Landmark Federal Guidance Affirms State Leadership Role in Bridging Digital Divide

On May 10, the Treasury Department released the interim final rule for the American Rescue Plan Act's (ARPA) Coronavirus State and Local Fiscal Recovery Funds, clarifying how state and local governments can use the funds for broadband deployment. The interim designation allows Treasury to get the rule in place quickly while seeking final comments. Much of the news coverage about ARPA has focused on the amount of spending, but the language in the rule denotes a shift in the federal stance on broadband expansion. Notably, the government’s approach offers states needed flexibility with federal funds, prioritizes community-based solutions, and embraces higher technology standards.

• Historic broadband funding to states and localities. ARPA is the first federal program that provides funds to these governments for broadband deployment. Importantly, the interim rule defines standards for state and local programs that use federal funds but does not include words such as “shall” and “require.” The absence of such imperatives allows recipients to determine funding priorities based on their understanding of the problem, not the federal government’s. This represents a historic moment in broadband policy and affirms the role of states in closing broadband gaps.
• Flexibility to define the target areas. The rule says states and localities should spend federal funds on unserved or underserved communities that lack “reliable” access to wireline connections of 25 megabits per second (Mbps) download and 3 Mbps upload. That’s the current Federal Communication Commission definition for broadband. Use of the word “reliable” is notable as well, indicating Treasury’s acknowledgement that available technologies may technically provide certain speeds but may not be able to deliver them consistently. Federal policymakers are giving states ample flexibility but remain committed to setting high standards for service.
• Preference for community-based solutions. Treasury recommends that recipients of federal ARPA funds prioritize support for projects that are “owned, operated by, or affiliated with local governments, non-profits, and co-operatives.” This recommendation reflects findings from The Pew Charitable Trusts and other organizations that the most successful and effective broadband initiatives are those that put community needs first when planning and implementing expansion projects. These projects can include partnerships with small community-based providers that are, by virtue of their location, often well-positioned to serve rural, unserved areas.
• A new federal speed standard. Treasury’s interim final rule states that, unless it is otherwise impractical, eligible projects should deliver service that reliably “meets or exceeds symmetrical upload and download” speeds of 100 Mbps. If that speed is impractical because of topography, geography, or cost, Treasury recommends that federal funds support technology delivering speeds of 100/20 Mbps and scalable to higher speeds. Treasury also states a preference for fiber optic technology. Collectively, this speed guidance surpasses standards used by other federal agencies, including the FCC, the Department of Agriculture, and the Department of Commerce. With this rule, Treasury joins states such as Illinois, Washington, and Vermont in setting requirements ensuring that public dollars for broadband are invested in solutions that reflect the rapidly evolving ways in which Americans use the internet and that will continue to meet those changing needs well into the future.