.
Broadband Loan and Grant Programs in the
USDA’s Rural Utilities Service
Lennard G. Kruger
Specialist in Science and Technology Policy
December 30, 2014
Congressional Research Service
7-5700
www.crs.gov
RL33816
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Summary
Given the large potential impact broadband access may have on the economic development of
rural America, concern has been raised over a “digital divide” between rural and urban or
suburban areas with respect to broadband deployment. While there are many examples of rural
communities with state of the art telecommunications facilities, recent surveys and studies have
indicated that, in general, rural areas tend to lag behind urban and suburban areas in broadband
deployment.
Citing the lagging deployment of broadband in many rural areas, Congress and the
Administration acted in 2001 and 2002 to initiate pilot broadband loan and grant programs within
the Rural Utilities Service (RUS) at the U.S. Department of Agriculture (USDA). Subsequently,
USDA's Rural Utilities Service
March 25, 2016
(RL33816)
Jump to Main Text of Report
Summary
Given the large potential impact broadband access may have on the economic development of rural America, concern has been raised over a "digital divide" between rural and urban or suburban areas with respect to broadband deployment. While there are many examples of rural communities with state of the art telecommunications facilities, recent surveys and studies have indicated that, in general, rural areas tend to lag behind urban and suburban areas in broadband deployment.
Citing the lagging deployment of broadband in many rural areas, Congress and the Administration acted in 2001 and 2002 to initiate pilot broadband loan and grant programs within the Rural Utilities Service (RUS) at the U.S. Department of Agriculture (USDA). Subsequently, Section 6103 of the Farm Security and Rural Investment Act of 2002 (P.L. 107-171
) amended the
Rural Electrification Act of 1936 to authorize a loan and loan guarantee program to provide funds
for the costs of the construction, improvement, and acquisition of facilities and equipment for
broadband service in eligible rural communities. The RUS/USDA houses two assistance
programs exclusively
created and dedicated to financing broadband deployment: the Rural Broadband Access
Loan and Loan Guarantee Program and the Community Connect Grant Program.
The 110th Congress considered reauthorization and modification of the loan and loan guarantee
program as part of the 2008 farm bill. The Food, Conservation, and Energy Act of 2008 became
law on June 18, 2008 (P.L. 110-246). Title VI (Rural Development) contains authorizing language
for the broadband loan program.
In the 113th Additionally, the Telecommunications Infrastructure Loan and Loan Guarantee Program (previously the Telephone Loan Program) primarily funds broadband deployment in rural areas.
In the 113th Congress, the 2014 farm bill (P.L. 113-79, the Agricultural Act of 2014) was signed
by the President on February 7, 2014. P.L. 113-79
amends amended Section 601 of the Rural Electrification
Act of 1936 (7 U.S.C. 950bb) to reauthorize the Rural Broadband Access Loan and Loan
Guarantee Program through FY2018. P.L. 113-79 also
includesincluded provisions to redefine project area
eligibility with respect to existing broadband service, increase the program
’'s transparency and
reporting requirements, define a minimum level of broadband service, require a study on the
gathering and use of address-level data, and establish a new Rural Gigabit Network Pilot
Program.
The Consolidated and Further Continuing Program.
Meanwhile, the Consolidated Appropriations Act,
2015 (P.L. 113-2352016 (P.L. 114-113) provided $4.5
million to the Rural Broadband Access Loan and Loan Guarantee Program to million to subsidize a
broadband loan level of $
24.07720.576 million, and $10.372 million to Community Connect broadband
grants.
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Contents
Background: Broadband and Rural America ................................................................................... 1
Pilot Broadband Loan and Grant Programs ..................................................................................... 3
Rural Broadband Access Loan and Loan Guarantee Program......................................................... 4
Community Connect Broadband Grants .......................................................................................... 6
The American Recovery and Reinvestment Act (P.L. 111-5) .......................................................... 7
Impact of Universal Service Reform on RUS Broadband Loan Programs...................................... 8
Appropriations ................................................................................................................................. 9
FY2012 ...................................................................................................................................... 9
FY2013 .................................................................................................................................... 10
FY2014 .................................................................................................................................... 11
FY2015 .................................................................................................................................... 11
Criticisms of RUS Broadband Programs ....................................................................................... 12
Loan Approval and Application Process ................................................................................. 12
Eligibility Criteria.................................................................................................................... 13
Loans to Communities With Existing Providers ..................................................................... 14
Follow-Up Audit by USDA Office of Inspector General ........................................................ 15
Broadband Loan Reauthorization: 2008 Farm Bill........................................................................ 16
Restricting Applicant Eligibility .............................................................................................. 16
Definition of “Rural Community” ........................................................................................... 16
Preexisting Broadband Service................................................................................................ 17
Technological Neutrality ......................................................................................................... 17
P.L. 110-246 ............................................................................................................................. 18
Eligibility and Selection Criteria ....................................................................................... 18
Loans to Communities With Existing Providers ............................................................... 19
Financial Requirements ..................................................................................................... 19
Loan Application Requirements ........................................................................................ 20
Other Provisions ................................................................................................................ 20
Implementation of P.L. 110-246 ........................................................................................ 21
Broadband Program Reauthorization: 2012 Farm Bill .................................................................. 21
Broadband Program Reauthorization: 2013 and 2014 Farm Bills ................................................. 22
Senate Bill, S. 954 ................................................................................................................... 23
House Bill, H.R. 2642 ............................................................................................................. 26
P.L. 113-79, the Agricultural Act of 2014 ................................................................................ 26
Tables
Table 1. Appropriations Funding for the Rural Broadband Access Loan and Loan
Guarantee Program ....................................................................................................................... 5
Table 2. Appropriations for the Community Connect Broadband Grants........................................ 6
Table 3. Recent and Proposed Appropriations for RUS Broadband Programs ................................ 9
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Contacts
Author Contact Information........................................................................................................... 28
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Background: Broadband and Rural America
grants. The Administration's FY2017 budget proposal requested zero funding for the broadband loan program and $39.492 million for the Community Connect broadband grant program. In the FY2017 budget justification, RUS stated that the budget request shifts resources to the broadband grant program and the Distance Learning and Telemedicine grant program, and that RUS intends to rewrite the Telecommunications Loan Program rules to expand eligibility.
Broadband Loan and Grant Programs in the USDA's Rural Utilities Service
Background: Broadband and Rural America
The broadband loan and grant programs at RUS are intended to accelerate the deployment of
broadband services in rural America.
“Broadband”"Broadband" refers to high-speed Internet access and
advanced telecommunications services for private homes, commercial establishments, schools,
and public institutions. Currently in the United States, residential broadband is primarily provided
via mobile wireless (e.g., smartphones), cable modem (from the local provider of cable television
service), or over the telephone line (digital subscriber line or
“DSL”"DSL"). Other broadband
technologies include fiber optic cable, fixed wireless, satellite, and broadband over power lines
(BPL).
Broadband access enables a number of beneficial applications to individual users and to
communities. These include e-commerce, telecommuting, voice service (voice over the Internet
protocol or
“VOIP”"VOIP"), distance learning, telemedicine, public safety, and others. It is becoming
generally accepted that broadband access in a community can play an important role in economic
development. A February 2006 study by the Massachusetts Institute of Technology for the
Department of Commerce
’'s Economic Development Administration marked the first attempt to
measure the impact of broadband on economic growth. The study found that
“"between 1998 and
2002, communities in which mass-market broadband was available by December 1999
experienced more rapid growth in employment, the number of businesses overall, and businesses
in IT-intensive sectors, relative to comparable communities without broadband at that time.
”1
"1
Subsequently, a June 2007 report from the Brookings Institution found that for every one
percentage point increase in broadband penetration in a state, employment is projected to increase
by 0.2% to 0.3% per year. For the entire U.S. private non-farm economy, the study projected an
increase of about 300,000 jobs, assuming the economy is not already at full employment.
2
2 Similarly, an August 2009 report from the USDA Economic Research Service found that counties
with a longer history of broadband availability had higher employment growth and higher
nonfarm private earnings than similarly situated counties with little or no broadband access since
2000.
3
3
Access to affordable broadband is viewed as particularly important for the economic development
of rural areas because it enables individuals and businesses to participate fully in the online
economy regardless of geographical location. For example, aside from enabling existing
businesses to remain in their rural locations, broadband access could attract new business
enterprises drawn by lower costs and a more desirable lifestyle. Essentially, broadband potentially
allows businesses and individuals in rural America to live locally while competing globally in an
online environment.
1
Gillett, Sharon E., Massachusetts Institute of Technology, Measuring Broadband’s Economic Impact, report prepared
for the Economic Development Administration, U.S. Department of Commerce, February 28, 2006, p. 4, available at
http://www.eda.gov/ImageCache/EDAPublic/documents/pdfdocs2006/mitcmubbimpactreport_2epdf/v1/
mitcmubbimpactreport.pdf.
2
Crandall, Robert, William Lehr, and Robert Litan, The Effects of Broadband Deployment on Output and Employment:
A Cross-sectional Analysis of U.S. Data, June 2007, 20 pp., http://www3.brookings.edu/views/papers/crandall/
200706litan.pdf.
3
Peter Stenberg, Mitchell Morehart, and Stephen Vogel, et al., Broadband Internet’s Value for Rural America, U.S.
Department of Agriculture, Economic Research Service, Economic Research Report Number 78, Washington, DC,
August 2009, p. iii, http://www.ers.usda.gov/Publications/ERR78/ERR78.pdf.
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online environment.
Given the large potential impact broadband may have on the economic development of rural
America, concern has been raised over a
“"digital divide
”" between rural and urban or suburban
areas with respect to broadband deployment. While there are many examples of rural
communities with state of the art telecommunications facilities,
44 recent surveys and studies have
indicated that, in general, rural areas tend to lag behind urban and suburban areas in broadband
deployment. For example:
•
According to
20132015 survey data from the Pew Research Center,
7067% of adults in
urban areas said they have a high-speed broadband connection at home, as
opposed to
6255% of adults in rural areas.
5
•
5
According to the FCC's 2016 Broadband Progress Report, there is a "significant disparity between rural and urban areas, with more than 39% of Americans living in rural areas lacking access to 25 Mbps/3 Mbps advanced telecommunications capability, as compared to 4% of Americans living in urban areas."6
A study commissioned by the National Agricultural & Rural Development Policy
Center noted a persistent 13 percentage point gap in broadband adoption between
metropolitan and non-metropolitan areas between 2003 and 2010.
6
•
7
The Department of Commerce report, Exploring the Digital Nation
: Embracing the Mobile Internet: America’s
Emerging Online Experience, found that while the digital divide between urban
and rural areas has lessened since 2007, it still persists with
7275% of urban
households adopting broadband service in
20112012, compared to
5863% of rural
households.7
•
According to December 2013 data from the National Broadband Map, 94% of
the population in urban areas have access to available broadband download
speeds of at least 25 Mbps, as opposed to 51% of the population in rural areas.8
households.8 The comparatively lower population density of rural areas is likely the major reason why
broadband is less deployed than in more highly populated suburban and urban areas. Particularly
for wireline broadband technologies—such as cable modem, fiber, and DSL—the greater the
geographical distances among customers, the larger the cost to serve those customers. Thus, there
is often less incentive for companies to invest in broadband in rural areas than, for example, in an
urban area where there is more demand (more customers with perhaps higher incomes) and less
cost to wire the market area.
The terrain of rural areas can also be a hindrance, in that it is more expensive to deploy
broadband technologies in a mountainous or heavily forested area. An additional added cost
factor for remote areas can be the expense of
“backhaul”"backhaul" (e.g., the
“"middle mile
”") which refers to
the installation of a dedicated line which transmits a signal to and from an Internet backbone
which is typically located in or near an urban area.
4
See for example: National Exchange Carrier Association (NECA), Trends 2010: A Report on Rural Telecom
Technology, 23 p., https://www.neca.org/cms400min/WorkArea/DownloadAsset.aspx?id=4892.
5
Home Broadband 2013, p. 3.
6
Brian Whiteacre, Roberto Gallardo, and Sharon Strover, National Agricultural & Rural Development Policy Center,
Rural Broadband Availability and Adoption: Evidence, Policy Challenges, and Options, March 2013, p. 13, available
at http://www.nardep.info/Broadband_2.html.
7
U.S. Department of Commerce, National Telecommunications and Information Administration, Exploring the Digital
Nation: America’s Emerging Online Experience, June 2013, p. 26, available at http://www.ntia.doc.gov/files/ntia/
publications/exploring_the_digital_nation_-_americas_emerging_online_experience.pdf.
8
NTIA, National Broadband Map, Broadband Statistics Report: Broadband Availability in Urban vs. Rural Areas, July
2014, p. 7, available at http://www.broadbandmap.gov/download/
Broadband%20Availability%20in%20Rural%20vs%20Urban%20Areas.pdf.
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which is typically located in or near an urban area.
Pilot Broadband Loan and Grant Programs
Given the lagging deployment of broadband in rural areas, Congress and the Administration acted
to initiate pilot broadband loan and grant programs within the Rural Utilities Service of the U.S.
Department of Agriculture. While RUS had long maintained telecommunications loan and grant
programs (Rural Telephone Loans and Loan Guarantees, Rural Telephone Bank, and more
recently, the Distance Learning and Telemedicine Loans and Grants) none were exclusively
dedicated to financing rural broadband deployment. Title III of the FY2001 agriculture
appropriations bill (P.L. 106-387) directed USDA/RUS to conduct a
“"pilot program to finance
broadband transmission and local dial-up Internet service in areas that meet the definition of
‘ 'rural area
’' used for the Distance Learning and Telemedicine Program.
”
"
Subsequently, on December 5, 2000, RUS announced the availability of $100 million in loan
funding through a one-year pilot program
“"to finance the construction and installation of
broadband telecommunications services in rural America.
”9"9 The broadband pilot loan program
was authorized under the authority of the Distance Learning and Telemedicine Program (7 U.S.C.
950aaa), and was available to
“"legally organized entities
”" not located within the boundaries of a
city or town having a population in excess of 20,000.
The FY2001 pilot broadband loan program received applications requesting a total of $350
million. RUS approved funding for 12 applications totaling $100 million. The FY2002 agriculture
appropriations bill (P.L. 107-76) designated a loan level of $80 million for broadband loans, and
on January 23, 2002, RUS announced that the pilot program would be extended into FY2002,
with $80 million in loans made available to fund many of the applications that did not receive
funding during the previous year.
10
10
Meanwhile, the FY2002 agriculture appropriations bill (P.L. 107-76) allocated $20 million for a
pilot broadband grant program, also authorized under the Distance Learning and Telemedicine
Program. On July 8, 2002, RUS announced the availability of $20 million for a pilot grant
program for the provision of broadband service in rural America. The program was specifically
targeted to economically challenged rural communities with no existing broadband service.
Grants were made available to entities providing
“"community-oriented connectivity,
”" which the
RUS defined as those entities
“"who will connect the critical community facilities including the
local schools, libraries, hospitals, police, fire and rescue services and who will operate a
community center that provides free and open access to residents.
”11
"11
In response to the July 8, 2002, Notice of Funds Availability, RUS received more than 300
applications totaling more than $185 million in requested grant funding. RUS approved 40 grants
totaling $20 million. The pilot program was extended into FY2003, as the Consolidated
Appropriations Resolution of 2003 (P.L. 108-7) allocated $10 million for broadband grants. On
September 24, 2003, 34 grants were awarded to eligible applicants who did not receive funding
during the previous year.
9
Rural Utilities Service, USDA, “Construction and Installation of Broadband Telecommunications Services in Rural
America; Availability of Loan Funds,” Federal Register, Vol. 65, No. 234, December 5, 2000, p. 75920.
10
Rural Utilities Service, USDA, “Broadband Pilot Loan Program,” Federal Register, Vol. 67, No. 15, January 23,
2002, p. 3140.
11
Rural Utilities Service, USDA, “Broadband Pilot Grant Program,” Federal Register, Vol. 67, No. 130, July 8, 2002,
p. 45080.
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during the previous year.
Rural Broadband Access Loan and Loan
Guarantee Program
Guarantee Program
Building on the pilot broadband loan program at RUS, Section 6103 of the Farm Security and
Rural Investment Act of 2002 (P.L. 107-171) amended the Rural Electrification Act of 1936 to
authorize a loan and loan guarantee program to provide funds for the costs of the construction,
improvement, and acquisition of facilities and equipment for broadband service in eligible rural
communities.
1212 Section 6103 made available, from the funds of the Commodity Credit
Corporation (CCC), a total of $100 million through FY2007. P.L. 107-171 also authorized any
other funds appropriated for the broadband loan program. The program was subsequently
reauthorized by Section 6110 of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246
), ),
and by Section 6104 of the Agricultural Act of 2014 (P.L. 113-79
).
).
Beginning in FY2004, Congress annually blocked mandatory funding from the CCC. Thus—
starting in FY2004—the program was funded as part of annual appropriations in the Distance
Learning and Telemedicine account within the Department of Agriculture appropriations bill.
Every fiscal year, Congress approves an appropriation (loan subsidy) and a specific loan level
(lending authority) for the Rural Broadband Access Loan and Loan Guarantee Program. Table 1
shows—for the life of the program to date—loan subsidies and loan levels (lending authority) set
by Congress in annual appropriations bills.
12
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Title VI of the Rural Electrification Act of 1936 (7 U.S.C. 950bb).
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Table 1. Appropriations Funding for the Rural Broadband Access Loan
and Loan Guarantee Program
Direct Appropriations
(subsidy level)
Loan Levels Estimated in
Annual Appropriationsa
FY2001 (pilot)
—
$100 million
FY2002 (pilot)
—
$80 million
FY2003
b
$80 million
FY2004
$13.1 million
$602 million
FY2005
$11.715 million
$550 million
FY2006
$10.75 million
$500 million
FY2007
$10.75 million
$500 million
FY2008
$6.45 million
$300 million
FY2009
$15.619 million
$400 million
FY2010
$28.96 million
$400 million
FY2011
$22.32 million
$400 million
FY2012
$6.0 million
$212 million
FY2013
$4 million
$42 million
FY2014
$4.5 million
$34.5 million
FY2015
$4.5 million
$24.1 million
Source: Compiled by CRS from appropriations bills.
a.
Actual loan levels for a fiscal year can vary from what is estimated in annual appropriations bill.
b.
Program received $40 million composed of $20 million from FY2002 plus $20 million from FY2003 of
Annual Appropriationsa
|
FY2001 (pilot)
|
—
|
$100 million
|
|
FY2002 (pilot)
|
—
|
$80 million
|
FY2003
|
b
$80 million
|
|
FY2004
|
$13.1 million
|
$602 million
|
|
FY2005
|
$11.715 million
|
$550 million
|
|
FY2006
|
$10.75 million
|
$500 million
|
|
FY2007
|
$10.75 million
|
$500 million
|
|
FY2008
|
$6.45 million
|
$300 million
|
|
FY2009
|
$15.619 million
|
$400 million
|
|
FY2010
|
$28.96 million
|
$400 million
|
|
FY2011
|
$22.32 million
|
$400 million
|
|
FY2012
|
$6.0 million
|
$212 million
|
|
FY2013
|
$4 million
|
$42 million
|
|
FY2014
|
$4.5 million
|
$34.5 million
|
|
FY2015
|
$4.5 million
|
$24.1 million
|
|
FY2016
|
$4.5 million
|
$20.6 million
|
Source: Compiled by CRS from appropriations bills.
a.
Actual loan levels for a fiscal year can vary from what is estimated in annual appropriations bill.
b.
Program received $40 million composed of $20 million from FY2002 plus $20 million from FY2003 of mandatory funding from the Commodity Credit Corporation, as directed by P.L. 107-171. In the FY2004,
FY2005, and FY2006 appropriations bills, mandatory funding from the CCC was canceled.
The Rural Broadband Access Loan and Loan Guarantee Program is codified as 7 U.S.C. 950bb.
On February 6, 2013 On July 30, 2015, the RUS published in the Federal Register
the Interim the rule (7 C.F.R. part 1738)
implementing the Rural Broadband Access Loan and Loan Guarantee Program
, as reauthorized
by the 2008 farm bill (P.L. 110-246).13 Entities eligible to receive loans included corporations,
by the enactment of the Agricultural Act of 2014 (P.L. 113-79).13 The first application period was opened from July 30 through September 30, 2015. There will be a minimum of two application periods per year. Entities eligible to receive loans include corporations, limited liability companies, cooperative or mutual organizations, Indian tribes
or tribal organizations, and state or local governments. Eligible areas for funding must be completely contained within a rural area (or composed of multiple rural areas). Additionally, at least 15% of the households in the proposed funded service areas must be unserved, no part of the proposed service area can have three or more incumbent service providers, and no part of the proposed service area can overlap with the service area of current RUS borrowers or of grantees that were funded by RUS. For the latest application information, see http://www.rd.usda.gov/programs-services/farm-bill-broadband-loans-loan-guarantees.
Community Connect Broadband Grants
, and state or local
government. Individuals or partnerships are not eligible.
Pursuant to the enactment of the Agricultural Act of 2014 (P.L. 113-79), RUS is currently
developing new regulations and rules for the program. Further information is available at
http://www.rurdev.usda.gov/utp_farmbill.html.
13
Department of Agriculture, Rural Utilities Service, “Rural Broadband Access Loans and Loan Guarantees,” 78
Federal Register 8353-8360, February 6, 2013, available at http://www.gpo.gov/fdsys/pkg/FR-2013-02-06/pdf/201302390.pdf. The final rule substantially adopts the interim rule published on March 14, 2011, available at
http://www.gpo.gov/fdsys/pkg/FR-2011-03-14/pdf/2011-5615.pdf.
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Community Connect Broadband Grants
The Consolidated Appropriations Act of 2004 (P.L. 108-199) appropriated $9 million
“"for a grant
program to finance broadband transmission in rural areas eligible for Distance Learning and
Telemedicine Program benefits authorized by 7 U.S.C. 950aaa.
”" Essentially operating the same as
the pilot broadband grants, the program provides grant money to applicants proposing to provide
broadband on a
“"community-oriented connectivity
”" basis to currently unserved rural areas for the
purpose of fostering economic growth and delivering enhanced health care, education, and public
safety services. Funding for the broadband grant program is provided through annual
appropriations in the Distance Learning and Telemedicine account within the Department of
Agriculture appropriations bill. Table 2 shows a history of appropriations for the Community
Connect Broadband Grants.
Table 2. Appropriations for the Community Connect
Broadband Grants
Fiscal Year
Appropriation
FY2002
$20 million
FY2003
$10 million
FY2004
$9 million
FY2005
$9 million
FY2006
$9 million
FY2007
$9 million
FY2008
$13.4 million
FY2009
$13.4 million
FY2010
$17.9 million
FY2011
$13.4 million
FY2012
$10.4 million
FY2013
$10.4 million
FY2014
$10.4 million
FY2015
$10.4 million
Source: Compiled by CRS from appropriations bills.
Eligible applicants for broadband grants include incorporated organizations, Indian tribes or tribal
organizations, state or local units of government, or cooperatives, private corporations, and
limited liability companies organized on a for profit or not-for-profit basis. Individuals or
partnerships are not eligible.
Funded projects must serve a rural area where broadband service does not exist, deploy free basic
broadband service for at least two years to all community facilities, offer basic broadband to
residential and business customers, and provide a community center with at least 10 computer
access points within the proposed service area while making broadband available for two years at
no charge to users within that community center.
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On May 3, 2013, RUS issued a new final rule for Community Connect grants in the Federal
Register.14 The final rule changes previous requirements related to matching funds, eligible
communities, and application scoring criteria. The final rule also removes the previous definition
of broadband service speed (200 kbps). A new threshold for broadband service speed and
broadband grant speed (the speed the grantee must deliver) will be provided in an annual Notice
Broadband Grants
|
Fiscal Year
|
Appropriation
|
|
FY2002
|
$20 million
|
|
FY2003
|
$10 million
|
|
FY2004
|
$9 million
|
|
FY2005
|
$9 million
|
|
FY2006
|
$9 million
|
|
FY2007
|
$9 million
|
|
FY2008
|
$13.4 million
|
|
FY2009
|
$13.4 million
|
|
FY2010
|
$17.9 million
|
|
FY2011
|
$13.4 million
|
|
FY2012
|
$10.4 million
|
|
FY2013
|
$10.4 million
|
|
FY2014
|
$10.4 million
|
|
FY2015
|
$10.4 million
|
|
FY2016
|
$10.4 million
|
Source: Compiled by CRS from appropriations bills.
Eligible applicants for broadband grants include most state and local governments, federally recognized tribes, non-profits, and for-profit corporations.
Funded projects must serve a rural area where broadband service (at least 3 Mbps, upload plus download) does not exist, deploy free broadband service for at least two years to all community facilities, and offer broadband to residential and business customers. Up to 10% of the grant may be used for the improvement, expansion, construction, or acquisition of a community center that provides online access to the public.
On May 3, 2013, RUS issued a new final rule for Community Connect grants in the Federal Register.14 The final rule changes previous requirements related to matching funds, eligible communities, and application scoring criteria. The final rule also removes the previous definition of broadband service speed (200 kbps). A new threshold for broadband service speed and broadband grant speed (the speed the grantee must deliver) will be provided in an annual Notice of Funding Availability (NOFA) in the Federal Register. The NOFA will also specify the deadline
for applications, the total amount of funding available, and the maximum and minimum amount
of funding available for each grant. Further information, including application materials and
guidelines, is available at http://www.
rurdev.usda.gov/utp_commconnect.html.
The American Recovery and Reinvestment Act
(P.L. 111-5)
On February 17, 2009, President Obama signed P.L. 111-5, the American Recovery and
Reinvestment Act (ARRA). Broadband provisions of the ARRA provided a total of $7.2 billion,
primarily for broadband grants. The total consisted of $2.5 billion to RUS broadband loan, grant,
and loan/grant combinations, and $4.7 billion to NTIA/DOC for a newly established Broadband
Technology Opportunities Program.15
The ARRA did not specify how the $2.5 billion is to be divided between the RUS grant and loan
programs. Regarding projects applying for funding, the ARRA stated that
•
at least 75% of the area to be served by a project receiving these funds shall be in
a rural area without sufficient access to high speed broadband service to facilitate
economic development, as determined by the Secretary of Agriculture;
•
priority shall be given to projects that will deliver end users a choice of more
than one broadband service provider;
•
priority shall be given to projects that provide service to the highest proportion of
rural residents that do not have access to broadband service;
•
priority shall be given to borrowers and former borrowers of rural telephone
loans;
•
priority shall be given to projects demonstrating that all project elements will be
fully funded, that can commence promptly, and that can be completed; and
•
no area of a project may receive funding to provide broadband service under the
Broadband Technology Opportunities Program at NTIA/DOC.
The ARRA also directed the Federal Communications Commission to develop a National
Broadband Plan (NBP). The NBP was released on March 16, 2010. Among its many
recommendations, the FCC recommended that Congress should consider expanding combination
14
Department of Agriculture, Rural Utilities Service, “Community Connect Broadband Grant Program,” 78 Federal
Register 25787-25795, May 3, 2013, available at http://www.gpo.gov/fdsys/pkg/FR-2013-05-03/pdf/2013-10502.pdf.
15
For more information on ARRA broadband programs, see CRS Report R41775, Background and Issues for
Congressional Oversight of ARRA Broadband Awards, by Lennard G. Kruger.
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grant-loan programs. The NBP also recommended that Congress should consider expanding the
Community Connect grant program, both in size and in the scope of its eligibility criteria.
rd.usda.gov/programs-services/community-connect-grants.
Impact of Universal Service Reform on RUS
Broadband Loan Programs
RUS currently has three programs that provide loans for broadband infrastructure projects: the
Rural Broadband Access Loan and Loan Guarantee program (also known as the Farm Bill
broadband loan program), the Broadband Initiatives Program (BIP under the ARRA), and the
Telecommunications Infrastructure Loan Program (established in 1949 as the Rural Telephone
Loan and Loan Guarantee program).
16
15
Whereas RUS broadband loans are used as up-front capital to invest in broadband infrastructure,
the Federal Communications Commission
’'s (FCC
’'s) Universal Service Fund (USF)—specifically,
the high cost fund—has functioned as an ongoing subsidy to keep the operation of
telecommunications networks in high cost areas profitable for providers. Many RUS
telecommunications and broadband borrowers (loan recipients) receive high cost USF subsidies.
In many cases, the subsidy received from USF helps provide the revenue necessary to keep the
loan viable. The Telecommunications Infrastructure Loan Program is highly dependent on high
cost USF revenues, with 99% (476 out of 480 borrowers) receiving interstate high cost USF
support. This is not surprising, given that the RUS Telecommunications Infrastructure Loans are
available only to the most rural and high cost areas (towns with populations less than 5,000).
Regarding broadband loans, 60% of BIP (stimulus) borrowers draw from state or interstate USF
support mechanisms, while 10% of Farm Bill (Rural Broadband Access Loan and Loan
Guarantee Program) broadband borrowers receive interstate high cost USF support.
17
16
The FCC, in an October 2011 decision, adopted an order that calls for the USF to be transformed,
in stages, over a multi-year period—from a mechanism to support voice telephone service to one
that supports the deployment, adoption, and use of both fixed and mobile broadband. More
specifically, the high cost program is being phased out and a new fund, the Connect America
Fund (CAF), which includes the targeted Mobility Fund and new Remote Areas Fund, is
replacing it.
18
17
During this transition, the uncertainty surrounding the FCC
’'s proposed methodology for
distributing Connect America Fund monies has led many small rural providers to postpone or
cancel investment in broadband network upgrades.
1918 According to RUS,
“demand for RUS loans
16
For more information on the RUS portfolio of telecommunications and broadband programs offering loans, loan
guarantees, grants, and loan/grant combinations, see CRS Report R42524, Rural Broadband: The Roles of the Rural
Utilities Service and the Universal Service Fund, by Angele A. Gilroy and Lennard G. Kruger.
17
Jessica Zufolo, Deputy Administrator, RUS, Overview of the RUS Telecommunications Loan and Grant Programs,
July 2011, Slide 7, http://www.narucmeetings.org/Presentations/Zufolo_7-2011.pdf.
18
For more information, see CRS Report R42524, Rural Broadband: The Roles of the Rural Utilities Service and the
Universal Service Fund, by Angele A. Gilroy and Lennard G. Kruger.
19
According to a January 2013 survey conducted by NTCA—The Rural Broadband Association, 69% of member
companies responding to the survey had either cancelled or postponed $492.7 million in broadband investments due to
the uncertainty surrounding the transition to the FCC’s Connect America Fund. See NTCA—The Rural Broadband
Association, Survey: FCC USF/ICC Impacts, January 2013, available at http://www.ntca.org/images/stories/
(continued...)
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"demand for RUS loans dropped to roughly 37% of the total amount of loan funds appropriated by Congress in FY2012,
”
" and that
“"[c]urrent and prospective RUS borrowers have communicated their hesitation to
increase their outstanding debt and move forward with planned construction due to the recently
implemented reductions in USF support and Inter-Carrier Compensation (ICC) payments.
”20
Appropriations
"19
Appropriations
The Rural Broadband Access Loan and Loan Guarantee Program and the Community Connect
Grant Program are funded through the annual Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations Act. The appropriation provided to the
broadband loan program is a loan subsidy which supports a significantly higher loan level.
Table 3. Recent and Proposed Appropriations for RUS Broadband Programs
(dollars)
FY2013
(P.L. 113-6)
FY2014
(Admin.
Request)
FY2014
(P.L. 11376)
FY2015
(Admin.
Request)
FY2015
(P.L. 113235)
Broadband
Loans
4.0 million
(42 million
loan level)
8.3 million
(63 million
loan level)
4.5 million
(34.5 million
loan level)
8.3 million
(44.2 million
loan level)
4.5 million
(24.1 million
loan level)
Community
Connect
Grants
10.372 million
10.372 million
10.372 million
20.372 million
10.372 million
FY2012
The Administration’s FY2012 budget proposal requested no funding for the Rural Broadband
Access Loan and Loan Guarantee Program, citing an anticipated accumulation of past-year
unobligated funding that would support a loan level totaling $1.2 billion. Since the FY2012
budget proposal was released, however, the Department of Defense and Full-Year Continuing
Appropriations Act, 2011 (P.L. 112-10) rescinded all available unobligated budget authority from
past years.
The Administration’s FY2012 budget proposal requested $18 million for the Community Connect
Grant Program.
On June 3, 2011, the House Appropriations Committee reported H.R. 2112, the Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012.
As reported (H.Rept. 112-101), H.R. 2112 would provide no funding for either the Rural
Broadband Access Loan and Loan Guarantee Program or the Community Connect Grant
Program. On June 16, 2011, the House approved (by a vote of 221-198) an amendment offered by
(...continued)
Documents/Advocacy/SurveyReports/FCC_USF_ICC_ImpactSurvey.pdf.
20
Letter from RUS to the FCC, February 13, 2013, available at https://prodnet.www.neca.org/publicationsdocs/wwpdf/
21513usda.pdf.
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Representative Gibson that provides $6 million in budget authority for the broadband loan
program. H.R. 2112, passed by the House on June 16, 2011, would provide a loan level of $210
million.
On September 7, 2011, the Senate Appropriations Committee reported its version of H.R. 2112
(S.Rept. 112-73). The Senate mark would provide $8 million in budget authority for broadband
loans and a loan level of $282 million. The committee also provided $10.372 million for
Community Connect grants. In its bill report, the committee encourages RUS to focus
expenditures on projects that bring broadband service to currently unserved households.
On November 18, 2011, the President signed the Consolidated and Further Continuing
Appropriations Act, 2012 (P.L. 112-55). P.L. 112-55 includes the conference agreement levels for
RUS broadband programs, including $6 million for the broadband loan program (subsidizing a
loan level of $212 million) and $10.372 million for Community Connect grants. The conference
report (H.Rept. 112-284) states that broadband funding is “intended to promote broadband
availability in those areas where there is not otherwise a business case for private investment in a
broadband network.” The conferees encourage RUS to focus expenditures on “projects that bring
broadband service to currently unserved households.”
FY2013
The Administration’s FY2013 budget proposal requested $8.915 million to subsidize a loan level
of $94.139 million. The loan level is a reduction of $75 million from what was available in
FY2012 ($169 million). According to the budget proposal, the reduction “will provide a program
level that is consistent with historical annual demand for this program.” The increase in loan
subsidy (from $6 million in FY2012 to $8.915 million in FY2013) is due to an increase in the
program subsidy rate that is caused by an increase in actual defaults in the program.
The Administration requested $13.379 million for broadband Community Connect grants, which
is a $3 million increase over the FY2012 level.
(dollars)
FY2014 (P.L. 113-76)
|
FY2015 (Admin. Request)
|
FY2015 (P.L. 113-235)
|
FY2016 (Admin. Request)
|
FY2016 (P.L. 114-113 )
|
FY2017 (Admin. Request)
|
|
Broadband Loans
|
4.5 million (34.5 million loan level)
|
8.3 million (44.2 million loan level)
|
4.5 million (24.1 million loan level)
|
9.6 million (44.2 million loan level)
|
4.5 million (20.6 million loan level)
|
0
|
|
Community Connect Grants
|
10.372 million
|
20.372 million
|
10.372 million
|
20.372 million
|
10.372 million
|
39 million
|
FY2013
The Administration's FY2013 budget proposal requested $8.915 million to subsidize a loan level of $94.139 million. The loan level was a reduction of $75 million from what was available in FY2012 ($169 million). According to the budget proposal, the reduction "will provide a program level that is consistent with historical annual demand for this program." The increase in loan subsidy (from $6 million in FY2012 to $8.915 million in FY2013) was due to an increase in the program subsidy rate caused by an increase in actual defaults in the program.
The Administration requested $13.379 million for broadband Community Connect grants, which is a $3 million increase over the FY2012 level.
On April 26, 2012, the Senate Appropriations Committee reported S. 2375, the Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies Appropriations Bill, 2013.
For FY2013, the committee recommended an appropriation of $6 million to subsidize a loan level
of $63 million for the broadband loan and loan guarantee program. The committee recommended
$10.372 million for broadband grants. In the bill report (S.Rept. 112-163), the committee stated
that funds for the broadband program are intended to promote broadband availability in those
areas where there is not otherwise a business case for private investment in a broadband network.
The committee encouraged RUS to focus on projects that bring broadband to currently unserved
households.
On June 19, 2012, the House Appropriations Committee reported its version of the agriculture
appropriations bill, H.R. 5973. The committee recommended an appropriation of $2 million to
subsidize a loan level of $21 million for the broadband loan and loan guarantee program. The
committee recommended $10.165 million for broadband grants. In the bill report (H.Rept.
112542112-542), the committee stated that funds for the broadband program are intended to promote
broadband availability in those areas where there is not otherwise a business case for private
investment in a broadband network, and directed RUS to focus expenditures on projects that
bring broadband to currently unserved households. Additionally, the committee expressed
concern and disappointment with the progress of RUS broadband projects funded by the
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American Recovery and Reinvestment Act (ARRA). The committee also directed USDA to
prepare reports on how the FCC
’'s Universal Service Fund and Intercarrier Compensation reforms
are likely to affect RUS telecommunications borrowers.
The Consolidated and Further Continuing Appropriations Act, 2013 (P.L. 113-6
) funded the ) funds the
broadband loan program at $4 million (supporting a loan level of approximately $42 million) and
the Community Connect grant program
iswas funded at $10.372 million.
FY2014
FY2014
The Administration
’'s FY2014 budget proposal requested $8.268 million to subsidize a broadband
loan level of $63.356 million. According to the budget proposal, a greater subsidy amount
is
was needed in FY2014
“"due to an increase in the cumulative principal write-off rate for this program,
causing the subsidy rate to increase from 9.47 percent in 2013 to 13.05 percent in 2014.
”" The
Administration requested $10.372 million for the Community Connect grant program.
On June 13, 2013, the House Appropriations Committee approved the FY2014 Agriculture
Appropriations Act (H.R. 2410
, , H.Rept. 113-116). The bill
providesprovided $5.5 million to subsidize a
loan level of $42.146 million for the broadband loan program, and $10.111 million for the
Community Connect grant program. In the bill report, the committee
statesstated that funding provided
for the broadband program
iswas intended to promote broadband availability in those areas where
there is not otherwise a business case for private investment in a broadband network. The
committee
directsdirected RUS to focus expenditures on projects that bring broadband service to
currently unserved households.
On June 20, 2013, the Senate Appropriations Committee approved its version of the FY2014
Agriculture Appropriations Act (S. 1244
, , S.Rept. 113-46). The bill
providesprovided $4 million to
subsidize a loan level of $30.651 million for the broadband loan program, and $10.372 million for
the Community Connect grant program.
The Consolidated Appropriations Act, 2014 (P.L. 113-76
) funded) funds the broadband loan program at
$4.5 million (supporting a loan level of $34.5 million), and the Community Connect grant
program
iswas funded at $10.372 million.
FY2015
FY2015
The Administration
’'s FY2015 budget proposal requested $8.268 million to subsidize a broadband
loan level of $44.238 million. For the Community Connect grant program, the Administration
requested $20.372 million,
which is about double the FY2014 level.
On May 29, 2014, the House Appropriations Committee approved the FY2015 Agriculture
Appropriations Act (H.R. 4800
, , H.Rept. 113-468). The bill
providesprovided $4.5 million to subsidize a
loan level of $24.077 million for the broadband loan program, and $10.372 million for the
Community Connect grant program. According to the bill report, priority for the broadband loan
program is to promote broadband availability in those areas where there is not otherwise a
business case for private investment in a broadband network. RUS
iswas directed to focus on projects
that bring broadband service to currently unserved households.
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On May 22, 2014, the Senate Appropriations Committee approved its version of the FY2015
Agriculture Appropriations Act (S. 2389
, , S.Rept. 113-164). The bill
providesprovided $6.435 million to
subsidize a loan level of $34.430 million for the broadband loan program, and $10.372 million for
the Community Connect grant program. The
Committee recommendscommittee recommended that the broadband loan
program promote broadband availability in those areas where there is not otherwise a business
case for private investment in a broadband network, and
encouragesencouraged RUS to focus on projects that
bring broadband service to currently unserved households.
The Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235
) provided $4.5 ) provides $4.5
million to subsidize a broadband loan level of $24.077 million, and $10.372 million to
Community Connect broadband grants.
Criticisms of RUS Broadband Programs
RUS broadband programs have been awarding funds to entities serving rural communities since
FY2001. Since their inception, a number of criticisms have emerged.
Loan Approval and Application Process
Perhaps the major criticism of the broadband loan program was that not enough loans are
approved, thereby making it difficult for rural communities to take full advantage of the program.
As of June 22, 2009, the broadband loan program received 225 applications, requesting a total of
$4.7 billion in loans. Of these, 97 applications were approved (totaling $1.8 billion), 120 were
returned (totaling $2.7 billion), and 8 are pending (totaling $170 million).21 According to RUS
officials, 28% of available loan money was awarded in 2004, and only 5% of available loan
money was awarded in 2005.22
The loan application process has been criticized as being overly complex and burdensome,
requiring applicants to spend months preparing costly market research and engineering
assessments. Many applications are rejected because the applicant’s business plan is deemed
insufficient to support a commercially viable business. The biggest reason for applications being
returned has been insufficient credit support, whereby applicants do not have sufficient cash-onhand (one year’s worth is required in most cases). The requirement for cash-on-hand is viewed as
particularly onerous for small startup companies, many of whom lack sufficient capital to qualify
for the loan. Such companies, critics assert, may be those entities most in need of financial
assistance.
FY2016
The Administration's FY2016 budget proposal requested $9.675 million to subsidize a broadband loan level of $44.239 million. For the Community Connect grant program, the Administration requested $20.372 million, which is about double the FY2015 level.
On July 14, 2015, the House Appropriations Committee approved the FY2016 Agriculture Appropriations Act (H.R. 3049, H.Rept. 114-205). The bill provided $5.265 million to subsidize a loan level of $24.077 million for the broadband loan program, and $10.372 million for the Community Connect grant program. According to the bill report, priority for the broadband loan program is to promote broadband availability in those areas where there is not otherwise a business case for private investment in a broadband network. RUS is directed to focus on projects that bring broadband service to currently unserved households. Additionally, the committee noted that tribal communities continue to struggle with gaining access to broadband. USDA is encouraged to provide a report that identifies the specific challenges Indian Tribal Organizations (ITOs) have in gaining access to broadband and to provide a plan for addressing these challenges, including how the Community Connect program can assist ITOs.
On July 16, 2015, the Senate Appropriations Committee approved its version of the FY2016 Agriculture Appropriations Act (S. 1800; S.Rept. 114-82). The bill provided $4.5 million to subsidize a loan level of $20.576 million for the broadband loan program, and $10.372 million for the Community Connect grant program. The committee recommended that the broadband loan program promote broadband availability in those areas where there is not otherwise a business case for private investment in a broadband network, and encouraged RUS to focus on projects that bring broadband service to currently unserved households. Additionally, the committee directed USDA to expedite implementation of the broadband provisions of the Agricultural Act of 2014, including the new authority to increase the minimum speeds available in rural communities. The committee also directed RUS and the FCC to coordinate on major policy decisions such as the FCC reforms of its universal service program (Connect America Fund).
The Consolidated Appropriations Act, 2016 (P.L. 114-113) provided $4.5 million to subsidize a broadband loan level of $20.576 million, and $10.372 million to Community Connect broadband grants.
FY2017
The Administration's FY2017 budget proposal requested zero funding for the broadband loan program and $39.492 million for the Community Connect broadband grant program. In the FY2017 budget justification, RUS stated that the budget request "shifts resources to the broadband grant program and the Distance Learning and Telemedicine grant program."20 In 2017, RUS will focus its resources on the Broadband Opportunity Council (BOC) recommendation for a regulation rewrite of the traditional Telecommunications Loan Program to expand eligibility to allow applicants that would have been eligible for the broadband program to be eligible for this program. Currently the Telecommunications Loan program (formerly the Telephone Loan program dating back to 1949) maintains an annual loan level of $690 million, and is only available to communities with populations of 5,000 or less.
According to RUS, funds for the broadband loan program will continue to provide loans in 2015 and 2016 for the costs of construction, improvement, and acquisition of facilities and equipment to provide broadband service to eligible rural communities. The funding in 2016 will provide for approximately 3 loans for the deployment of broadband infrastructure. No carryover funds will be available for 2017.
The FY2017 request of $39.492 million for the Community Connect broadband grant program is almost four times the FY2016 level. According to RUS, funding will support approximately 7 broadband grants in 2016 and 19 broadband grants in 2017.
Criticisms of RUS Broadband Programs
RUS broadband programs have been awarding funds to entities serving rural communities since FY2001. Since their inception, a number of criticisms have emerged.
Loan Approval and Application Process
Perhaps the major criticism of the broadband loan program was that not enough loans are approved, thereby making it difficult for rural communities to take full advantage of the program. As of June 22, 2009, the broadband loan program received 225 applications, requesting a total of $4.7 billion in loans. Of these, 97 applications were approved (totaling $1.8 billion), 120 were returned (totaling $2.7 billion), and 8 are pending (totaling $170 million).21 According to RUS officials, 28% of available loan money was awarded in 2004, and only 5% of available loan money was awarded in 2005.22
The loan application process has been criticized as being overly complex and burdensome, requiring applicants to spend months preparing costly market research and engineering assessments. Many applications are rejected because the applicant's business plan is deemed insufficient to support a commercially viable business. The biggest reason for applications being returned has been insufficient credit support, whereby applicants do not have sufficient cash-on-hand (one year's worth is required in most cases). The requirement for cash-on-hand is viewed as particularly onerous for small startup companies, many of whom lack sufficient capital to qualify for the loan. Such companies, critics assert, may be those entities most in need of financial assistance.
In report language to the FY2006 Department of Agriculture Appropriations Act (P.L. 109-97
), ),
the Senate Appropriations Committee (S.Rept. 109-92) directed the RUS
“"to reduce the
burdensome application process and make the program requirements more reasonable,
particularly in regard to cash-on-hand requirements.
”" The committee also directed USDA to hire
more full-time employees to remedy delays in application processing times.
21
Private communication, USDA, June 23, 2009.
GAO, Broadband Deployment is Extensive throughout the United States, but It Is Difficult to Assess the Extent of
Deployment Gaps in Rural Areas, p. 33.
22
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At a May 17, 2006, hearing held by the Senate Committee on Agriculture, Nutrition, and Forestry,
the Administrator of the RUS stated that RUS is working to make the program more user friendly,
while at the same time protecting taxpayer investment:
As good stewards of the taxpayers
’' money, we must make loans that are likely to be repaid.
One of the challenges in determining whether a proposed project has a reasonable chance of
success is validating the market analysis of the proposed service territory and ensuring that
sufficient resources are available to cover operating expenses throughout the construction
period until such a time that cash flow from operations become sufficient. The loan
application process that we have developed ensures that the applicant addresses these areas
and that appropriate resources are available for maintaining a viable operation.
23
23
According to RUS, the loan program was initially overwhelmed by applications (particularly
during a two week period in August 2003), and as the program matured, application review times
have dropped.
2424 On May 11, 2007, RUS released a Proposed Rule which sought to revise
regulations for the broadband loan program. In the background material accompanying the
Proposed Rule, RUS stated that the average application processing time in 2006 was almost half
of what it was in 2003.
25
Eligibility Criteria
25
Eligibility Criteria
Since the inception of the broadband grant and loan programs, the criteria for applicant eligibility
have been criticized both for being too broad and for being too narrow. An audit report released
by USDA
’'s Office of Inspector General (IG) found that the
“programs’"programs' focus has shifted away
from those rural communities that would not, without Government assistance, have access to
broadband technologies.
”26"26 Specifically the IG report found that the RUS definition of rural area
has been
“"too broad to distinguish usefully between suburban and rural communities,
”27"27 with the
result that, as of March 10, 2005, $103.4 million in loans and grants (nearly 12% of total funding
awarded) had been awarded to 64 communities located near large cities. The report cited
examples of affluent suburban subdivisions qualifying as rural areas under the program guidelines
and receiving broadband loans.
28
28
On the other hand, eligibility requirements have also been criticized as too narrow. For example,
the limitation of assistance only to communities of 20,000 or less in population excludes small
rural towns that may exceed this limit, and also excludes many municipalities seeking to deploy
their own networks.
29 Similarly, per capita income requirements can preclude higher income
23
Testimony of Jim Andrew, Administrator, Rural Utilities Service, U.S. Department of Agriculture, “Broadband
Program Administered by USDA’s Rural Utilities Service,” full committee hearing before the Senate Committee on
Agriculture, Nutrition, and Forestry, 109th Congress, May 17, 2006.
24
Rural Utilities Service, private communication, January 18, 2007.
25
Rural Utilities Service, Department of Agriculture, “Rural Broadband Access Loans and Loan Guarantees,”
Proposed Rule, Federal Register, Vol. 72, No. 91, May 11, 2007, p. 26744.
26
U.S. Department of Agriculture, Office of Inspector General, Southwest Region, Audit Report: Rural Utilities
Service Broadband Grant and Loan Programs, Audit Report 09601-4-Te, September 2005, p. I, http://www.usda.gov/
oig/webdocs/09601-04-TE.pdf.
27
Ibid., p. 6.
28
Ibid., p. 8.
29
Martinez, Michael, “Broadband: Loan Fund’s Strict Rules Foil Small Municipalities,” National Journal’s
Technology Daily, August 23, 2005.
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29 Similarly, per capita income requirements can preclude higher income communities with higher costs of living (e.g., rural Alaska), and the limitation of grant programs
only to underserved areas excludes rural communities with existing but very limited broadband
access.
30
30
Loans to Communities With Existing Providers
The IG report found that RUS too often has given loans to communities with existing broadband
service. The IG report found that
“"RUS has not ensured that communities without broadband
service receive first priority for loans,
”" and that although RUS has a system in place to prioritize
loans to unserved communities, the system
“"lacks a cutoff date and functions as a rolling
selection process—priorities are decided based on the applicants who happen to be in the pool at
any given moment.
”31"31 The result is that a significant number of communities with some level of
preexisting broadband service have received loans. According to the IG report, of 11 loans
awarded in 2004, 66% of the associated communities served by those loans had existing service.
According to RUS, 31% of communities served by all loans (during the period 2003 through
early 2005) had preexisting competitive service (not including loans used to upgrade or expand
existing service).
3232 In some cases, according to the IG report,
“"loans were issued to companies in
highly competitive business environments where multiple providers competed for relatively few
customers.
”33"33 At the May 1, 2007, hearing before the House Subcommittee on Specialty Crops,
Rural Development, and Foreign Agriculture, then-RUS Administrator James Andrews testified
that of the 69 broadband loans awarded since the program
’'s inception, 40% of the communities
approved for funding were unserved at the time of loan approval, and an additional 15% had only
one broadband provider.
34
34
Awarding loans to entities in communities with preexisting competitive service raised criticism
from competitors who already offer broadband to those communities. According to the National
Cable and Telecommunications Association (NCTA),
“"RUS loans are being used to unfairly
subsidize second and third broadband providers in communities where private risk capital already
has been invested to provide broadband service.
”35"35 Critics argued that providing loans in areas
with preexisting competitive broadband service creates an uneven playing field and discourages
further private investment in rural broadband.
3636 In response, RUS stated in the IG report that its
policies are in accordance with the statute, and that they address
“"the need for competition to
increase the quality of services and reduce the cost of those services to the consumer.
”37 RUS
"37 RUS argued that the presence of a competitor does not necessarily mean that an area is adequately
served, and additionally, that in order for some borrowers to maintain a viable business in an
30
GAO, Broadband Deployment is Extensive throughout the United States, but It Is Difficult to Assess the Extent of
Deployment Gaps in Rural Areas, pp. 33-34.
31
Ibid., p. 13.
32
Ibid., p. 14.
33
Ibid., p. 15
34
Testimony of James Andrew, Administrator, Rural Utilities Service, U.S. Department of Agriculture, before the
Subcommittee on Specialty Crops, Rural Development, and Foreign Agriculture, House Committee on Agriculture,
May 1, 2007.
35
Letter from Kyle McSlarrow, President and CEO, National Cable & Telecommunications Association to the
Honorable Mike Johanns, Secretary of the U.S. Department of Agriculture, May 16, 2006.
36
Testimony of Tom Simmons, Vice President for Public Policy, Midcontinent Communications, before Senate
Committee on Agriculture, Nutrition, and Forestry, May 17, 2006.
37
Audit Report: Rural Utilities Service Broadband Grant and Loan Programs, p. 17.
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served, and additionally, that in order for some borrowers to maintain a viable business in an unserved area, it may be necessary for that company to also be serving more densely populated
rural areas where some level of competition already exists.
38
38
Follow-Up Audit by USDA Office of Inspector General
In 2008, as directed by the House Appropriations Committee (H.Rept. 110-258, FY2008
Agriculture appropriations bill), the IG reexamined the RUS broadband loan and loan guarantee
program to determine whether RUS had taken sufficient corrective actions in response to the
issues raised in the 2005 IG report. The IG concluded
“"the key problems identified in our 2005
report—loans being issued to suburban and exurban communities and loans being issued where
other providers already provide access—have not been resolved.
”39
"39
Specifically, the follow-up IG report found that between 2005 and 2008, RUS broadband
borrowers providing services in 148 communities were within 30 miles of cities with 200,000
inhabitants, including communities near very large urban areas such as Chicago and Las Vegas.
The IG report also found that since 2005
“"RUS has continued providing loans to providers in
markets where there is already competing service.
”40"40 Of the 37 applications approved since
September 2005, 34 loans were granted to applicants in areas where one or more private
broadband providers already offered service. These 34 borrowers received $873 million to service
1,448 communities. The IG report found that since 2005, 77% of communities which were
expected to receive service from a project financed by an approved RUS broadband loan had at
least one existing broadband provider present, 59% had 2 or more existing providers, and 27%
had 3 or more existing providers.
41
41
In an official response to the follow-up IG report, RUS fundamentally disagreed with the IG
criticisms, stating that the loans awarded between 2005 and 2008 were provided
“"in a way
entirely consistent with the statutory requirements of the underlying legislation governing
administration of the program, the regulations and guidance issued by the Department to
implement the statute, and the intent of Congress.
”42"42 Specifically RUS argued that its May 11,
2007, Proposed Rule, and the subsequent changes to the broadband loan and loan guarantee
statute made by the 2008 farm bill, both addressed concerns over loans to non-rural areas and to
communities with preexisting broadband providers. However, the Final Rule based on the
Proposed Rule and the 2008 farm bill had not yet been released and implemented during the
2005-2008 period examined by the IG, and RUS was compelled by law to continue awarding
broadband loans under the existing law and rules.
During 2009 and 2010, the Rural Broadband Access Loan and Loan Guarantee program was in
hiatus while RUS implemented the Broadband Initiatives Program (Recovery Act grants and
loans) and developed new regulations implementing the 2008 farm bill. On March 14, 2011, the
new rules were released. According to Jonathan Adelstein,
“this regulation and other measures
38
Rural Utilities Service, private communication, January 18, 2007.
U.S. Department of Agriculture, Office of Inspector General, Southwest Region, Audit Report Rural Utilities Service
Broadband Loan and Loan Guarantee Program, Report No. 09601-8-Te, March 2009, p. 9.
40
Ibid, p. 5.
41
Ibid, pp. 5-6.
42
Ibid, p. 14.
39
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taken by the agency have addressed all the concerns raised by the OIG,” and on March 24, 2011,
“the OIG notified RUS that it has closed its audits of the RUS broadband loan program.”43
Broadband Loan Reauthorization: 2008 Farm Bill
The 110th Congress considered reauthorization of the Rural Broadband Access Loan and Loan
Guarantee program as part of the 2008 farm bill. The following are some key issues which were
considered during the debate over reauthorization of the RUS broadband loan and loan guarantee
program.
Restricting Applicant Eligibility
The RUS broadband program was criticized for excluding too many applicants due to stringent
financial requirements (e.g., the requirement that an applicant have a year’s worth of cash-onhand) and an application process—requiring detailed business plans and market surveys—that
some viewed as overly expensive and burdensome to complete. During the reauthorization
process, Congress considered whether the criteria for loan eligibility should be modified, and
whether a more appropriate balance could be found between the need to make the program more
accessible to unserved and often lower-income rural areas, and the need to protect taxpayers
against bad loans.
Definition of “Rural Community”
The definition of which communities qualify as “rural” had been changed twice by statute since
the broadband loan program was initiated. Under the pilot program, funds were authorized under
the Distance Learning and Telemedicine Program, which defines “exceptionally rural areas”
(under 5,000 inhabitants), “rural areas” (between 5,000 and 10,000) and “mid-rural areas”
(between 10,000 and 20,000). RUS determined that communities of 20,000 or less would be
eligible for broadband loans in cases where broadband services did not already exist.
"this regulation and other measures taken by the agency have addressed all the concerns raised by the OIG," and on March 24, 2011, "the OIG notified RUS that it has closed its audits of the RUS broadband loan program."43
2014 GAO Report
In May 2014, GAO released its report, USDA Should Evaluate the Performance of the Rural Broadband Loan Program.44 In the report, GAO analyzed rural broadband loans awarded between the years 2003 and 2013. GAO found that of the 100 loans awarded (worth $2 billion), 43% were no longer active due to 25 loans rescinded and 18 defaulted (RUS rejected 149 of the 249 applications received); that RUS loans can help promote limited broadband deployment and economic development, but performance goals do not fully align with the program's purpose; and that FCC reforms of the Universal Service Fund and intercarrier compensation have created temporary uncertainty that may be hindering investment in broadband.
To address its findings, GAO made two recommendations to the Secretary of Agriculture: evaluate loans made by RUS through the broadband loan program to identify characteristics of loans that may be at risk of rescission or default; and align performance goals under the "enhance rural prosperity" strategic objective in the Annual Performance Report to the broadband loan program's purpose, to the extent feasible.45
Broadband Loan Reauthorization: 2008 Farm Bill
The 110th Congress considered reauthorization of the Rural Broadband Access Loan and Loan Guarantee program as part of the 2008 farm bill. The following are some key issues which were considered during the debate over reauthorization of the RUS broadband loan and loan guarantee program.
Restricting Applicant Eligibility
The RUS broadband program was criticized for excluding too many applicants due to stringent financial requirements (e.g., the requirement that an applicant have a year's worth of cash-on-hand) and an application process—requiring detailed business plans and market surveys—that some viewed as overly expensive and burdensome to complete. During the reauthorization process, Congress considered whether the criteria for loan eligibility should be modified, and whether a more appropriate balance could be found between the need to make the program more accessible to unserved and often lower-income rural areas, and the need to protect taxpayers against bad loans.
Definition of "Rural Community"
The definition of which communities qualify as "rural" had been changed twice by statute since the broadband loan program was initiated. Under the pilot program, funds were authorized under the Distance Learning and Telemedicine Program, which defines "exceptionally rural areas" (under 5,000 inhabitants), "rural areas" (between 5,000 and 10,000) and "mid-rural areas" (between 10,000 and 20,000). RUS determined that communities of 20,000 or less would be eligible for broadband loans in cases where broadband services did not already exist.
In 2002, this definition was made narrower by the Farm Security and Rural Investment Act (P.L.
107-171), which designated eligible communities as any incorporated or unincorporated place
with fewer than 20,000 inhabitants, and which was outside any standard metropolitan statistical
area (MSA). The requirement that communities not be located within MSA
’'s effectively
prohibited suburban communities from receiving broadband loans. However, in 2004, the
definition was again changed by the FY2004 Consolidated Appropriations Act (P.L. 108-199
). ).
The act broadened the definition, keeping the population limit at 20,000, but eliminating the MSA
prohibition, thereby permitting rural communities near large cities to receive loans. Thus the
current definition used for rural communities is the same as what was used for the broadband
pilot program, except that loans can now be issued to communities with preexisting service.
The definition of what constitutes a
“rural”"rural" community is always a difficult issue for
congressional policy makers in determining how to target rural communities for broadband
43
Testimony of Jonathan Adelstein, Administrator of RUS, before the House Subcommittee on Communications and
Technology, Committee on Energy and Commerce, April 1, 2011, p. 8, http://republicans.energycommerce.house.gov/
Media/file/Hearings/Telecom/040111/Adelstein.pdf.
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assistance. On the one hand, the narrower the definition the greater the possibility that deserving
communities may be excluded. On the other hand, the broader the definition used, the greater the
possibility that communities not traditionally considered
“rural” or “underserved”"rural" or "underserved" may be eligible
for financial assistance.
A related issue is the scope of coverage proposed by individual applications. While many of the
loan applications propose broadband projects offering service to multiple rural communities, RUS
identified a trend
towardstoward larger regional and national proposals, covering hundreds or even more
than 1,000 communities.
4446 The larger the scope of coverage, the greater the complexity of the
loan application and the larger the possible benefits and risks to taxpayers.
Preexisting Broadband Service
Loans to areas with competitive preexisting service—that is, areas where existing companies
already provide some level of broadband—sparked controversy because loan recipients are likely
to compete with other companies already providing broadband service.
During reauthorization, Congress was asked to more sharply define whether and/or how loans
should be given to companies serving rural areas with preexisting competitive service.
4547 On the
one hand, some argued that the federal government should not be subsidizing competitors for
broadband service, particularly in sparsely populated rural markets which may be able only to
support one provider. Furthermore, keeping communities with preexisting broadband service
eligible may divert assistance from unserved areas that are most in need. On the other hand, many
suburban and urban areas currently receive the benefits of competition between broadband
providers—competition which can potentially drive down prices while improving service and
performance. It is therefore appropriate, others argued, that rural areas also receive the benefits of
competition, which in some areas may not be possible without federal financial assistance. It was
also argued that it may not be economically feasible for borrowers to serve sparsely populated
unserved communities unless they are permitted to also serve more lucrative areas which may
already have existing providers.
Technological Neutrality
Technological Neutrality
The 2002 farm bill (P.L. 107-171) directed RUS to use criteria that are
“"technologically neutral
”
" in determining which projects to approve for loans. In other words, RUS is prohibited from
typically valuing one broadband technology over another when assessing loan applications. As of
November 10, 2008, 37% of approved and funded projects employed fiber-to-the-home
technology, 17% employed DSL, 25% fixed wireless, 19% hybrid fiber-coaxial (cable), and 2%
broadband over powerlines (BPL).
46 No funding has been provided for projects utilizing satellite
broadband.47
44
Rural Utilities Service, private communication, January 18, 2007.
The statute (7 U.S.C. 950bb) allows States and local governments to be eligible for loans only if “no other eligible
entity is already offering, or has committed to offer, broadband services to the eligible rural community.”
46
USDA, Rural Utilities Service, “FCC/USDA Rural Broadband Educational Workshop,” power point presentation,
November 20, 2008, http://www.usda.gov/rus/telecom/broadband/workshops/
FCC_USDABroadbandWorkshopNov20.pdf.
47
According to the GAO, satellite companies state that RUS’s broadband loan program requirements “are not readily
(continued...)
45
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48 No funding has been provided for projects utilizing satellite broadband.49
While decisions on funded projects were required to be technologically neutral, RUS (through the
Secretary of Agriculture) had the latitude to determine minimum required data transmission rates
for broadband projects eligible for funding. According to the statute,
“"the Secretary shall, from
time to time as advances in technology warrant, review and recommend modifications of rate-
ofdataof-data transmission criteria for purposes of the identification of broadband service technologies.
”
"
Some argued that the minimum speed thresholds should be raised to ensure that rural areas
receive
“"next-generation
”" broadband technologies with faster data rates capable of more varied
and sophisticated applications. On the other hand, significantly raising minimum data rates could
exclude certain technologies—for example typical data transmission rates for fiber and some
wireless technologies exceed what is offered by
“"current generation
”" technologies such as DSL
and cable. Proponents of keeping the minimum threshold at a low level argued that underserved
rural areas are best served by any broadband technology that is economically feasible to deploy,
regardless of whether it is
“next” or “current” generation.
P.L. 110-246
"next" or "current" generation.
P.L. 110-246
The Food, Conservation, and Energy Act of 2008 became law on June 18, 2008 (P.L. 110-246
). ).
Section 6110,
“"Access to Broadband Telecommunications Services in Rural Areas,
”" reauthorized
the RUS broadband loan and loan guarantee program and addressed many of the criticisms and
issues raised during the reauthorization process. The following summarizes broadband-related
provisions that changed previous law.
Eligibility and Selection Criteria
•
Defines rural area as any area other than (1) a city or town that has a population
of greater than 20,000 and (2) an urbanized area contiguous and adjacent to a city
or town with a population greater than 50,000. The Secretary may, by regulation
only, consider not to be rural an area that consists of any collection of census
blocks contiguous to each other with a housing density of more than 200 housing
units per square mile and that is contiguous with or adjacent to an existing
boundary of a rural area.
•
Provides that the highest priority is to be given to applicants that offer to provide
broadband service to the greatest proportion of households currently without
broadband service. Eligible entities are required to submit a proposal to the
Secretary that meets the requirements for a project to offer to provide service to a
rural area and agree to complete build out of the broadband service within three
years.
(...continued)
compatible with their business model or technology,” and that “because the agency requires collateral for loans, the
program is more suited for situations where the providers, rather than individual consumers, own the equipment being
purchased through the loan. Yet, when consumers purchase satellite broadband, it is common for them to purchase the
equipment needed to receive the satellite signal, such as the reception dish.” Satellite companies argue that in some
rural areas, satellite broadband might be the most feasible and cost-effective solution. See GAO, Broadband
Deployment is Extensive throughout the United States, but It Is Difficult to Assess the Extent of Deployment Gaps in
Rural Areas, pp. 34-35.
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•
rural area and agree to complete build out of the broadband service within three years.
Prohibits any eligible entity that provides telecommunications or broadband
service to at least 20% of the households in the United States from receiving an
amount of funds under this section for a fiscal year in excess of 15% of the funds
authorized and appropriated for the broadband loan program.
•
Directs the Secretary of Agriculture
“"from time to time as advances in technology
warrant,
”" to review and recommend modifications in rate-of-data transmission
criteria for the purpose of identifying eligible broadband service technologies. At
the same time, the Secretary is prohibited from establishing requirements for
bandwidth or speed that have the effect of precluding the use of evolving
technologies appropriate for use in rural areas.
Loans to Communities With Existing Providers
•
Prohibits the Secretary from making a loan in any area where there are three or
more incumbent service providers unless the loan meets all of the following
requirements: (1) the loan is to an incumbent service provider that is upgrading
service in that provider
’'s existing territory; (2) the loan proposes to serve an area
where not less than 25% of the households are offered service by not more than 1
provider; and (3) the applicant is not eligible for funding under another provision
of the Rural Electrification Act. Incumbent service provider is defined as an
entity providing broadband service to not less than 5% of the households in the
service territory proposed in the application. Also prohibits the Secretary from
making a loan in any area where not less than 25% of the households are offered
broadband service by not more than one provider unless a prior loan has been
made in the same area.
Financial Requirements
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Directs the Secretary to consider existing recurring revenues at the time of
application in determining an adequate level of credit support. Requires the
Secretary to ensure that the type, amount, and method of security used to secure a
loan or loan guarantee is commensurate to the risk involved with the loan or loan
guarantee, particularly when the loan or loan guarantee is issued to a financially
healthy, strong, and stable entity. The Secretary is also required, in determining
the amount and method of security, to consider reducing the security in areas that
do not have broadband service.
•
Allows the Secretary to require an entity to provide a cost-share in an amount not
to exceed 10% of the amount of the loan or loan guarantee.
•
Retains the current law rate of interest for direct loans—which is the rate
equivalent to the cost of borrowing to the Department of Treasury for obligations
of comparable maturity or 4%.
•
Directs that loan or loan guarantee may have a term not to exceed 35 years if the
Secretary determines that the loan security is sufficient.
•
In case of substantially underserved trust areas (for example, Indian lands),
where the Secretary determines a high need exists for the benefits of the program,
the Secretary has the authority to provide loans with interest rates as low as 2%
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and may waive nonduplication restrictions, matching fund requirements, credit
support requirements, or other regulations.
Loan Application Requirements
•
Allows the Secretary to require an entity that proposes to have a subscriber
projection of more than 20% of the broadband service market in a rural area to
submit a market survey. However, the Secretary is prohibited from requiring a
market survey from an entity that projects to have less than 20% of the
broadband market.
•
Requires public notice of each application submitted, including the identity of the
applicant, the proposed area to be served, and the estimated number of
households in the application without terrestrial-based broadband. Authorizes the
Secretary to take steps to reduce the costs and paperwork associated with
applying for a loan or loan guarantee under this section by first-time applicants,
particularly those who are smaller and start-up Internet providers.
•
Allows the Secretary to establish a pre-application process under which a
prospective applicant may seek a determination of area eligibility. Provides that
an application, or a petition for reconsideration of a decision on such an
application, that was pending on the date 45 days before enactment of this act
and that remains pending on the date of enactment of this act is to be considered
under eligibility and feasibility criteria in effect on the original date of
submission of the application.
Other Provisions
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Authorizes the Rural Broadband Access Loan and Loan Guarantee program at
$25 million to be appropriated for each of fiscal years 2008 through 2012.
•
Requires that the Secretary annually report to Congress on the rural broadband
loan and loan guarantee program. The annual report is to include information
pertaining to the loans made, communities served and proposed to be served,
speed of broadband service offered, types of services offered by the applicants
and recipients, length of time to approve applications submitted, and outreach
efforts undertaken by USDA.
•
Section 6111 provides for a National Center for Rural Telecommunications
Assessment. The Center is to assess the effectiveness of broadband loan
programs, work with existing rural development centers to identify appropriate
policy initiatives, and provide an annual report that describes the activities of the
Center, the results of research carried out by the Center, and any additional
information that the Secretary may request. An appropriation of $1 million is
authorized for each of the fiscal years 2008 through 2012.
•
Section 6112 directs the Chairman of the Federal Communications Commission
(FCC), in coordination with the Secretary, to submit to Congress a report
describing a comprehensive rural broadband strategy. Requires the report to be
updated during the third year after enactment.
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Implementation of P.L. 110-246
During 2009 and 2010, the Farm Bill Broadband Loan Program was on hiatus as RUS
implemented the Broadband Initiatives Program (BIP) established under the American Recovery
and Reinvestment Act of 2009 (P.L. 111-5). At the same time, final regulations implementing the
broadband loan program as reauthorized by the 2008 farm bill were on hold and were being
refined to reflect, in part, RUS experience in implementing BIP. Subsequently, on March 14,
2011, an Interim Rule and Notice was published in the Federal Register setting forth the rules and
regulations for the broadband loan program as reauthorized by P.L. 110-246
.48.50 While the rule is
immediately effective, RUS is accepting public comment before ultimately releasing a final rule.
The application guide and all supporting materials for the Farm Bill Broadband Loan Program are
available at http://www.rurdev.usda.gov/utp_farmbill.html
.
.
Meanwhile, pursuant to Section 6112 of P.L. 110-246, the FCC released on May 22, 2009, its
report on rural broadband strategy, entitled Bringing Broadband to Rural America
.49.51 The report
made a series of recommendations including improved coordination of rural broadband efforts
among federal agencies, states, and communities; better assessment of broadband needs,
including technological considerations and broadband mapping and data; and overcoming
challenges to rural broadband deployment.
Broadband Program Reauthorization: 2012 Farm Bill
As reauthorized by the 2008 farm bill, the Rural Broadband Access Loan and Loan Guarantee
Program was authorized through FY2012. On April 26, 2012, the Senate Committee on
Agriculture, Nutrition, and Forestry approved the Agriculture Reform, Food and Jobs Act of 2012
( (S. 3240). Section 6104 of the act (Title VI, Rural Development) would have extended the RUS
broadband program through FY2017. On June 20, 2012, the Senate agreed to amendment
S.Amdt. 2457, offered by Senator Warner, that substituted an amended version of Section 6104.
S. 3240 passed the Senate on June 21, 2012.
On April 25, 2012, the House Subcommittee on Rural Development, Research, Biotechnology,
and Foreign Agriculture, Committee on Agriculture, held a hearing entitled,
“"Formulation of the
2012 Farm Bill: Rural Development Programs.
”" Among those testifying were two witnesses
representing the National Telecommunications Cooperative Association (NTCA), Organization
for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO),
Western Telecommunications Alliance (WTA), and the National Cable and Telecommunications
Association (NCTA).
5052 Among the issues debated at the hearing was whether or not the rural
broadband loan program should be modified to prohibit loans to projects serving areas with
incumbent broadband service providers.
On July 9, 2012, H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012
(FARRM), was introduced by Representative Lucas. Section 6105 of the act (Access to
48
U.S. Department of Agriculture, Rural Utilities Service, “7 CFR Part 1738, Rural Broadband Access Loans and Loan
Guarantees,” 76 Federal Register 13770-13796, March 14, 2011.
49
Michael J. Copps, Acting Chairman, Federal Communications Commission, Bringing Broadband to Rural America:
Report on a Rural Broadband Strategy, May 22, 2009, 83 p.
50
Hearing testimony is available at http://agriculture.house.gov/hearings/hearingDetails.aspx?NewsID=1567.
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Broadband Telecommunications Services in Rural Areas) would have amended the current
broadband statute (Section 601 of the Rural Electrification Act of 1936 (7 U.S.C. 950bb)).
H.R. 6083 was marked up by the House Committee on Agriculture and approved on July 12,
2012. During the July 11 markup, the committee adopted an amendment offered by
Representative Johnson of Illinois that instructs the Secretary to give priority to applicants that
offer to provide broadband service not predominantly for business service, but where at least 25%
of customers in the proposed service territory are commercial interests. The committee rejected
an amendment offered by Representative Gibson that would have authorized loan-grant
combinations.
The 2012 farm bill (S. 3240
//H.R. 6083) was ultimately not enacted by the
112th112th Congress.
However, Title VII of the American Taxpayer Relief Act of 2012 extended farm bill program
authorizations, including the broadband program, by one year (through September 30, 2013).
Meanwhile, other introduced bills, relating to the 2012 farm bill broadband program, included the
following:
•
S. 1895, the Upstate Works Act introduced by Senator Gillibrand on November
17, 2011, would have extended the Farm Bill broadband loan program
authorization through FY2017.
•
S. 2275, the Broadband Connections for Rural Opportunities Program (BCROP)
Act of 2012 introduced by Senator Gillibrand on March 29, 2012, would have
amended the Rural Electrification Act to establish a broadband grant program,
define an eligible rural area as under 50,000 population, provide refinements to
the application process, establish a rural broadband clearinghouse website, and
require reports to Congress on the effectiveness of all federal broadband
assistance programs and policies.
•
S. 2298, the Connecting Rural America Act introduced by Senator Brown of
Ohio on April 18, 2012, would have amended the Rural Electrification Act to
establish a broadband grant program, set the definition of an incumbent service
provider as serving no less than 15% of the households in a service area (up from
5% in the current statute), establish transparency and reporting requirements,
provide mandatory annual funding of $20 million from the Commodity Credit
Corporation, and in addition to funds otherwise made available, authorize $25
million in annual appropriations through FY2017.
Broadband Program Reauthorization:
2013 and 2014 Farm Bills
In the
113th113th Congress, 2013 farm bill legislation in the House and Senate
includesincluded the broadband
program reauthorization provisions contained in the 2012 farm bill. Both the House and Senate
bills would extend the reauthorization of the RUS broadband program through FY2018.
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Senate Bill, S. 954
On May 14, 2013, the Senate Committee on Agriculture, Nutrition, and Forestry reported the
Agriculture Reform, Food and Jobs Act of 2013 (S. 954, introduced by Senator Stabenow). S. 954
was passed by the Senate on June 10, 2013. The Senate adopted S.Amdt. 998 (introduced by
Senator Leahy), which expands pilot loan and grant projects to include ultra-high speed service (1
gigabit per second or higher downstream speeds). Section 6104 of S. 954
(" (“Access to Broadband
Telecommunications Services in Rural Areas
”"), as passed by the Senate,
includesincluded the following
changes from the broadband provision in the
currentthen-existing statute (7 U.S.C. 950bb):
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Broadband grants—A new broadband grant program is added to the existing loan
and loan guarantee program authorization. The bill specifies that the amount of
any grant shall not exceed 50% of the development costs of the grant projects
(e.g., 50% is set as the maximum federal cost share rate). However, the USDA
Secretary has the authority to adjust that rate up to 75% if it is determined that
the project serves a remote or low income area that does not have access to
broadband service from any provider.
•
Definition of rural area—Under S. 954, all rural development programs,
including the broadband grant and loan program, would conform to a uniform
definition of a rural area: any area that is not a city or town with a population
greater than 50,000, and that is not an urbanized area contiguous and adjacent to
a city or town with a population over 50,000. Because the current definition of a
rural area eligible for broadband loans is towns with populations under 20,000,
this new definition would increase the number of communities eligible for
broadband assistance.
•
Definition of broadband service—S. 954 establishes
“"the minimum acceptable
level of broadband service
”" as at least 4 Mbps downstream and 1 Mbps upstream.
At least once every two years, the Secretary may adjust this speed definition and
may consider establishing different minimum speeds for fixed and mobile
(wireless) broadband. The current statute states that from
“"time to time
”" the
Secretary shall recommend modifications in speed criteria for broadband.
•
Project area eligibility—S. 954 lowers the maximum allowable number of
incumbent providers in any part of an eligible service area from two to one.
Additionally, S. 954 provides that an eligible area is one where no less than 25%
of the households in the proposed service territory are unserved or have
broadband service levels below the minimum acceptable level of broadband
service (which is set at 4 Mbps/1 Mbps). Current statute states that eligible areas
must (with some exceptions) have not more than one incumbent broadband
provider in not less than 25% of households in the proposed service area. S. 3240
allows RUS to increase the 25% requirement if more than 25% of the project cost
is being funded by a grant, or if there is one or more communities in the proposed
service area with populations over 20,000. RUS can decrease the 25%
requirement to 18% for service areas with a population less than 7,500, and to
15% for populations under 5,000.
•
Evaluation period—S. 954 directs RUS to establish not less than two, and not
more than four, evaluation periods for each fiscal year to compare and prioritize
grant, loan, and loan guarantee applications. Under current statute, broadband
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loan applications are submitted and considered year-round—there is no set
application or evaluation period.
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Priority setting—S. 954 directs RUS to give the highest priority to applicants that
offer to provide broadband service to the greatest proportion of unserved rural
households or rural households that do not have residential broadband service
that meets the minimum acceptable level of broadband service, as certified by the
affected community, city, county, or designee; or demonstrated on the broadband
map of the affected state if the map contains address-level data, or the National
Broadband Map if address-level data are unavailable. RUS shall provide equal
consideration to all qualified applicants, including those that have not previously
received grants, loans, or loan guarantees. After giving priority to the applicants
described above, RUS shall then give priority to projects that serve rural
communities with a population of less than 20,000, with a high percentage of
low-income residents, that are isolated from other significant population centers,
and that are experiencing outmigration. Current statute directs RUS to give
highest priority to applicants that offer to provide broadband service to the
greatest proportion of households that, prior to the provision of the broadband
service, had no incumbent service provider.
•
Transparency—RUS shall promptly post on its website an announcement that
identifies each applicant; the amount and type of support requested by each
applicant; and a list of the census block groups that the applicant proposes to
service. RUS will provide not less than 15 days for broadband service providers
to voluntarily submit information about the broadband services that the providers
offer in the groups or tracts listed so that RUS may assess whether the
applications submitted meet the eligibility requirements. If no broadband service
provider submits this information, RUS will consider the number of providers in
the group or tract to be established by reference to the most current National
Broadband Map or any other data RUS may collect or obtain through reasonable
efforts. Current statute requires that RUS publish a notice of each application,
including the identity of the applicant, each area proposed to be served by the
applicant, and the estimated number of households without terrestrial-based
broadband service in those areas.
•
Recipient and applicant reporting—The Secretary shall require quarterly reports
from grant and loan recipients describing in detail the use of the assistance, and
the progress
towardstoward fulfilling project objectives. RUS shall maintain a fully
searchable database on the Internet that contains a list of each entity that has
applied for assistance, and the description status of each application. For each
entity receiving assistance, the database shall provide the name of the entity, the
type of assistance being received, the purpose for which the entity is receiving
the assistance, and each quarterly report submitted. There is no requirement in
current statute for quarterly reports or for RUS to post such information on the
Internet.
•
De-obligation—S. 954 directs RUS to establish written procedures for recovering
funds from loan defaults, de-obligating awards to grantees that demonstrate an
insufficient level of performance or wasteful or fraudulent spending, awarding
those funds to new or existing applicants, and consolidating and minimizing
overlap among programs. There is no comparable language in the current statute.
Congressional Research Service
24
Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
.
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•
Report to Congress—S. 954 adds requirements to the content of the annual report
to Congress, including the number of residences and businesses receiving new
broadband services; network improvements, including facility upgrades and
equipment purchases; average broadband speeds and prices on a local and
statewide basis; any changes in broadband adoption rates; and any specific
activities that increase high speed broadband access for educational institutions,
health care providers, and public safety service providers.
•
Broadband build-out data—As a condition of receiving a grant, loan, or loan
guarantee, a recipient shall provide to RUS address-level broadband build-out
data that indicate the location of new broadband service that is being provided or
upgraded within the service territory supported. These data will be included in
the semiannual updates to the National Telecommunications and Information
Administration’s (NTIA’ Administration's (NTIA's) National Broadband Map, and effective beginning on
the date NTIA receives the data, NTIA shall use only address-level broadband
build-out data for the National Broadband Map. RUS shall submit to NTIA any
correction to the National Broadband Map that is based on the actual level of
broadband coverage within the rural area, including any requests for a correction
from an elected or economic development official. Not later than 30 days after
the date on which the NTIA receives a correction submitted, NTIA shall
incorporate the correction into the National Broadband Map. There is no
comparable provision in current statute.
•
Pilot programs—The Secretary may carry out pilot programs in conjunction with
state and local governments and Indian tribes (which may be in partnership with
other entities, as determined appropriate by the Secretary) to address areas that
are unserved or have service levels below the minimum acceptable level of
broadband service, or to provide a limited number of projects offering ultra-high
speed service, defined as downstream speeds of 1 gigabit per second or higher.
There is no comparable provision in the statute.
•
Market survey requirement—S. 954 provides that survey information must be
certified by the affected community, city, county, or designee; and demonstrated
on the broadband map of the affected state if the map contains address-level data,
or the National Broadband Map if address-level data are unavailable. The current
statute has no such requirement for certification and demonstration of market
survey information.
•
Terms and conditions—In determining the term and conditions of assistance, the
Secretary may consider whether the recipient would be serving an area that is
unserved, and if so, can establish a limited initial deferral period or comparable
terms necessary to achieve the financial feasibility and long-term sustainability of
the project. There is no such deferral period authorized in the current statute.
•
Authorization—S. 954 authorizes the broadband grant, loan, and loan guarantee
program at $50 million per year through FY2018, with at least 1% to be used for
conducting oversight and implementing the accountability measures and related
activities authorized. S. 3240 does not specify how the authorized amount should
be divided between grants, loans, and loan guarantees. The current statute
authorized the loan and loan guarantee program at $25 million per year through
FY2012, and did not set aside funding for administrative purposes.
Congressional Research Service
25
Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
.
House Bill, H.R. 2642
H.R. 2642, the Federal Agriculture Reform and Risk Management Act of 2013 (FARRM), was
passed by the House on July 11, 2013. Section 5106 of H.R. 2642
(" (“Access to Broadband
Telecommunications Services in Rural Areas
”") would make the following changes to the current
broadband loan statute:
•
while continuing to provide that the highest priority is to be given applicants that
“ "offer to provide broadband service to the greatest proportion of households that,
prior to the provision of broadband service had no incumbent service provider,
”
" H.R. 2642 additionally instructs the Secretary to give priority to applicants that
offer to provide broadband service not predominantly for business service, but
where at least 25% of customers in the proposed service territory are commercial
interests;
•
instructs the Secretary to include additional information in its public notice of
each loan application, including the amount and type of support requested, and a
list of the census block groups or tracts proposed to be served;
•
requires the Secretary to establish a process under which an incumbent service
provider may (but shall not be required to) submit not less than 15 days and not
more than 30 days after the publication of the public notice, information
regarding the broadband services that the provider offers in the proposed service
territory, so that the Secretary may assess whether the application meets the
eligibility requirements;
•
in considering the technology needs of customers in a proposed service territory,
the Secretary is directed to take into consideration the upgrade or replacement
cost for the construction or acquisition of facilities and equipment in the territory;
and
•
and
reauthorizes the broadband loan and loan guarantee program through FY2018 at
the current level of $25 million per year.
P.L. 113-79, the Agricultural Act of 2014
On January 27, 2014, the conference report for the Agricultural Act of 2014 was filed (H.Rept.
113-333). The conference agreement was approved by the House on January 29, approved by the
Senate on February 4, and signed into law (P.L. 113-79) by the President on February 7, 2014.
P.L. 113-79 amends Section 601 of the Rural Electrification Act of 1936 (7 U.S.C. 950bb) to
reauthorize the Rural Broadband Access Loan and Loan Guarantee Program through FY2018.
P.L. 113-79 also includes provisions to redefine project area eligibility with respect to existing
broadband service, increase the program
’'s transparency and reporting requirements, define a
minimum level of broadband service, require a study on the gathering and use of address-level
data, and establish a new Rural Gigabit Network Pilot Program. The conference agreement did
not not include the Senate bill proposal to create a new grant component to the existing broadband
loan and loan guarantee program, nor did the conference agreement adopt the Senate bill
’s
's broadening of the definition for eligible rural areas.
Specifically, Section 6104 of P.L. 113-79 makes the following changes to the Rural Broadband
Access Loan and Loan Guarantee program:
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Congressional Research Service
26
Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
.
c11173008
•
Project area eligibility—provides that an eligible area is one where not less than
15% of the households in the proposed service territory are unserved or have
service levels below the minimum acceptable level of broadband service (which
is set at 4 Mbps/1 Mbps).
•
Priority—directs RUS to give the highest priority to applicants that offer to
provide broadband service to the greatest proportion of unserved households or
households that do not have residential broadband service that meets the
minimum acceptable level of broadband service, as certified by the affected
community, city, county, or designee; or demonstrated on the broadband map of
the affected state if the map contains address-level data, or the National
Broadband Map if address-level data are unavailable. RUS shall provide equal
consideration to all qualified applicants, including those that have not previously
received grants, loans, or loan guarantees. Also gives priority to applicants that
offer to provide broadband service not predominantly for business service, but if
at least 25% of customers in the proposed service territory are commercial
interests
•
interests
Evaluation period—directs RUS to establish not less than two evaluation periods
for each fiscal year to compare loan and loan guarantee applications and to
prioritize loans and loan guarantees to all or part of rural communities that do not
have residential broadband service that meets the minimum acceptable level of
broadband service.
•
Market survey requirement—provides that survey information must be certified
by the affected community, city, county, or designee; and demonstrated on the
broadband map of the affected state if the map contains address-level data, or the
National Broadband Map if address-level data are unavailable.
•
Notice requirement—directs RUS to maintain a fully searchable database on the
Internet that contains a list of each entity that has applied for assistance, the
status of each application, and a detailed description of each application. For each
entity receiving assistance, the database shall provide the name of the entity, the
type of assistance being received, the purpose for which the entity is receiving
the assistance, and each semiannual report submitted.
•
Reporting—requires semiannual reports from loan recipients for three years after
completion of the project describing in detail the use of the assistance, and the
progress
towardstoward fulfilling project objectives.
•
Default and deobligation—directs RUS to establish written procedures for
recovering funds from loan defaults, deobligating awards that demonstrate an
insufficient level of performance or fraudulent spending, awarding those funds to
new or existing applicants, and minimizing overlap among programs.
•
Service area assessment—directs RUS to promptly post on its website a list of
the census block groups that an applicant proposes to service. RUS will provide
not less than 15 days for broadband service providers to voluntarily submit
information about the broadband services that the providers offer in the groups or
tracts listed so that RUS may assess whether the applications submitted meet the
eligibility requirements. If no broadband service provider submits this
information, RUS will consider the number of providers in the group or tract to
Congressional Research Service
27
Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
.
be established by reference to the most current National Broadband Map or any
other data RUS may collect or obtain through reasonable efforts.
•
Definition of broadband service—establishes
“"the minimum acceptable level of
broadband service
”" as at least 4 Mbps downstream and 1 Mbps upstream. At least
once every two years, the Secretary shall review and may adjust this speed
definition and may consider establishing different minimum speeds for fixed and
mobile (wireless) broadband.
•
Terms and conditions—in determining the terms and conditions of assistance, the
Secretary may consider whether the recipient would be serving an area that is
unserved (or has service levels below the minimum acceptable level of
broadband service), and if so, can establish a limited initial deferral period or
comparable terms necessary to achieve the financial feasibility and long-term
sustainability of the project.
•
Report to Congress—adds requirements to the content of the annual report to
Congress, including the number of residences and businesses receiving new
broadband services; network improvements, including facility upgrades and
equipment purchases; average broadband speeds and prices on a local and
statewide basis; any changes in broadband adoption rates; and any specific
activities that increase high speed broadband access for educational institutions,
health care providers, and public safety service providers.
•
Reauthorization—reauthorizes the broadband loan and loan guarantee program
through FY2018 at the current level of $25 million per year.
•
Study on providing effective data for the National Broadband Map—directs
USDA, in consultation with DOC and the FCC, to conduct a study of the ways
data collected by RUS could most effectively be shared with the FCC to support
the development and maintenance of the National Broadband Map. The study
shall include a consideration of the circumstances under which address-level data
could be collected by RUS and appropriately shared with the FCC.
Additionally, Section 6105 establishes a new Rural Gigabit Network Pilot Program. Specifically,
USDA is authorized to provide grants, loans, or loan guarantees for projects that would extend
ultra-high speed broadband service (defined as 1 gigabit per second downstream capacity) to rural
areas where ultra-high speed service is not provided in any part of the proposed service territory.
The pilot program is authorized at $10 million per year for the years FY2014 through FY2018.
Author Contact Information
Lennard G. Kruger
Specialist in Science and Technology Policy
lkruger@crs.loc.gov, 7-7070
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28
Legislation in the 114th Congress
Aside from appropriations bills, several bills have been introduced into the 114th Congress that would impact the RUS broadband programs. These include the following:
- H.R. 3152 (Nolan), introduced on July 22, 2015, as the Rural Broadband Initiative Act, would amend the Rural Electrification Act of 1936 to establish an Office of Rural Broadband within the USDA. Under this bill, the new office would administer all rural broadband-related grant and loan programs previously administered by the RUS. Headed by an Under Secretary for Rural Broadband Initiatives, the office is directed to conduct extensive, nationwide outreach to rural areas; foster the development of a comprehensive rural broadband strategic vision; plan coordination of federal resources for state, regional, and local governments to assist citizens living and working in rural areas; assess all relevant technologies as the technologies are able to support in whole or in part rural broadband needs and requirements; serve as a single information source for all rural broadband programs and services administered by federal agencies, and coordinate the activities undertaken under federal rural broadband programs; and provide technical assistance to state, regional, and local governments to develop broadband deployment strategies. The Under Secretary is also directed to develop a comprehensive rural broadband strategy to be submitted to the President and Congress; convene a Rural Broadband Advisory Panel; and establish a comprehensive and interactive rural broadband web-based clearinghouse that describes options, opportunities, resources, successful public-private partnerships, comprehensive funding sources, and technology tutorials for rural broadband.
- H.R. 4160 (Huffman), introduced on December 2, 2015, as the Rural Broadband Infrastructure Investment Act, would amend Section 601 of the Rural Electrification Act of 1936 (7 U.S.C. 950bb) to establish a broadband grant program to accompany the Rural Broadband Loan program. The bill would also make changes to the Telecommunications Infrastructure Loan and Loan Guarantee program—specifically raising the threshold for an eligible rural area from 5,000 to 20,000 population, and permitting USDA to give preference to loan applications that support regional telecommunications development.
- S. 268 (Sanders), introduced on January 27, 2015, as the Rebuild America Act of 2015, would appropriate $2.5 billion per year through FY2019 for the broadband initiatives program established under title VI of the Rural Electrification Act of 1936 (7 U.S.C. 950bb et seq.) to expand the access and quality of broadband service across the rural United States.
Author Contact Information
[author name scrubbed], Specialist in Science and Technology Policy
([email address scrubbed], [phone number scrubbed])
Footnotes
| 1.
|
Gillett, Sharon E., Massachusetts Institute of Technology, Measuring Broadband's Economic Impact, report prepared for the Economic Development Administration, U.S. Department of Commerce, February 28, 2006, p. 4, available at http://www.eda.gov/ImageCache/EDAPublic/documents/pdfdocs2006/mitcmubbimpactreport_2epdf/v1/mitcmubbimpactreport.pdf.
|
| 2.
|
Crandall, Robert, William Lehr, and Robert Litan, The Effects of Broadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data, June 2007, 20 pp., http://www3.brookings.edu/views/papers/crandall/200706litan.pdf.
|
| 3.
|
Peter Stenberg, Mitchell Morehart, and Stephen Vogel, et al., Broadband Internet's Value for Rural America, U.S. Department of Agriculture, Economic Research Service, Economic Research Report Number 78, Washington, DC, August 2009, p. iii, http://www.ers.usda.gov/Publications/ERR78/ERR78.pdf.
|
| 4.
|
See for example: National Exchange Carrier Association (NECA), Trends 2010: A Report on Rural Telecom Technology, 23 p., https://www.neca.org/cms400min/WorkArea/DownloadAsset.aspx?id=4892.
|
| 5.
|
Pew Research Center, Home Broadband 2015, December 21, 2015, p. 8, available at http://www.pewinternet.org/files/2015/12/Broadband-adoption-full.pdf..
|
| 6.
|
2016 Broadband Progress Report, pp. 33-34.
|
| 7.
|
Brian Whiteacre, Roberto Gallardo, and Sharon Strover, National Agricultural & Rural Development Policy Center, Rural Broadband Availability and Adoption: Evidence, Policy Challenges, and Options, March 2013, p. 13, available at http://www.nardep.info/Broadband_2.html.
|
| 8.
|
U.S. Department of Commerce, National Telecommunications and Information Administration, Exploring the Digital Nation: Embracing the Mobile Internet, October 2014, p. 16, available at https://www.ntia.doc.gov/files/ntia/publications/exploring_the_digital_nation_embracing_the_mobile_internet_10162014.pdf.
|
| 9.
|
Rural Utilities Service, USDA, "Construction and Installation of Broadband Telecommunications Services in Rural America; Availability of Loan Funds," Federal Register, Vol. 65, No. 234, December 5, 2000, p. 75920.
|
| 10.
|
Rural Utilities Service, USDA, "Broadband Pilot Loan Program," Federal Register, Vol. 67, No. 15, January 23, 2002, p. 3140.
|
| 11.
|
Rural Utilities Service, USDA, "Broadband Pilot Grant Program," Federal Register, Vol. 67, No. 130, July 8, 2002, p. 45080.
|
| 12.
|
Title VI of the Rural Electrification Act of 1936 (7 U.S.C. 950bb).
|
| 13.
|
Department of Agriculture, Rural Utilities Service, "Rural Broadband Access Loans and Loan Guarantees," Interim rule, 80 Federal Register 45397-45413, July 30, 2015, available at http://www.rd.usda.gov/files/UTP_BBInterimRule.pdf.
|
| 14.
|
Department of Agriculture, Rural Utilities Service, "Community Connect Broadband Grant Program," 78 Federal Register 25787-25795, May 3, 2013, available at http://www.gpo.gov/fdsys/pkg/FR-2013-05-03/pdf/2013-10502.pdf.
|
| 15.
|
For more information on the RUS portfolio of telecommunications and broadband programs offering loans, loan guarantees, grants, and loan/grant combinations, see CRS Report R42524, Rural Broadband: The Roles of the Rural Utilities Service and the Universal Service Fund, by [author name scrubbed] and [author name scrubbed].
|
| 16.
|
Jessica Zufolo, Deputy Administrator, RUS, Overview of the RUS Telecommunications Loan and Grant Programs, July 2011, Slide 7, http://www.narucmeetings.org/Presentations/Zufolo_[phone number scrubbed].pdf.
|
| 17.
|
For more information, see CRS Report R42524, Rural Broadband: The Roles of the Rural Utilities Service and the Universal Service Fund, by [author name scrubbed] and [author name scrubbed].
|
| 18.
|
According to a January 2013 survey conducted by NTCA—The Rural Broadband Association, 69% of member companies responding to the survey had either cancelled or postponed $492.7 million in broadband investments due to the uncertainty surrounding the transition to the FCC's Connect America Fund. See NTCA—The Rural Broadband Association, Survey: FCC USF/ICC Impacts, January 2013, available at http://www.ntca.org/images/stories/Documents/Advocacy/SurveyReports/FCC_USF_ICC_ImpactSurvey.pdf.
|
| 19.
|
Letter from RUS to the FCC, February 13, 2013, available at https://prodnet.www.neca.org/publicationsdocs/wwpdf/21513usda.pdf.
|
| 20.
|
2017 USDA Budget Explanatory Notes for Committee on Appropriations, p. 31-34, available at http://www.obpa.usda.gov/31rus2017notes.pdf.
|
| 21.
|
Private communication, USDA, June 23, 2009.
|
| 22.
|
GAO, Broadband Deployment is Extensive throughout the United States, but It Is Difficult to Assess the Extent of Deployment Gaps in Rural Areas, p. 33.
|
| 23.
|
Testimony of Jim Andrew, Administrator, Rural Utilities Service, U.S. Department of Agriculture, "Broadband Program Administered by USDA's Rural Utilities Service," full committee hearing before the Senate Committee on Agriculture, Nutrition, and Forestry, 109th Congress, May 17, 2006.
|
| 24.
|
Rural Utilities Service, private communication, January 18, 2007.
|
| 25.
|
Rural Utilities Service, Department of Agriculture, "Rural Broadband Access Loans and Loan Guarantees," Proposed Rule, Federal Register, Vol. 72, No. 91, May 11, 2007, p. 26744.
|
| 26.
|
U.S. Department of Agriculture, Office of Inspector General, Southwest Region, Audit Report: Rural Utilities Service Broadband Grant and Loan Programs, Audit Report 09601-4-Te, September 2005, p. I, http://www.usda.gov/oig/webdocs/09601-04-TE.pdf.
|
| 27.
|
Ibid., p. 6.
|
| 28.
|
Ibid., p. 8.
|
| 29.
|
Martinez, Michael, "Broadband: Loan Fund's Strict Rules Foil Small Municipalities," National Journal's Technology Daily, August 23, 2005.
|
| 30.
|
GAO, Broadband Deployment is Extensive throughout the United States, but It Is Difficult to Assess the Extent of Deployment Gaps in Rural Areas, pp. 33-34.
|
| 31.
|
Ibid., p. 13.
|
| 32.
|
Ibid., p. 14.
|
| 33.
|
Ibid., p. 15
|
| 34.
|
Testimony of James Andrew, Administrator, Rural Utilities Service, U.S. Department of Agriculture, before the Subcommittee on Specialty Crops, Rural Development, and Foreign Agriculture, House Committee on Agriculture, May 1, 2007.
|
| 35.
|
Letter from Kyle McSlarrow, President and CEO, National Cable & Telecommunications Association to the Honorable Mike Johanns, Secretary of the U.S. Department of Agriculture, May 16, 2006.
|
| 36.
|
Testimony of Tom Simmons, Vice President for Public Policy, Midcontinent Communications, before Senate Committee on Agriculture, Nutrition, and Forestry, May 17, 2006.
|
| 37.
|
Audit Report: Rural Utilities Service Broadband Grant and Loan Programs, p. 17.
|
| 38.
|
Rural Utilities Service, private communication, January 18, 2007.
|
| 39.
|
U.S. Department of Agriculture, Office of Inspector General, Southwest Region, Audit Report Rural Utilities Service Broadband Loan and Loan Guarantee Program, Report No. 09601-8-Te, March 2009, p. 9.
|
| 40.
|
Ibid, p. 5.
|
| 41.
|
Ibid, pp. 5-6.
|
| 42.
|
Ibid, p. 14.
|
| 43.
|
Testimony of Jonathan Adelstein, Administrator of RUS, before the House Subcommittee on Communications and Technology, Committee on Energy and Commerce, April 1, 2011, p. 8, http://republicans.energycommerce.house.gov/Media/file/Hearings/Telecom/040111/Adelstein.pdf.
|
| 44.
|
Government Accountability Office, USDA Should Evaluate the Performance of the Rural Broadband Loan Program, May 2014, 56 pp., available at http://www.gao.gov/assets/670/663578.pdf.
|
| 45.
|
Ibid, pp. 31-32.
|
| 46.
|
Rural Utilities Service, private communication, January 18, 2007.
|
| 47.
|
The statute (7 U.S.C. 950bb) allows States and local governments to be eligible for loans only if "no other eligible entity is already offering, or has committed to offer, broadband services to the eligible rural community."
|
| 48.
|
USDA, Rural Utilities Service, "FCC/USDA Rural Broadband Educational Workshop," power point presentation, November 20, 2008, http://www.usda.gov/rus/telecom/broadband/workshops/FCC_USDABroadbandWorkshopNov20.pdf.
|
| 49.
|
According to the GAO, satellite companies state that RUS's broadband loan program requirements "are not readily compatible with their business model or technology," and that "because the agency requires collateral for loans, the program is more suited for situations where the providers, rather than individual consumers, own the equipment being purchased through the loan. Yet, when consumers purchase satellite broadband, it is common for them to purchase the equipment needed to receive the satellite signal, such as the reception dish." Satellite companies argue that in some rural areas, satellite broadband might be the most feasible and cost-effective solution. See GAO, Broadband Deployment is Extensive throughout the United States, but It Is Difficult to Assess the Extent of Deployment Gaps in Rural Areas, pp. 34-35.
|
| 50.
|
U.S. Department of Agriculture, Rural Utilities Service, "7 CFR Part 1738, Rural Broadband Access Loans and Loan Guarantees," 76 Federal Register 13770-13796, March 14, 2011.
|
| 51.
|
Michael J. Copps, Acting Chairman, Federal Communications Commission, Bringing Broadband to Rural America: Report on a Rural Broadband Strategy, May 22, 2009, 83 p.
|
| 52.
|
Hearing testimony is available at http://agriculture.house.gov/hearings/hearingDetails.aspx?NewsID=1567.
|