Funding
A Deep Dive into the BEAD Program’s Matching Funds
Will the program’s matching funds requirement stretch federal dollars, or hinder smalller providers?
Following announcements from large fiber equipment providers that they are building fiber equipment manufacturing plants in the United States, the telecommunications industry is turning its focus from domestic manufacturing requirements to other regulatory burdens that have the potential to bar Broadband Equity Access and Deployment projects.
Of those regulations, matching and letter of credit requirements could be the major hurdles. Rules for the $42.5 billion BEAD program require that grantees produce a match of at least 25 percent of total program awards on top of a letter of credit. A letter of credit certifies that a bank will reimburse the federal government with 25 percent of program awards in the event of a default.
“Nobody wants to see BEAD funding go to waste. But requiring applicants to provide a 25 percent match and a 25 percent letter of credit risks shutting out those best-placed to bridge the digital divide and does little to protect U.S. taxpayers,” Connect Humanity CEO Jochai Ben-Avie told Broadband Breakfast. Connect Humanity is a digital equity advocacy group that invests in community connectivity providers.
Matching requirement
Many small, rural, minority and women-owned internet service providers and municipalities are ready and willing to build affordable, high-speed broadband in America’s least served and most marginalized communities, said Ben-Avie. “But, unlike the large incumbents, they don’t have millions of dollars spare to scale the BEAD capital hurdle,” he said. He called the letter of credit requirement a test of a provider’s ability to lock up working capital rather than the provider’s ability to deliver high-speed broadband.
Read the three reports on BEAD in advance of the BEAD Implementation Summit on September 21, 2023. Register now and receive a copy of each of the three reports!
- July 2023 – A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment Program
- August 2023 – Precursors to BEAD Implementation: A Deep Dive Into Prior Broadband Programs
- September 2023 – A Deep Dive into the BEAD Program’s Matching Funds
Or – sign up for the Broadband Breakfast Club and receive access to all Premium Content!
Funding
$113 Million in Broadband Grants Aim to Empower Colorado’s Local Providers
All but one of the awardees are Colorado-based internet service providers.
WASHINGTON, January 4, 2024 – Colorado on Wednesday tentatively granted more than $113.5 million in broadband expansion awards to 13 applicants to connect nearly 19,000 homes and businesses across southwest Colorado.
All but one of the awardees are Colorado-based internet service providers and municipal network operators. The other, Visionary Communications, offers service across two additional states, Montana and Wyoming.
Administered through the Advance Colorado Broadband Grant Program, the awards were funded by the Treasury Department’s Capital Projects Fund. The program saw fierce competition, receiving 112 applications seeking a combined total of over $642 million across 47 counties.
Clearnetworx emerged as a major victor, securing $25.3 million for five projects. Based in Montrose, Colorado, the locally owned and operated fiber and wireless service provider arose in 2012 to address the region’s broadband scarcity.
Clearnetworx has been granted awards to install fiber along Highway 160 and Highway 184 in Montezuma County. This development coincides with the Colorado Transportation Commission’s recent approval of a fee schedule that allows broadband service providers to install fiber along the state’s roadways at reduced rates. Under the revised fiber access fee structure, broadband providers in rural counties such as Montezuma will gain access to some of the most competitive rates in the region, priced at $0.03 per foot.
Close on its heels, Maverix Broadband, is in line to win $25.1 million, aiming to deploy fiber-to-the-home services across Gilpin, Boulder, Chaffee, and Saguache counties, and Kiowa city, extending coverage to 731 locations in a city of 725 residents.
Fort Collins Connexion, a municipal broadband utility, secured $10.8 million for four projects serving 1,409 locations in Larimer County. Meanwhile, another municipal network operator, Loveland Pulse, is slated to receive $3.2 million to extend fiber connectivity to three service areas.
The Southern Ute Indian Tribe secured $8.5 million to serve 557 locations within the Southern Ute Reservation, marking a significant step in enhancing connectivity.
The recipients are committing over $42 million in additional funds towards the project’s costs – a total $155.5 million investment.
Additionally, more funding from the Capital Projects Fund is designated for the Ridge View campus in rural Colorado. This initiative aims to establish a supportive residential community to aid in overcoming homelessness, ensuring long-term housing stability, and fostering successful reintegration into preferred communities.
The awards are set for finalization following an ongoing challenge process.
The state is committed to connecting 99 percent of Colorado’s households to “adequate” broadband by 2027. Today, over 90 percent of Colorado’s households and businesses have access to internet with 100 * 20 Megabits per second service, according to state data.
Funding
Florida Announces $13 Million for Broadband Devices
The money will allow community centers to loan devices like laptops and routers.
WASHINGTON, January 4, 2024 – Florida announced on Wednesday $13 million in grant funding for devices through its Digital Connectivity Technology Program.
Counties, municipalities, non-profits, and organizations serving high-poverty areas can apply for grants until March 4. The funds can be used to make devices like laptops and routers available for loan at local community centers, or to equip those community centers with connectivity equipment and devices.
The money comes from the Treasury Department’s Capital Projects Fund, a $10 billion pandemic response that provides states money for expanding broadband infrastructure and other connectivity projects. About $9 billion of that has been awarded so far.
Florida received an additional $247 million in CPF funds for its Broadband Infrastructure Program, which the state awarded in July. Those projects are expected to get broadband 59,000 homes, businesses, farms, and community centers.
CPF rules require new infrastructure funded by the program to deliver speeds of at least 100 * 100 Megabits per second (Mbps), but most projects funded by the state are expected to provide up to 1 * 1 Gigabit per second (Gbps).
The state will hold a webinar on the Digital Connectivity Technology Program’s application process on January 10.
Funding
In Year-End Message, FCC Chairwoman Urges Affordable Connectivity Funding
The low-income internet subsidy could run out of funding as early as April 2024.
WASHINGTON, December 29, 2023 – Federal Communications Commission Chairwoman Jessica Rosenworcel again called for Congress to fund the Affordable Connectivity Program.
In a year in review note published Friday, Rosenworcel touted the FCC’s efforts to promote the ACP, which provides a $30 monthly internet discount to low-income households. She noted the more than $77 million in ACP outreach grants – money for organizations to advertise the program and get eligible households enrolled – the Commission awarded in 2023 and the 7 million new households that signed up for the program, bringing the total to more than 22 million.
“But our progress here cannot slow down – we need help from Congress to keep this groundbreaking program going,” she wrote.
The ACP was set up with a $14.6 billion allocation from the Infrastructure, Investment and Jobs Act. About $3.6 billion of that remains, according to a monitoring tool developed by the advocacy group Institute for Local Self-Reliance. Rosenworcel testified to the Senate in September that the Commission expects that money to dry up as early as April 2024.
Republican leaders on the House and Senate commerce committees expressed some skepticism about the program in a December 18 letter to Rosenworcel, calling the ACP “wasteful” because many enrolled low-income households were able to subscribe to broadband before receiving the subsidy. The FCC’s estimates put the number at 78 to 80, Rosenworcel testified at a November House oversight hearing, but she noted the figures are not exact, as providers are not required to collect that information when someone enrolls.
President Joe Biden asked Congress in October for $6 billion to keep the fund afloat through 2024. Bipartisan groups of lawmakers and broadband industry groups have also pushed for Congress to refund the program, saying it will be an important tool for closing the digital divide and ensuring low-income subscribers stay online.
Providers who build new infrastructure with money from the Infrastructure Act’s $42.5 billion Broadband Equity, Access and Deployment program will be required to participate in the ACP, which experts have said would help stabilize revenue for ISPs who build in the hard-to-serve areas targeted by BEAD.
Rep. Yvette Clarke, D-New York, hinted at introducing a bill before the new year to address the impending ACP shortfall during the FCC oversight hearing, but the legislation has not yet materialized.
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A Deep Dive into the BEAD Program’s Matching Funds
Digital Inclusion
Provider Says FCC Should Freeze Affordable Connectivity Program Transfers
After February 7, the FCC is not going to require ISPs to accept ACP transfers.
WASHINGTON, January 13, 2024 – The Federal Communications Commission will start to shut down a key internet subsidy program for low-income households early next month, but one provider thinks the agency needs to do more.
The FCC said Thursday that the Affordable Connectivity Program will stop accepting new enrollments after February 7. New internet access providers can’t join the program after that date, either.
According to MVNO provider TruConnect, the FCC needs to broaden its plan. The virtual wireless company said the agency should freeze the ability of current ACP enrollees to transfer their benefits to another internet provider after February 7.
“A benefit transfer freeze during this time is in the best interest of ACP households, ACP providers, program integrity and program efficiency until funding either expires or is reappropriated,” TruConnect’s lawyer Judson H. Hill said in a filing posted on the FCC’s website today.
Hill said he communicated TruConnect’s position on Jan. 9 to Noah Stein, Deputy Bureau Chief of the FCC’s Wireline Competition Bureau, which issued the FCC’s 15-page ACP shutdown order two days later.
FCC’s shutdown order restricts the transfer of ACP benefits
According to the FCC, about 22 million low-income households have enrolled in the ACP, which Congress established in late 2021 with $14.2 billion to take $30 off monthly internet bills. The program’s last full month will be April without new funding by Congress, the FCC said.
The FCC’s rules provide that “households may transfer their ACP service benefit once per calendar month, with limited exceptions.”
In Thursday’s order, the FCC said it would not “require providers to perform transfer-in transactions for enrolled ACP households seeking to transfer their benefit.”
Instead, the FCC said it will allow “providers to choose whether to accept transfers after the ACP enrollment freeze.”
TruConnect didn’t provide any specifics behind its support for a transfer freeze.
In his discussion with the FCC’s Stein, Hill said he “emphasized that once program enrollments are frozen, that to achieve an orderly program wind down until funding expires that the [FCC] should also freeze ACP household subscriber benefit transfers between ACP programs providers.”
TruConnect’s website is effectively a portal to sign up ACP households and includes offers such as free 8 GB of high-speed data, free unlimited talk and text, and an option to buy a tablet for $10.01.
The ACP is administered by the Universal Service Administrative Co. under the FCC’s oversight. USAC’s website does not appear to have information on how many ACP enrollees have transferred to a new internet provider during the 24-month life of the ACP, which was created to help struggling Americans rebound from the pandemic.
Ted Hearn is the Editor of Policyband, a new website dedicated to comprehensive coverage of the broadband communications market. This piece was published on Policyband on January 12, 2024, and is reprinted with permission.
Broadband's Impact
CES 2024: Industry Wants Federal Data Privacy Law
The current patchwork of state laws makes compliance difficult, said representatives from T-Mobile and Meta.
LAS VEGAS, January 12, 2024 – Industry stakeholders called for federal data privacy legislation at CES on Thursday.
“I think oftentimes companies can be in the position of opposing additional regulation at the federal level,” said Melanie Tiano, director of federal regulatory affairs at T-Mobile. “But this is probably one of those areas where that’s not the case, in part because of the flurry of activity going on at the state level, which makes compliance in the U.S. marketplace extraordinarily confusing and difficult.”
The New Jersey legislature cleared one such bill on Monday. If that’s signed into law by the state’s governor, it would bring the number up to 13. Federal efforts, notably the American Data Privacy and Protection Act, have stalled in recent years.
“We will continue to be seriously committed to getting legislation done in a bipartisan way. That’s not always easy right now, but we’re continuing to work on that” said Tim Kurth, chief counsel for the House Innovation, Data and Commerce Subcommittee.
Simone Hall Wood, privacy and public policy manager at Meta, said “privacy regulation should not inhibit beneficial uses of data.” The company has argued it has a legitimate interest in data use practices that the European Union has found to be out of compliance with its data privacy law, the GDPR.
Industry groups, including the Consumer Technology Association, which runs the CES conference, have advocated for a light-touch privacy law in the United States, in contrast with the more comprehensive European standard.
Kurth had similar thoughts Thursday, saying the GDPR “really hurt startups and really hurt innovations.”
Still, Woods said establishing a uniform standard is something the law does well.
“It sets certainty across the marketplace for what privacy protections look like for consumers. And so that aspect of it is positive,” she said.
Broadband's Impact
CES 2024: NTIA and House Commerce Weigh in on Spectrum Policy
Reinstating FCC auction authority is the ‘number one priority’ of the Energy and Commerce Committee Chair.
LAS VEGAS, January 12, 2024 – A senior National Telecommunications and Information Administration advisor and the chief lawyers for both Democratic and Republican sides of the House Subcommittee on Communications and Technology talked about their spectrum policy priorities on Thursday at CES.
The group touted U.S. wins at the World Radiocommunication Conference in Dubai, as well as lawmakers’ goals for spectrum auction authority heading into 2024.
World Radio Congress
Going into the conference, in which representatives from around the world meet to coordinate spectrum usage, “the 6 GigaHertz (GHz) issue was the top priority of the U.S. government,” said Phil Murphy, a senior advisor at the NTIA.
The band was set aside in 2020 by the Federal Communications Commission for unlicensed use in the United States, but some countries like China wanted to see some of the band tapped for 5G mobile use, Murphy said.
The U.S. delegation was ultimately able to deliver in December: the conference decision set aside 700 MegaHertz (MHz) for mobile, but left the door open for regulatory agencies to approve unlicensed use throughout the band.
That’s a win for the American Wi-Fi industry: the Wi-Fi alliance announced its official Wi-Fi 7 certification on Monday ahead of the tech conference. The new generation supports wider spectrum channels and multi-link operation, both of which will make use of the 1,200 MHz of real estate in the 6 GHz band.
“We’re really excited by the results,” Murphy said. “We’re really excited to see 6 GHz moving forward, not just here in the United States, but in other parts of the world as well.”
Auction authority
The Federal Communications Commission’s authority to auction and issue licenses for the commercial use of electromagnetic spectrum expired for the first time in March 2023. That’s not an issue for technologies like Wi-Fi, which don’t require such licenses to operate in bands set aside for unlicensed use, but it is important for ever-expanding 5G networks and wireless broadband.
“The Chair’s number one priority is to reauthorize the FCC spectrum auction authority that expired in March,” said Kate O’Connor, chief counsel for the Republican majority on the communications and technology subcommittee. “Even if it hasn’t been public, there’s been a lot going on behind the scenes.”
Jennifer Epperson, chief counsel for the Democratic side of the subcommittee, and Murphy, the NTIA advisor, agreed on the importance of the issue.
“I think reauthorizing the FCC’s spectrum auction authority is a priority for the administration as well,” he said. “There’s probably spectrum that the FCC has available to auction right now, but they can’t because they don’t have the authority to do so.”
At a House oversight hearing in November, FCC Chairwoman Jessica Rosenworcel said “I have a bunch of bands sitting in the closet at the FCC,” pointing to 550 MHz in the 12.7-13.25 GHz band as spectrum the agency could go to auction with “relatively quickly.”
Efforts at blanket reauthorization have stalled publicly since a bill cleared the House Energy and Commerce Committee in May, but a stopgap measure allowing the Commission to issue licenses that had been purchased before the lapse was signed into law in December.
“With the funding bills coming up, we’re taking a look and hoping that we can turn this on as soon as possible,” O’Connor said.
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