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The “digital divide” is a term that has been used to characterize a gap between “information haves
and have-nots,” or in other words, between those Americans who use or have access to
telecommunications technologies (e.g., telephones, computers, the Internet) and those who do
not. One important subset of the digital divide debate concerns high-speed Internet access and
advanced telecommunications services, also known as broadband. Broadband is provided by a
series of technologies (e.g., cable, telephone wire, fiber, satellite, wireless) that give users the
ability to send and receive data at volumes and speeds far greater than traditional “dial-up”
Internet access over telephone lines.
Broadband technologies are currently being deployed primarily by the private sector throughout
the United States. While the numbers of new broadband subscribers continue to grow, studies and
data suggest that the rate of broadband deployment in urban and high income areas are outpacing
deployment in rural and low-income areas. Some policymakers, believing that disparities in
broadband access across American society could have adverse economic and social consequences
on those left behind, assert that the federal government should play a more active role to avoid a
“digital divide” in broadband access. One approach is for the federal government to provide
financial assistance to support broadband deployment in unserved and underserved areas.
Economic stimulus legislation enacted by the 111th Congress includes provisions that provides
federal financial assistance for broadband deployment. On February 17, 2009, President Obama
signed P.L. 111-5, the American Recovery and Reinvestment Act (ARRA). The ARRA provides a
total of $7.2 billion for broadband, consisting of $4.7 billion to NTIA/DOC for a newly
established Broadband Technology Opportunities Program and $2.5 billion to existing
RUS/USDA broadband programs.
Meanwhile, it is expected that the Obama Administration will ultimately develop a national
broadband policy or strategy that will seek to reduce or eliminate the “digital divide” with respect
to broadband. It is likely that elements of a national broadband policy, in tandem with broadband
investment measures in the American Recovery and Reinvestment Act, will significantly shape
and expand federal policies and programs to promote broadband deployment and adoption. A key
issue is how to strike a balance between providing federal assistance for unserved and
underserved areas where the private sector may not be providing acceptable levels of broadband
service, while at the same time minimizing any deleterious effects that government intervention
in the marketplace may have on competition and private sector investment.
This report will be updated as events warrant.

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Introduction ..................................................................................................................................... 1
Status of Broadband Deployment in the United States ................................................................... 1
Broadband in Rural and Underserved Areas ................................................................................... 2
Is Broadband Deployment Data Adequate?..................................................................................... 4
Broadband and the Federal Role ..................................................................................................... 6
Bush Administration.................................................................................................................. 7
Obama Administration .............................................................................................................. 7
Current Federal Broadband Programs ............................................................................................. 8
Rural Utilities Service Programs............................................................................................... 9
The Universal Service Concept and the FCC............................................................................ 9
Universal Service and the Telecommunications Act of 1996 ........................................... 10
Universal Service and Broadband..................................................................................... 12
Legislation in the 110th Congress .................................................................................................. 13
Broadband Stimulus Legislation in the 111th Congress ................................................................. 14
House ...................................................................................................................................... 14
Senate ...................................................................................................................................... 16
Comparison of House and Senate Bills................................................................................... 17
P.L. 111-5: The American Recovery and Reinvestment Act of 2009 ...................................... 19
Other Legislation in the 111th Congress ........................................................................................ 20
Concluding Observations .............................................................................................................. 21

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Table 1. Selected Federal Domestic Assistance Programs Related to Telecommunications
Development .............................................................................................................................. 22
Table 2. Selected Federal Programs Funding Broadband Access.................................................. 25

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Author Contact Information .......................................................................................................... 27

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The “digital divide” is a term used to describe a perceived gap between perceived “information
haves and have-nots,” or in other words, between those Americans who use or have access to
telecommunications technologies (e.g., telephones, computers, the Internet) and those who do
not.1 Whether or not individuals or communities fall into the “information haves” category
depends on a number of factors, ranging from the presence of computers in the home, to training
and education, to the availability of affordable Internet access.
Broadband technologies are currently being deployed primarily by the private sector throughout
the United States. While the numbers of new broadband subscribers continue to grow, studies and
data suggest that the rate of broadband deployment in urban and high income areas are outpacing
deployment in rural and low-income areas. Some policymakers, believing that disparities in
broadband access across American society could have adverse economic and social consequences
on those left behind, assert that the federal government should play a more active role to avoid a
“digital divide” in broadband access. One approach—adopted in the American Recovery and
Reinvestment Act of 2009 (P.L. 111-5)—is for the federal government to provide financial
assistance, primarily grants, to support broadband deployment in unserved and underserved areas.
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Prior to the late 1990s, American homes accessed the Internet at maximum speeds of 56 kilobits
per second by dialing up an Internet Service Provider (such as AOL) over the same copper
telephone line used for traditional voice service. A relatively small number of businesses and
institutions used broadband or high speed connections through the installation of special
“dedicated lines” typically provided by their local telephone company. Starting in the late 1990s,
cable television companies began offering cable modem broadband service to homes and
businesses. This was accompanied by telephone companies beginning to offer DSL service
(broadband over existing copper telephone wireline). Growth has been steep, rising from 2.8
million high speed lines reported as of December 1999, to 121.2 million lines as of December 31,
2007. Of the 121.2 million high speed lines reported by the FCC, 74.0 million serve residential
users.2 Since the deployment of residential broadband in the United States, the primary residential
broadband technologies deployed continue to be cable modem and DSL. A distinction is often
made between “current generation” and “next generation” broadband (commonly referred to as
next generation networks or NGN). “Current generation” typically refers to currently deployed
cable, DSL, and many wireless systems, while “next generation” refers to dramatically faster
download and upload speeds offered by fiber technologies and also potentially by future
generations of cable, DSL, and wireless technologies.3 In general, the greater the download and

1 The term “digital divide” can also refer to international disparities in access to information technology. This report
focuses on domestic issues only.
2 FCC, High-Speed Services for Internet Access: Status as of December 31, 2007, January 2009. Available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-287962A1.pdf.
3 Initially, and for many years following, the FCC defined broadband (or more specifically “high-speed lines”) as over
200 kilobits per second (kbps) in at least one direction, which was roughly four times the speed of conventional dialup
Internet access. In recent years, the 200 kbps threshold was considered too low, and on March 19, 2008, the FCC
(continued...)
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upload speeds offered by a broadband connection, the more sophisticated (and potentially
valuable) the application that is enabled.
December 2008 survey data from the Pew Internet and American Life Project found that 57% of
Americans have broadband at home.4 It is estimated that less than 10% of U.S. households have
no access to any broadband provider whatsoever (not including satellite).5 While the broadband
adoption or penetration rate stands at close to 60% of U.S. households, broadband availability is
much higher, at more than 90% of households. Thus, approximately 30% of households have
access to some type of terrestrial (non-satellite) broadband service, but do not choose to
subscribe. According to the FCC, possible reasons for the gap between broadband availability and
subscribership include the lack of computers in some homes, price of broadband service, lack of
content, and the availability of broadband at work.6 According to Pew, non-broadband users tend
to be older, have lower incomes, have trouble using technology, and may not see the relevance of
using the Internet to their lives. Between 2007 and 2008, low income Americans (under $20,000
annual income) and African Americans showed no significant growth in home broadband
adoption after strong growth in previous years.7 Pew also found that about one-third of adults
without broadband cite price and availability as the reasons why they don’t have broadband in
their homes, while two-thirds cite reasons such as usability and relevance.8
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While the number of new broadband subscribers continues to grow, the rate of broadband
deployment in urban and high income areas appears to be outpacing deployment in rural and low-
income areas. While there are many examples of rural communities with state of the art
telecommunications facilities,10 recent surveys and studies have indicated that, in general, rural
areas tend to lag behind urban and suburban areas in broadband deployment. Data (2008) from
the Pew Internet & American Life Project indicate that while broadband adoption is growing in
urban, suburban, and rural areas, broadband users make up larger percentages of urban and

(...continued)
adopted a report and order (FCC 08-89) establishing new categories of broadband speed tiers for data collection
purposes. Specifically, 200 kbps to 768 kbps will be considered “first generation,” 768 kbps to 1.5 Mbps as “basic
broadband tier 1,” and increasingly higher speed tiers as broadband tiers 2 through 7 (tier seven is greater than or equal
to 100 Mbps in any one direction). Tiers can change as technology advances.

4 Horrigan, John, Pew Internet & American Life Project, “Barriers to Broadband Adoption—The User Perspective,”
December 19, 2008, available at http://otrans.3cdn.net/fe2b6b302960dbe0d7_bqm6ib242.pdf.
5 S. Derek Turner, Free Press, Down Payment on Our Digital Future, December 2008, p. 8.
6 Federal Communications Commission, Fourth Report to Congress, “Availability of Advanced Telecommunications
Capability in the United States,” GN Docket No. 04-54, FCC 04-208, September 9, 2004, p. 38. Available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-04-208A1.pdf.
7 “Barriers to Broadband Adoption—The User Perspective,” p. 1.
8 Horrigan, John, Pew Internet & American Life Project, “Obama’s Online Opportunities II: If You Build It Will They
Log On?” January 21, 2009, available at http://www.pewinternet.org/pdfs/PIP_Broadband%20Barriers.pdf.
9 For more information on rural broadband and broadband programs at the Rural Utilities Service, see CRS Report
RL33816, Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service, by Lennard G. Kruger.
10 See for example: National Exchange Carrier Association (NECA), Trends 2006: Making Progress With Broadband,
2006, 26 p. Available at http://www.neca.org/media/trends_brochure_website.pdf.
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suburban users than rural users. Pew found that the percentage of all U.S. adults with broadband
at home is 60% for suburban areas, 57% for urban areas, and 38% for rural areas.11
Similarly, according to the latest FCC data on the deployment of high-speed Internet connections
(released January 2009), high-speed subscribers were reported in 99% of the most densely
populated zip codes, as opposed to 90% of zip codes with the lowest population densities. For zip
codes ranked by median family income, high-speed subscribers were reported present in 99% of
the top one-tenth of zip codes, as compared to 92% of the bottom one-tenth of zip codes.12
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 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.13
Some policymakers believe that disparities in broadband access across American society could
have adverse consequences on those left behind, and that advanced telecommunications
applications critical for businesses and consumers to engage in e-commerce are increasingly
dependent on high speed broadband connections to the Internet. Thus, some say, communities and
individuals without access to broadband could be at risk to the extent that e-commerce becomes a
critical factor in determining future economic development and prosperity. A February 2006 study
done by the Massachusetts Institute of Technology for the Economic Development
Administration of the Department of Commerce marked the first attempt to quantitatively
measure the impact of broadband on economic growth. The study found that “between 1998 and
2002, communities in which mass-market broadband was available by December 1999
experienced more rapid growth in employment, the number of businesses overall, and businesses
in IT-intensive sectors, relative to comparable communities without broadband at that time.”14
Subsequently, a June 2007 report from the Brookings Institution found that for every one
percentage point increase in broadband penetration in a state, employment is projected to increase
by 0.2 to 0.3% per year. For the entire U.S. private non-farm economy, the study projected an
increase of about 300,000 jobs.15
Some also argue that broadband is an important contributor to U.S. future economic strength with
respect to the rest of the world. According to the International Telecommunications Union, the

11 Horrigan, John B., Pew Internet & American Life Project, Home Broadband Adoption 2008, July 2008, p. 3.
Available at http://www.pewinternet.org/pdfs/PIP_Broadband_2008.pdf.
12 FCC, High-Speed Services for Internet Access: Status as of December 31, 2007, p. 4.
13 The terrain of rural areas can also be a hindrance to broadband deployment because 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” (e.g., the “middle mile”) which refers to the installation of a dedicated line which
transmits a signal to and from an Internet backbone which is typically located in or near an urban area.
14 Gillett, Sharon E., Massachusetts Institute of Technology, Measuring Broadband’s Economic Impact, report
prepared for the Economic Development Administration, U.S. Department of Commerce, February 28, 2006 p. 4.
15 Crandall, Robert, William Lehr, and Robert Litan, The Effects of Broadband Deployment on Output and
Employment: A Cross-sectional Analysis of U.S. Data, June 2007, 20 pp. Available at http://www3.brookings.edu/
views/papers/crandall/200706litan.pdf.
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U.S. ranks 24th worldwide in broadband penetration (subscriptions per 100 inhabitants in 2007).16
Data from the Organization for Economic Cooperation and Development (OECD) found the U.S.
ranking 15th among OECD nations in broadband access per 100 inhabitants as of June 2008.17 By
contrast, in 2001 an OECD study found the U.S. ranking 4th in broadband subscribership per 100
inhabitants (after Korea, Sweden, and Canada).18 While many argue that the U.S. declining
performance in international broadband rankings is a cause for concern,19 others maintain that the
OECD and ITU data undercount U.S. broadband deployment,20 and that cross-country broadband
deployment comparisons are not necessarily meaningful and inherently problematic.21 Finally, an
issue related to international broadband rankings is the extent to which broadband speeds and
prices differ between the U.S. and the rest of the world.22
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Obtaining an accurate snapshot of the status of broadband deployment is problematic. Anecdotes
abound of rural and low-income areas which do not have adequate Internet access, as well as
those which are receiving access to high-speed, state-of-the-art connections. Rapidly evolving
technologies, the constant flux of the telecommunications industry, the uncertainty of consumer
wants and needs, and the sheer diversity and size of the nation’s economy and geography make
the status of broadband deployment very difficult to characterize. The FCC periodically collects
broadband deployment data from the private sector via “FCC Form 477”—a standardized
information gathering survey. Statistics derived from the Form 477 survey are published every six
months. Additionally, data from Form 477 are used as the basis of the FCC’s (to date) five
broadband deployment reports.

16 International Telecommunications Union, Economies by broadband penetration, 2007. Available at
http://www.itu.int/ITU-D/ict/statistics/at_glance/top20_broad_2007.html.
17 OECD, OECD Broadband Statistics, June 2008. Available at http://www.oecd.org/sti/ict/broadband.
18 OECD, Directorate for Science, Technology and Industry, The Development of Broadband Access in OECD
Countries, October 29, 2001, 63 pp. For a comparison of government broadband policies, also see OECD, Directorate
for Science, Technology and Industry, Broadband Infrastructure Deployment: The Role of Government Assistance,
May 22, 2002, 42 pp.
19 See Turner, Derek S., Free Press, Broadband Reality Check II: The Truth Behind America’s Digital Divide, August
2006, pp 8-11. Available at http://www.freepress.net/files/bbrc2-final.pdf; and Turner, Derek S., Free Press, ‘Shooting
the Messenger’ Myth vs. Reality: U.S. Broadband Policy and International Broadband Rankings, July 2007, 25 pp.,
available at http://www.freepress.net/files/shooting_the_messenger.pdf.
20 National Telecommunications and Information Administration, Fact Sheet: United States Maintains Information and
Communication Technology (ICT) Leadership and Economic Strength, at http://www.ntia.doc.gov/ntiahome/press/
2007/ICTleader_042407.html.
21 See Wallsten, Scott, Progress and Freedom Foundation, Towards Effective U.S. Broadband Policies, May 2007, 19
pp. Available at http://www.pff.org/issues-pubs/pops/pop14.7usbroadbandpolicy.pdf. Also see Ford, George, Phoenix
Center, The Broadband Performance Index: What Really Drives Broadband Adoption Across the OECD?, Phoenix
Center Policy Paper Number 33, May 2008, 27 pp; available at http://www.phoenix-center.org/pcpp/PCPP33Final.pdf.
22 See price and services and speed data on OECD Broadband Portal, available at http://www.oecd.org/sti/ict/
broadband; Turner, Derek S., Free Press, Broadband Reality Check II: The Truth Behind America’s Digital Divide,
August 2006, pp 5-9; Kende, Michael, Analysis Consulting Limited, Survey of International Broadband Offerings,
October 4, 2006, 12 p, available at http://www.analysys.com/pdfs/BroadbandPerformanceSurvey.pdf; and Atkinson,
Robert D., The International Technology and Innovation Foundation, Explaining International Broadband Leadership,
May 2008, 108 p, available at http://www.itif.org/files/ExplainingBBLeadership.pdf.
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The FCC is working to refine the data used in future Reports in order to provide an increasingly
accurate portrayal. In its March 17, 2004 Notice of Inquiry for the Fourth Report, the FCC sought
comments on specific proposals to improve the FCC Form 477 data gathering program.23 On
November 9, 2004, the FCC voted to expand its data collection program by requiring reports
from all facilities based carriers regardless of size in order to better track rural and underserved
markets, by requiring broadband providers to provide more information on the speed and nature
of their service, and by establishing broadband-over-power line as a separate category in order to
track its development and deployment. The FCC Form 477 data gathering program was extended
for five years beyond its March 2005 expiration date.24
The Government Accountability Office (GAO) has cited concerns about the FCC’s zip-code level
data. Of particular concern is that the FCC will report broadband service in a zip code even if a
company reports service to only one subscriber, which in turn can lead to some observers
overstating broadband deployment. According to GAO, “the data may not provide a highly
accurate depiction of local deployment of broadband infrastructures for residential service,
especially in rural areas.” The FCC has acknowledged the limitations in its zip code level data.25
On April 16, 2007, the FCC announced a Notice of Proposed Rulemaking which sought comment
on a number of broadband data collection issues, including how to develop a more accurate
picture of broadband deployment; gathering information on price, other factors determining
consumer uptake of broadband, and international comparisons; how to improve data on wireless
broadband; how to collect information on subscribership to voice over Internet Protocol service
(VoIP); and whether to modify collection of speed tier information.26
On March 19, 2008, the FCC adopted an Order that substantially expands its broadband data
collection capability. Specifically, the Order expands the number of broadband reporting speed
tiers to capture more information about upload and download speeds offered in the marketplace,
requires broadband providers to report numbers of broadband subscribers by census tract, and
improves the accuracy of information collected on mobile wireless broadband deployment.
Additionally, in a Further Notice of Proposed Rulemaking, the FCC sought comment on
broadband service pricing and availability.27
During the 110th Congress, state initiatives to collect broadband deployment data in order to
promote broadband in underserved areas were viewed as a possible model for governmental
efforts to encourage broadband. In particular, an initiative in the Commonwealth of Kentucky—

23 Federal Communications Commission, Notice of Inquiry, “Concerning the Deployment of Advanced
Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and possible Steps to
Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996,” FCC 04-55, March 17,
2004, p. 6.
24 FCC News Release, FCC Improves Data Collection to Monitor Nationwide Broadband Rollout, November 9, 2004.
Available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-254115A1.pdf.
25 U.S. Government Accountability Office, Broadband Deployment is Extensive throughout the United States, but It Is
Difficult to Assess the Extent of Deployment Gaps in Rural Areas, GAO-06-426, May 2006, p. 3.
26 Federal Communications Commission, Notice Proposed Rulemaking, “Development of Nationwide Broadband Data
to Evaluate Reasonable and Timely Deployment of Advanced Services to All Americans, Improvement of Wireless
Broadband Subscribership Data, and Development of Data on Interconnected Voice Over Internet Protocol (VoIP)
Subscribership,” WC Docket No. 07-38, FCC 07-17, released April 16, 2007, 56 pp.
27 FCC, News Release, “FCC Expands, Improves Broadband Data Collection,” March 19, 2008. Available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-280909A1.pdf.
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called ConnectKentucky—has developed detailed broadband inventory mapping which identifies
local communities that lack adequate broadband service. Kentucky is using this data to promote
public-private partnerships in order to reach a goal of universal broadband coverage in the state.28
Other states are pursuing or considering similar approaches.
The 110th Congress explored ways to support or implement the types of broadband mapping and
data collection efforts demonstrated by ConnectKentucky. The Broadband Data Improvement Act
was enacted by the 110th Congress and became P.L. 110-385 on October 10, 2008. The law
requires the FCC to collect demographic information on unserved areas, data comparing
broadband service with 75 communities in at least 25 nations abroad, and data on consumer use
of broadband. The act also directs the Census Bureau to collect broadband data, the Government
Accountability Office to study broadband data metrics and standards, and the Department of
Commerce to provide grants supporting state broadband initiatives.
P.L. 111-5, the American Recovery and Reinvestment Act, provides NTIA with an appropriation
of $350 million to implement the Broadband Data Improvement Act and to develop and maintain
a national broadband inventory map, which shall be made accessible to the public no later than
two years after enactment.
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The Telecommunications Act of 1996 (P.L. 104-104) addressed the issue of whether the federal
government should intervene to prevent a “digital divide” in broadband access. Section 706
requires the FCC to determine whether “advanced telecommunications capability [i.e., broadband
or high-speed access] is being deployed to all Americans in a reasonable and timely fashion.” If
this is not the case, the act directs the FCC to “take immediate action to accelerate deployment of
such capability by removing barriers to infrastructure investment and by promoting competition
in the telecommunications market.”
Since 1999, the FCC has issued and adopted five reports pursuant to Section 706. All five reports
formally concluded that the deployment of advanced telecommunications capability to all
Americans is reasonable and timely. The fifth and most recent 706 report was adopted on March
19, 2008, and released on June 12, 2008.29 Two FCC Commissioners (Michael Copps and
Jonathan Adelstein) have repeatedly dissented from the reports’ conclusions that broadband
deployment is reasonable and timely, arguing that the relatively poor world ranking of United
States broadband penetration indicates that deployment is insufficient, that the FCC’s definition
of broadband was outdated and not comparable to the much higher speeds available to consumers
in other countries, that the use of zip code data (measuring the presence of at least one broadband
subscriber within a zip code area) did not sufficiently characterize the availability of broadband

28 Testimony of Brian Mefford, President and CEO, Connected Nation, Inc., before the Senate Committee on
Commerce, Science and Transportation, April 24, 2007. Available at http://commerce.senate.gov/public/_files/
DC_Committeetestimony_04_23_07.pdf.
29 Federal Communications Commission, Fifth Report, “In the Matter of Inquiry Concerning the Deployment of
Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps
to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996,” GN Docket No. 07-
45, FCC 08-88, Adopted March 19, 2008, Released June 12, 2008. 76 pp. Available at http://hraunfoss.fcc.gov/
edocs_public/attachmatch/FCC-08-88A1.pdf.
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across geographic areas, and that broadband deployment is impeded by the lack of a
comprehensive national broadband policy.30
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The Bush Administration pursued a broadband policy that emphasized deregulation, non-
intervention by government in the marketplace, and general tax policies intended to foster overall
economic growth. On March 26, 2004, President Bush endorsed a goal of “universal broadband
access by 2007,” and on April 26, 2004, announced a broadband initiative which included
promoting legislation which would permanently prohibit all broadband taxes, making spectrum
available for wireless broadband and creating technical standards for broadband over power lines,
and simplifying rights-of-way processes on federal lands for broadband providers.31
Subsequently, on January 31, 2008, NTIA released a report, entitled, Networked Nation:
Broadband in America, 2007 which characterized the Bush Administration’s broadband initiative
as follows:
From its first days, the Administration has implemented a comprehensive and integrated
package of technology, regulatory, and fiscal policies designed to lower barriers and create
an environment in which broadband innovation and competition can flourish.32
The Bush Administration broadband policy embraced the view that a minimum of government
intervention would create an economic climate favorable to private sector investment in the
broadband market. According to NTIA, the report showed “that the Administration’s technology,
regulatory, and fiscal policies have stimulated innovation and competition, and encouraged
investment in the U.S. broadband market contributing to significantly increased accessibility of
broadband services.”33
During the 110th Congress, some policymakers disagreed with the Bush Administration’s
assessment and asserted that the federal government should play a more active role to avoid a
“digital divide” in broadband access. Bills were introduced seeking to provide federal financial
assistance for broadband deployment in the form of grants, loans, subsidies, and/or tax credits.
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It is expected that the Obama Administration will ultimately develop a national broadband policy
or strategy that will seek to reduce or eliminate the “digital divide” with respect to broadband.
One of the key elements of the Obama transition’s technology agenda is to “deploy next-
generation broadband,” and specifically:

30 Ibid., pp. 5, 7.
31 See White House, A New Generation of American Innovation, April 2004. Available at http://www.whitehouse.gov/
infocus/technology/economic_policy200404/innovation.pdf.
32 U.S. Department of Commerce, National Telecommunications and Information Administration, Networked Nation:
Broadband in America 2007, January 2008, p. I. Available at http://www.ntia.doc.gov/reports/2008/
NetworkedNationBroadbandinAmerica2007.pdf.
33 NTIA, Press Release, “Gutierrez Hails Dramatic U.S. Broadband Growth,” January 31, 2008. Available at
http://www.ntia.doc.gov/ntiahome/press/2008/NetworkedNation_013108.html.
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Work towards true broadband in every community in America through a combination of
reform of the Universal Service Fund, better use of the nation’s wireless spectrum,
promotion of next-generation facilities, technologies and applications, and new tax and loan
incentives. America should lead the world in broadband penetration and Internet access.34
The Obama campaign released a policy blueprint for technology and innovation that includes
policy proposals intended to result in full broadband penetration and deployment of next-
generation broadband. Specifically, policy proposals include:
• redefining broadband at speeds “demanded by 21st century business and
communications;”
• reforming universal service to support affordable broadband specifically focusing
on unserved communities;
• creating incentives for more efficient use of government spectrum and new
standards for commercial spectrum to bring affordable broadband to rural
communities;
• ensuring that schools, libraries and hospitals have access to next-generation
networks and that adequate training and resources are available to enable these
institutions to take full advantage of broadband connectivity; and
• encouraging public/private partnerships at the local level that result in broadband
to unserved communities.35
It is likely that these and other potential elements of a national broadband policy, in tandem with
broadband investment measures and development of a national broadband strategy by the FCC as
directed by the American Recovery and Reinvestment Act of 2009, will significantly shape and
expand federal policies and programs intended to promote broadband deployment and adoption.
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Aside from the broadband programs newly established by the American Recovery and
Reinvestment Act of 2009 (P.L. 111-5),36 the Rural Broadband Access Loan and Loan Guarantee
Program and the Community Connect Broadband Grants, both at the Rural Utilities Service of the
U.S. Department of Agriculture, are currently the only federal programs exclusively dedicated to
deploying broadband infrastructure. However, there exist other federal programs that provide
financial assistance for various aspects of telecommunications development. The major vehicle
for funding telecommunications development, particularly in rural and low-income areas, is the
Universal Service Fund (USF). While the USF’s High Cost Program does not explicitly fund
broadband infrastructure, subsidies are used, in many cases, to upgrade existing telephone
networks so that they are capable of delivering high-speed services. Additionally, subsidies
provided by USF’s Schools and Libraries Program and Rural Health Care Program are used for a
variety of telecommunications services, including broadband access.

34 Office of the President-Elect, Technology Agenda, available at http://change.gov/agenda/technology_agenda.
35 Barack Obama, Connecting and Empowering All Americans Through Technology and Innovation, 2008, available at
http://obama.3cdn.net/780e0e91ccb6cdbf6e_6udymvin7.pdf.
36 See CRS Report R40436, Broadband Infrastructure Programs in the American Recovery and Reinvestment Act, by
Lennard G. Kruger.
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Table 1 (at the end of this report) shows selected federal domestic assistance programs
throughout the federal government that can be associated with telecommunications development.
Many (if not most) of these programs can be related, if not necessarily to the deployment of
broadband technologies in particular, then to telecommunications and the “digital divide” issue
generally.
Table 2 (also at the end of this report) presents selected federal programs that have provided
financial assistance for broadband. These programs are broken down into three categories: first,
programs that fund access to telecommunications services in unserved or underserved areas;
second, general economic development programs that have funded broadband-related projects;
and third, applications-specific programs which will typically fund some aspect of broadband
access as a means towards supporting a particular application, such as distance learning or
telemedicine.
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The Rural Electrification Administration (REA), subsequently renamed the Rural Utilities Service
(RUS), was established by the Roosevelt Administration in 1935. Initially, it was established to
provide credit assistance for the development of rural electric systems. In 1949, the mission of
REA was expanded to include rural telephone providers. Congress further amended the Rural
Electrification Act in 1971 to establish within REA a Rural Telephone Account and the Rural
Telephone Bank (RTB). Rural Telephone Loans and Loan Guarantees provide long-term direct
and guaranteed loans for telephone lines, facilities, or systems to furnish and improve
telecommunications service in rural areas. The RTB—liquidated in FY2006—was a public-
private partnership intended to provide additional sources of capital that would supplement loans
made directly by RUS. Another program, the Distance Learning and Telemedicine Program,
specifically addresses health care and education needs of rural America.
RUS implements two programs specifically targeted at providing assistance for broadband
deployment in rural areas: the Rural Broadband Access Loan and Loan Guarantee Program and
Community Connect Broadband Grants. The 110th Congress reauthorized and reformed the Rural
Broadband Access Loan and Loan Guarantee program as part of the 2008 farm bill (P.L. 110-
234). For further information on rural broadband and the RUS broadband programs, see CRS
Report RL33816, Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service, by
Lennard G. Kruger.
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Since its creation in 1934 the Federal Communications Commission (FCC) has been tasked with
“... mak[ing] available, so far as possible, to all the people of the United States, ... a rapid,
efficient, Nation-wide, and world-wide wire and radio communications service with adequate
facilities at reasonable charges.... ”38 This mandate led to the development of what has come to be
known as the universal service concept.

37 The section on universal service was prepared by Angele Gilroy, Specialist in Telecommunications, Resources,
Science and Industry Division. For more information on universal service, see CRS Report RL33979, Universal
Service Fund: Background and Options for Reform, by Angele A. Gilroy.
38 Communications Act of 1934, As Amended, Title I sec.1 [47 U.S.C. 151].
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The universal service concept, as originally designed, called for the establishment of policies to
ensure that telecommunications services are available to all Americans, including those in rural,
insular and high cost areas, by ensuring that rates remain affordable. Over the years this concept
fostered the development of various FCC policies and programs to meet this goal. The FCC offers
universal service support through a number of direct mechanisms that target both providers of and
subscribers to telecommunications services.39
The development of the federal universal service high cost fund is an example of provider-
targeted support. Under the high cost fund, eligible telecommunications carriers, usually those
serving rural, insular and high cost areas, are able to obtain funds to help offset the higher than
average costs of providing telephone service.40 This mechanism has been particularly important to
rural America where the lack of subscriber density leads to significant costs. FCC universal
service policies have also been expanded to target individual users. Such federal programs
include two income-based programs, Link Up and Lifeline, established in the mid-1980s to assist
economically needy individuals. The Link Up program assists low-income subscribers pay the
costs associated with the initiation of telephone service and the Lifeline program assists low-
income subscribers pay the recurring monthly service charges. Funding to assist carriers
providing service to individuals with speech and/or hearing disabilities is also provided through
the Telecommunications Relay Service Fund. Effective January 1, 1998, schools, libraries, and
rural health care providers also qualified for universal service support.
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Passage of the Telecommunications Act of 1996 (P.L. 104-104) codified the long-standing
commitment by U.S. policymakers to ensure universal service in the provision of
telecommunications services.
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Congress, through the 1996 Act, not only codified, but also expanded the concept of universal
service to include, among other principles, that elementary and secondary schools and
classrooms, libraries, and rural health care providers have access to telecommunications services
for specific purposes at discounted rates. (See Sections 254(b)(6) and 254(h)of the 1996
Telecommunications Act, 47 U.S.C. 254.)
1. The Schools and Libraries Program. Under universal service provisions contained in the 1996
Act, elementary and secondary schools and classrooms and libraries are designated as
beneficiaries of universal service discounts. Universal service principles detailed in Section
254(b)(6) state that “Elementary and secondary schools and classrooms ... and libraries should
have access to advanced telecommunications services.... ” The act further requires in Section
254(h)(1)(B) that services within the definition of universal service be provided to elementary
and secondary schools and libraries for education purposes at discounts, that is at “rates less than
the amounts charged for similar services to other parties.”

39 Many states participate in or have programs that mirror FCC universal service mechanisms to help promote universal
service goals within their states.
40 Additional FCC policies such as rate averaging and pooling have also been implemented to assist high cost carriers.
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The FCC established the Schools and Libraries Division within the Universal Service
Administrative Company (USAC) to administer the schools and libraries or “E (education)-rate”
program to comply with these provisions. Under this program, eligible schools and libraries
receive discounts ranging from 20 to 90 percent for telecommunications services depending on
the poverty level of the school’s (or school district’s) population and its location in a high cost
telecommunications area. Three categories of services are eligible for discounts: internal
connections (e.g., wiring, routers and servers); Internet access; and telecommunications and
dedicated services, with the third category receiving funding priority. According to data released
by program administrators, $21.3 billion in funding has been committed over the first ten years of
the program with funding released to all states, the District of Columbia and all territories.
Funding commitments for funding Year 2008 (July 1, 2008 - June 30, 2009), the eleventh and
current year of the program, totaled $2.2 billion as of March 10, 2009.41
2. The Rural Health Care Program. Section 254(h) of the 1996 Act requires that public and non-
profit rural health care providers have access to telecommunications services necessary for the
provision of health care services at rates comparable to those paid for similar services in urban
areas. Subsection 254(h)(1) further specifies that “to the extent technically feasible and
economically reasonable” health care providers should have access to advanced
telecommunications and information services. The FCC established the Rural Health Care
Division (RHCD) within the USAC to administer the universal support program to comply with
these provisions. Under FCC established rules only public or non-profit health care providers are
eligible to receive funding. Eligible health care providers, with the exception of those requesting
only access to the Internet, must also be located in a rural area. The funding ceiling, or cap, for
this support was established at $400 million annually. The funding level for Year One of the
program (January 1998 - June 30, 1999) was set at $100 million. Due to less than anticipated
demand, the FCC established a $12 million funding level for the second year (July 1, 1999 to
June 30, 2000) of the program but has since returned to a $400 million yearly cap. As of March
17, 2009, covering the first 11 years of the program, a total of $284.7 million has been committed
to 4,167 rural health care providers. The primary use of the funding is to provide reduced rates for
telecommunications and information services necessary for the provision of health care.42
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Section 714 of the 1996 Act created the Telecommunications Development Fund (TDF). The TDF
is a private, non-governmental, venture capital corporation currently overseen by a five-member
board of directors and fund management. The TDF focuses on seed, early stage, and select later
stage investments in communications and has $90 million under management in two funds. Fund
I is no longer making new investments. Fund II remains active and currently has 13 companies in
its investment portfolio Funding is largely derived from the interest earned from the upfront
payments bidders submit to participate in FCC auctions. The TDF also provides entrepreneur
education, training, management and technical assistance in underserved rural and urban
communities through the TDF Foundation.43

41 For additional information on this program, including funding commitments, see the E-rate website:
http://www.universalservice.org/sl/.
42 For additional information on this program, including funding commitments, see the RHCD website:
http://www.universalservice.org/rhc/.
43 For additional information on the TDF fund and TDF Foundation see the TDF website at http://www.tdfund.com.
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One of the policy debates surrounding universal service is whether access to advanced
telecommunications services (i.e. broadband) should be incorporated into universal service
objectives. The term universal service, when applied to telecommunications, refers to the ability
to make available a basket of telecommunications services to the public, across the nation, at a
reasonable price. As directed in the 1996 Telecommunications Act [Section 254(c)] a federal-state
Joint Board was tasked with defining the services which should be included in the basket of
services to be eligible for federal universal service support; in effect using and defining the term
“universal service” for the first time. The Joint Board’s recommendation, which was subsequently
adopted by the FCC in May 1997, included the following in its universal service package: voice
grade access to and some usage of the public switched network; single line service; dual tone
signaling; access to directory assistance; emergency service such as 911; operator services; access
and interexchange (long distance) service.
Some policy makers expressed concern that the FCC-adopted definition is too limited and does
not take into consideration the importance and growing acceptance of advanced services such as
broadband and Internet access. They point to a number of provisions contained in the Universal
Service section of the 1996 Act to support their claim. Universal service principles contained in
Section 254(b)(2) state that “Access to advanced telecommunications services should be provided
to all regions of the Nation.” The subsequent principle (b)(3) calls for consumers in all regions of
the nation including “low-income” and those in “rural, insular, and high cost areas” to have
access to telecommunications and information services including “advanced services” at a
comparable level and a comparable rate charged for similar services in urban areas. Such
provisions, they state, dictate that the FCC expand its universal service definition.
Others caution that a more modest approach is appropriate given the “universal mandate”
associated with this definition and the uncertainty and costs associated with mandating
nationwide deployment of such advanced services as a universal service policy goal. Furthermore
they state the 1996 Act does take into consideration the changing nature of the
telecommunications sector and allows for the universal service definition to be modified if future
conditions warrant. Section 254(c)of the act states that “universal service is an evolving level of
telecommunications services” and the FCC is tasked with “periodically” reevaluating this
definition “taking into account advances in telecommunications and information technologies and
services.” Furthermore, the Joint Board is given specific authority to recommend “from time to
time” to the FCC modification in the definition of the services to be included for federal universal
service support. The Joint Board, on November 19, 2007, concluded such an inquiry and
recommended that the FCC change the mix of services eligible for universal service support. The
Joint Board recommended, among other things, that “the universal availability of broadband
Internet services” be included in the nation’s communications goals and hence be supported by
federal universal service funds.44 In response to the Joint Board recommendation, the FCC, on
January 29, 2008, released three notices of proposed rulemaking dealing with specific aspects of
universal service, including an examination of the scope of the definition. The FCC is still

44 The Joint Board recommended that the definition of those services that qualify for universal service support be
expanded and that the nation’s communications goals include the universal availability of: mobility services (i.e.,
wireless voice); broadband Internet services; and voice services at affordable and comparable rates for all rural and
non-rural areas. For a copy of this recommendation see http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07J-
4A1.pdf.
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examining proposals for universal service reform, including expanding the program to include
broadband, but has not taken action.
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In the 110th Congress, legislation was introduced that would provide financial assistance for
broadband deployment. Of particular note is the reauthorization of the Rural Utilities Service
(RUS) broadband loan program, which was enacted as part of the 2008 farm bill (P.L. 110-234).
In addition to reauthorizing and reforming the RUS broadband loan program, P.L. 110-234
contains provisions establishing a National Center for Rural Telecommunications Assessment and
requiring the FCC and RUS to formulate a comprehensive rural broadband strategy.
The Broadband Data Improvement Act (P.L. 110-385) was enacted by the 110th Congress and
requires the FCC to collect demographic information on unserved areas, data comparing
broadband service with 75 communities in at least 25 nations abroad, and data on consumer use
of broadband. The act also directs the Census Bureau to collect broadband data, the Government
Accountability Office to study broadband data metrics and standards, and the Department of
Commerce to provide grants supporting state broadband initiatives.
Meanwhile, the America COMPETES Act (H.R. 2272) was enacted (P.L. 110-69) and contains a
provision authorizing the National Science Foundation (NSF) to provide grants for basic research
in advanced information and communications technologies. Areas of research include affordable
broadband access, including wireless technologies. P.L. 110-69 also directs NSF to develop a plan
that describes the current status of broadband access for scientific research purposes.
The following is a listing of broadband related bills enacted in the 110th Congress.
P.L. 110-69 (H.R. 2272)
America COMPETES Act. Authorizes the National Science Foundation (NSF) to provide grants
for basic research in advanced information and communications technologies. Areas of research
include affordable broadband access, including wireless technologies. Also directs NSF to
develop a plan that describes the current status of broadband access for scientific research
purposes. Introduced May 10, 2007; referred to House Committee on Science and Technology.
Passed House May 21, 2007. Passed Senate July 19, 2007. Signed into law, August 9, 2007.
P.L. 110-161 (H.R. 2764)
Consolidated Appropriations Act, 2008. For Rural Utilities Service, U.S. Department of
Agriculture, provides $6.45 million to support a loan level of $300 million for the broadband loan
program, and $13.5 million for broadband community connect grants. Signed by President,
December 26, 2007.
P.L. 110-234 (H.R. 2419)
Food, Conservation, and Energy Act of 2008. Reauthorizes broadband program at the Rural
Utilities Service through FY2012. Establishes a National Center for Rural Telecommunications
Assessment. Directs USDA and the FCC to submit to Congress a comprehensive rural broadband
strategy. Introduced May 22, 2007; referred to Committee on Agriculture, and in addition to
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Committee on Foreign Affairs. Subcommittee on Specialty Crops, Rural Development, and
Foreign Agriculture held markup of Title VII (Rural Development) on June 6, 2007. Reported by
House Committee on Agriculture (H.Rept. 110-256) on July 23, 2007. Passed House July 27,
2007. Passed Senate with an amendment, December 14, 2007. Conference report (H.Rept. 110-
627) approved by the House May 14, 2008, and by the Senate May 15, 2008. Vetoed by the
President, May 21, 2008. House and Senate overrode veto on May 21 and May 22, 2008. Became
P.L. 110-234, May 22, 2007.
P.L. 110-329 (H.R. 2638)
Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009. Continuing
resolution funds RUS broadband loan and grant program at FY2008 levels through March 6,
2009. Signed by President September 30, 2008.
P.L. 110-385 (S. 1492)
Broadband Data Improvement Act. Seeks to improve the quality of federal broadband data
collection and encourage state initiatives that promote broadband deployment. Requires the FCC
to collect demographic information on unserved areas, data comparing broadband service with 75
communities in at least 25 nations abroad, and data on consumer use of broadband. Directs the
Census Bureau to collect broadband data, the Government Accountability Office to study
broadband data metrics and standards, and the Department of Commerce to provide grants
supporting state broadband initiatives. Introduced May 24, 2007; referred to Committee on
Commerce, Science, and Transportation. Ordered to be reported July 19, 2007; reported by
Committee (S.Rept. 110-204) and placed on Senate Legislative Calendar, October 24, 2007.
Passed by Senate with an amendment September 26, 2008. Passed by House September 29, 2008.
Became P.L. 110-385, October 10, 2008.
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In December 2008, leadership in the House and Senate, as well as the Obama transition team,
announced their intention to include a broadband component in the infrastructure portion of the
economic stimulus package. At the same time, numerous interested parties, including: broadband
equipment manufacturers; large, mid-sized, and small wireline and wireless service providers;
satellite operators; telecommunications unions; consumer groups; education groups; public safety
organizations; think tanks; and others unveiled a multitude of specific proposals for government
support of broadband infrastructure.45
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On January 21, 2009, the House Appropriations Committee approved legislative language for the
spending portion of the economic stimulus package (H.R. 1, American Recovery and

45 See CRS Report R40149, Infrastructure Programs: What’s Different About Broadband?, by Charles B. Goldfarb and
Lennard G. Kruger, p. 21.
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Reinvestment Act of 2009). The legislation would provide $6 billion to support deployment of
broadband and wireless services in rural, unserved, and underserved areas of the nation. Of the
total, $2.825 billion would be provided to the Rural Utilities Service (RUS) of the Department of
Agriculture, and $3.175 billion to the National Telecommunications and Information
Administration of the Department of Commerce. The House broadband stimulus provisions are
included within Title II (under Rural Utilities Service), Title III (under National
Telecommunications and Information Administration), and Title VI (Broadband
Communications) of H.R. 1. Specifically, the legislation breaks down as follows:
• $2.825 billion to the Rural Utilities Service for additional loans, loan guarantees,
and grants to finance “open access” broadband infrastructure. Specifies that at
least 75% of the area to be served by a project receiving funds shall be in a rural
area without sufficient access to high speed broadband service to facilitate
economic development, as determined by the Secretary of Agriculture. Priority is
given to projects that provide service to the most rural residents that do not have
access to broadband services. Priority is also given to borrowers and former
borrowers of rural telephone loans.
• $350 million to the National Telecommunications and Information
Administration to establish the State Broadband Data and Development Grant
Program, as authorized by the recently enacted Broadband Data Improvement
Act (P.L. 110-385). Grants would be used to develop and implement statewide
initiatives to identify and track the availability and adoption of broadband within
each state. Would also be used to develop and maintain a nationwide broadband
inventory map.
• $1 billion to NTIA for Wireless Deployment Grants for wireless voice service
and advanced wireless broadband service (at least 3 Mbps downstream, 1 Mbps
upstream). To the extent possible, 25% of the grants are to be awarded for
providing wireless voice service in unserved areas, and 75% for advanced
wireless broadband service in underserved areas. Grant recipients are required to
operate on an “wireless open access” basis.
• $1.825 billion to NTIA for Broadband Deployment Grants for basic broadband
service (at least 5 Mbps downstream, 1 Mbps upstream) or advanced broadband
service (at least 45 Mbps downstream, 15 Mbps upstream). To the extent
possible, 25% of the grants are to be awarded for providing basic broadband in
unserved areas, and 75% for advanced broadband service in underserved areas.
Grant recipients are required to operate on an “open access” basis.
For the Wireless and Broadband Deployment Grants, the terms “unserved,” “underserved,” “open
access,” and “wireless open access” shall be defined by the FCC not later than 45 days after
enactment of the legislation. Also for these grants, each state planning to participate is required to
submit to NTIA a report detailing which geographic areas within that state are most in need of
wireless voice, advanced wireless broadband, basic broadband, and advanced broadband services
in both unserved and underserved areas. Unserved and underserved areas identified by a state
shall not constitute more than 20% of the population or geographic area of that state.
While the RUS broadband programs and the State Broadband Data and Development Grant
Program were previously authorized (the RUS programs have operated for seven years, while the
state grants is newly established by P.L. 110-385, the Broadband Data Improvement Act, and not
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yet funded), the Broadband Deployment Grants and the Wireless Deployment Grants would be
newly authorized.
On January 22, 2009, the House Committee on Energy and Commerce marked up and approved
sections 3101 (nationwide broadband inventory map to be developed by NTIA) and 3102
(authorizing wireless and broadband deployment grants at NTIA). An amendment in the nature of
a substitute, offered by the Chairman, additionally requires NTIA to issue an annual report
assessing the impact and effectiveness of the grants, and expands the list of eligible entities to
include satellite companies. Other amendments agreed to by the Committee would:
• include the improvement of interoperable broadband communications systems
used for public safety and emergency response among factors to be considered in
award decisions;
• direct the FCC to review and revise its definitions of unserved and underserved
areas after completion of NTIA’s nationwide broadband inventory map;
• direct the FCC to submit to Congress a national broadband plan; and
• direct NTIA to consider whether an eligible entity is a socially and economically
disadvantaged small business.
On January 28, 2009, the House passed H.R. 1. An amendment agreed to by the House would
make projects funded by the newly established NTIA broadband and wireless grant programs
eligible for worker training grant money (under Title IX, Subtitle A of H.R. 1).
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On February 7, 2009, a substitute amendment to H.R. 1 (S.Amdt. 570, the “Collins-Nelson
amendment”) was submitted in the Senate. S.Amdt. 570 would provide $7 billion to NTIA for
establishment of a national broadband service development and expansion program called the
Broadband Technology Opportunities Program. This is $2 billion less than what was provided in
the Senate Appropriations Committee mark (S. 336, S.Rept. 111-3). The program, as provided in
S.Amdt. 570, consists of:
• $6.650 billion for competitive broadband grants, of which not less than $200
million shall be available for competitive grants for expanding public computer
center capacity (including at community colleges and public libraries); not less
than $250 million to encourage sustainable adoption of broadband service; and
$10 million transferred to the Department of Commerce Office of Inspector
General for audits and oversight.
• $350 million for funding the Broadband Data Improvement Act (P.L. 110-385)
and for the purpose of developing and maintaining a broadband inventory map,
which shall be made accessible to the public no later than two years after
enactment. Funds deemed necessary and appropriate by the Secretary of
Commerce may be transferred to the FCC for the purposes of developing a
national broadband plan, which shall be completed one year after enactment.
Significant language related to Broadband Technology Opportunities Program grants includes the
following:
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• 50% of the total grant funding shall be used to support projects in rural
communities, and funds may be transferred for this purpose to USDA’s Rural
Utilities Service if deemed appropriate by the Secretary of Commerce and in
consultation with the Secretary of Agriculture. In cases where this funding is
made available to the RUS broadband loan, loan guarantee, and grant programs,
at least 75% of the area to be served by a project receiving funds shall be in a
rural area without sufficient access to high speed broadband service to facilitate
economic development, as determined by the Secretary of Agriculture. Priority is
given to projects that provide service to the highest proportion of rural residents
that do not have sufficient access to broadband services.
• Among the purposes of the grant program is to provide broadband to citizens
residing in unserved and underserved areas. NTIA may consult with the chief
executive officer of any state with respect to identifying unserved and
underserved areas within that state, and with respect to the allocation of grant
funds within that state.
• NTIA shall, in coordination with the FCC, develop nondiscrimination and
network interconnection obligations that shall be contractual conditions of grants
awarded.
• The federal share of any project may not exceed 80% unless NTIA determines
financial hardship.
• Grant eligibility includes: a state or political subdivision, a nonprofit foundation,
corporation, institution or association, Indian tribe, Native Hawaiian organization
or other nongovernmental entity in partnership with a state or political
subdivision, Indian tribe, or native Hawaiian organization.
• Grants may be used to acquire equipment and technology necessary for
broadband infrastructure, to construct and deploy broadband service related
infrastructure, to ensure access to broadband by community anchor institutions,
to facilitate broadband service by vulnerable populations, to construct and deploy
broadband facilities to improve public safety communications.
S.Amdt. 570 also includes an investment tax credit for qualified broadband expenditures. The
provision would establish a 10% tax credit for investment in current generation broadband in
rural and underserved areas, a 20% tax credit for investment in current generation broadband in
unserved areas, and a 20% tax credit for investment in next generation broadband in rural,
underserved, and unserved areas. Current generation is defined as at least 5 Mbps download
speed and 1 Mbps upload, or for wireless broadband, 3Mbps download and 768 kbps upload.
Next generation is defined as at least 100 Mbps download and 20 Mbps upload.
On February 10, 2009, the Senate passed H.R. 1 as amended by S.Amdt. 570.
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The following are some key similarities and differences between the House-passed and Senate-
passed broadband provisions of H.R. 1:
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• both the House and Senate bills would rely primarily on grants as a strategy to
stimulate broadband deployment – House total funding is $6 billion, Senate total
is $7 billion;
• House would provide $3.175 billion to NTIA and $2.825 billion to RUS
broadband programs; Senate provides all funding to NTIA, but directs that 50%
should finance projects in rural areas, DOC can transfer this funding in part to the
RUS broadband loan and grant programs if deemed appropriate;
• both the House and Senate bills would provide $350 million to NTIA for funding
the Broadband Data Improvement Act and to develop a national broadband
inventory map;
• Senate specifically sets aside not less than $200 million for competitive grants for
expanding public computer center capacity (including at community colleges and
public libraries) and not less than $250 million to encourage sustainable adoption
of broadband service; funding is not specifically set aside for these purposes in
the House bill;
• Senate has a 20% matching requirement for grant recipients (which can be
waived in case of financial hardship); House doesn’t have a matching
requirement but cites a 20% match as a positive consideration when assessing
grant applications;
• House sets funding allocation percentages for Broadband Technology
Opportunity grants based on minimum broadband speed requirements (download
and upload) and whether area is unserved or underserved, directs FCC to define
“unserved” and “underserved” within 45 days; Senate doesn’t prescribe
allocations based on minimum download/upload speeds and whether an area is
unserved or underserved, instead directs NTIA to consult with each state to
identify unserved and underserved areas as well as the appropriate allocation of
grant funds within that state;
• House mandates “open access” requirement for grant projects and requires that
projects adhere to FCC’s net neutrality principles, directs FCC to define “open
access” and “wireless open access” within 45 days; Senate directs that NTIA
shall, in coordination with the FCC, develop nondiscrimination and network
interconnection obligations that shall be contractual conditions of grants
awarded;
• House defines entities eligible for grants as essentially any provider of wireless
or broadband service, including states or local governments; Senate defines an
eligible applicant as a state or political subdivision thereof, a nonprofit
foundation, corporation, institution or association, Indian tribe, Native Hawaiian
organization or other nongovernmental entity in partnership with a state or
political subdivision, Indian tribe, or native Hawaiian organization;
• Senate includes broadband investment tax credits; House does not include
broadband tax incentives;
• House directs that 50% of grant funds are to be awarded no later than September
30, 2009; Senate directs all funds to be awarded by the end of FY2010; and
• both the House and Senate bills direct FCC to develop a national broadband plan
in one year.
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On February 17, 2009, President Obama signed P.L. 111-5, the American Recovery and
Reinvestment Act (ARRA). Broadband provisions of the ARRA provide a total of $7.2 billion,
primarily for broadband grants. The total consists of $4.7 billion to NTIA/DOC for a newly
established Broadband Technology Opportunities Program and $2.5 billion to existing
RUS/USDA broadband programs.46
Regarding the $2.5 billion to RUS/USDA broadband programs, the ARRA specifies that at least
75% of the area to be served by a project receiving funds shall be in a rural area without sufficient
access to high speed broadband service to facilitate economic development, as determined by the
Secretary of Agriculture. Priority is given to projects that provide service to the most rural
residents that do not have access to broadband services. Priority is also given to borrowers and
former borrowers of rural telephone loans.
Of the $4.7 billion appropriated to NTIA:
• $4.35 billion is directed to a competitive broadband grant program, of which not
less than $200 million shall be available for competitive grants for expanding
public computer center capacity (including at community colleges and public
libraries); not less than $250 million to encourage sustainable adoption of
broadband service; and $10 million transferred to the Department of Commerce
Office of Inspector General for audits and oversight; and
• $350 million is directed for funding the Broadband Data Improvement Act (P.L.
110-385) and for the purpose of developing and maintaining a broadband
inventory map, which shall be made accessible to the public no later than two
years after enactment. Funds deemed necessary and appropriate by the Secretary
of Commerce may be transferred to the FCC for the purposes of developing a
national broadband plan, which shall be completed one year after enactment.
The Broadband Technology Opportunities Program within NTIA is authorized by Division B,
Title VI of the ARRA. Specific implementation requirements and guidelines for the new NTIA
broadband grants are as follows:
• Directs NTIA to consult with each state to identify unserved and underserved
areas (with respect to access to broadband service) as well as the appropriate
allocation of grant funds within that state. The Conferees (H.Rept. 111-16)
“intend that the NTIA has discretion in selecting the grant recipients that will best
achieve the broad objectives of the program.”
• The substitute does not define “unserved area,” “underserved area,” and
“broadband.” The Conferees instructed NTIA to coordinate its understanding of
these terms with the FCC, and in defining “broadband service” to take into
consideration technical differences between wireless and wireline networks and
to consider the actual speeds these networks are able to deliver to consumers
under a variety of circumstances.

46 For information on existing broadband programs at RUS, see: CRS Report RL33816, Broadband Loan and Grant
Programs in the USDA’s Rural Utilities Service, by Lennard G. Kruger.
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• Directs NTIA, in coordination with the FCC, to publish “non-discrimination and
network interconnection obligations” that shall be contractual conditions of
awarded grants, and specifies that these obligations should adhere, at a minimum,
to the FCC’s broadband principles to promote the openness and interconnected
nature of the Internet (FCC 05-151, adopted August 5, 2005).
• Directs NTIA, when considering applications for grants, to consider whether the
project will provide the greatest broadband speed possible to the greatest
population of users in the area. There are no specific speed thresholds that
applicants must meet to be eligible for a grant. The Conferees acknowledged that
while speed thresholds could have the unintended effect of thwarting broadband
deployment in some areas, deploying next-generation speeds would likely result
in greater job creation and job preservation. NTIA is instructed to “seek to fund,
to the extent practicable, projects that provide the highest possible, next-
generation broadband speeds to consumers.”
• Defines entities eligible for grants as: a state or political division thereof; the
District of Columbia; a territory or possession of the United States; an Indian
tribe or native Hawaiian organization; a nonprofit foundation, corporation,
institution or association; or any other entity, including a broadband service or
infrastructure provider, that NTIA finds by rule to be in the public interest. It was
the intent of the Conferees that as many entities as possible be eligible to apply
for a grant, including wireless carriers, wireline carriers, backhaul providers,
satellite carriers, public-private partnerships, and tower companies.
• Requires NTIA to consider whether a grant applicant is a socially and
economically disadvantaged small business as defined under the Small Business
Act.
• Directs NTIA to ensure that all awards are made before the end of FY2010.
Grantees will be required to substantially complete projects within two years
after the grant is awarded.
• Directs that the federal share of any project cannot exceed 80% unless the
applicant petitions NTIA and demonstrates financial need.
The Conference Agreement and public law bill did not include the broadband investment tax
credit provisions that were contained in the Senate bill. For more information on implementation
of the broadband provisions of the ARRA, see CRS Report R40436, Broadband Infrastructure
Programs in the American Recovery and Reinvestment Act, by Lennard G. Kruger.
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P.L. 111-8 (H.R. 1105). Omnibus Appropriations Act, 2009. Appropriates to RUS/USDA $15.619
million to support a loan level of $400.487 million for the Rural Broadband Access Loan and
Loan Guarantee Program, and $13.406 million for the Community Connect Grant Program. To
the FCC, designates not less than $3 million to establish and administer a State Broadband Data
and Development matching grants program for State-level broadband demand aggregation
activities and creation of geographic inventory maps of broadband service to identify gaps in
service and provide a baseline assessment of statewide broadband deployment. Passed House
February 25, 2009. Passed Senate March 10, 2009. Signed by President, March 12, 2009.
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H.R. 691 (Meeks). Broadband Access Equality Act of 2009. Amends the Internal Revenue
Code of 1986 to provide credit against income tax for businesses furnishing broadband services to
underserved and rural areas. Introduced January 26, 2009; referred to Committee on Ways and
Means.
H.R. 760 (Eshoo). Advanced Broadband Infrastructure Bond Initiative of 2009. Amends the
Internal Revenue Code of 1986 to provide an income tax credit to holders of bonds financing new
advanced broadband infrastructure. Introduced January 28, 2009; referred to Committee on Ways
and Means and in addition to Committee on Energy and Commerce.
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As Congress considers various options for encouraging broadband deployment, a key issue is
how to strike a balance between providing federal assistance for unserved and underserved areas
where the private sector may not be providing acceptable levels of broadband service, while at the
same time minimizing any deleterious effects that government intervention in the marketplace
may have on competition and private sector investment. In addition to loans, loan guarantees, and
grants for broadband infrastructure deployment, a wide array of policy instruments are available
to policymakers including universal service reform, tax incentives to encourage private sector
deployment, broadband bonds, demand-side incentives (such as assistance to low income families
for purchasing computers), regulatory and deregulatory measures, and spectrum policy to spur
roll-out of wireless broadband services. In assessing federal incentives for broadband
deployment, Congress will likely consider the appropriate mix of broadband deployment
incentives to create jobs in the short and long term, the extent to which incentives should target
next-generation broadband technologies, the extent to which “underserved” areas with existing
broadband providers should receive federal assistance, and how broadband stimulus measures of
the ARRA might fit into the context of overall goals for a national broadband policy.

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Table 1. Selected Federal Domestic Assistance Programs Related to Telecommunications Development
Web Links for More Information
Program Agency
Description

FY2008
http://12.46.245.173/cfda/cfda.html: Go
(obligations) to “All Programs Listed Numerically”
and search by program
Public Telecommunications National Telecommunications
Assists in planning, acquisition, installation
$19.5 million
http://www.ntia.doc.gov/otiahome/ptfp/
Facilities—Planning and
and Information
and modernization of public
index.html
Construction
Administration, Dept. of
telecommunications facilities
Commerce

Investments for Public
Economic Development
Provides grants to economically distressed
$249 million
http://www.eda.gov/
Works and Economic
Administration, Dept. of
areas for construction of public facilities and
Development Facilities
Commerce
infrastructure, including broadband
deployment and other types of
telecommunications enabling projects
Rural Telephone Loans and Rural Utilities Service, U.S.
Provides long-term direct and guaranteed
$145 million
http://www.usda.gov/rus/telecom/index.htm
Loan Guarantees
Dept. of Agriculture
loans to qualified organizations for the
(hardship

purpose of financing the improvement,
loans);
expansion, construction, acquisition, and
$250 million
operation of telephone lines, facilities, or
(cost of
systems to furnish and improve
money loans);
telecommunications service in rural areas
$295 million
(FFB Treasury
loans)
Distance Learning and
Rural Utilities Service, U.S.
Provides seed money for loans and grants to $24.7 million
http://www.usda.gov/rus/telecom/dlt/dlt.htm
Telemedicine Loans and
Dept. of Agriculture
rural community facilities (e.g., schools,
(grants)

Grants
libraries, hospitals) for advanced
$28 million
telecommunications systems that can provide (loans and
health care and educational benefits to rural loan-grant
areas
combinations)

Rural Broadband Access
Rural Utilities Service, U.S.
Provides loan and loan guarantees for
$300 million
http://www.usda.gov/rus/telecom/
Loan and Loan Guarantee Dept. of Agriculture
facilities and equipment providing broadband (cost of
broadband.htm
Program
service in rural communities
money loans)
Community Connect
Rural Utilities Service, U.S.
Provides grants to applicants proposing to
$13.4 million http://www.usda.gov/rus/telecom/index.htm
Broadband Grants
Dept. of Agriculture
provide broadband service on a “community-
oriented connectivity” basis to rural
communities of under 20,000 inhabitants.
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Web Links for More Information
Program Agency
Description

FY2008
http://12.46.245.173/cfda/cfda.html: Go
(obligations) to “All Programs Listed Numerically”
and search by program
Education Technology
Office of Elementary and
Grants to State Education Agencies for
$267 million
http://www.ed.gov/Technology/TLCF/
State Grants
Secondary Education, Dept. of development of information technology to
index.html

Education
improve teaching and learning in schools

Ready to Teach
Office of Assistant Secretary
Grants to carry out a national
$10.7 million
http://www.ed.gov/programs/readyteach/
for Educational Research and
telecommunication-based program to

index.html
Improvement, Dept. of
improve the teaching in core curriculum
Education
areas.
Special Education—
Office of Special Education and Supports development and application of
$39.3 million http://www.ed.gov/about/offices/list/osers/
Technology and Media
Rehabilitative Services, Dept. of technology and education media activities for
index.html?src=mr/
Services for Individuals
Education
disabled children and adults

with Disabilities
Telehealth Network
Health Resources and Services Grants to develop sustainable telehealth
$3.9 million
http://www.hrsa.gov/telehealth/
Grants
Administration, Department of programs and networks in rural and frontier
Health and Human Services
areas, and in medically unserved areas and
populations.
Medical Library Assistance National Library of Medicine,
Provides funds to train professional
$67.5 million http://www.nlm.nih.gov/ep/extramural.html
National Institutes of Health,
personnel; strengthen library and information

Department of Health and
services; facilitate access to and delivery of
Human Services
health science information; plan and develop
advanced information networks; support
certain kinds of biomedical publications; and
conduct research in medical informatics and
related sciences
State Library Program
Office of Library Services,
Grants to state library administrative
$171.5 million http://www.imls.gov/grants/library/
Institute of Museum and
agencies for promotion of library services

lib_gsla.asp#po
Library Services, National
that provide all users access to information

Foundation on the Arts and the through State, regional, and international
Humanities
electronic networks

Native American and
Office of Library Services,
Supports library services including
$3.7 million
http://www.imls.gov/grants/library/lib_nat.asp
Native Hawaiian Library
Institute of Museum and
electronically linking libraries to networks

Services
Library Services, National
Foundation on the Arts and the
Humanities
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Web Links for More Information
Program Agency
Description

FY2008
http://12.46.245.173/cfda/cfda.html: Go
(obligations) to “All Programs Listed Numerically”
and search by program
Appalachian Area
Appalachian Regional
Provides project grants for Appalachian
$73 million
http://www.arc.gov/index.do?nodeId=21
Development
Commission
communities to support the physical
infrastructure necessary for economic
development and improved quality of life.
Delta Area Economic
Delta Regional Authority
Grants to support self-sustaining economic
$7.8 million
http://www.dra.gov/programs/information-
Development
development of eight states in Mississippi
technology
Delta region.
Denali Commission
Denali Commission
Provides grants through a federal and state
$106 million
http://www.denali.gov/
Program
partnership designed to provide critical
infrastructure and utilities throughout Alaska,
particularly in distressed communities
Source: Prepared by CRS based on information from the Catalog of Federal Domestic Assistance.
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Table 2. Selected Federal Programs Funding Broadband Access
Program Comments
Programs Funding Access to Telecommunications in Underserved Areas
Rural Broadband Access Loan and
Provides loan and loan guarantees for facilities and equipment providing
Loan Guarantee Program (Rural
broadband service in rural communities.
Utilities Service, U.S. Department of
Agriculture)
Community Connect Broadband
Provides grants to applicants proposing to provide broadband service on a
Grants (Rural Utilities Service, U.S.
“community-oriented connectivity” basis to rural communities of under
Department of Agriculture)
20,000 inhabitants.
Rural Telephone Loans and Loan
Since 1995, the RUS Rural Telephone Loan and Loan Guarantee program—
Guarantees (Rural Utilities Service,
which has traditionally financed telephone voice service in rural areas under
U.S. Department of Agriculture)
5,000 inhabitants—has required that all telephone facilities receiving
financing must be capable of providing DSL broadband service at a rate of at
least 1 megabyte per second.
Universal Service Fund: High Cost
While the USF’s High Cost Program does not explicitly fund broadband
Program (Federal Communications
infrastructure, subsidies are used, in many cases, to upgrade existing
Commission)
telephone networks.
Federal Economic Development Programs Funding Broadband Access
Community Development Block
In Michigan, a Digital Divide Investment Program (DDIP) combined Michigan
Grants (Department of Housing and
Broadband Development Authority loans (initially $12 million) and CDBG
Urban Development)
grant funding ($4 million) to deploy a hybrid fixed wireless and fiber
network in two rural counties which would make broadband affordable for
low to moderate income residents.
Indian Community Development
In 2005, HUD awarded the Coquille Indian Tribe a $421,354 grant used to
Block Grants (Department of Housing fund the Coquille Broadband Technology Infrastructure Project. The project
and Urban Development)
will allow for improved connectivity for reservation residents,
improvements in rural community access, and potentially increased wireless
Internet access for the Tribal and surrounding communities.
Grants for Public Works and
Supports the proliferation of broadband networks as a key priority for
Economic Development Facilities
regional economic growth. Examples: $6 million grant to a company in
(Economic Development
Virginia for investment in 300 miles of fiber optic cable in nine counties and
Administration, Department of
three cities; $2 million grant to companies in Vermont to help build a 424
Commerce)
mile fiber optic broadband network in rural northern Vermont; and $270
thousand to support a Rhode Island Wireless Innovation Networks project.
EDA encourages communities eligible for RUS programs to access that first
before applying for EDA investment dollars.
Appalachian Regional Commission
The Appalachian Regional Development Act Amendments of 2002
reauthorized ARC for five years and created specific authority for a Region-
wide initiative to bridge the telecommunications and technology gap
between the Appalachian Region and the rest of the United States.
Supported a telecommunications initiative ($33 million over five year
period) which includes projects such as: a regional fiber network across
northeast Mississippi; wireless demonstrations in rural New York, Ohio,
Pennsylvania, Virginia, West Virginia, and Georgia; and a regionwide effort in
Kentucky to compile an inventory of broadband access across the 51
Appalachian counties and work with the private sector to substantially
increase broadband coverage. In Maryland, a county-wide high-speed
wireless network, funded by ARC over several years, now serves over
4,500 customers.
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Program Comments
Delta Regional Authority
During a strategic planning retreat in February 2005, the DRA board
determined that one of the authority’s three top policy priorities would be
information technology. To support its policy position, the authority
devoted $150,000 to create an information technology plan for the region.
Denali Commission
Funded Telecommunications Survey in 2000 which was used to determine
the state of broadband deployment in Alaska and used as basis for applying
for RUS broadband assistance.
Applications-Based Federal Programs Related to Broadband
Universal Service Fund: Schools and
Used to fund broadband access for schools and libraries.
Libraries or “E-Rate” Program
(Federal Communications
Commission)
Universal Service Fund: Rural Health
Used to fund broadband access for rural health care centers.
Care Program (Federal
Communications Commission)
Distance Learning and Telemedicine
Provides seed money for loans and grants to rural community facilities (e.g.,
Program (Rural Utilities Service, U.S.
schools, libraries, hospitals) for advanced telecommunications systems that
Department of Agriculture)
can provide health care and educational benefits to rural areas.
Public Safety Interoperable
Provides funding to states and territories to enable and enhance public
Communications Grant Program
safety agencies’ interoperable communications capabilities.
(National Telecommunications and
Information Administration,
Department of Commerce)
Telehealth Network Grants (Health
Grants to develop sustainable telehealth programs and networks in rural
Resources and Services
and frontier areas, and in medically unserved areas and populations.
Administration, Department of Health
and Human Services)
Public Telecommunications Facilities
Grants for public television, public radio, and nonbroadcast distance learning
Program (National
projects.
Telecommunications and Information
Administration, Department of
Commerce)
Education technology programs
Examples include Education Technology State Grants, Ready to Teach.
(Department of Education)
State Library Grants (Office of Library Grants to state library administrative agencies for promotion of library
Services, Institute of Museum and
services that provide all users access to information through State, regional,
Library Services, National Foundation and international electronic networks.
on the Arts and the Humanities)
Medical Library Assistance (National
Provides funds to train professional personnel; strengthen library and
Library of Medicine, National
information services; facilitate access to and delivery of health science
Institutes of Health, Department of
information; plan and develop advanced information networks; support
Health and Human Services)
certain kinds of biomedical publications; and conduct research in medical
informatics and related sciences.

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Lennard G. Kruger
Specialist in Science and Technology Policy
lkruger@crs.loc.gov, 7-7070
Angele A. Gilroy
Specialist in Telecommunications Policy
agilroy@crs.loc.gov, 7-7778

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