COVID 19 Federal Funding Can Address Broadband Gap

David Robinson
The Montrose Group, LLC

COVID 19 illustrated the economic challenges for communities without adequate broadband services. According to the FCC, the definition of broadband internet is a minimum of 25 Mbps download and 3 Mbps upload speeds.[i] Broadband provides high speed internet access via multiple types of technologies including fiber optics, wireless, cable, DSL and satellite.[ii] The availability of broadband enables all the benefits of the digital information age to support business growth, and it eliminates the lack of density and the challenge of distance created for rural communities in particular. Regions without adequate broadband networks struggle to utilize telemedicine, telework and even basic wireless telecommunication service. According to the Federal Communications Commission and USDA, 80% of the 24 million American households that do not have reliable, affordable high-speed internet are located in rural areas. The lack of high-speed access carries real economic consequences. The World Bank estimates that a 10% increase in broadband penetration can lead to a 1.21% jump in GDP growth in developed economies and a 1.38% jump in developing economies.[iii] The FCC argues that the economic payoff from investing to improve broadband access is greater than from other types of infrastructure investments.[iv]

As the map above indicates, struggling rural communities like Southeast Ohio that is in the heart of Appalachia, lack adequate broadband services. The availability of broadband service is not the only economic development strategy needed for rural communities. However, with the expected growth of telework, telemedicine and other remote work efforts, rural communities would be well served to address their broadband challenges now.

Cost estimates to support the expansion of broadband to all rural customers are estimated at $61 B to serve all rural customers.[v] The Boston Consulting Group believes that with a mix of technologies deployed across counties, providing broadband access to underserved rural Americans would require a capital expenditure of $8 B to $12 B—less than for any individual technology, and, at approximately $50 per month in potential user revenue, the investment would likely pay for itself in roughly five to six years.[vi]

While no national policy solutions for rural broadband have been adopted, the $2.2 Trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act offers a number of funding sources for regions looking to address broadband gaps. However, fifty broadband grant programs exist in different agencies of the federal government that offer opportunities for regions to address broadband gaps.[vii]

The U.S. Department of Commerce’s Economic Development Administration (EDA) is traditionally at the point of the spear for the federal government related to economic development programs and can also be a source of funding for regional broadband programs. Congress recently provided the EDA with $1.5 B in supplemental funding for the Public Works & Economic Adjustment Assistance (EAA) program. The EDA’s EAA program is designed to offer a wide range of technical, planning, and public works and infrastructure assistance in regions experiencing adverse economic changes that occur suddenly or over time. With the recent onset of the COVID 19 pandemic, almost every community in the United States is experiencing sudden and adverse economic change. Adopting a broadband strategic plan for a region is a smart first step to implementing a broadband strategy, and the EDA has funding that can support that planning effort.

Economic Adjustment Assistance funding can provide invaluable support to your economic development efforts:

• Strategy Grants – supports the development, updating or refinement of a Comprehensive Economic Development Strategy (CEDS). As a community, having a CEDS in place is a prerequisite for qualifying for EDA funds for projects. Some questions to ask about a CEDS: if you have a CEDS in place, how has the COVID 19 crisis impacted priorities in your current strategy? Does your strategy need to be updated or refined? and, if you do not have a CEDS in place, should you have one? A strategy grant will help fund developing your strategy and broadband could be a focus.
• Implementation Grants – supports the execution of activities identified in a CEDS. What strategic priorities are listed within your CEDS that will prepare your community for future economic development success and broadband? How could EDA implementation funds bring strategies to fruition?
• CEDS strategies around infrastructure improvements, including site acquisition, site preparation, construction, rehabilitation and equipping of facilities can be funded through implementation grants. Specific strategies within a CEDS can be funded, as can multiple elements of a single investment (think establishing a new industrial park where land acquisition and extension of public infrastructure are necessary).

The EAA program is EDA’s most flexible program. Under the EAA program, EDA can fund market and environmental studies, planning or construction grants, and seed or replenish RLFs to provide small businesses with capital needs. In these trying times, focusing on priorities like creating an EDA-recognized CEDS or catalyzing a priority within an existing CEDS elevates a community’s competitiveness in receiving EDA funding. To position your community’s projects competitively for EDA EAA funding, prioritize projects that are positioned to start quickly and create jobs faster; look at how the project will enable your community/region to become more diversified and economically balanced; and relieves economic distress of your community/region. Almost any community across the country can argue that EDA Economic Adjustment Assistance funding would be key to raising businesses and employees up out of economic adversity. The EAA program can then be used to fund public works infrastructure including broadband services.

Under the CARES Act, the U.S. Department of Agriculture (USDA) will receive funding across many of its most vital programs to support the agriculture industry sector and rural America that can support the funding for rural broadband programs. The USDA’s Rural Development programs will receive a total of $145.5 Million to fund programs designed to advance rural Americans access to lending and technology—including $100 M for rural broadband services.  The USDA has been investing more than $700 Million a year for modern broadband e-Connectivity in rural communities and with stimulus funding will see another $100 Million in grant funding to support e-Connectivity through its programs. e-Connectivity priorities of the USDA are aimed at increased productivity that fosters economic development, job growth, rural entrepreneurship and innovative technologies where every part of rural America, including the farm, is connected to the web; improved operations where connectivity helps farmers enhance real-time activity of operations in the fields, manages finances, and responds to real-time international market conditions; enhanced healthcare options to bring remote access to all forms of healthcare services, like proper prescription medication submissions, distance learning and training for addiction services and treatment counseling, and telehealth visits; educational opportunities so rural students have the same digital learning tools and WiFi hotspots as their peers; and competitive entrepreneurship that opens the global digital marketplace up for rural e-commerce products.

The USDA Rural Development Broadband ReConnect Loan and Grant Program awards loans and grants to provide funds for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide broadband service in eligible rural areas that do not have access to at least 10 Mbps downstream and 1 Mbps upstream. Elements of the program include:
⦁ 100% Grant – up to $25,000,000 max grant request;
⦁ 50% Loan / 50% Grant – up to $25,000,000 loan and $25,000,000 grant request and loan/grant requests will always be equal;
⦁ 100% Loan – up to $50,000,000 max loan request; and
⦁ Eligible Applicants – cooperatives, non-profits, or mutual associations; for-profit corporations or LLCs; state or local governments, or any agency, subdivision, instrumentality, or political subdivision thereof; territory or possession of the United States; or an Indian tribe.

The USDA Distance Learning and Telemedicine (DLT) program helps rural communities use the unique capabilities of telecommunications to connect each other and to the world, overcoming the effects of remoteness and low population density. Most state and local government entities, as well as federally-recognized Tribes, non-profits, for-profit businesses, and consortias of eligible entities may apply for grant funds so long as the applicants provide education or health care through telecommunications.

The USDA DLT 100% grants require a minimum 15% match from the applicant with award ranges from $50,000 – $1,000,000, and eligible uses including acquisition of eligible capital assets (broadband transmission facilities; audio, video and interactive video equipment; terminal and data equipment; computer hardware, network components and software; inside wiring and similar infrastructure that further DLT services); acquisition of instructional programming for eligible equipment; and acquisition of technical assistance and instruction for using eligible equipment.

 The CARES Act also appropriates $200 M for the FCC to use to respond to the coronavirus, including for use by healthcare providers offering telehealth services during the coronavirus emergency. FCC Chairman Ajit Pai has announced his intention to dedicate the funding to telehealth under its Rural Health Care Program. The FCC currently has budgeted about $600 million for the program, so if all funds are devoted to rural telehealth, the budget would increase by about one-third. The healthcare providers subsidized by this program choose their providers for the subsidized services.

[i] https://www.verizon.com/info/definitions/broadband/

[ii] Ibid.

[iii] https://www.bcg.com/en-us/publications/2018/economic-case-bringing-broadband-rural-united-states.aspx

[iv] Ibid.

[v] https://www.telecompetitor.com/economists-put-the-tab-at-61-billion-to-bring-fiber-broadband-to-rural-u-s/

[vi] https://www.bcg.com/en-us/publications/2018/economic-case-bringing-broadband-rural-united-states.aspx

[vii] https://broadbandusa.ntia.doc.gov/new-fund-search