Analysis

It’s hard to look anywhere in the broadband industry today and not hear about digital inclusion. One big reason for this is the two giant grant programs created by Congress in the Infrastructure Investment and Jobs Act to tackle digital equity issues. The first is the State Digital Equity Capacity Grant Program, that will allocate $1.5 billion to the States for this program – that’s $300 million per year from 2022 through 2026. The second is the Digital Equity Competitive Grant Program.

I’ve been asked three or four times in the last few weeks why anybody would invest in building rural broadband networks with the goal of getting rich. I’ve been hearing the same rumors as everybody else that there are private equity investors ready to jump into the rural grant arena. I have no specific knowledge that this is going to occur, but I’ve run across several internet service providers (ISPs) recently who claim to have access to nearly unlimited equity funding.

According to U.S. News & World Report, New Hampshire is 10th overall in access to broadband, But the state ranks 35th for data speed. BroadbandNow estimates that only 30 percent of the state has access to fiber-optic service and only about 7 percent has access to 1-gig service. On June 7, 2022, the U.S.

In October 2021, Governor Jim Justice (R-WV) announced a billion-dollar strategy to bring broadband access to 200,000 homes and businesses in West Virginia. “We’ve been talking for years about how to fix the rural broadband problem. Now we’re finally going to do it," he said. The plan got a $136 million boost from the U.S.

The National Telecommunications and Information Administration (NTIA) is beginning an epic effort to implement the broadband provisions of the Infrastructure Investment and Jobs Act (IIJA). Congress allocated $42.45 billion to build rural broadband through the Broadband Equity, Access, and Development (BEAD) Program, and these resources have the potential to provide internet access to most if not all households that do not currently have access. NTIA states in its Notice of Funding Opportunity (NOFO) that its focus is to provide service to unserved and underserved areas.

The Infrastructure Investment and Jobs Act made it clear that Broadband Equity, Access, and Deployment (BEAD) Program grants should be made available to everybody—commercial entities, non-profit entities, Tribes, and municipal entities. But there will be an eventual showdown since many states have barriers or restrictions against municipal participation in building, owning, or operating commercial broadband networks. If there is any one area where politics creep into building broadband, it is with state restrictions on municipalities.

Louisiana is aiming to close the digital divide in the state by 2029. Getting there could cost over $1 billion. This week, the state partnered with the U.S. Department of Treasury to help reach that goal. On June 7, Treasury approved Louisiana for $176.7 million of support from the Coronavirus Capital Projects Fund (CPF).

There are a lot of extra costs for a broadband provider to accept Broadband Equity, Access, and Deployment (BEAD) Program funding including Environmental and Historic Preservation Reviews, Letters of Credit, Prevailing Wages, Requirements on Contractors, Reporting Requirements, and Taxes. I have to laugh when I look at these requirements and see that reaching that single remote location might get layered with hundreds of thousands of dollars of extra costs. The biggest drawback of expensive grant compliance is that it drives up the cost of every grant project.

On July 2, 2018, then-Governor Ralph Northam (D-VA) announced that the Commonwealth of Virginia should achieve functionally universal broadband coverage within 10 years. Reaching that goal would be no easy feat. At the time, Virginia was investing just $4 million a year into its broadband program and 660,000 Virginians did not have access to high-speed internet. This week, Virginia's efforts got a big boost when the U.S. Department of Treasury approved nearly $220 million to support broadband deployment projects in the Commonwealth.

Recently, the Minnesota Telephone Alliance and the Minnesota Rural Electric Association asked the Minnesota Public Utilities Commission to revoke the Eligible Telecommunications Carrier (ETC) status for LTD Broadband. ETC staus must awarded by a state regulatory authority or by the Federal Communications Commission to any carrier that wants to collect funding from the FCC’s Universal Service Fund. The petition stems from LTD being the winner in the Rural Digital Opportunity Fund (RDOF) auction in Minnesota to receive $311 million to bring broadband to 102,000 passing in the state.