Over the past decade, a range of states have developed and executed strategies to methodically chip away at rural broadband challenges. These states have formed broadband task forces; they have brought stakeholders together to gauge needs; they have stood up state broadband offices to put sophisticated strategies into action; and they have provided information and resources to localities, community anchors, and the public.

Some states have gone one step further: They have invested substantial public dollars, through grant programs, to fund broadband deployments in areas that lack adequate service. By providing state funding to match private investment and federal grants, these states have enabled deployment in areas that cannot attract sufficient private investment. Through financial incentives and accurate data, states such as Minnesota, Maryland, and Alabama have incented the private sector to collaborate with local communities in addressing broadband deficits.

Successful State Broadband Programs Have Similar Attributes

State funding programs have proved effective through multiple stages of the broadband deployment process. Broadband planning grants help towns and cities to evaluate local conditions and develop the plans and partnerships to apply effectively for federal broadband grants. Broadband infrastructure grants provide capital to deploy new facilities to fill service gaps, based on community and economic development goals.

Today, the Benton Institute for Broadband & Society released Putting State Broadband Funds to Work: Best Practices In State Rural Broadband Grant Programs. While the report analyzes a wide range of best practices, three major trends in particular are worth emphasizing.

First, state development funding programs have increasingly integrated digital equity and economic development considerations into each stage of the funding program development process. Grant programs that previously had focused solely on deployment costs have expanded to include consideration of digital inclusion and economic benefits—to low-income communities, farms, small businesses, and teleworkers—thus also enabling grantees to compete for federal programs that focus on such metrics, including those of the Economic Development Administration (EDA), which requires careful evaluation of economic impacts.

Second, early restrictions on the types of organizations that could apply for deployment grants have been replaced by broad, inclusive eligibility criteria that recognize the value of innovative collaborations among a range of entities, including electric cooperatives, local governments, and private companies. For example, California once required that funding applicants possess a Certificate of Public Convenience and Necessity (CPCN) or a Wireless Identification Registration (WIR), effectively restricting the program to companies offering wireline telephone or cellular telephone services. That restriction excluded newer broadband competitors and municipalities, thus reducing the number of applications far below available funding and resulting in far more investment by grantees in middle-mile infrastructure than in critically needed last-mile connections to unserved homes and businesses. Now, California welcomes a much broader set of applicants, and its program performance has improved significantly.

Third, the best state funding programs include a critical role for local governments and communities, working in collaboration with private partners, to ensure local input and benefit from local insights, and bring to bear local assets and resources. Indeed, the past decade of experimentation has given rise to a range of cooperative agreements between localities and private entities. Many of the best state grant programs provide flexibility for business structures that include public-private partnerships and other infrastructure access and management agreements. These new organizational forms allow adaptation to reflect the needs and resources of each party involved, while leveraging benefits in financing and permitting available to such hybrid forms. Many states welcome these flexible collaborations; Virginia and Maryland actually require cooperation between a public and a private entity.

Successful State Broadband Programs Follow Established Paths

Effective state broadband funding programs are not formed overnight. They are the result of research, conversations, and coordination with myriad stakeholders, along with development of state-level organizations capable of working with communities and internet service providers (ISPs).

Generally, successful broadband funding programs have progressed through three key stages: first, planning and research to understand challenges and build strategy; second, program design; and third, execution, monitoring, and adjustment.

In the first stage, states must develop an overall broadband plan that identifies where improved connectivity is most needed and how those needs should be met. To understand these needs and possible connectivity solutions, the state’s multistakeholder broadband planning group and administrative broadband office must coordinate with a variety of stakeholders, including the state’s business community, anchor institutions, local leadership, and the ISPs themselves. A formal broadband mapping and digital equity assessment program then enable the state’s broadband policymakers to develop more specific goals and priorities necessary to evaluate more technical deployment issues and the state’s broadband funding needs.

In the second stage, states design the structure and rules of their broadband funding programs to meet these goals. To ensure that the state’s resources can be utilized to their fullest, the deployment grant evaluation process should reward funding competitively to the proposals that offer the best combination of broadband capabilities to the areas most in need at the lowest cost to the state. Most reviewed state programs established strong incentives for deployments to seek additional federal support and reduce deployment costs by working closely with municipalities to leverage their local knowledge and resources. State planning grants are frequently offered to improve deployment strategies and cost estimates and facilitate federal grant awards. Other well-chosen eligibility characteristics establish location preferences, ensure that only scalable broadband technologies capable of meeting future needs are deployed, and enable a variety of more flexible deployment strategies and partnerships to be used.

In the third stage, states execute their grant strategies and then revise and adjust them for further rounds of funding to incorporate lessons learned in earlier rounds. For example, states have learned from experience with cost-saving deployment technologies such as micro-trenching, enabling existing funding programs to make a greater impact. Some states have updated their definitions of “unserved” and “underserved” to reflect best practices and to meet rapidly increasing household broadband needs. Others have increased the technical requirements for new deployments to ensure that state-assisted deployments can scale to meet bandwidth needs over the next decade and beyond.

States do not progress through these stages uniformly. For example, whereas Minnesota’s grant program was initially developed from nearly a decade of prior state-level strategy development, Illinois moved from planning to grant program execution quickly and efficiently, in part because it benefited from Minnesota’s lessons learned and best practices. Multiple iterations of the Minnesota broadband task force met from 2008 until the state created an administrative entity to execute broadband strategy in 2013, with initial infrastructure grant funding in 2015. The grant program has evolved by using feedback from prior grant cycles to fine-tune its approach and cultivate a pipeline of potential projects. In contrast, states such as Illinois and Virginia learned from Minnesota’s example and demonstrate how the time between planning and program execution can be dramatically reduced. Illinois’s $420 million grants program was launched in 2019, following simultaneous development of the program and availability information-gathering, stakeholder outreach, and strategy development.

The range of state funding program structures is broad, as each state solution is customized to its unique mix of needs, resources, and policy environment. To sort through this complexity, this paper describes a range of successful funding programs and suggests replicable elements in each stage. This analysis is intended to serve as a resource for policymakers at state, local, and federal levels regarding lessons learned and best practices in broadband grant-making.

Putting State Broadband Funds to Work: Best Practices In State Rural Broadband Grant Programs is available now from the Benton Institute for Broadband & Society. In subsequent case studies to be published online later this year, we will illustrate these programs and practices in more depth.

The Broadband Equity Partnership is a mission-driven consultancy founded by HR&A Advisors and CTC Technology & Energy following three years of collaboration and the development of New York City’s Internet Master Plan. Our work builds capacity in federal, state, and local governments, institutions, community organizations, and internet service businesses to accelerate universal broadband and digital inclusion.

Ryland Sherman, a broadband economics and policy researcher at CTC Technology & Energy, focuses on federal and state broadband strategy and policy frameworks; mapping and funding programs; and digital equity initiatives.

Joanne Hovis is president of CTC Technology & Energy, where she heads the firm’s work in public broadband strategy, network business planning, market analysis, and policy. Joanne advises states and local governments on how to build strategy and opportunity for public–private partnerships in broadband.

Jacob Levin is a senior analyst at CTC Technology & Energy, where he develops policy proposals, market analyses, and broadband strategy for local and state government clients. He relies on industry experience and market research to model ongoing costs and revenue opportunities associated with broadband investments, and to develop resilient business models in the public interest.

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 2021. Redistribution of this email publication - both internally and externally - is encouraged if it includes this copyright statement.

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Broadband Delivers Opportunities and Strengthens Communities