When it comes to the economic stimulus package, enormous sums of money are being considered to jump-start the economy. There is also considerable uncertainty regarding where and how this money will be spent. This column intends to inform OSP® Magazine's readers regularly about the status of the broadband portion of the American Recovery and Reinvestment Act of 2009 (ARRA), signed into law on February 17, 2009, and what it means to telecommunications service providers.

The first step is to put the numbers in perspective. Out of the roughly $787 billion in the ARRA, approximately $26.4 billion is targeted for agricultural, rural aid and the FDA. Out of this, "only" $7.2 billion is assigned to the "Broadband Stimulus" package. This funding can be divided into two groups: $2.5 billion will be administrated by the Rural Utility Services (RUS) of the US Department of Agriculture and $4.7 billion will be administrated by the Department of Commerce's National Telecommunications and Information Administration (NTIA) under the Broadband Technology Opportunity Program (BTOP).

- The RUS funds will be distributed as grants, loans and loan guarantees, but no guidance has yet been provided regarding how the money should be split into these three categories. However, in their initial webcast on March 10, 2009, David Villano, Assistant Administrator for Telecommunication Programs of the USDA said that they prefer loan guarantees as this would allow them to support more applications.

- There are many categories within the NTIA funds that are intended for other uses besides broadband deployment by service providers:

• $350 million for broadband mapping
• $250 million for innovative programs to encourage sustainable adoption of broadband service
• $200 million for expanding public computer center capacity
• $10 million allocated for audits and oversight (transferred to Department of Commerce)
• Three percent available for program administrative costs (~$141 million)

So if you've done the math, there is approximately $3.8 billion left for true broadband deployments from the NTIA funds. Together with the $2.5 billion from RUS, the total available funds for broadband deployment is about $6.4 billion – not enough to cover all of rural America but enough to help a large number of communities receive or improve their broadband services.

The next step is to review the current status of the rules and requirements development. Both programs, RUS and NTIA require that funds must be awarded by September 30, 2010, with substantial work to be completed within 2 years from grant award – so technically speaking, the latest spending date by service providers is September 30, 2012. Both agencies want to move fast and plan to issue three Notices of Funding Availability (NOFA) followed by three phases, each three months long to award the grants within that period of time. The first NOFA is expected in late March or early April. In addition, both agencies will publicly report applicants and grant receivers – after all it is the taxpayers' money that is spent, so full transparency will be required. The law requests the agencies work together and with the FCC to further define the rules and requirements. In addition, the applicants are required to comply with the FCC's non-discrimination and network interconnection obligations and to include the four principles of the FCC's broadband policy statement (adopted August 5, 2005) by which consumers are entitled to:

• Access the lawful Internet content of their choice
• Run applications and use services of their choice, subject to the needs of law enforcement
• Connect their choice of legal devices that do not harm the network
• Competition among network providers, application and service providers, and content providers

For telecommunication service providers this should be nothing new.

Now that we have reviewed program similarities, here are some of the differences. To facilitate rural economic development, RUS funds are available for broadband infrastructure in the U.S. where 75 percent of the area to be served shall be in a "rural" area without "sufficient" access to "high speed broadband" service "as determined by the Secretary of Agriculture." Priority shall be given to projects that:

• Provide end-users a choice of more than one service provider
• Provide service to the highest proportion of rural residents without access to broadband services
• Are from borrowers or former borrowers under title II of the Rural Electrification Act of 1936 (or include such borrowers) – RUS has published latest list on February 4, 2009, on their Web site
• Prove that all project elements will be fully funded, can be completed and can promptly begin following approval

If RUS funds are received, then no NTIA funds will become available (no "double dipping") for the same project or equipment – and vice versa.

To apply for funding from NTIA, an applicant must be a government entity, a non-profit entity (e.g., rural telephone cooperatives may qualify) or any other entity that the NTIA finds by rule to be in the public interest (e.g., members of organizations like NTCA or U.S. Telecom, etc. may qualify automatically). Funding will be provided for:

• Improving broadband access in "unserved/underserved" areas
• Broadband education, awareness, access, equipment
• Support of certain entities/organizations (e.g., schools, libraries, healthcare providers)
• Improving use of broadband access for public safety agencies
• Stimulating broadband demand

You may have noticed many of the words above are in quotation marks, which indicates there are quite a few definitions to be clarified before the agencies can start reviewing applications. Also under discussion is whether or not the same requirements should apply to wireline and wireless broadband deployments or if they should be different. Another fundamental issue is determining the priority in ranking applications to meet the objectives of the programs; clearly, the programs are intended to create jobs – this is what our country needs the most at this time. The broadband stimulus plan, in particular, is meant to do so by bridging the "digital divide" to ensure that rural areas have the same broadband offerings that urban areas have, where download speeds of up to 50 Mb/s and sometimes even more are already offered. The programs are also intended to increase the competitiveness of our nation in terms of broadband capability, to catch up with nations that have, on average, more than 50 Mb/s available per household, such as Japan or Korea. However, the money is not enough to achieve this for all. It is important to develop a ranking system that clarifies the objectives—connect as many communities as possible, or connect communities with high quality, high performance services.

The application process has not been fully developed and communicated, but the existing RUS loan program may serve as a model. However, the Secretary of Agriculture must submit to Congress a report on planned spending and actual obligations describing the use of the funds within 90 days of enactment (May 18, 2009) – so time is of the essence here.

NTIA plans to consider if the project increases "affordability" of and "subscribership" to services to the greatest population in an area, if it provides the greatest broadband speeds possible to the greatest population in an area, and if it enhances service for health-care delivery, education or children. They will also consider if the applicant is a "socially- and economically-disadvantaged small business" (e.g., Indian tribe or Hawaiian native owned) and ensure that it does not result in "unjust enrichment."

Again, many of the terms are in quotation marks and need further work by the agencies. This is why the agencies were on a road trip until March 24, seeking feedback via public hearings. The agencies received a lot of comments and suggestions to clarify those terms, specifically how broadband should be defined. Another key topic was to streamline the process and award grants as quickly as possible while balancing the need to avoid waste, fraud and abuse. [Note: The full transcripts of these meetings can be found at http://www.ntia.doc.gov/broadbandgrants/meetings.html]

Several industry associations such as the FTTH Council or PCIA Wireless have already or are in the process of filing comments. Service providers have the opportunity to influence the plan's rules by contacting the agencies directly with their proposals to clarify the definitions and process requirements. They need to do so quickly; the deadline for comments to the RUS and NTIA is April 13, 2009. For help with contacts or to discuss what the best definitions are, please contact me at econstimulusinfo@corning.com.

Legal Disclaimer: This material is intended to provide general information about that portion of the American Recovery and Reinvestment Act of 2009 (the "Act") related to broadband deployments in the United States. These materials are based on information from multiple sources (e.g. USDA and USDC presentations, webinars by industry associations, the Act). Many factors, including the final provisions of the Act, any accompanying regulations and other government programs may change, delay or terminate public funds for broadband deployment. Corning Cable Systems makes no promises about, and does not assume any liability for, the accuracy or completeness of the information provided in this presentation. Corning Cable Systems does not assume any obligation to update this presentation or you about changes to the Act.