Is Your State Prepared to Distribute its Share of $42B in Federal Broadband Funds?

The pending Infrastructure Investment and Jobs Act allocates more than $65 Billion for broadband access, equity and deployment. As passed by the U.S. Senate, the bill allocates the majority of available funding ($42B) for grants to states. Under the Act, states would receive block grants and would be responsible for distributing the Federal funding via competitively awarded subgrants.

State and local leaders are already wrestling with the best way to allocate funding made available state, county and local governments via the American Rescue Plan (signed into law in March 2021). The prospect that the Infrastructure Investment and Jobs Act will become law means that state leaders should also start preparing to administer and distribute broadband-specific funds to advance broadband access and adoption in their state.

Distributing $42B in broadband funding will be no mean task. The stakes are high. All Americans need access to reliable broadband networks — the emergence of the COVID-19 pandemic made this fact crystal clear — and given the scale of proposed $42B program, there is a real opportunity for state leaders to help transform unserved areas into connected communities.

Preparing for ‘BTOP 2.0’

Starting in 2009 and continuing until 2012, the National Telecommunication and Information Administration (NTIA) established and administered a $5.7B broadband grant program — the Broadband Technology Opportunities Program (BTOP). As far as I am aware, BTOP constituted the Federal government’s largest broadband grant program ever. I worked on the team responsible for developing and implementing the programmatic rules guiding BTOP and, reflecting on my experience working on BTOP, I have drawn three key takeaways (see my post from September 2020 for a more complete discussion of these takeaways):

· Addressing broadband access and adoption issues is hard work. Even with billions of dollars, there are no silver bullet solutions that are successful in every circumstance in every community.

· Partnerships are critical. Neither the private sector nor the government/non-profit sectors will be able to achieve universal access to broadband or significant improvements in digital inclusion without effective public-private partnerships.

· Success will come through identifying and leveraging force multipliers. Greatest progress will be made when efforts to expand broadband access and inclusion are designed to ‘catch the wind’ rather than ‘swim against the tide.’

Under the Infrastructure Investment and Jobs Act passed by the Senate, NTIA would be responsible for administering the $42B grant program for states. If/when NTIA is called upon to develop guidelines for the state grant program, I have little doubt that NTIA will seek to draw-upon its experience developing and administering BTOP. Indeed, I anticipate that NTIA’s guidelines will be drafted to encourage each state to administer their own BTOP grant programs.

Preparing to write this post, I reviewed laws enacted in Michigan and Pennsylvania that established state broadband grant programs in 2020. I read the laws with an eye towards the legal authorities and policies that are critical for an effective grant program and should be emulated by other states. Based on my review of the newly enacted laws, I propose three recommendations for steps that Governors and State Legislatures can take to help ensure their state is prepared to most effectively administer Federal broadband funding under ‘BTOP 2.0’.

Three Recommendations for State Legislatures and Governors

Recommendation #1. Designate a State Agency with Clear and Singular Responsibility for your State’s Broadband Grant Program.

Both the Pennsylvania and Michigan laws get this right. The Pennsylvania law ensures that the Commonwealth Financing Authority has the clear authority and the singular responsibility for establishing and administering the state’s broadband grant program. In Michigan, the responsibility and authority goes to the state’s Department of Technology, Management and Budget.

The Infrastructure and Jobs Act passed by the Senate includes language specifying that states must engage in “local coordination” and a 5-year planning process. Specifically, the bill requires the state to submit to NTIA a “5-year-action plan,” which “shall be informed by collaboration with local and regional entities.” The local coordination, planning efforts and cross-departmental collaboration will all be facilitated by having a state agency with clear authority and singular responsibility.

The department with responsibility for the state’s broadband grant program must also have adequate resources. The Pennsylvania law allocates $5million per year to the Financing Authority for the specific purpose of administering the broadband grant program. The Michigan law allocates no specific level of funding but does authorize the Department of Technology, Management and Budget to use funds from either a state appropriation or Federal source to pay the Department’s cost to administer the program.

Recommendation #2. Institute a Matching Requirement.

Both the Pennsylvania and Michigan law include a statutory requirement that organizations seeking a grant must commit to finance a certain percentage of proposed project. Pennsylvania requires a minimum commitment of 25% of the overall project’s cost. Michigan requires a commitment of at least 50%.

If set at an appropriate level, the matching requirement should allow the funds being distributed by the state to enable more broadband projects and expand broadband services to more unserved areas. A matching requirement that is set too high, however, will limit the number of grant proposal related to particularly rural locations with low density populations that may not provide adequate return on investment for grant applicants. BTOP required a 20% match and provided NTIA’s Administrator to grant waivers under specific circumstances.

A matching requirement means that applicants have ‘skin in the game’ and the requirement should help ensure that the state is funding feasible and sustainable broadband projects — projects in which non-government entities are willing to invest. Additionally, during BTOP, the team at NTIA observed that the matching requirement helped encourage partnerships between organizations. In many cases, the resulting partnerships made for more impactful broadband projects.

Recommendation #3. Establish a Transparent and Easy to Administer Overbuild Challenge Process with a Shot Clock.

Both the Pennsylvania and Michigan law include provisions that establish a overbuild challenge process. The enacted laws each recognize that broadband grants should not fund areas with adequate existing broadband service available. The Michigan law directs the program administrator to publish its award recommendations and accept comments or objections for 60-days. Under the Michigan, the program administrator will investigate comments and objections. The law also provides a means for applicants to delineate an area as unserved. The Pennsylvania law directs the program administrator to publish the applications on its website. The law also establishes a 45-day overbuild challenge period, during which a broadband service provider offering service within a proposed project area may submit a challenge.

During BTOP, the overbuild challenge process was an important but — in some cases — challenging to administer component of the grant program. Based on the experience of the BTOP team, I would recommend the following:

· Ensure the program administrator has the resources required to investigate complaints and challenges. It is also important that the program administrator has technical resource sufficient to accurately assess supporting data submitted along with a challenge.

· Leverage the FCC’s approach to data collection rather than establish a state-specific collection schema. Leveraging the FCC’s approach to data collection should help ensure that the state has access to data submitted by all providers and facilitate making apple-to-apple comparisons between current service areas and proposed new service areas.

About this Medium Site

On this Medium site, I explore an array of topics related to the transformative power of smart and connected communities. A central question for this observer of the so-called smart community movement: how will municipalities, real estate developers, universities and other leading organizations develop, deploy and support smart and connected community projects at scale?

I welcome feedback and comments from readers.