OSP's Broadband Stimulus Update #6: December 23, 2009

More than 10 months after the American Recovery and Reinvestment Act (ARRA) had been signed into law on February 17, 2009, RUS and NTIA, the two agencies required to administrate the funds for the Broadband Stimulus Program, published the first grant recipients. Definition of the rules, requirements and processes took longer than anticipated with much debate along the way. But, the waiting time is over, and stimulus award winners are being announced.

In a high-profile announcement event in Dawsonville, Georgia, Vice President Joe Biden announced the first grant recipients. The highly anticipated first grant announcement was relatively small with 18 recipients awarded only $183 million. These grants represent less than 10 percent of the $2.2 billion for the first Notice of Funds Availability (NOFA), and only 2 percent of the total of $7.2 billion available (a second NOFA is likely to be published in early 2010, and all funds must be awarded by the end of September 2010). Of the $183 million, NTIA has awarded $129 million and RUS $54 million; only $2.6 million were provided in the form of loans rather than grants. The recipients committed to matching funds of approximately $46 million (or 20 percent of the total).

The remainder of the $2 billion is expected to be awarded within the next 75 days -- by early March 2010. Also, it was expected that $4 billion would be awarded with this first NOFA -- so this is another setback. The delays are contributed to the sheer volume of applications and the agencies being understaffed.

As expected, with approximately $170 million, the majority of the grants went to Infrastructure Projects, while the Public Computer Center and the Sustainable Broadband Adoption programs were relatively small parts of the awards. The 18 grants were distributed among 17 states: Alaska, Arizona, Colorado, Georgia, Hawaii, Maine, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Mexico, New York (twice), Ohio, Oklahoma, South Dakota, and Washington (twice). Also of note is that one project covered two states (Colorado/Nebraska), and one project received funds from two programs, the Public Computer Center and the Sustainable Broadband Adoption programs.

As stated in my last column, several types of Infrastructure Projects were among the approximately 2,200 applications submitted to the agencies in mid-August 2009: last-mile networks deploying everything from digital subscriber line (DSL) to hybrid-fiber coax (HFC) to fiber to the home (FTTH), many different wireless technologies and also many middle-mile projects connecting communities lacking sufficient broadband connectivity to the Internet were proposed with requested funding in the total range of almost $28 billion. Receiving approximately $122 million of the $170 million in grants, the clear winner of this first grant wave from the first NOFA award is the middle mile. Last-mile awards were less than half of this amount at $51.4 million.

Last-mile and middle-mile projects in Alaska, Hawaii, Colorado, Michigan, New Hampshire, New York, Ohio, and Oklahoma received grants. The most prominent grant was awarded to ION Hold Co., LLC. ION matches their $39.7 million grant with an additional $9.9 million and plans to build 10 new segments of a fiber optic network to serve more than 70 rural communities in upstate New York and parts of Pennsylvania and Vermont. This project has survived challenges from incumbent service providers Windstream and Time Warner Cable, who had opposed the application, claiming they already provide broadband services in these areas. Another large grant was awarded to the North Georgia Network Cooperative, Inc. The $33.5 million grant with an additional $8.8 million in matching funds supports plans for a 260-mile regional fiber optic ring to improve broadband speeds, network reliability and general affordability for last-mile service in the North Georgia foothills.

It is encouraging that funds were granted to deploy next-generation broadband networks capable of delivering Gigabit broadband speeds with more reliability and better affordability to rural areas and tens of megabit (MB) broadband speeds to households within rural areas with fiber optic networks. Two all-fiber access networks (AFANs) received grants: one to provide symmetrical 20 Mb/s services in Bretton Woods, NH, and to deliver broadband voice and IPTV in Potsdam, NY. A different project by Consolidated Electric Coop plans to use the grants to deploy a mix of smart grid and fiber optic backbone network in the North Central Ohio region.

One 4G wireless network grant was made to serve 9,000 locations in a 90,000 square mile area in the southwestern Alaska region. TDS Telecom won an $8.6 million grant to deploy DSL services “comparable to the services provided in its more populated areas” through its Chatham Telephone Company in Michigan.

Non-infrastructure projects like Public Computing (to expand computer center capacity for public use in libraries, community colleges, and other public venues) and Sustainable Broadband Adoption (to fund innovative projects that promote broadband demand with population groups where the technology has traditionally been under-utilized) received only $7.3 million and $2.4 million respectively, but this was expected and required by law to be much smaller. Four public computer center awards were made through the Department of Commerce to the Arizona State Library ($1.3 million), City of Boston, MA ($1.9 million), Regents of the University of Minnesota ($2.9 million) and The Inland Northwest Community Access Network in Washington ($1.3 million). Only two Sustainable Broadband Adoption awards were made, also through the Department of Commerce: New Mexico State Library ($1.5 million) and again, The Inland Northwest Community Access Network ($981,000).

Cable companies were not among the recipients, and municipalities only received funds in the smaller parts of the program. Privately-owned telcos received the majority of the funds. However, public/private partnerships like the ION project won some sizeable grants.

It will definitely be interesting to see what awards will be granted for the remainder of the first $2.2 billion as the definitions, rules, and processes may change for the second NOFA that is expected to be published in early 2010.

For any questions, please contact me at econstimulusinfo@corning.com

Notes:
• BIP: Broadband Initiatives Program of the RUS
• BTOP: Broadband Technology Opportunities Program of the NTIA

Sources:
• USDA: http://www.usda.gov/recovery
• Department of Commerce: http://www.commerce.gov/recovery
• US Government: http://www.Recovery.gov and http://www.WhiteHouse.gov/Recovery
• RUS and NTIA NOFA: http://www.broadbandusa.gov
• NTIA BTOP: http://www.ntia.doc.gov/broadbandgrants
• RUS: http://www.rurdev.usda.gov
• FCC: http://www.fcc.gov/recovery/broadband

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.