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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.
According to the FCC's First Communications Market Report, as of 2017, 24% of Americans in rural areas lacked coverage from fixed terrestrial 25 Mbps/3 Mbps broadband, as compared to only 1.5% of Americans in urban areas. The comparatively lower population density of rural areas is likely a 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 and fiber—the greater the geographical distances among customers, the larger the cost to serve those customers.
customers, the larger the cost to serve those customers.
The Rural Utilities Service (RUS) at the U.S. Department of Agriculture (USDA) houses two three
ongoing 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, and the ReConnect Program. Additionally, the Telecommunications
Infrastructure Loan and Loan Guarantee Program (previously the Telephone Loan Program) funds
broadband deployment in rural areas. Distance Learning and Telemedicine (DLT) grants—while
not principally supporting connectivity—fund equipment and software that operate via
telecommunications to rural end-users of telemedicine and distance learning applications.
The Consolidated Appropriations Act, 2018 (P.L. 115-1412019 (P.L. 116-6) provided $5.83 million to subsidize a
rural broadband loan level of $29.851 million, $30 million to Community Connect broadband
grants, $4947 million for DLT grants, and $0.8631.725 million in loan subsidies for a total loan level of
$690 million for the Telecommunications Infrastructure Loan and Loan Guarantee Program. P.L. 115-141 also appropriated $600 million to RUS to "conduct a new broadband loan and grant pilot program." On December 14, 2018, RUS released the Funding Opportunity Announcement and solicitation of applications for the new pilot broadband loan and grant program, which is called the ReConnect Program.
P.L.
116-6 also provided $550 million for the ReConnect Program, which is in addition to the $600
million provided in the 2018 Consolidated Appropriations Act.
On December 20, 2018, the President signed the 2018 farm bill (P.L. 115-334, Agriculture
Improvement Act of 2018). Regarding the RUS broadband programs, the act includes provisions
authorizing a grant component in combination with the broadband loan program; increasing the
annual authorization level from $25 million to $350 million; raising the proposed service area
eligibility threshold of unserved households from 15% to 50% for broadband loans; authorizing
grants, loans, and loan guarantees for middle mile infrastructure; directing improved federal
agency broadband program coordination; and providing eligible applicants with technical
assistance and training to prepare applications. In the 116th116th Congress, appropriations will
determine the extent to which these programs will be funded.
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. CurrentlyCurrently in the United States, residential broadband is primarily provided
via cable modem (from the local provider of cable television service), fiber-optic cable, mobile
wireless (e.g., smartphones), or over the copper telephone line (digital subscriber line or "DSL"). “DSL”).
Other broadband technologies include fixed wireless and satellite.
Broadband access enables a number of beneficial applications to individual users and to
communities. These include ecommerce, 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.
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. A 2016 study from the Hudson Institute found that rural broadband providers
directly and indirectly added $24.1 billion to the U.S. economy in 2015. The rural broadband
industry supported 69,595 jobs in 2015, both through its own employment and the employment
that its purchases of goods and services generated.1
1
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,22 recent surveys and studies have
indicated that, in general, rural areas tend to lag behind urban and suburban areas in broadband
deployment. For example
”7
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 that transmits a signal to and from an internet backbone, which
is typically located in or near an urban area.
Another important broadband availability issue is the extent to which there are multiple
broadband providers offering competition and consumer choice. Typically, multiple providers are
more prevalent in urban than in rural areas.8
Because private providers are unlikely to earn enough revenue to cover the costs of deploying and operating broadband networks in many unserved rural areas, it is unlikely that private investment 8
https://docs.fcc.gov/public/attachments/FCC-18-181A1.pdf.
4 Ibid., Figure G-2b, p. 133.
5 Pew Research Center, Internet/Broadband Fact Sheet, February 5, 2018, available at http://www.pewinternet.org/factsheet/internet-broadband/.
6 U.S. Department of Commerce, National Telecommunications and Information Administration, Digital Nation Data
Explorer, June 6, 2018, available at https://www.ntia.doc.gov/data/digital-nation-data-explorer#sel=internetUser&
demo=metro&pc=prop&disp=chart.
7 U.S. Department of Commerce, National Telecommunications and Information Administration, “The State of the
Urban/Rural Digital Divide,” August 10, 2016, available at https://www.ntia.doc.gov/blog/2016/state-urbanruraldigital-divide.
8 See Table 2 in CRS In Focus IF10441, Broadband Deployment: Status and Federal Programs, by Lennard G. Kruger.
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
Rural Broadband Programs at the Rural Utilities
Service
Because private providers are unlikely to earn enough revenue to cover the costs of deploying and
operating broadband networks in many unserved rural areas, it is unlikely that private investment
alone will bring service to these areas.9alone will bring service to these areas.9 In 2000, 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."10”10 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 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.11
11
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."12
”12
The pilot program was extended into FY2003, as the Consolidated Appropriations Resolution of
2003 (P.L. 108-7) allocated $10 million for broadband grants.
Currently, RUS has four ongoing programs that have been established to incentivize and subsidize broadband infrastructure investment in unserved and underserved rural areas. These
9
Government Accountability Office, Projects and Policies Related to Deploying Broadband in Unserved and
Underserved Areas, GAO-14-409, April 2014, p. 9, available at http://www.gao.gov/assets/670/662711.pdf.
10 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.
11 Rural Utilities Service, USDA, “Broadband Pilot Loan Program,” Federal Register, Vol. 67, No. 15, January 23,
2002, p. 3140.
12 Rural Utilities Service, USDA, “Broadband Pilot Grant Program,” Federal Register, Vol. 67, No. 130, July 8, 2002,
p. 45080.
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
Currently, RUS has four ongoing programs that have been established to incentivize and
subsidize broadband infrastructure investment in unserved and underserved rural areas. These
include the following:
In addition, a new broadband loan and grant pilot program—the ReConnect Program—has been
established and funded at $600 million by the Consolidated Appropriations Act, 2018 (P.L. 115-141).
P.L. 115141).
Table A-1 in the Appendix shows the total amount and number of awards provided by the RUS
broadband programs for each state between FY2009 and FY2016.
In its April 2017 report, Rural Broadband Deployment: Improved Consistency with Leading
Practices Could Enhance Management of Loan and Grant Programs, GAO reported that
(according to RUS data) since FY2004, RUS has approved 704 broadband projects totaling
almost $8.6 billion in loans and $144.8 million in grants to deploy telecommunications or
broadband infrastructure networks in rural areas.13
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.1414 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
13
Government Accountability Office, Rural Broadband Deployment: Improved Consistency with Leading Practices
Could Enhance Management of Loan and Grant Program, GAO-17-301, April 2017, p. 2, available at
https://www.gao.gov/assets/690/684093.pdf.
14 Title VI of the Rural Electrification Act of 1936 (7 U.S.C. 950bb).
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
shows—for the life of the program to date—loan subsidies and loan levels (lending authority) set
by Congress in annual appropriations bills.
Loan Guarantee Program
Direct Appropriations |
Loan Levels Estimated in | |
|
FY2001 (pilot) |
— |
$100 million |
|
FY2002 (pilot) |
— |
$80 million |
|
FY2003 |
$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 |
|
FY2017 |
$4.5 million |
$27.0 million |
|
FY2018 |
$5 million |
$29.0 million |
Source:
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
FY2017
$4.5 million
$27.0 million
FY2018
$5 million
$29.0 million
FY2019
$5.8 million
$29.8 million
Source: Compiled by CRS from appropriations bills.
a. 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 July 30, 2015, the RUS published in the Federal Register the interim rule (7 C.F.R. part 1738)
implementing the Rural Broadband Access Loan and Loan Guarantee Program as reauthorized by
the enactment of the Agricultural Act of 2014 (P.L. 113-79),15),15 and the interim rule was made final
on June 9, 2016. 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.
Whereas RUS had previously been setting two application periods per year, the
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 https://www.gpo.gov/fdsys/pkg/FR-2015-07-30/pdf/
2015-18624.pdf.
15
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
The latest Notice of Solicitation of Applications (NOSA) announced that RUS is now accepting
applications on a rolling basis through September 30, 20182019, which will give RUS the ability to
request additional information and modifications to submitted applications if necessary. RUS will
evaluate the submitted applications every 90 days, and anticipates at least two evaluation periods for FY2018
for FY2019. The minimum loan amount is $300100,000, while the maximum loan amount is $25
million. The NOSA has maintained its definition of broadband service and broadband lending
speed at no less than 25 Mbps download and 3 Mbps upload for both mobile and fixed services.16
16
The 2018 farm bill, which was signed by the President on December 20, 2018 (P.L. 115-334, ,
Agriculture Improvement Act of 2018) adds a grant component to the broadband loan program,
increases the annual authorization level from $25 million to $350 million, and changes the
proposed service area threshold from 15% to 50%. RUS will issue a revised regulation that
implements the changes made by the 2018 farm bill. For up to one year after enactment, the
Secretary shall use the previously existing rules and regulations for the broadband loan program
until a final rule is issued.
For the latest application information, see http://www.rd.usda.gov/programs-services/farm-bill-broadbandbillbroadband-loans-loan-guarantees.
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.
Department of Agriculture, Rural Utilities Service, “Rural Broadband Access Loan and Loan Guarantees Program,”
Notice of Solicitation of Applications (NOSA), 83 Federal Register 57406-57407, November 15, 2018, available at
https://www.govinfo.gov/content/pkg/FR-2018-11-15/pdf/2018-24860.pdf.
16
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
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
FY2016
$10.4 million
FY2017
$34.5 million
FY2018
$30 million
FY2019
$30 million
Source: 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 |
|
FY2016 |
$10.4 million |
|
FY2017 |
$34.5 million |
|
FY2018 |
$30 million |
Source: Compiled by CRS from appropriations bills.
Compiled by CRS from appropriations bills.
Eligible applicants for broadband grants include most state and local governments, federally
recognized tribes, nonprofits, and for-profit corporations.
Funded projects must serve a rural area where broadband service above a specified minimum
speed 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.17Federal
Register.17 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.
On March 15, 2018, RUS issued a Notice of Solicitation of Applications (NOSA) establishing an application window for FY2018 Community Connect grants through May 14, 2018.18 The NOSA established a new
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.
17
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
In February 2019, RUS issued a Funding Opportunity Announcement (FOA) establishing an
application window for FY2019 Community Connect grants through April 15, 2019.18 The FOA
set a minimum threshold for speeds constituting broadband service at 10 Mbps download and 1
Mbps upload for both fixed and mobile broadband. The minimum broadband speed that an
applicant must propose to deliver is 25 Mbps download, 3 Mbps upload for both fixed and mobile
service to the customer. Further The minimum grant is $100,000 and the maximum is $3 million. Further
information, including application materials and guidelines, is available at
http://www.rd.usda.gov/programs-services/community-connect-grants.
.
The 2018 farm bill (P.L. 115-334) ) codifies the Community Connect Grant Program and
authorizes the program at $50 million for each of fiscal years 2018 through 2023.
The Telecommunications Infrastructure Loan and Loan Guarantee Program19Program19 provides loans and
loan guarantees for the construction, maintenance, improvement, and expansion of telephone
service and broadband in rural areas. The program was first authorized in 1949 to finance rural
telephone service. Since 1995, RUS has required that networks funded by this program offer
broadband service as well.
Loans and loan guarantees are available only to rural areas and towns with a population of 5,000 or less. Also, the program cannot fund networks that duplicate similar services in the same area.
or less. Eligible areas are those without telecommunications facilities or areas where the applicant is the recognized telecommunications provider. Funded projects cannot duplicate existing services. The program is authorized to provide several different types of financing, including
20
The annual loan level for the Telecommunications Infrastructure Loan and Loan Guarantee
Program is $690 million. Currently, the 5% hardship loans are not offered—because of low
18
Department of Agriculture, Rural Utilities Service, Funding Opportunity Announcement, available at
https://www.rd.usda.gov/files/2019_CC_FOAfinal.pdf.
19 For more information, see http://www.rd.usda.gov/programs-services/telecommunications-infrastructure-loans-loanguarantees.
20 2017 USDA Budget Explanatory Notes for Committee on Appropriations, p. 31-2, available at
http://www.obpa.usda.gov/31rus2017notes.pdf.
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
interest rates, the Treasury and FFB loans can currently offer lower interest rates than the 5%
offered by hardship loans.
The Distance Learning and Telemedicine (DLT) Program was established by the 1996 farm bill—
the Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127). Though initially
providing both grants and loans, since FY2009 only DLT grants have been awarded by RUS.
DLT grants serve as initial capital assets for equipment and software that operate via
telecommunications to rural end-users of telemedicine and distance learning. DLT grants do not
support connectivity. Grant funds may be used for audio, video, and interactive video equipment;
terminal and data terminal equipment; computer hardware, network components, and software;
inside wiring and similar infrastructure; acquisition of instructional programming; broadband
facilities;2121 and technical assistance. Eligible applicants include most entities in rural areas that
provide education or health care through telecommunications, including most state and local
governmental entities, federally recognized tribes, nonprofits, for-profit businesses, and consortia
of eligible entities.
The 2018 farm bill (P.L. 115-334) reauthorizes the DLT program through FY2023 at $82 million
per year and sets aside 20% of DLT grant funding for applications related to substance use
disorder treatment services.
ReConnect Program
An Interagency Task Force on Agriculture and Rural Prosperity was created on April 25, 2017, by
Executive Order 13790 and was charged with identifying legislative, regulatory, and policy
changes to promote agriculture, economic development, job growth, infrastructure improvements,
technological innovation, energy security, and quality of life in rural America. The first
recommendation of the Task Force’s report to the President was to expand e-connectivity in rural
and tribal areas.22
To help implement this recommendation, the Administration requested $500 million in a
discretionary add-on to the FY2018 appropriation which would fund a combination grant/loan
program at USDA/RUS to deploy broadband in rural and tribal areas.
Section 779 of the Consolidated Appropriations Act, 2018 (P.L. 115-141) appropriated $600
million to RUS to "“conduct a new broadband loan and grant pilot program."” The law states that
the funding is to "“remain available until expended,"” and that
The Explanatory Statement that accompanied the FY2018 Consolidated Appropriations Act states
The agreement reiterates that funding should be prioritized to areas currently lacking access
to broadband service, and investments in broadband shall consider any technology that best
serves the goals of broadband expansion. Lastly, the agreement restates the importance of
coordination among federal agencies in expanding broadband deployment and adoption
and expects the Department to take caution to maximize these limited resources and not
overbuild or duplicate existing broadband capable infrastructure.
The Senate-passed version of H.R. 6147, which includes the FY2019 agriculture appropriations bill, includes a provision (Division C, §764) directing the Secretary of Agriculture, in administering the $600 million pilot loan and grant program, to ensure that applicants determined to be ineligible have a means of appealing or otherwise challenging that determination in a timely fashion. The legislation also directs the Secretary,
The Consolidated Appropriations Act, 2019 (P.L. 116-6) provides $550 million in FY2019 for the
pilot broadband loan and grant program, now called the Rural eConnectivity Pilot Program, or
ReConnect Rural Broadband Program. The $550 million includes $125 million in direct
appropriation, plus $425 million to be reprogrammed from the cushion of credit subaccount (7
U.S.C. 940c). Division B, Section 779 directs the Secretary of Agriculture to ensure that
applicants determined to be ineligible for the ReConnect Program have a means of appealing or
otherwise challenging that determination in a timely fashion. The law also directs the Secretary,
in determining whether an entity may overbuild or duplicate broadband expansion efforts made
by an entity that has received an RUS broadband loan, to not consider loans that were rescinded
or defaulted on, or loans the terms and conditions of which were not met, if the entity under
consideration has not previously defaulted on, or failed to meet the terms and conditions of, a
Rural Utilities Service loan or had a Rural Utilities Service loan rescinded.
or defaulted on.
H.R. 6147, as passed by the Senate, would appropriate $425 million to the e-connectivity broadband pilot loan and grant program in FY2019. H.R. 5961, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2019, as approved by the House Appropriations Committee, would provide $550 million.
On July 27, 2018, RUS released a notice of inquiry and request for comments on the $600 million "Broadband e-Connectivity Pilot Program." Specifically, RUS asked for comments (due September 10, 2018) on questions including the following:
On December 14, 2018, RUS released the Funding Opportunity Announcement (FOA) and
solicitation of applications for the new pilot broadband loan and grant program, which is named the "ReConnect Program."22ReConnect Program.23 As set forth in the statute, at least 90%
of the households to be served by a project receiving a loan or grant under the pilot program shall
be in a rural area without sufficient access to broadband at a minimum speed of 10 Mbps/1 Mbps.
RUS defines "“sufficient access to broadband"” as any rural area that has fixed, terrestrial
broadband service delivering at least 10 Mbps downstream and 1 Mbps upstream. Mobile and
satellite service will not be considered in making the determination that households in the
proposed funded service area do not have sufficient access to broadband.
Approximately $560
U.S. Department of Agriculture, Rural Utilities Service, “Broadband Pilot Program,” Federal Register, vol. 83, no.
240, December 14, 2018, pp. 64315-64325, available at https://www.govinfo.gov/content/pkg/FR-2018-12-14/pdf/
2018-27038.pdf.
23
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
With the government shutdown delaying the roll-out of the ReConnect Program, on February 25,
2019, RUS released an amendment and clarification to the December FOA, with revised
application deadlines.24
Approximately $600 million has been set aside for funding opportunities under the FOA, with
additional budget authority available for a reserve which may be used for additional loans or
grants. Award recipients must complete projects within five years. Entities eligible for awards are:
states or local governments, U.S. territories, an Indian tribe, nonprofit entities, for-profit
corporations, limited liability companies, and cooperative or mutual organizations.
The ReConnect Program consists of three funding This includes
telecommunications companies, rural electric cooperatives and utilities, internet service
providers, and municipalities.
Funds will be awarded for projects that have financially sustainable business models that will
bring broadband to rural homes, businesses, farms, ranches, and community facilities such as first
responders, health care facilities, and schools. The ReConnect Program consists of three funding
categories.
categories.
According to RUS, the online application portal will be open in late February. More information on the ReConnect Program is available at https://reconnect.usda.gov.
RUS has three programs that provide or have provided 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).23
25
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.24
26
The FCC, in an October 2011 decision, adopted an order that calls for the USF to be transformed,
in stages, over a multiyear 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
25
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.
26 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.
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
Fund (CAF), which includes the targeted Mobility Fund and new Remote Areas Fund, is
replacing it.25
27
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.2628 According to RUS, "“demand for RUS loans
dropped to roughly 37% of the total amount of loan funds appropriated by Congress in FY2012," ”
and "“[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.”29
Appropriations
The Rural Broadband Access Loan and Loan Guarantee Program, the Community Connect Grant
Program, the Telecommunications Infrastructure Loan and Loan Guarantee program, the Rural
Broadband ReConnect Program, and the Distance Learning and Telemedicine grant program are
funded through the annual Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies Appropriations Act. The appropriations provided to the broadband loan
programs are loan subsidies which support a significantly higher loan level. Table 3 shows recent
and proposed appropriations for the rural broadband programs in the Rural Utilities Service.
27
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.
28 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.
29 Letter from RUS to the FCC, February 13, 2013, available at https://prodnet.www.neca.org/publicationsdocs/wwpdf/
21513usda.pdf.
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
Table 3. Recent and Proposed Appropriations for RUS Broadband Programs
(dollars)
FY2017
(P.L. 11531)
FY2018
P.L. 115141)
FY2019
(Admin.
Request)
FY2019
P.L. 116-6
Rural Broadband Loans (farm bill)
4.5 million
(27 million
loan level)
5.0 million
(29.8 million
loan level)
4.5 million
(23.1 million
loan level)
5.8 million
(29.8 million
loan level)
Telecom Infrastructure Loans and
Loan Guarantees
3 million
(690 million
loan level)
0.863 million
(690 million
loan level)
0.863 million
(690 million
loan level)
1.725 million
(690 million
loan level)
Community Connect Grants
34.5 million
30 million
30 million
30 million
DLT Grants
26.6 million
49 milliona
23.6 million
47 millionb
ReConnect
Program
—
600 million
—
Source:implemented reductions in USF support and Inter-Carrier Compensation (ICC) payments."27
The Interagency Task Force on Agriculture and Rural Prosperity was created on April 25, 2017 by Executive Order 13790 and was charged with identifying legislative, regulatory, and policy changes to promote agriculture, economic development, job growth, infrastructure improvements, technological innovation, energy security, and quality of life in rural America. The first recommendation of the Task Force's report to the President is to expand e-connectivity in rural and tribal areas.28
To help implement this recommendation, the Administration requested $500 million in a discretionary add-on to the FY2018 appropriation which would fund a combination grant/loan program at USDA/RUS to deploy broadband in rural and tribal areas. The Administration also requested $50 million for the National Telecommunications and Information Administration (NTIA) at the Department of Commerce to conduct an assessment, within 12 months, of the current state of broadband access nationwide, including identification of existing infrastructure, gaps, and opportunities for more efficient deployment. This information is intended to help RUS and other federal agencies more effectively target funding to areas where it will have the greatest impact.
The Consolidated Appropriations Act, 2018 (P.L. 115-141) appropriated $600 million to RUS to "conduct a new broadband loan and grant pilot program." The act also appropriated $7.5 million to NTIA to update the national broadband availability map in coordination with the FCC.
The Rural Broadband Access Loan and Loan Guarantee Program, the Community Connect Grant Program, the Telecommunications Infrastructure Loan and Loan Guarantee program, and the Distance Learning and Telemedicine grant program are funded through the annual Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act. The appropriations provided to the broadband loan programs are loan subsidies which support a significantly higher loan level. Table 3 shows recent and proposed appropriations for the broadband loan program, the Community Connect grant program, the DLT grant program, and Telecommunications Infrastructure loans and loan guarantees.
The Telecommunications Loan program has, for the most part, been self-sustaining and set at an annual loan level of $690 million with typically little or no annual appropriation or budget authority required to subsidize the loans.
|
|
FY2019 (Admin. Request) |
FY2019 (H.R. 5961) |
FY2019 (H.R. 6147 as passed by Senate) |
|
|
Broadband Loans |
|
|
|
5.8 million (29.8 million loan level) |
5.8 million (29.8 million loan level) |
|
Telecom Infrastructure Loans |
|
|
|
1.125 million (690 million loan level) |
1.725 million (690 million loan level) |
|
Community Connect Grants |
34.5 million |
30 million |
30 million |
30 million |
30 million |
|
DLT Grants |
26.6 million |
|
23.6 million |
32 million |
30 million |
|
Broadband Loan and Grant Pilot Program |
— |
600 million |
— |
550 million |
425 million |
Source: CRS, based on congressional budget documents.
a. CRS, based on congressional budget documents.
a. Includes an additional $20 million to help address the opioid epidemic in rural America.
The Administration'
b. Includes an additional $16 million to help address the opioid epidemic in rural America.
c. Includes $125 million in appropriations plus $425 million to be reprogrammed from the cushion of credit
subaccount (7 U.S.C. 940c).
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."29”30 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 three 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.
30
2017 USDA Budget Explanatory Notes for Committee on Appropriations, p. 31-34, available at
http://www.obpa.usda.gov/31rus2017notes.pdf.
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
On April 19, 2016, the House Appropriations Committee approved the FY2017 Agriculture
Appropriations Act (H.R. 5054; ; H.Rept. 114-531). The bill provided $4.56 million to subsidize a
loan level of $20 million for the broadband loan program, and $33 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 underserved households and areas. 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 May 19, 2016, the Senate Appropriations Committee approved its version of the FY2017
Agriculture Appropriations Act (S. 2956; ; S.Rept. 114-259). The bill provided $4.5 million to
subsidize a loan level of $27.043 million for the broadband loan program, and $10.372 million for
the Community Connect grant program. Regarding the broadband loan program, the committee stated
stated
Recognizing the positive changes the Agricultural Act of 2014 made to the Rural
Broadband Access Loans and Loan Guarantees programs, the Committee continues to
encourage the Department to implement a comprehensive rural broadband strategy
including investment in advanced networks that will meet the needs of a 21st21st century
economy. However, the Committee is concerned that the Department of Agriculture has
not prioritized funding on cost-effectiveness on a per-household basis or on the
affordability of the service being provided to consumers as factors in the awards process.
The Committee believes that the best way to ensure that funds under this program are spent
to promote affordable broadband availability in those unserved and underserved areas,
where there is not otherwise a business case for private investment, is to prioritize awards
that reach as many unserved and underserved Americans as possible for each dollar spent
and to ensure that affordable service is provided by award recipients. As such, the
Committee directs the Department of Agriculture to develop criteria for the consideration
of awards under this program that include the cost-effectiveness of award proposals on a
per-household basis and the affordability of broadband service to potential subscribers.
Regarding the Community Connect Program'’s Minimum Broadband Service benchmark, the
committee expressed the concern that the program is not in step with current needs and industry
standards, and encouraged USDA to increase the program'’s Minimum Broadband Service
definition, which will enable more rural communities to be eligible for Community Connect
grants.
The Consolidated Appropriations Act, 2017 (P.L. 115-31) provided $4.5 million to subsidize a
broadband loan level of $27.043 million, $34.5 million to Community Connect broadband grants,
and $26.6 million for DLT grants. The Explanatory Statement accompanying P.L. 115-31 directed
that $1.6 million of the funds for DLT grants be used to provide for upgrades to the equipment
and facilities of ambulances (and other emergency transportation vehicles) and to medical
facilities, such as hospitals and community health centers.
For the Telecommunications Infrastructure Loan and Loan Guarantee program, the
Administration requested a loan level of $345 million in direct Treasury loans and $345 million in
FFB loans. The Administration requested an appropriation (budget authority) of $3 million to
subsidize the Treasury loan level, and $11 million in budget authority to subsidize modification of
existing Treasury loans (thereby offering current borrowers reduced interest rates).
Both the House and Senate Appropriations Committees (H.R. 5054//H.Rept. 114-531; ; S. 2956/ /
S.Rept. 114-259) approved the Administration-requested FY2017 loan level ($345 million for
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
Treasury loans and $345 million for FFB loans) and approved the budget authority request of $3
million to subsidize the Treasury loan level. However, neither the House nor Senate
Appropriations Committees approved the Administration'’s request for $11 million to support loan
modifications.
The Consolidated Appropriations Act, 2017 (P.L. 115-31) provided an appropriation of $3.071
million for direct treasury loans to support a total loan level of $690 million for the
Telecommunications Infrastructure Loan Program.
FY2018
The Administration'’s FY2018 budget proposal requested the following for RUS broadband
programs:
”33
On July 12, 2017, the House Appropriations Committee approved the Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2018 (
(H.R. 3268; ; H.Rept. 115-232). The bill provided $4.521 million to subsidize a loan level of
$26.991 million for the broadband loan program. Funding provided for the broadband loan
program was intended to promote availability in those areas where there is not otherwise a
business case for private investment in a broadband network. The committee directed RUS to
focus expenditures on projects that bring broadband service to underserved households and areas.
The House bill provided $122.692 million for the new Rural Economic Infrastructure Account
(24% below the Administration request), which would include both Community Connect and
DLT grants, along with Community Facilities grants and Home Repair grants. The bill included
language requiring at least 15% of the account resources ($18.4 million) be allocated to each
program area. The committee noted that tribal communities continue to struggle with gaining
access to broadband service, and encouraged the Secretary to provide a report that identifies the
31
2018 USDA Budget Explanatory Notes for Committee on Appropriations, Rural Utilities Service, p. 31-34, available
at https://www.obpa.usda.gov/31rusexnotes2018.pdf.
32 Ibid., p. 31-34.
33 2018 USDA Budget Explanatory Notes for Committee on Appropriations, Rural Development, p. 28-18, available at
https://www.obpa.usda.gov/28rdexnotes2018.pdf.
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
specific challenges Indian Tribal Organizations (ITOs) have in gaining access to broadband
service and provide a plan for addressing these challenges, including how the Community
Connect program can assist ITOs.
Regarding telecommunications loans, the House matched the Administration proposal, providing
a loan level of $690 million ($345 million in direct Treasury loans and $345 million in FFB
loans) with an appropriation of $0.863 million to subsidize direct Treasury loans.
Additionally, the House Appropriations Committee report directed USDA to continue
coordinating with the FCC, NTIA, and other related federal agencies to ensure that policies tied
to one federal program do not undermine the objectives and functionality of another. The
committee directed the department to prepare a report, in collaboration with the FCC and DOC,
detailing areas of responsibility toward addressing rural broadband issues. The report shall
include, but not be limited to, how the programs work complimentarily to one another; how they
address broadband issues in unserved and underserved areas, including tribal lands; identify
barriers to infrastructure investment in rural areas and tribal lands; data speeds which fixed,
wireless, and mobile broadband users in rural areas and tribal lands experience; and cost
estimates to increase speeds to 25 Mbps in unserved communities and communities currently
being served by speeds less than 25 Mbps.
On July 20, 2017, the Senate Appropriations Committee approved its version of the FY2018
agriculture appropriations bill (S. 1603; ; S.Rept. 115-131). The bill provided $4.53 million to
subsidize a loan level of $27.043 million for the broadband loan program, $30 million for the
Community Connect grant program, and $26.6 million for DLT grants. Unlike the House and the
Administration request, the committee did not include funding for Rural Economic Infrastructure
grants. For telecommunications loans, the Senate matched the House bill and the Administration
proposal, providing a loan level of $690 million ($345 million in direct Treasury loans and $345
million in FFB loans) with an appropriation of $0.863 million to subsidize direct Treasury loans.
Regarding the broadband loan program, the committee encouraged RUS to focus expenditures on
projects that bring broadband service to currently unserved households, and directed RUS to
report back to the committee on administrative efforts to eliminate duplicative or overbuilding of
broadband technology. The committee also recommended that USDA explore a pilot grant
program to demonstrate the use of multistrand fiber-optic cable that exists as part of electrical
transmission infrastructure to provide state-of-the-art broadband services to currently underserved
rural schools and medical centers within a mile of the existing cable.
The Consolidated Appropriations Act, 2018 (P.L. 115-141) provided $5 million to subsidize a
broadband loan level of $29.851 million, $30 million to Community Connect broadband grants,
and $49 million for DLT grants, which included an additional $20 million to address the opioid
epidemic in rural America. P.L. 115-141 also appropriated $600 million to RUS to "“conduct a
new broadband loan and grant pilot program."
”
FY2019
The Administration'’s FY2019 budget proposal requested the following for RUS broadband
programs:
37
On May 16, 2018, the House Appropriations Committee approved the FY2019 Agriculture
Appropriations bill (H.R. 5961; ; H.Rept. 115-706). The bill would provide the following:
).
In the committee report, the committee expressed its view that "“it is important for Departments to
avoid efforts that could duplicate existing networks built by private investment or those built
leveraging and utilizing other federal programs."” As such, the committee "“directs the Secretary of
Agriculture to coordinate with the Federal Communications Commission (FCC) and the National
Telecommunications Information Administration (NTIA) to ensure wherever possible that
broadband loans and grants issued under the pilot program are being targeted to areas that are
currently unserved."” The committee directed USDA to use the NTIA'’s assessment of the current
state of broadband access nationwide, and to explore using all broadband technologies, including,
but not limited to, fiber, cable modem, fixed wireless, and television white space.
The committee also noted that tribal communities continue to struggle with gaining access to
broadband service, and encouraged the Secretary to provide a report that identifies the specific
challenges Indian Tribal Organizations (ITOs) have in gaining access to broadband service and
provide a plan for addressing these challenges, including how the Community Connect program
can assist ITOs.
34
2019 USDA Budget Explanatory Notes for Committee on Appropriations, Rural Utilities Service, p. 31-29, available
at https://www.obpa.usda.gov/FY19explan_notes.html.
35 Ibid., p. 31-21.
36 Ibid., p. 31-30.
37 Ibid., p. 31-29.
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
On May 24, 2018, the Senate Appropriations Committee approved its FY2019 Agriculture
Appropriations bill (S. 2976; ; S.Rept. 115-259). The bill would provide the following:
The committee encouraged RUS to focus expenditures on projects that bring broadband service to
currently unserved households, and directed RUS to report back to the committee on
administrative efforts to eliminate duplicative or overbuilding of broadband technology. The
committee also recommended that USDA explore a pilot grant program to demonstrate the use of
multistrand fiber-optic cable that exists as part of electrical transmission infrastructure to provide
state-of-the-art broadband services to currently underserved rural schools and medical centers
within a mile of the existing cable; encouraged RUS to coordinate with the FCC and other
relevant federal entities when making determinations of sufficient broadband access, to ensure the
most accurate and up-to-date broadband coverage data are used, while being cognizant of
potential problems of overbuilding; encouraged the Secretary to utilize appropriate grant program
funds to locate buried, antiquated infrastructure facilities prior to construction of new utilities
infrastructure financed by RUS; and urged RUS to ensure the agency'’s criteria and application
processes provide for fair consideration of open access projects by accounting for the unique
structures and opportunities such projects present in advancing broadband deployment in
unserved and underserved communities.
The Senate agriculture appropriations bill was incorporated
On February 15, 2019, the Consolidated Appropriations Act, 2019 was signed into law (P.L. 1166). The FY2019 appropriations and levels are:
Rural Broadband Access Loans—$5.83 million in budget authority to subsidize a
broadband loan level of $29.851 million.
Telecommunications Infrastructure Loans and Loan Guarantees—$1.725 million
in budget authority to subsidize direct Treasury loans set at a level of $345
million. Along with a loan level of $345 million for FFB guaranteed loans, the
total loan level is $690 million.
Community Connect Grants—$30 million.
Distance Learning and Telemedicine Grants—$47 million (including $16 million
to address the opioid epidemic in rural America).
ReConnect Program—$550 million ($125 million direct appropriation plus $425
million to be reprogrammed from the cushion of credit account.
P.L. 116-6 also directs USDA rural development programs, including the broadband programs, to
allocate (to the maximum extent feasible) at least 10% of funds to projects in persistent poverty
counties.
The conference report (H.Rept. 116-9) contains language directing USDA to avoid efforts that
could duplicate existing networks built by private investment or those built leveraging and
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
utilizing other federal programs, and directs the Secretary to coordinate with the FCC and NTIA
to ensure wherever possible that broadband loans and grants are targeted to areas that are
currently unserved. In particular, the conference agreement directs USDA to use the NTIA’s
assessment of the current state of broadband access nationwide. USDA is also directed, in
implementing a strategy for broadband deployment to unserved communities, to explore using all
technologies, including but not limited to, fiber, cable modem, fixed wireless, and television
white space.
Past 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.
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 start-up 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.
into H.R. 6147 (a "minibus" appropriations bill) and passed by the Senate on August 1, 2018.
RUS broadband programs have been awarding funds to entities serving rural communities since FY2001. Since their inception, a number of criticisms have emerged.
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).37 According to RUS officials, 28% of available loan money was awarded in 2004, and only 5% of available loan money was awarded in 2005.38
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 start-up 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.
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.39
38
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
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.
38
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have dropped.39have dropped.40 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 2003.41
40
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."42”41 Specifically the IG report found that the RUS definition of rural area
has been "“too broad to distinguish usefully between suburban and rural communities,"43”42 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.44
43
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.4544 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.46
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."47”46 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
39
Rural Utilities Service, private communication, January 18, 2007.
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.
41 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.
42 Ibid., p. 6.
43 Ibid., p. 8.
44 Martinez, Michael, “Broadband: Loan Fund’s Strict Rules Foil Small Municipalities,” National Journal’s
Technology Daily, August 23, 2005.
45 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.
46 Ibid., p. 13.
40
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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).47existing service).48 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."49”48 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.50
49
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."51”50 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.5251 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."53”52 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
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.54
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."55
”54
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."56 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 two or more existing providers, and 27%
47
Ibid., p. 14.
Ibid., p. 15.
49 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.
50 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.
51 Testimony of Tom Simmons, Vice President for Public Policy, Midcontinent Communications, before Senate
Committee on Agriculture, Nutrition, and Forestry, May 17, 2006.
52 Audit Report: Rural Utilities Service Broadband Grant and Loan Programs, p. 17.
53 Rural Utilities Service, private communication, January 18, 2007.
54 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.
48
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The IG report also found that since 2005 “RUS has continued providing loans to providers in
markets where there is already competing service.”55 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 two or more existing providers, and 27%
had three or more existing providers.56
had three or more existing providers.57
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."58”57 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 nonrural 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 then-RUS Administrator Jonathan Adelstein, "this “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."59
In May 2014, GAO released its report, USDA Should Evaluate the Performance of the Rural
Broadband Loan Program.60.59 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
55
Ibid., p. 5.
Ibid., pp. 5-6.
57 Ibid., p. 14.
58 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.
59 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.
56
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loans that may be at risk of rescission or default; and align performance goals under the "enhance “enhance
rural prosperity"” strategic objective in the Annual Performance Report to the broadband loan program'
program’s purpose, to the extent feasible.61
The Rural Broadband Access Loan and Loan Guarantee program is authorized by Section 601 of
the Rural Electrification Act of 1936. Since the program was established in the 2002 farm bill, it
has been subsequently reauthorized and modified by the 2008 and 2014 farm bills. The 2018 farm
bill seeks to again reauthorize and modify the program, as well as addressing other RUS
broadband programs and issues.
The 110th
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.
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-handonhand) 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.
”
The definition of which communities qualify as "rural"“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
60
Ibid., pp. 31-32.
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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 policymakers in determining how to target rural communities for broadband
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 toward larger regional and national proposals, covering hundreds or even more
than 1,000 communities.6261 The larger the scope of coverage, the greater the complexity of the
loan application and the larger the possible benefits and risks to taxpayers.
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.6362 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
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%
61
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.”
62
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broadband over powerlines (BPL).63broadband over powerlines (BPL).64 No funding has been provided for projects utilizing satellite
broadband.65
64
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-of-dataofdata 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.
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.
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,
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Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
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. 110-246.66.65 While the rule was
immediately effective, RUS accepted public comment before ultimately releasing a final rule.
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.67.66 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.
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 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 included 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 include a Senate bill proposal (S. 954) to create a new grant component to the existing
broadband loan and loan guarantee program, nor did the conference agreement adopt the Senate bill'
bill’s broadening of the definition for eligible rural areas.
Specifically, Section 6104 of P.L. 113-79 made the following changes to the Rural Broadband
Access Loan and Loan Guarantee program:
In addition, Section 6105 authorized a new Rural Gigabit Network Pilot Program. Specifically,
USDA was 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 was authorized at $10 million per year for the years FY2014 through
FY2018. However, no funding was appropriated for this pilot program over that period, and the
Rural Gigabit Network Pilot Program was not implemented.
On July 30, 2015, the RUS published in the Federal Register the interim rule (7 C.F.R. part 1738)
implementing the Rural Broadband Access Loan and Loan Guarantee Program as reauthorized by
the February 7, 2014 enactment of the Agricultural Act of 2014 (P.L. 113-79).68).67 Publication of the
interim rule allowed the program to go forward, initially with two application periods per year.
The interim rule was made final on June 9, 2016.
With the 2014 farm bill expiring on September 30, 2018, the 115th115th Congress considered
reauthorization of the RUS broadband loan and loan guarantee program and other broadband-relatedbroadbandrelated provisions in the 2018 farm bill.
House
On April 12, 2018, H.R. 2, the Agriculture and Nutrition Act of 2018, was introduced by
Representative Conaway. Subtitle B of Title VI ("“Connecting Rural Americans to High Speed Broadband"
Broadband”) would reauthorize the Rural Broadband Access Loan and Loan Guarantee Program
and make a number of changes to the RUS rural broadband programs.6968 On April 18, 2018, the
House Agriculture Committee approved H.R. 2 ( (H.Rept. 115-661) with amendments. On June 21,
2018, the House passed H.R. 2.
H.R. 2
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 https://www.gpo.gov/fdsys/pkg/FR-2015-07-30/pdf/
2015-18624.pdf.
68 See House Committee on Agriculture, “Section-by-Section, H.R. 2, the Agriculture and Nutrition Act of 2018,” pp.
41-43, available at https://agriculture.house.gov/uploadedfiles/
agriculture_and_nutrition_act_of_2018_section_by_section.pdf.
67
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Senate
On June 11, 2018, the 2018 Senate farm bill, S. 3042, was introduced by Senator Roberts. The
Agriculture Improvement Act of 2018 was approved on June 13, 2018 by the Committee on
Agriculture, Nutrition, and Forestry and ordered to be reported with an amendment in the nature
of a substitute favorably. On June 28, 2018, the Senate passed its version of H.R. 2.
The following are some key differences between the House and Senate bills with respect to the
rural broadband loan and loan guarantee program.
Eligible Projects
Under current law, projects eligible for rural broadband loans and loan guarantees can only (with
some exceptions) serve areas in which 15% or more of households are unserved or have service
levels below the minimum acceptable level of broadband service. Additionally under current law,
an eligible service area can have no more than two incumbent broadband service providers. The
House bill does not change the current service area eligibility threshold for rural broadband loans
and loan guarantees.
On the other hand, the Senate bill would require that rural broadband loans, loan guarantees, and
grants can only serve areas in which 90% or more of households are unserved or have service
levels below the minimum acceptable level of broadband service. The Senate bill also provides
that an eligible service area can have no more than one incumbent broadband service provider.
Grant Authority
Both the House and Senate bills add a grant component to the current farm bill broadband loan
and loan guarantee program. In the House bill, grants are only available in combination with
associated loans under the rural broadband, electric infrastructure, and telecommunications
infrastructure loan and loan guarantee programs. Additionally, project areas must serve hard-to-reachtoreach communities—specifically areas with a density of less than 12 service points per road mile
and where no incumbent provider delivers fixed terrestrial broadband service at or above the
minimum broadband speed. The maximum federal share of a total project cost varies by the
density of the project service area, ranging from a 25% to 75% federal share.
In the Senate bill, grants are subject to the same service area eligibility criteria as broadband loans
and loan guarantees (no less than 90% unserved, no more than 1 incumbent). The maximum
federal share for a grant is 50%, although USDA can adjust the federal share up to 75% if the
Secretary determines that the project would serve particularly remote, unserved, and low-income
areas.
Both the House and Senate bills set the minimum broadband service speed at 25 Mbps
(download)/3 Mbps (upload), to be reviewed by the Secretary at least once every two years.
Additionally, the House bill requires USDA to establish projections of minimum acceptable
standards of broadband service for 5, 10, 15, 20, and 30 years into the future. Unless cost
prohibitive, projects eligible for a rural broadband loan or loan guarantee must provide broadband
service at the minimum level, and must be determined capable of meeting future minimum speed
standards over the life of the loan or loan guarantee.
The House bill authorizes RUS to make rural broadband loans or loan guarantees to middle mile
infrastructure projects, which are defined as any broadband infrastructure that does not connect
directly to end user locations (including anchor institutions) and may include interoffice transport,
backhaul, internet connectivity, data centers, or special access transport to rural areas. The Senate
bill does not contain a middle mile infrastructure provision.
Reauthorization Levels
For rural broadband loans and loan guarantees, the House bill sets an authorization level of $150
million for each of fiscal years 2019 through 2023. Additionally, the House bill provides $350
million for each of fiscal years 2019 to 2023 for grants to be available in combination with
associated loans and loan guarantees.
The Senate bill sets an authorization level for broadband loans, loan guarantees, and grants of
$150 million for each of fiscal years 2019 through 2023.
On December 10, 2018, the Conference Report (H.Rept. 115-1072) accompanying H.R. 2, the
Agriculture Improvement Act of 2018, was filed. The Conference Report was agreed to in the
House and Senate on December 11 and December 12 respectively. On December 20, 2018, the
President signed the bill (P.L. 115-334).
). The following summarizes the major provisions relevant to RUS broadband programs.
Program
Adds a grant component to the existing program, which is now authorized to provide grants,
loans, loan guarantees, and loan/grant combinations.
Authorizes $10 million for each of fiscal years 2018 through 2023 for grants, loans, and loan
guarantees towards middle mile infrastructure projects. Middle mile infrastructure connects
underserved rural areas to the internet backbone; it does not connect directly to end-user
locations. A project is eligible if at least 75% of the interconnection points serve eligible rural
areas. A grant cannot exceed 20% of the total project cost.
Renames the Rural Gigabit Network Pilot Program (which was authorized in the 2014 farm bill
but never funded through appropriations) as the Innovative Broadband Advancement Program,
which is authorized to provide a grant, a loan, or both to an eligible entity to demonstrate
innovative broadband technologies or methods of broadband deployment that significantly
decrease the cost of deployment and provide substantially faster broadband speeds than are
available in a rural area. The program is authorized at $10 million for each of fiscal years 2018
through 2023.
Codifies the existing Community Connect Grant Program and authorizes the program at $50
million for each of fiscal years 2018 through 2023. Defines an eligible service area as having
broadband service capacity less than speeds of 10 Mbps download and 1 Mbps upload.
Requires the Secretary, beginning on October 1, 2020, to consider any portion of a service
territory subject to an outstanding grant agreement as unserved for the purposes of broadband
loan programs if broadband service is not provided at a minimum of 10 Mbps/1 Mbps, unless the
broadband provider has begun or already constructed broadband facilities in that area which
would meet the minimum acceptable broadband service standard.
Requires the Secretary to establish written procedures for all broadband programs to recover
funds from loan and grant defaults, deobligate awards that demonstrate an insufficient level of
performance or fraudulent spending, award those funds on a competitive basis to new or existing
applicants, and minimize overlap among programs. The Secretary may establish a deferral period
of not shorter than the buildout period established for the project in order to support the financial
feasibility and long-term sustainability of the project.
The Secretary may obligate, but not disperse, funds before the completion of otherwise required
environmental, historical, or other types of reviews if the Secretary determines that a subsequent
site-specific review shall be adequate and easily accomplished for the location of towers, poles, or
other broadband facilities in the service area of the borrower without compromising the project or
the required reviews.
The proceeds of any loan or loan guarantee may be used by the recipient for the purpose of
refinancing an outstanding obligation on another telecommunications loan.
Allows a recipient of grants, loans, or loan guarantees provided by the Office of Rural
Development to use not more than 10% of the amount for rural broadband infrastructure projects,
including both retail and nonretail activities, except for a recipient who is seeking to provide retail
broadband service in any area where such service is available at the minimum broadband speeds.
Additionally allows a recipient of electric grants, loans, or loan guarantees to set aside not more
than 10% of the amount for retail broadband service, for use only in an area that is not being
provided with the minimum acceptable level of broadband service. The funding cannot result in
competitive harm to any existing grant, loan, or loan guarantee under the Rural Electrification Act
of 1936.
Clarifies that the Secretary, through the RUS telephone loan program, may refinance loans of
persons furnishing telephone service in rural areas, including indebtedness of recipients on
another telecommunications loan made under the Rural Electrification Act. Also strikes the
current law limitation that the refinancing may not constitute more than 40% of the loan.
Provides that for one year after enactment, the Secretary shall use the previously existing rules
and regulations for the broadband loan and Community Connect grant program until a final rule
is issued.
Establishes an interagency Rural Broadband Integration Working Group that shall consult with a
wide spectrum of stakeholders to identify, assess, and determine possible actions relating to
barriers and opportunities for broadband deployment in rural areas. Not later than 60 days after
enactment, the Working Group shall publish a comprehensive survey of federal programs that
currently support or could reasonably be modified to support broadband deployment and
adoption; and all federal agency policies and rules with the direct or indirect effect of facilitating
or regulating investment in, or deployment of, wired and wireless broadband networks. The
Working Group will submit to the President a list of actions that federal agencies can take to
support broadband deployment and adoption, including timelines to complete a list of priority
actions and rulemakings.
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Other Legislation in the 115th Congress
Aside from the 2018 farm bills and annual appropriations legislation, the following bills were
introduced into the 115th115th Congress seeking to impact the RUS broadband programs:
Table A-1. Rural Development Telecom Awards, FY2009-FY2016
($ millions)
2009-2014
Amount
2015
# Awards
Amount
2016
# Awards
Amount
TOTAL
# Awards
Amount
# Awards
AL
60.4
19
1.3
3
0.45
2
62.1
24
AK
149.4
40
3.8
7
1.4
4
154.6
51
AZ
46.4
25
0
0
0.21
1
46.6
26
AR
279.8
45
25.7
3
10.3
7
315.8
55
CA
46.2
27
0.46
2
2.1
7
48.7
36
CO
85.8
29
0.26
1
0.18
1
86.2
31
FL
49.4
6
0.35
2
0
0
49.8
8
GA
112.4
20
0.90
2
1.5
6
114.8
28
HI
1.7
5
0
0
0
0
1.7
5
ID
51.3
26
0.48
1
12.7
1
64.5
28
IL
155.8
33
0.15
1
0.62
2
156.6
36
IN
128.2
14
0
0
0.55
2
128.7
16
IA
290.2
53
40.9
6
15.2
2
346.3
61
KS
373.1
47
0.14
1
26.5
3
399.7
51
KY
321.8
42
0.56
3
0.97
3
323.4
48
LA
54.8
16
0
0
1.4
3
56.3
19
ME
23.4
44
2.7
7
1.6
5
27.8
56
MD
74.4
31
0.10
1
0
0
74.5
32
MA
0.50
1
0
0
0.64
2
1.1
3
MI
126.8
24
0.98
3
0.54
2
128.3
29
MN
327.4
63
30.9
4
7.8
7
366.1
74
MS
50.3
25
1.7
3
2.0
4
53.9
32
MO
214.8
56
0.67
3
0
0
215.4
59
MT
359.8
25
30.3
3
30.7
5
420.8
33
NE
153.2
34
4.2
2
0.31
2
157.7
38
NV
20.1
10
0.38
1
1.4
3
21.9
14
NH
3.9
8
0.92
2
5.5
1
10.3
11
NJ
0.32
2
0
0
0
0
0.32
2
NM
191.5
34
5.8
2
14.4
3
211.7
39
NY
64.8
42
0.48
2
0.22
1
65.5
45
NC
153.6
30
0
0
1.3
5
154.8
35
ND
376.6
39
60.3
5
55.3
2
492.3
46
Congressional Research Service
40
Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service
2009-2014
2015
2016
TOTAL
OH
46.0
33
0.25
1
0.39
2
46.7
36
OK
308.6
74
22.9
4
4.5
6
336.1
84
OR
75.3
34
0.20
1
0.99
1
75.6
36
PA
4.4
18
0
0
1.0
4
5.4
22
PR
1.7
4
0
0
0
0
1.7
4
SC
205.4
21
14.0
6
1.3
4
220.7
31
SD
133.5
25
1.1
4
17.6
5
152.2
34
TN
235.9
38
0.63
2
3.5
8
240.1
48
TX
326.5
61
13.4
1
14.7
2
354.6
64
UT
22.2
15
0.33
2
0.30
1
22.8
18
VT
124.8
13
0
0
0
0
124.8
13
VA
103.8
28
3.4
2
2.4
3
109.6
33
WA
149.4
32
0.38
1
0.46
1
150.2
34
WV
48.3
19
0
0
1.2
3
49.5
22
WI
336.9
72
9.3
7
1.1
4
347.3
83
WY
54.1
10
0
0
0
0
54.1
10
VI
0.75
1
0
0
0
0
0.75
1
Western
Pacific
122.8
7
0.49
1
0
0
123.3
8
TOTAL
6,648.7
1,420
280.9
102
244.2
130
7,174.0
1,652
Source: USDA, Rural Development, 2016 Progress Report.
Notes: Includes four RUS loan and grant programs: Rural Broadband Loan and Loan Guarantee Program,
Telecommunications Infrastructure Loan and Loan Guarantee Program, Community Connect Grant Program,
and Distance Learning and Telemedicine Grant Program. Data for 2009-2014 includes the 2009-2010 Broadband
Initiatives Program funds appropriated by the American Recovery and Reinvestment Act (ARRA). According to
the ($ millions)
|
2009-2014 |
2015 |
2016 |
TOTAL |
|||||||||||||||||
|
Amount |
# Awards |
Amount |
# Awards |
Amount |
# Awards |
Amount |
# Awards |
|||||||||||||
|
AL |
|
|
|
|
|
|
|
| ||||||||||||
|
AK |
|
|
|
|
|
|
|
| ||||||||||||
|
AZ |
|
|
|
|
|
|
|
| ||||||||||||
|
AR |
|
|
|
|
|
|
|
| ||||||||||||
|
CA |
|
|
|
|
|
|
|
| ||||||||||||
|
CO |
|
|
|
|
|
|
|
| ||||||||||||
|
FL |
|
|
|
|
|
|
|
| ||||||||||||
|
GA |
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|
|
|
|
|
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| ||||||||||||
|
HI |
|
|
|
|
|
|
|
| ||||||||||||
|
ID |
|
|
|
|
|
|
|
| ||||||||||||
|
IL |
|
|
|
|
|
|
|
| ||||||||||||
|
IN |
|
|
|
|
|
|
|
| ||||||||||||
|
IA |
|
|
|
|
|
|
|
| ||||||||||||
|
KS |
|
|
|
|
|
|
|
| ||||||||||||
|
KY |
|
|
|
|
|
|
|
| ||||||||||||
|
LA |
|
|
|
|
|
|
|
| ||||||||||||
|
ME |
|
|
|
|
|
|
|
| ||||||||||||
|
MD |
|
|
|
|
|
|
|
| ||||||||||||
|
MA |
|
|
|
|
|
|
|
| ||||||||||||
|
MI |
|
|
|
|
|
|
|
| ||||||||||||
|
MN |
|
|
|
|
|
|
|
| ||||||||||||
|
MS |
|
|
|
|
|
|
|
| ||||||||||||
|
MO |
|
|
|
|
|
|
|
| ||||||||||||
|
MT |
|
|
|
|
|
|
|
| ||||||||||||
|
NE |
|
|
|
|
|
|
|
| ||||||||||||
|
NV |
|
|
|
|
|
|
|
| ||||||||||||
|
NH |
|
|
|
|
|
|
|
| ||||||||||||
|
NJ |
|
|
|
|
|
|
|
| ||||||||||||
|
NM |
|
|
|
|
|
|
|
| ||||||||||||
|
NY |
|
|
|
|
|
|
|
| ||||||||||||
|
NC |
|
|
|
|
|
|
|
| ||||||||||||
|
ND |
|
|
|
|
|
|
|
| ||||||||||||
|
OH |
|
|
|
|
|
|
|
| ||||||||||||
|
OK |
|
|
|
|
|
|
|
| ||||||||||||
|
OR |
|
|
|
|
|
|
|
| ||||||||||||
|
PA |
|
|
|
|
|
|
|
| ||||||||||||
|
PR |
|
|
|
|
|
|
|
| ||||||||||||
|
SC |
|
|
|
|
|
|
|
| ||||||||||||
|
SD |
|
|
|
|
|
|
|
| ||||||||||||
|
TN |
|
|
|
|
|
|
|
| ||||||||||||
|
TX |
|
|
|
|
|
|
|
| ||||||||||||
|
UT |
|
|
|
|
|
|
|
| ||||||||||||
|
VT |
|
|
|
|
|
|
|
| ||||||||||||
|
VA |
|
|
|
|
|
|
|
| ||||||||||||
|
WA |
|
|
|
|
|
|
|
| ||||||||||||
|
WV |
|
|
|
|
|
|
|
| ||||||||||||
|
WI |
|
|
|
|
|
|
|
| ||||||||||||
|
WY |
|
|
|
|
|
|
|
| ||||||||||||
|
VI |
|
|
|
|
|
|
|
| ||||||||||||
|
Western Pacific |
|
|
|
|
|
|
|
| ||||||||||||
|
TOTAL |
|
|
|
|
|
|
|
| ||||||||||||
Source: USDA, Rural Development, 2016 Progress Report.
Notes: Includes the four RUS loan and grant programs: Rural Broadband Loan and Loan Guarantee Program, Telecommunications Infrastructure Loan and Loan Guarantee Program, Community Connect Grant Program, and Distance Learning and Telemedicine Grant Program. Data for 2009-2014 includes the 2009-2010 Broadband Initiatives Program funds appropriated by the American Recovery and Reinvestment Act (ARRA). According to the Rural Development 2017 Performance Report, RUS awarded 107 telecom loans and grants in FY2017, totaling
$502 million. The 2017 Performance Report does not break down awards by state.
Author Contact Information
| 1. |
Hanns Kuttner, Hudson Institute, The Economic Impact of Rural Broadband, April 2016, available at https://s3.amazonaws.com/media.hudson.org/files/publications/20160419KuttnerTheEconomicImpactofRuralBroadband.pdf. |
| 2. |
See for example, National Exchange Carrier Association (NECA), Trends: A Report on Rural Telecom Technology, 18 pages, December 2015, available at https://www.neca.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=12331&libID=12351. |
| 3. |
Draft First Consolidated Communications Marketplace Report, GN Docket No. 18-231, released November 21, 2018, p. 135, available at https://www.fcc.gov/document/adopting-first-consolidated-communications-marketplace-report. |
| 4. |
Draft First Communications Market Report, p. 138. |
| 5. |
|
| 6. |
U.S. Department of Commerce, National Telecommunications and Information Administration, Digital Nation Data Explorer, June 6, 2018, available at https://www.ntia.doc.gov/data/digital-nation-data-explorer#sel=internetUser&demo=metro&pc=prop&disp=chart. |
| 7. |
U.S. Department of Commerce, National Telecommunications and Information Administration, "The State of the Urban/Rural Digital Divide," August 10, 2016, available at https://www.ntia.doc.gov/blog/2016/state-urbanrural-digital-divide. |
| 8. |
See Table 2 in CRS In Focus IF10441, Broadband Deployment: Status and Federal Programs, by [author name scrubbed]. |
| 9. |
Government Accountability Office, Projects and Policies Related to Deploying Broadband in Unserved and Underserved Areas, GAO-14-409, April 2014, p. 9, available at http://www.gao.gov/assets/670/662711.pdf. |
| 10. |
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. |
| 11. |
Rural Utilities Service, USDA, "Broadband Pilot Loan Program," Federal Register, Vol. 67, No. 15, January 23, 2002, p. 3140. |
| 12. |
Rural Utilities Service, USDA, "Broadband Pilot Grant Program," Federal Register, Vol. 67, No. 130, July 8, 2002, p. 45080. |
| 13. |
Government Accountability Office, Rural Broadband Deployment: Improved Consistency with Leading Practices Could Enhance Management of Loan and Grant Program, GAO-17-301, April 2017, p. 2, available at https://www.gao.gov/assets/690/684093.pdf. |
| 14. |
Title VI of the Rural Electrification Act of 1936 (7 U.S.C. 950bb). |
| 15. |
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 https://www.gpo.gov/fdsys/pkg/FR-2015-07-30/pdf/2015-18624.pdf. |
| 16. |
Department of Agriculture, Rural Utilities Service, "Rural Broadband Access Loan and Loan Guarantees Program," Notice of Solicitation of Applications (NOSA), 83 Federal Register 13225-13226, March 28, 2018, available at https://www.gpo.gov/fdsys/pkg/FR-2018-03-28/pdf/2018-06175.pdf. |
| 17. |
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. |
| 18. |
Department of Agriculture, Rural Utilities Service, "Announcement of Grant Application Deadlines and Funding Levels," Notice of Solicitation of Applications (NOSA), 83 Federal Register 11494-11499, March 15, 2018, available at https://www.gpo.gov/fdsys/pkg/FR-2018-03-15/pdf/2018-05200.pdf. |
| 19. |
For more information, see http://www.rd.usda.gov/programs-services/telecommunications-infrastructure-loans-loan-guarantees. |
| 20. |
2017 USDA Budget Explanatory Notes for Committee on Appropriations, p. 31-2, available at http://www.obpa.usda.gov/31rus2017notes.pdf. |
| 21. |
As of FY2018, purchasing and installing broadband facilities has been added to the approved grant purposes. This purpose is limited to a maximum of 20% of the requested grant amount and must be used for providing distance learning or telemedicine services. The awardee must own the final broadband asset in order for funding to be approved. See USDA Rural Development, Distance Learning and Telemedicine Grant Program Application Guide Fiscal Year 2018, p. 7, available at https://www.rd.usda.gov/files/2018-DLT_App-Guide_final.pdf. |
| 22. |
U.S. Department of Agriculture, Rural Utilities Service, "Broadband Pilot Program," Federal Register, vol. 83, no. 240, December 14, 2018, pp. 64315-64325, available at https://www.govinfo.gov/content/pkg/FR-2018-12-14/pdf/2018-27038.pdf. |
| 23. |
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]. |
| 24. |
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. |
| 25. |
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]. |
| 26. |
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. |
| 27. |
Letter from RUS to the FCC, February 13, 2013, available at https://prodnet.www.neca.org/publicationsdocs/wwpdf/21513usda.pdf. |
| 28. |
U.S. Department of Agriculture, Agriculture and Rural Prosperity Task Force, Report to the President of the United States from the Task Force on Agriculture and Rural Prosperity, October 21, 2017, pp. 17-20, available at https://www.usda.gov/sites/default/files/documents/rural-prosperity-report.pdf. The Task Force recommended that the Administration establish executive leadership to expand e-connectivity across rural America, assess the state of rural e-connectivity, reduce regulatory barriers to infrastructure deployment, assess the efficacy of current programs, and incentivize private capital investment. |
| 29. |
2017 USDA Budget Explanatory Notes for Committee on Appropriations, p. 31-34, available at http://www.obpa.usda.gov/31rus2017notes.pdf. |
| 30. |
2018 USDA Budget Explanatory Notes for Committee on Appropriations, Rural Utilities Service, p. 31-34, available at https://www.obpa.usda.gov/31rusexnotes2018.pdf. |
| 31. |
Ibid., p. 31-34. |
| 32. |
2018 USDA Budget Explanatory Notes for Committee on Appropriations, Rural Development, p. 28-18, available at https://www.obpa.usda.gov/28rdexnotes2018.pdf. |
| 33. |
2019 USDA Budget Explanatory Notes for Committee on Appropriations, Rural Utilities Service, p. 31-29, available at https://www.obpa.usda.gov/FY19explan_notes.html. |
| 34. |
Ibid., p. 31-21. |
| 35. |
Ibid., p. 31-30. |
| 36. |
Ibid., p. 31-29. |
| 37. |
Private communication, USDA, June 23, 2009. |
| 38. |
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. |
| 39. |
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. |
| 40. |
Rural Utilities Service, private communication, January 18, 2007. |
| 41. |
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. |
| 42. |
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. |
| 43. |
Ibid., p. 6. |
| 44. |
Ibid., p. 8. |
| 45. |
Martinez, Michael, "Broadband: Loan Fund's Strict Rules Foil Small Municipalities," National Journal's Technology Daily, August 23, 2005. |
| 46. |
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. |
| 47. |
Ibid., p. 13. |
| 48. |
Ibid., p. 14. |
| 49. |
Ibid., p. 15. |
| 50. |
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. |
| 51. |
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. |
| 52. |
Testimony of Tom Simmons, Vice President for Public Policy, Midcontinent Communications, before Senate Committee on Agriculture, Nutrition, and Forestry, May 17, 2006. |
| 53. |
Audit Report: Rural Utilities Service Broadband Grant and Loan Programs, p. 17. |
| 54. |
Rural Utilities Service, private communication, January 18, 2007. |
| 55. |
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. |
| 56. |
Ibid., p. 5. |
| 57. |
Ibid., pp. 5-6. |
| 58. |
Ibid., p. 14. |
| 59. |
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. |
| 60. |
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. |
| 61. |
Ibid., pp. 31-32. |
| 62. |
Rural Utilities Service, private communication, January 18, 2007. |
| 63. |
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." |
| 64. |
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. |
| 65. |
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. |
| 66. |
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. |
| 67. |
Michael J. Copps, Acting Chairman, Federal Communications Commission, Bringing Broadband to Rural America: Report on a Rural Broadband Strategy, May 22, 2009, 83 pp. |
| 68. |
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 https://www.gpo.gov/fdsys/pkg/FR-2015-07-30/pdf/2015-18624.pdf. |
| 69. |
See House Committee on Agriculture, "Section-by-Section, H.R. 2, the Agriculture and Nutrition Act of 2018," pp. 41-43, available at https://agriculture.house.gov/uploadedfiles/agriculture_and_nutrition_act_of_2018_section_by_section.pdf. |