Insights

Congress Invests Historic $65 Billion in Nation's High-Speed Internet Networks and Affordability Program

By Danielle Frappier and Victoria Samuels

11.15.21

Today, President Biden signed into law a bill that provides for historic levels of investment in the nation's infrastructure, including $65 billion to construct and upgrade networks used to provide high-speed internet access, as well as making permanent a program that reduces the costs to low-income consumers purchasing these services.

The funding will primarily be disbursed in the form of one-time grants to states, territories, Tribal organizations, and other governmental entities, in some instances for those entities to further distribute the funding to industry through a subgrant process. It also appropriates an additional $2 billion in funding for the USDA's grant and loan ReConnect program (with some updates to the program included in the new legislation), and $600 million for state private activity bonds to fund broadband networks in areas lacking broadband service. In addition to the network and affordability funding provisions, the new legislation establishes two grant programs to promote digital equity, which will provide up to $1.5 billion to states and territories, and entities such as non-profit foundations and anchor institutions, to implement programs that promote digital equity and increase broadband adoption.

Below, we discuss the four new network and affordability subsidy programs, and updates to the ReConnect program in more detail, along with a high level discussion of each program. However, the various federal, state, territorial, and Tribal entities administering these funds will necessarily need to provide further details and requirements in the coming months, especially for any funding to be disbursed to private industry or consumers.

Broadband Equity, Access, and Deployment Program (Sections 60101-60105)

The bulk of the funding—$42.5 billion—will be disbursed by the National Telecommunications and Information Administration (NTIA) to state and territorial governments to fund the deployment of internet access services at speeds of 100/20 Mbps to unserved and underserved areas of the U.S. and its territories, through a new program to be called the Broadband Equity, Access and Deployment Program. This represents the single largest investment in broadband services in U.S. history.

Under this program, each state, the District of Columbia, and Puerto Rico will receive at least $100 million in funding, and American Samoa, Guam, Northern Mariana Islands, and the U.S. Virgin Islands will each receive at least $25 million in funding. The remaining $37 billion will be allocated based on the proportion of unserved and underserved locations in the state or territory, and will be available in three tranches for governments with approved applications: 5 percent for planning, 20 percent upon initial acceptance of a project proposal, and 75 percent upon final acceptance of the proposal.

Importantly, there is a requirement that the state, territory, or subgrantee commit to at least a 25 percent funding match, although the matching funds may be in the form of prior COVID-19 funding or in-kind, and this requirement may be waived.

State and territorial governments may use these funds to competitively award subgrants to public or private subgrantees for, among other possible approved uses:

1. Providing service in unserved areas (i.e., those in which at least 80 percent of the locations lack upload and download speeds of 25/3 Mbps) and/or underserved areas (i.e., those lacking 100/20 Mbps service and low latency sufficient to support real-time interactive applications);
2. Connecting eligible community anchor institutions;
3. Data collection, broadband mapping, and planning;
4. Installing internet and Wi-Fi infrastructure or providing reduced-cost broadband within a multi-family residential building;
5. Broadband adoption, including programs to provide affordable internet-capable devices; and
6. Any use determined necessary by NTIA.

The legislation directs the states and territories to create five-year plans that will require recipients to complete the deployment of broadband networks four years after the receipt of funding, with the possibility for certain, limited extensions. Deployed services must meet a minimum speed of 100/20 Mbps with latency low enough to enable real-time interactive applications, and 5G and other advanced technologies must be prioritized.

In awarding money through sub-grants, states and territories must prioritize projects that seek to serve areas that lack 25/3 Mbps first, then areas that lack access to 100/20 Mbps speeds, and finally those that connect unconnected community anchor institutions. Within each of those areas, states and territories must give preference to projects that seek to serve high-poverty areas and those with higher speeds, as well as projects that offer faster deployments, and based on provider compliance with federal labor and employment laws. On-going obligations of grantees and subgrantees include the requirement to offer a low-cost broadband internet service, consumer outreach, and a 48-hour limit on network outages.

Within 180 days of enactment of the legislation, NTIA is directed to issue a Notice of Funding Opportunity, and otherwise, to establish a process to fund planning and pre-deployment activities for state and territory governments, make available an online application form to be used by state and territory governments to submit their initial and final proposals, and partner with the Federal Communications Commission (FCC) to establish standards for state and territory governments to assess subgrantee capabilities and capacities.

Affordable Connectivity Program—Transforms and Makes Permanent Existing EBB Program (Sections 60501-60506)

In creating the Affordable Connectivity Program (ACP), Congress is tweaking and making permanent the Emergency Broadband Benefit (EBB) program it created in early 2021 in the Consolidated Appropriations Act. Unlike the other programs discussed here, the ACP (like the EBB program before it) is focused solely on addressing the challenges of affordability of broadband internet access services, primarily providing recurring monthly subsidies to consumers in the form of discounts on their monthly bills, as well as one-time subsidies for connected laptops and tablets.

Congress has allocated $14.2 billion for this permanent iteration of the program (whereas it had allocated $3.2 billion for the EBB program). Based on estimates of when EBB program funding will be exhausted, this new injection of funding could last a number of years.

The new ACP rules differ in the following key aspects from the EBB program:

Reduces the monthly internet service subsidy from $50 in the EBB program to $30 in ACP (with the possible preservation of the $75 subsidy on Tribal lands if the provider can demonstrate hardship to the provider), and eliminates the connected device subsidy that was available in the EBB program;
Allows participating providers to offer an ACP discount on all broadband plans that meet program rules, and not just those offered as of Dec. 1, 2020;
Expands income eligibility from households earning 135 percent of the Federal Poverty Guidelines (FPG) for the relevant household size in the EBB program to those earning 200 percent of the FPG for the relevant household size;
Adds the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) as a qualifying program;
Removes sudden loss of income and prior participation in the provider's own low-income program as a basis for household qualification; and
Mandates participating provider consumer outreach, which was merely encouraged in the EBB program.

The new legislation calls for the transition from the EBB program to ACP either once EBB program funding is exhausted or December 31, 2021, whichever occurs first. The steps required to make the changes are somewhat unclear.

While the legislation does not specify, the most likely next step is for the FCC to issue a Notice of Proposed Rulemaking to address the changes from the EBB program to ACP. This would then require a comment and reply period prior to a final order establishing the revamped program.

Tribal Broadband Connectivity Program (Section 60201)

The new legislation appropriates an additional $2 billion to the existing $980 million Tribal Broadband Connectivity Program administered by NTIA, a program that was created in the 2021 Consolidated Appropriation Act. The NTIA recently closed an application window for the first round of funding, and is expected to announce winners in November 2021. Presumably, a new application window will be opened in the coming months, and there may be multiple such windows as the new legislation also indicates that there may be additional appropriations in the future.

The Tribal Broadband Connectivity Program seeks to deploy or expand high speed internet access services to Tribal lands, and increase adoption of such services especially to address digital inclusion, affordability, telemedicine, workforce development, and other similar goals.

The funding will be awarded to Tribal organizations, such as a Tribal governmental entity, Tribal colleges or universities, the Department of Hawaiian Home Lands, and Alaska Native Corporations. There is no official per-project floor or ceiling, and similar to the Broadband Deployment Program, the projects must be completed within four years absent an extension.

Enabling Middle Mile Broadband Infrastructure Grants (Section 60401)

The new legislation also appropriates $1 billion for the years 2022-2026 to subsidize up to 70 percent of the costs of the construction, improvement, or acquisition of middle mile broadband infrastructure that reduces the cost of last mile services and improves network resiliency that mitigates against single points of failure in broadband networks.

The new program will fund wireline or "private" wireless broadband infrastructure, such as leased dark fiber, point-to-point circuits to data centers, towers, and microwave links. This infrastructure must be capable of providing 1/1 Gigabit service to anchor institutions and interconnected entities located within 1,000 feet of the middle mile infrastructure and be deployed within five years of being funded absent an extension.

NTIA will also administer this program, and may award funding grants to state or Tribal governmental entities, private entities, utilities, non-profit entities, regional planning councils, economic development authorities, Native entities, or partnerships of two or more of the previously mentioned entities. In making its awards, NTIA is directed to give priority to projects that leverage existing rights-of-way, assets, and infrastructure, are designed to enable the connection of unserved anchor institutions, facilitate the development of carrier-neutral interconnection facilities, improve the redundancy and resiliency of existing middle mile infrastructure, and reduce regulatory and permitting barriers.

In evaluating applications, NTIA will give priority to an application from an eligible entity that satisfies two or more of the following criteria: the eligible entity (i) adopts a fiscally sustainable build out strategy, (ii) commits to offering reasonable rates on a carrier-neutral basis, (iii) identifies specific last mile providers that meet certain requirements, (iv) secures supplemental investments or in-kind support that will be used to accelerate completion of the project, and (v) demonstrates that the project will benefit national security interests.

Although the legislation does not specify, the next likely step will be for NTIA to issue a Notice of Funding Opportunity.

Updates to RUS ReConnect Program (Division J, Title I)

The new legislation provides an additional $2 billion in funding for the USDA's Rural Utilities Service ReConnect program with some updated provisions for the new funding, including:

At least 50 percent of the households to be served by a funded project must be located in a rural area that lacks broadband service at speeds of 25/3 Mbps;
10 percent of the funding must be made available in areas in which 90 percent or more of the households lack sufficient access to broadband; and
The projects must build networks that provide broadband service at speeds of 100/20 Mbps "to the extent possible."