businesses, and 207 farms spread over 246 square miles.

The Community Connect program provides financial assistance to eligible applicants that will provide broadband service in rural, economically-challenged communities where service does not exist. A subcomponent of this program is the Distance Learning and Telemedicine program where an array of grants was made during FY21 to improve access to learning resources and vital healthcare services.

  • In Georgia, the Morehouse School of Medicine used a $997,194 grant to purchase interactive telecommunications, distance learning, and telemedicine equipment. USDA funding is used to provide a variety of health care services to residents in underserved rural areas of nine counties across the state.
  • The Fall Mountain Regional School District in New Hampshire received a $995,158 grant to provide distance learning services in Cheshire and Sullivan counties.

The Rural Broadband Loans, Loan/Grant Combinations, and Loan Guarantees (Farm Bill Broadband Program) furnishes loans and loan guarantees to provide funds for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide service at the broadband lending speed in eligible rural areas. Broadband loans provide funding on a technology-neutral basis for financing:

  • The construction, improvement, and acquisition of facilities required to provide service at the broadband lending speed including facilities required for providing other services through the same facilities;
  • The cost of leasing facilities required to provide service at the broadband lending speed if such lease qualifies as a capital lease under Generally Accepted Accounting Principles (GAAP); and
  • An acquisition, under certain circumstances and with restrictions.

Department of Commerce

The Department of Commerce, home of NTIA and the Economic Development Administration (EDA), aims to create the conditions for economic growth and opportunity for all communities. NTIA is charged with administering eight broadband programs enacted by the Consolidated Appropriations Act, 2021, and the Infrastructure Investment and Jobs Act. In FY21, NTIA's broadband investments were mainly through three programs:

1. The Tribal Broadband Connectivity Program is directed to tribal governments to be used for broadband deployment on tribal lands, as well as for telehealth, distance learning, broadband affordability, and digital inclusion. Congress established the program in the Consolidated Appropriations Act, 2021 with $1 billion in initial funding. In early June 2021, NTIA issued a Notice of Funding Opportunity seeking infrastructure projects that expand the availability of broadband services on Tribal lands and prioritize deploying broadband infrastructure to unserved households. NTIA invited proposals that address the digital divide on Tribal lands, including broadband and digital inclusion planning, telehealth, education, training staff, and Tribal community members, and providing technical support and capacity building for Tribal institutions.

2. The Broadband Infrastructure Program is a $288 million broadband deployment program directed to partnerships between a state, or one or more political subdivisions of a state, and providers of fixed broadband service to support broadband infrastructure deployment to areas lacking broadband, especially rural areas. In May 2021 NTIA announced it would accept applications for projects designed to:

  • Provide broadband service to the greatest number of households in an eligible service area;
  • Provide broadband service to rural areas;
  • Be most cost-effective in providing broadband service; or
  • Provide broadband service with a download speed of at least 100 Mbps and an upload speed of at least 20 Mbps.

By August 2021 NTIA had received more than 230 applications for a total of more than $2.5 billion in funding requests across 49 states and U.S. territories.

3. The Connecting Minority Communities Pilot Program is a $268 million grant program aimed at Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and Minority-Serving Institutions (MSIs) for the purchase of broadband internet access service and eligible equipment or to hire and train information technology personnel. NTIA released rules for the program in June 2021 and began accepting applications in August of that year.

The Economic Development Administration (EDA) views its ability to fund broadband projects as an integral tool for helping communities and regions build the capacity for economic development. EDA funds various types of projects designed to support broadband deployment based on the individual needs of communities and regions, including studies, planning activities, technical assistance on the deployment of technologies based on broadband, and the funding of actual broadband infrastructure. EDA has two programs where broadband is an eligible expense: the FY20 Economic Adjustment Assistance Program and the FY20 Public Works Program.

The Economic Adjustment Assistance Program provides a wide range of technical, planning, and public works and infrastructure assistance in regions experiencing adverse economic changes that may occur suddenly or over time. The program can assist state and local entities in responding to a wide range of economic challenges through: 1) Strategy Grants to support the development, updating or refinement of a Comprehensive Economic Development Strategy (CEDS) and 2) Implementation Grants to support the execution of activities identified in a CEDS (or equivalent), such as infrastructure improvements, including site acquisition, site preparation, construction, rehabilitation and equipping of facilities. Specific activities may be funded as separate investments or as multiple elements of a single investment. EDA also runs specific programs under the EAA program including:

  • SPRINT Challenge: to support the development, creation, or expansion of programs that accelerate technology-based economic development and respond to the challenges caused by the coronavirus pandemic.
  • Coronavirus Aid, Relief, And Economic Security (CARES) Act: to provide a wide range of financial assistance to communities and regions as they respond to and recover from the impacts of the COVID-19 pandemic.
  • American Rescue Plan Act: to provide larger, more transformational investments across the nation while utilizing its greatest strengths, including flexible funding to support community-led equitable economic development.

EDA's Public Works Program helps distressed communities revitalize, expand, and upgrade their physical infrastructure. This program enables communities to attract new industries; encourage business expansion; diversify local economies; and generate or retain long-term, private-sector jobs and investment through the acquisition or development of land and infrastructure improvements needed for the successful establishment or expansion of industrial or commercial enterprises.

Federal Communications Commission

The Federal Communications Commission regulates interstate and international communications by radio, television, wire, satellite, and cable in all 50 states, the District of Columbia, and U.S. territories. An independent U.S. government agency overseen by Congress, the FCC is the federal agency responsible for implementing and enforcing America’s communications laws and regulations.

The FCC's broadband programs are primarily focused on funding infrastructure deployment and digital inclusion or adoption projects. The  FCC reported on 19 broadband-specific programs with $10.6 billion in appropriations, $7.6 billion obligated, and $6.3 billion outlayed in FY21. For the period of October 1, 2022 through September 30, 2021, the FCC's totals far eclipsed all other agencies administering broadband-specific programs. In FY21, the total appropriated broadband spending was approximately $13.5 billion, just under $8 billion was obligated, and just over $6.6 billion was outlayed.

The Emergency Connectivity Fund is a $7.171 billion program that helps schools and libraries provide the tools and services their communities need for remote learning. For eligible schools and libraries, the program covers reasonable costs of laptop and tablet computers; Wi-Fi hotspots; modems; routers; and broadband connectivity purchases for off-campus use by students, school staff, and library patrons. Congress authorized the Emergency Connectivity Fund as part of the American Rescue Plan Act of 2021. To date, the program has provided relief for 17 million students, school staff, and library patrons through support to approximately 11,000 schools, 1,000 libraries, and 120 consortia. The program has provided nearly 13 million connected devices and over 8 million broadband connections.

The Emergency Broadband Benefit Program (EBB) launched in FY21 (and its successor program the Affordable Connectivity Program launched in FY22). EBB provided a discount of up to $50 per month towards broadband service for eligible low-income households and up to $75 per month for households on qualifying Tribal lands. Congress allocated $3.2 billion for this program in the Consolidated Appropriations Act, 2021. In the Infrastructure Investment and Jobs Act, Congress extended the life of EBB, transforming it into the Affordable Connectivity Program (ACP). In total, Congress allocated over $17 billion to make monthly broadband bills more affordable for low-income households. As of May 29, 2023, over 18 million households are enrolled in ACP.

The schools and libraries universal service support program, commonly known as the E-rate program, helps schools and libraries to obtain affordable broadband. Established by Congress in the Telecommunications Act of 1996, the E-rate provides discounts for internet access and internal connections to eligible schools and libraries. When the Telecommunications Act was passed, only 14 percent of classrooms had access to the internet, and most schools with internet access (74 percent) used dial-up Internet access. By 2005, nearly all schools had access to the internet, and 94 percent of all instructional classrooms had internet access. Similarly, by 2006, nearly all public libraries were connected to the internet, and 98 percent of them offered public internet access.

In 2011, the FCC reformed its universal service program for rural telephone service so it could more effectively support networks delivering both broadband and voice. In 2014,  the FCC required companies receiving Connect America Fund support for fixed broadband to serve consumers with speeds of at least 10 Mbps for downloads and 1 Mbps for uploads. The FCC also offered support totaling up to nearly $1.8 billion annually to a class of larger telecommunications carriers known as price cap carriers in early 2015, to potentially expand broadband service to over five million rural Americans.

Since 1985, the Lifeline program has provided a discount on phone service for qualifying low-income consumers. In 2016, the FCC included broadband as a support service in the Lifeline program. In 2021, the Lifeline program distributed nearly $724 million to carriers providing service to qualifying low-income households. Lifeline offers a $9.25-per-month discount on mainly wireless services that include 1,000 voice minutes and an allotment of mobile broadband data. Currently, about 7.3 million households are enrolled in the Lifeline program.

The Rural Health Care Fund is currently made up of two programs: the Healthcare Connect Fund Program and the Telecommunications Program. The Healthcare Connect Fund Program, established in 2012, provides support for high-capacity broadband connectivity to eligible health care providers and encourages the formation of state and regional broadband health care provider networks. Under the Rural Health Care Program, eligible rural health care providers receive a 65 percent flat discount on an array of communications services. These services include internet access, dark fiber, business data, traditional digital service line (DSL), and private carriage services. The Telecommunications Program, established in 1997, subsidizes the difference between urban and rural rates for telecommunications services. When the Commission established the Rural Health Care Program in 1997, it capped program funding at $400 million per funding year. Beginning in funding year 2016, health care provider funding requests for high-speed broadband began to outpace that funding cap. In 2018, the FCC increased the annual funding cap to $571 million and annually adjusted the funding cap to reflect inflation. The program funding cap for funding year 2023 is just over $682 million.

The COVID-19 Telehealth Program provided $200 million in funding, appropriated by Congress as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to help health care providers provide connected care services to patients at their homes or mobile locations in response to the COVID-19 pandemic. Consolidated Appropriations Act, 2021, provided the Commission additional funding for the COVID-19 Telehealth Program: 

  • For Round 1, $200 million was appropriated in March 2020.
  • For Round 2, $249.95 million was appropriated in December 2020.
  • During FY21, the COVID-19 Telehealth Program reimbursed nearly $140 million in telehealth costs to 460 entities previously awarded funding commitments for Round 1 projects. The Commission announced Round 2 funding commitments totaling $83 million to 134 eligible telehealth providers.
  • Over the course of both rounds of the program, at least two awards were made in each state, territory, and the District of Columbia.

Most awardee reports presented qualitative and quantitative evidence suggesting that COVID-19 Telehealth Program funding was effective in helping patients access health care during the pandemic. Many post-program reports concluded that telehealth funding helped safeguard health professionals and vulnerable populations, conserved resources such as hospital rooms and personal protective equipment (PPE), and assisted in maintaining or increasing the volume of patient care services.

The FCC's Alternative Connect America Cost Model (ACAM) provides funding to rate-of-return carriers that voluntarily elected to transition to a new cost model for calculating High Cost support in exchange for meeting defined broadband build-out obligations. ACAM models the forward-looking economic costs of deploying a high-speed network and delivering broadband service. Carriers that elected this option receive predictable monthly payments to provide voice and broadband service to all funded locations over the program’s 10-year support term (2017-2026).

The Alternative Connect America Cost Model (ACAM) II provides funding to rate-of-return carriers that voluntarily elected to transition to a new cost model for calculating High Cost support in exchange for meeting defined broadband build-out obligations. Carriers that elected this option receive predictable monthly payments based on support of up to $200 for each funded location over the program’s 10-year support term (2017-2026). Participating carriers must meet annual deployment milestones that started in year four, 2022.

Connect America Fund - Broadband Loop Support (CAF BLS) provides support for voice and broadband service, including stand-alone broadband. The fund, a reform of Interstate Common Line Support (ICLS), helps carriers recover the difference between loop costs associated with providing voice and/or broadband service and consumer loop revenues. In 2018, the FCC set a budget of $1.42 billion for CAF BLS, which rises annually with inflation, and reduced the monthly per-line limit on support from $250 to $225 as of July 2019 and $200 as of July 2021. The 2018 order also establishes new deployment obligations for carriers remaining on CAF BLS support, requiring them to expand deployment of broadband at speeds of 25/3 Mbps before 2024.

In 2018, the FCC conducted an auction (the Connect America Fund - Phase II Auction) to allocate support to certain eligible areas across the United States. Over 100 bidders won $1.49 billion over 10 years to provide fixed broadband and voice services to over 700,000 locations in 45 states. Winning bidders must offer at least one voice and one broadband service to 40% of the required number of locations in a state by the end of the third year of support, an additional 20% in each subsequent year, reaching 100% by the end of the sixth year of support.

Building on the Connect America Fund, the FCC established the Rural Digital Opportunity Fund to support broadband network deployments in unserved rural areas. The FCC budgeted over $20 billion for two reverse auctions to award support to bring broadband to over five million homes and businesses in census blocks that were entirely unserved by voice and broadband with download speeds of at least 25 Mbps. The first auction was conducted in November 2020 with winning bids announced in early 2021. But of the $9.2 billion over 10 years tentatively won in the auction, over $2.8 billion has gone into default. Three of the 10 largest winning bidders—LTD Broadband, SpaceX, and Starry—alone generated nearly $2.5 billion in defaults and there were many other smaller defaults. As yet, the FCC has made no announcement about what will happen to the money associated with the defaults.

In 2018, the FCC took major steps to promote the deployment of advanced, hardened voice and broadband networks in Puerto Rico and the U.S. Virgin Islands through the Bringing Puerto Rico Together Fund (Uniendo a Puerto Rico Fund) and the Connect USVI Fund. In Stage 1, the FCC provided approximately $51.2 million in new Universal Service Fund (USF) support to Puerto Rico and $13 million to the U.S. Virgin Islands to help restore voice and broadband service following Hurricanes Irma and Maria, which was in addition to $65.8 million immediately provided for emergency support. For Stage 2, the FCC replaced existing frozen high-cost fixed network support mechanisms with a competitive process for long-term support over a 10-year period with specific deployment obligations for all locations in Puerto Rico and the U.S. Virgin Islands. As part of Stage 2, the FCC also authorized high-cost support to mobile carriers to deploy advanced mobile communications networks with high-speed 4G LTE and 5G technologies over a three-year period.

In 2016, the FCC adopted the Alaska Plan Order, which froze $1.5 billion in funding over ten years and allocated that money to maintain, extend, and upgrade broadband service across certain areas of Alaska. Ultimately, fifteen rate-of-return carriers and eight of their wireless affiliates elected the plan which the FCC estimated would bring broadband to as many as 111,302 fixed locations and 133,788 mobile consumers.

Department of the Treasury

The Department of the Treasury is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States. The Department is responsible for a wide range of activities such as advising the President on economic and financial issues, encouraging sustainable economic growth, and fostering improved governance in financial institutions.  In response to COVID-19, Treasury administers the American Rescue Plan which includes many programs designed to provide relief to state, local, and Tribal governments to enable them to continue to support the public health response and lay the foundation for a strong and equitable economic recovery.

Two programs included in the American Rescue Plan—the Coronavirus State and Local Fiscal Recovery Funds and the Capital Projects Fund—include broadband as an eligible use of funds. While these programs did not have specific appropriations for broadband, high-speed internet access is a main investment initiative for these programs.

Using Fiscal Recovery Funds, state, local, and Tribal governments helped over 116,000 households with internet access. Fiscal Recovery Funds are being used to expand broadband's reach:

  • Yavapai County, Arizona, is using $20 million for the design, construction, implementation, and maintenance of telecommunications equipment and services providing "last mile" internet access to communities. The focus is on ensuring unserved or underserved households and businesses in unincorporated areas in Yavapai County receive high-speed broadband.
  • Orange County, Florida, has committed $7.4 million to expand access to broadband infrastructure. This initiative will provide last-mile service directly to homes and/or businesses.
  • Waterloo, Iowa, will use $2.5 million for the design and construction of a city-owned fiber network to provide high-speed reliable broadband internet to connect residents and businesses.
  • Boone County, Kentucky, will construct fiber-to-the-premises high speed broadband infrastructure capable of delivering 1 gigabit speed service to every household in the county. The county will also address affordability with a strategic partnership with the incumbent service provider to authorize a discount on monthly service to individual subscribers.
  • Putnam County, West Virginia, is using $10 million to construct a fiber-optic broadband network designed to provide reliable, high speed internet to all residents and business in the county.

The Capital Projects Fund (CPF) is providing $10 billion to states, territories, freely associated states, and Tribal governments to fund critical capital projects that enable work, education, and health monitoring in response to the COVID public health emergency. These funds are addressing many challenges laid bare by the pandemic, especially in rural America, Tribal communities, and low- and moderate-income communities, helping to ensure that all communities have access to the high-quality modern infrastructure, including broadband, needed to access critical services. The first CPF awards were not made until FY2022.

Treasury also administers the Community Development Financial Institutions (CDFI) Fund  which works to expand economic opportunity for underserved people and communities. By offering tailored resources and innovative programs that invest federal dollars alongside private sector capital, the CDFI Fund serves mission-driven financial institutions that take a market-based approach to supporting economically disadvantaged communities.

The CDFI Fund jointly administers with the Internal Revenue Service the New Markets Tax Credit (NMTC) ProgramBroadband is one of many eligible areas of investment for the NMTC Program, which incentivizes community development and economic growth through the use of tax credits that attract private investment to distressed communities.

As of the end of FY 2021, the NMTC Program has:

  • Generated $8 of private investment for every $1 of federal funding,
  • Created nearly 239 million square feet of manufacturing, office, and retail space, and
  • Financed more than 10,800 businesses.

Over 76 percent of New Markets Tax Credit investments have been made in highly distressed areas. These are communities with low median incomes and high rates of unemployment.

Quick Bits

Weekend Reads (resist tl;dr)

ICYMI from Benton

Upcoming Events

June 5—RightsCon Costa Rica (AccessNow)

June 5—Can attainable broadband deployment be achieved without the Affordable Connectivity Program? (Brookings)

June 5—UTC Telecom & Technology Conference (Utilities Technology Council)

June 7—Utah Broadband Confluence (NTIA)

June 8—June 2023 Open FCC Meeting

June 8—The Future of the Internet in Europe

June 13—Massachusetts Broadband & Digital Equity Summit (NTIA)

June 14—Closing the Digital Divide: The Affordable Connectivity Program on the Ground and in DC (New America)

June 15—Meeting of the Communications Equity and Diversity Council (FCC)

June 26—Smart Rural Community (NTCA—The Rural Broadband Association)

June 28—Readying Rural Communities to Capture the Benefits of Digitalization (University of Idaho Extension)

July 18—Open Meeting of the Internet of Things Advisory Board

August 20––Fiber Connect 2023 (Fiber Broadband Association)

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

© Benton Institute for Broadband & Society 2023. Redistribution of this email publication - both internally and externally - is encouraged if it includes this copyright statement.

For subscribe/unsubscribe info, please email headlinesATbentonDOTorg

Kevin Taglang

Kevin Taglang
Executive Editor, Communications-related Headlines
Benton Institute
for Broadband & Society
1041 Ridge Rd, Unit 214
Wilmette, IL 60091
headlines AT benton DOT org

Share this edition:

Benton Institute for Broadband & Society Benton Institute for Broadband & Society Benton Institute for Broadband & Society

Benton Institute for Broadband & Society

Broadband Delivers Opportunities and Strengthens Communities

By Kevin Taglang.