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  STAFF REPORT TO COMMISSIONERS

Broadband Programs Pursuant to the American Recovery And Reinvestment Act of 2009
STAFF REPORT TO COMMISSIONERS
Department of Commerce:
 
The American Recovery and Reinvestment Act (ARRA) funds Section 6001, The Broadband Technology Opportunities Program (“Program”) with $4.7 provided to the National Telecommunications and Information Administration (NTIA) in consultation with the Federal Communications Commission (FCC).[1]
 The majority of this fund is for competitive grants which can only be awarded directly to a State if the State applies as an eligible entity and meets the eligibility requirements. The Program requires at least one grant be awarded in each state.
 
           Competitive grants require a 20% match although exceptions may be allowed. Eligible entities include a State or political subdivision, Indian Tribe, a non-profit organization, a broadband service or infrastructure provider and any other entity that NTIA finds to be in the public interest.  Competitive grants can be for an array of items including 1) the purchase of equipment, software, hardware, digital network technology, infrastructure for broadband services, 2) the construction of broadband related infrastructure, including that used for public safety, 3) access to broadband service by community anchor institutions and 4) access to broadband service by low-income, unemployed, aged, and otherwise vulnerable populations. Grant receivers are obligated at a minimum to adhere to the principles contained in the Commission’s broadband policy statement regarding non-discrimination and network interconnection. All grants must be awarded before the end of fiscal year 2010.
The Program does not require any State action nor does it assign any functions to States.[2]  Although Section 6001 (c) uses “may consult a state…” the Committee on Conference report directs the NTIA to consult with States on the identification of unserved and underserved areas and the allocation of grant funds to projects affecting each state. States are encouraged to coalesce stake holders and partners in assessing the community needs and meeting the other requirements of the act.[3]
The Program also allocates $350 million to NTIA for the broadband mapping obligations in S. 1492, The Broadband Data Improvement Act, that was passed without appropriations. S. 1492 is attached as Appendix C and contains separate eligible entity definitions and competitive matching grant criteria. It is unlikely that any mapping results S. 1492 would be available in time to identify areas for grant applications. The S. 1492 should be managed with the intent of providing future information for additional federal and state efforts and for the public’s use.
 
Department of Agriculture:
The ARRA also provides $2.5 billion to the USDA under the Rural Electrification Act (REA) for grants, loans and guaranteed loans for broadband infrastructure with funding priority going to project applications from borrowers or former borrowers under REA. As with other REA programs, there is no fund awarding or tracking activity required by a state for these grant and loans. This program also provides “That no area of a projected funded with amounts made available under this paragraph may receive funding to provide broadband service under the Broadband Technologies Opportunity Program” (NTIA Program).  This USDA program is also almost exclusively focused on small telecommunications carriers who serve almost exclusively rural areas of the state.
This paper does not address any further details on the USDA funding mechanism. This paper reviews in detail the Department of Commerce Program provided through NTIA.
 
RECOMMENDATIONS:
Oregon should take immediate actions to ensure that the Program’s competitive grants are awarded in-state so Oregonians and their communities can benefit from 1) the expansion of broadband availability in unserved areas, 2) additional broadband providers and faster speeds in underserved areas, and 3) computer, network and infrastructure projects for schools, libraries, health centers and public safety. Specific state allocations based on population or other criteria are not application to this Program; the Program appears to be first-come-first-served.
Because of the diverse nature of the Program’s intended reach and the short time frame for grant disbursement, Oregon must work quickly and efficiently to identify high-return investment possibilities, synergies with other ARRA and Oregon programs, and potential eligible entities.  Oregon must immediately establish a liaison committee with NTIA and a collection point or funnel for eligible entities to work through.[4]
 
1.      State Agency participation:  It is anticipated that these agencies could fully participate with the expertise of current personnel.
 
A.     Governor’s Office to ensure comprehensive and cohesive state involvement; to establish a Program Task Force with representation from all involved agencies, associations, the business sector, and the broadband providers.
 
B.     Economic and Community Development for specific community and public involvement, particularly for 1) inclusion of zone based programs, 2) financial options for the eligible entity 20% match, 3) expertise in HUD CDGB and where outstanding broadband needs are most relevant to economic growth, 4) involvement of socially and economically disadvantaged small businesses, 5) assistance with NTIA application forms and requirements, and 6) advancing the Program through its existing connection with private enterprise.
 
C.     PUC to 1) promote least-risk eligible entity participation of both regulated and non-regulated carriers that provide broadband services, 2) assess shovel-ready project priorities, and 3) assist NTIA in assessing infrastructure investments that would not otherwise be made or that might not be made as quickly without the Program funding.
 
2.      Outreach to other agencies and associations. It is contemplated that as the Program process matures other state agencies, associations and businesses could be additional resources for the Governor’s Program Task Force, OECDD and the PUC, especially for aggregating demand, ensuring community involvement, and fostering useful technology applications.
 
A.     ORTCC members, specifically those members that represent counties, cities, health and education that are familiar with the current state of broadband for these areas and how broadband is relevant to those they represent.
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B.     Local elected officials input on 1) possible funding synergies with certain other ARRA funded projects such as Title 1 Education for the Disadvantaged, Education Technology and the Community Services Block Grant, and 2) ways to aggregate broadband demand in their city.
 
C.     Oregon Housing and Community Services for its expertise in low-income household programs and possible derived synergies from combining the application of Program grants with other ARRA programs such as the Public Housing Capital Fund.
 
D.     Department of Education for possible demand aggregation and/or funding synergies with its Title IV-B 21st Century Community Learning Center Grant Program.
 
E.      Oregon APCO for the inclusion of public safety needs that may be met by Program grants.
 
F.      OHSU and other health-care providers involved in tele-health issues.
 
G.     Oregon Associations that could or should participate.
·        Oregon Regional Councils Association.
·        Bureau of Indian Affairs
·        Other Associations that could assist with broadband demand aggregation.
               
PROGRAM APPROPRIATIONS OF $4.7 BILLION:
 
1.      $4.35 billion to be expended pursuant to Division B of the Act of which;
A.     Not less than $200 million for competitive grants for expanding public computer center capacity including at community colleges and public libraries.
B.     Not less than $250 million for competitive grants for innovated programs to encourage sustainable adoption of broadband service
C.     $10 million to the Office of Inspector General, Department of Commerce for the purpose of audits and oversight of funds provided under BTOP.
2.      Up to $350 million for the purpose of developing and maintaining a broadband inventory map.[5]
3.      Not more than 3% of total funds to be used for administrative costs.
4.      The funds provided under this Program may be transferred to the FCC for the purposes of developing a national broadband plan or for carrying out any other FCC responsibility pursuant to Division B of this Act.
 
PROGRAM APPLICATIONS:

1.    Provide access to broadband service to consumers resid­ing in unserved areas.

2.    Provide improved access to broadband service to con­sumers residing in underserved areas.

3.    Provide broadband education, awareness, training, access, equipment, and support to:

A.     schools, libraries, medical and healthcare providers, community colleges and other institutions of higher education, and other community support organizations and entities to facilitate greater use of broadband service by or through these organizations;
B.     organizations and agencies that provide outreach, access, equipment, and support services to facilitate greater use of broadband service by low-income, unemployed, aged, and otherwise vulnerable populations; and
C.   job-creating strategic facilities located within a State-designated economic zone, Economic Development District designated by the Department of Commerce, Re­newal Community or Empowerment Zone designated by the Department of Housing and Urban Development, or Enterprise Community designated by the Department of Agriculture.
 
4.      Improve access to, and use of, broadband service by public safety agencies.
 
5.      Stimulate the demand for broadband, economic growth, and job creation.

 

CONSIDERATIONS:
 
1.      Timing and Program establishment:
All awards are to be made before the end of fiscal year (October) 2010. NTIA must first establish the Program guidelines and rules and develop specific application forms for the diverse competitive grant funding mechanisms.  Oregon representatives should be available to assist all eligible entities in completing competitive grant applications and therefore should be working directly with NTIA as it develops the application forms. The OECDD have expertise in this area from managing other grant/loan programs.
 
2.      Identifying opportunities:
The majority of the competitive grant funding is for broadband infrastructure that wireless carriers, wireline carriers, backhaul providers, satellite carriers, public—private partnerships, and tower companies can provide as eligible entities. Other competitive grants provide broadband education, awareness, training, access, and equipment. The OECDD and the PUC should form a team to evaluate areas with specific infrastructure needs and create a priority list.
 
The OECDD should concentrate on identifying competitive grant areas that would benefit the most from job-creating strategic facilities and areas that would ensure access to broadband service by community an­chor institutions. OECDD should work closely with other agencies and organizations that provide outreach, access, equipment, and support services to facilitate greater use of broadband service by low-income, unemployed, aged, and otherwise vulnerable populations and those that would use community anchor institutions such as libraries and educational centers.[6] 
 
Carriers should have an available avenue to work directly with the state in identifying unserved and underserved areas for build-out.[7] PUC staff should work directly with all carriers to ensure any infrastructure plans are viable; fulfill the Programs criteria with the least amount of risk to the carrier. This should include associating or overlapping rural grants for unserved areas with suburban and urban grants for underserved areas.  The PUC should also advise the Governor’s Program Task Force where the competitive grants would most likely require outreach efforts to stimulate or aggregate demand. 
 
The Conferees noted “that the construction of broadband facilities capable of delivering next-generation broadband speeds is likely to result in greater job creation and job preservation than projects centered on current- generation broadband speeds. Therefore, the Conferees instruct the NTIA to seek to fund, to the extent practicable, projects that provide the highest possible, next-generation broadband speeds to consumers.” The PUC staff’s technical expertise on broadband services by type of service provider, including upload and download speeds currently available and those considered next-generation, will allow it to assist NTIA in ensuring this criteria is appropriately met.  
 
PROGRAM CRITERIA:
 
1.      Applications: NTIA is to design applications to include:
A.     How grant will be used in an efficient and expeditious manner, including a showing that the project would not have been implemented during the grant period without Federal grant assistance;
B.   Demonstrate capability to carrying out the project in compliance with all applicable Federal, State, and local laws;
C.   Demonstrate that it will appropriate or otherwise unconditionally obligate, from non-Federal sources, a 20% fund match;
D.   Disclose the source and amount of other Federal or State funding sources from which the applicant receives, or has applied for, funding for activities or projects to which the application relates; and
E.   Provide such assurances and procedures as the Assistant Secretary may require to ensure that grant funds are used and accounted for in an appropriate manner.
 
2.      Grants: NTIA will establish grants that to the extent practical:
A.   award not less than 1 grant in each State;
B.     consider whether an application to deploy infrastructure in an area—
·        will, if approved, increase the affordability of, and subscribership to, service to the greatest population of users in the area;
·        will, if approved, provide the greatest broadband speed possible to the greatest population of users in the area;
·        will, if approved, enhance service for health care delivery, education, or children to the greatest population of users in the area; and
·     will, if approved, not result in unjust enrichment as a result of support for non-recurring costs through another Federal program for service in the area; and
  1. consider whether the applicant is a socially and economically disadvantaged small business concern as defined under section 8(a) of the Small Business Act (15 U.S.C. 637).
 
OECDD and the PUC can certainly pre-assess proposed broadband projects against the above criteria to assist NTIA in determining applicant’s approval and to assure the projects being funded will have positive results for Oregonians.[8]
 

3.   Grant Reporting/Tracking: NTIA will establish reporting requirements:

  1. any entity receiving a grant shall require to report quarterly on its use of the funds and its progress towards its objectives, such reports will be made available to the public,

  2. may establish additional reporting and information requirements,

  3. shall establish appropriate mechanisms to ensure appropriate use and compliance with all terms of any use of funds;

  4. may de-obligate awards to grantees that demonstrate an insufficient level of performance, or wasteful or fraudulent spending,

  5. shall create and maintain a fully searchable database, accessible on the Internet at no cost to the public:

     

·        that contains at least a list of each entity that has applied for a grant,
·        a description of each application,
·        the status of each such application,
·        the name of each entity receiving funds,
·        the purpose for which such entity is receiving such funds,
·        each quarterly report submitted by the entity,
·        and such other information sufficient to allow the public to understand and monitor grants awarded under the program.
 
NTIA may request state support for C. above. The PUC could work with NTIA to establish a federal/state process to ensure the grants secured are being used according to the approved application.[9] This could cause frictionwith carrierapplicants whose broadband service is not regulated by the PUC unless NTIA adopted and incorporated specific rules allowing State authorized agencies to assist in monitoring the use of the Program grants.
 
4. Contractual Conditions: NTIA, in coordination with the FCC and at the time it formalizes grant applications, shall publish the non-discrimination and network interconnection obligations that shall be contractual conditions of grants awarded under this section, including, at a minimum, adherence to the principles contained in the Commission’s broadband policy statement (FCC 05–15, adopted August 5, 2005).[10]
 
5.    Reporting Requirements:Not later than 1 year after the date of enactment of this section, the Commission shall submit to the Committee on Energy and Commerce of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate, a report containing a national broadband plan.
 
  1. The national broadband plan required by this section shall seek to ensure that all people of the United States have access to broadband capability and shall establish benchmarks for meeting that goal. The plan shall also include—
·        an analysis of the most effective and efficient mech­anisms for ensuring broadband access by all people of the United States;
·     a detailed strategy for achieving affordability of such service and maximum utilization of broadband infra­structure and service by the public;
·     an evaluation of the status of deployment of broadband service, including progress of projects supported by the grants made pursuant to this section; and
·     a plan for use of broadband infrastructure and services in advancing consumer welfare, civic participation, public safety and homeland security, community develop­ment, health care delivery, energy independence and efficiency, education, worker training, private sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes.
  1. In developing the plan, the Commission shall have access to data provided to other Government agencies under the Broadband Data Improvement Act (47 U.S.C. 1301 note).[11]
  2. The Assistant Secretary shall develop and maintain a comprehensive nationwide inventory map of existing broadband service capability and availability that depicts the geographic extent to which broadband service capability is deployed and available from a commercial provider or public provider throughout each State. Not later than 2 years after the date of the enactment of this Act, the Assistant Secretary shall make the broadband inventory map accessible by the public on a World Wide Web site of the National Telecommunications and Information Administration in a form that is interactive and searchable.[12]
  3. The Assistant Secretary shall have the authority to prescribe such rules as are necessary to carry out the purposes of this section.
 

The PUC should have access to the FCC’s new 477 carrier reports once they have been filed and review by the FCC. The new reports will include additional broadband information that was not available before. Oregon should find these reports useful in monitoring the Oregon’s broadband deployment. The reports generated from the Broadband Data Improvement Act will also assist in this effort


[1] Section 6001 of the ARRA is attached as Appendix A
[2] Rather confusing is this statement in the Conference Report: “The Conferees further intend that the NTIA will, in its discretion, assist the States in post-grant monitoring to ensure that recipients comply fully with the terms and conditions of their grants.” There is nothing in the Program language regarding States doing post-grant monitoring and there is no associated State funding in the appropriations section.
[3] The Conference Report is attached as Appendix B
[4] The Conferees recognize that States have resources and a familiarity with local economic, demographic, and market conditions that could contribute to the success of the broadband grant program.
[5] Section (l) of the Program states “The Assistant Secretary shall develop and maintain a com­prehensive nationwide inventory map of existing broadband service capability and availability in the United States that depicts the geo­graphic extent to which broadband service capability is deployed and available from a commercial provider or public provider throughout each State. Not later than 2 years after the date of the enactment of this Act, the Assistant Secretary shall make the broadband inventory map developed and maintained pursuant to this section accessible by the public on a World Wide Web site of the National Telecommunications and Information Administration in a form that is interactive and searchable.”
[6] States are encouraged to coalesce stakeholders and partners, assess community needs, aggregate demand for services, and evaluate demand for technical assistance.
[7] The Conferees therefore expect and intend that the NTIA, at its discretion, will seek advice and assistance from the States in reviewing grant applications, as long as the NTIA retains the sole authority to approve the awards.
[8] The Conferees therefore expect and intend that the NTIA, at its discretion, will seek advice and assistance from the States in reviewing grant applications, as long as the NTIA retains the sole authority to approve the awards.
 
[9] “The Conferees further intend that the NTIA will, in its discretion, assist the States in post-grant monitoring to ensure that recipients comply fully with the terms and conditions of their grants.”
[10] See Appendix D for the FCC’s broadband policy statement.
[11] See Appendix C for the Broadband Data Improvement Act.
[12] Clarity will have to be sought regarding this inventory map and its association with the mapping being performed with the $350 million appropriation. 

 

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