Broadband Infrastructure Programs in the
American Recovery and Reinvestment Act

Lennard G. Kruger
Specialist in Science and Technology Policy
November 5, 2009
Congressional Research Service
7-5700
www.crs.gov
R40436
CRS Report for Congress
P
repared for Members and Committees of Congress

Broadband Infrastructure Programs in the American Recovery and Reinvestment Act

Summary
The American Recovery and Reinvestment Act (ARRA, P.L. 111-5) provided $7.2 billion
primarily for broadband grant programs to be administered by two separate agencies: the National
Telecommunications and Information Administration (NTIA) of the Department of Commerce
(DOC) and the Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA). Of
the $7.2 billion total, the ARRA provided $4.7 billion to establish a Broadband Technology
Opportunities Program (BTOP) at NTIA, and $2.5 billion as funding for broadband grant, loan,
and loan/grant combination programs at RUS. Broadband grants and loans funded by the ARRA
are competitive and applicants must apply directly to NTIA and RUS. The NTIA appropriation
also included $350 million for a national broadband inventory map, funding for the Broadband
Data Improvement Act (P.L. 110-385), and funding to be transferred to the Federal
Communications Commission (FCC) to develop a national broadband plan.
The unprecedented scale and scope of the ARRA broadband programs, coupled with the short
time frame for awarding grants, presents daunting challenges with respect to program
implementation as well as Congressional oversight. Congress is closely monitoring how equitably
and effectively broadband grants are allocated among states and the various stakeholders, and to
what extent the programs fulfill the goals of short term job creation and the longer term economic
benefits anticipated from improved broadband availability, access, and adoption. A continuing
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.
The first round of funding for broadband grants, loans, and loan/grant combinations was
announced with the release of a Notice of Funds Availability (NOFA) on July 1, 2009. The NOFA
contains eligibility requirements, application rules and procedures, and evaluation criteria for
BTOP at NTIA and for the Broadband Initiatives Program (BIP) at RUS. Program
implementation decisions made by NTIA and RUS could have a significant impact on how the
program is shaped and targeted, and the extent to which the program meets the goals and
purposes set forth by the ARRA. Implementation issues include defining “underserved” and
“unserved” areas with respect to broadband service, defining “nondiscrimination and network
interconnection obligations,” defining “broadband,” the role of the states, broadband data
collection, and evaluation and transparency.
NTIA and RUS received over 2,200 applications requesting nearly $28 billion in funding. While
initially NTIA and RUS had expected to begin announcing awards in November, because of the
volume and complexity of the applications received, award announcements are expected to begin
by December 15, 2009. Meanwhile, the second funding round will likely open in early 2010.
Prior to the second round, NTIA and RUS will collect public comment on “lessons learned” and
on what changes should be reflected in the second round NOFA. Controversial issues, such as the
RUS definition of “remote unserved areas,” will likely be reexamined as part of the second NOFA
process.


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Broadband Infrastructure Programs in the American Recovery and Reinvestment Act

Contents
Introduction ................................................................................................................................ 1
American Recovery and Reinvestment Act of 2009, P.L. 111-5.................................................... 1
NTIA/DOC ........................................................................................................................... 2
RUS/USDA .......................................................................................................................... 4
Implementation of ARRA Broadband Programs .......................................................................... 4
Grants, Loans, and Loan/Grant Combinations for Broadband Expansion ............................... 4
BIP Grants, Loans, and Grant/Loan Combinations........................................................... 6
BTOP Grants .................................................................................................................. 7
BIP and BTOP Application and Evaluation Process ......................................................... 8
First Funding Round ....................................................................................................... 8
Second Funding Round ................................................................................................... 9
State Broadband Data and Development Grant Program ........................................................ 9
Development of National Broadband Plan........................................................................... 10
Issues Related to Implementation .............................................................................................. 11
Defining “Underserved” and “Unserved” ............................................................................ 12
Defining Broadband............................................................................................................ 13
Defining “Non-Discrimination and Network Interconnection Obligations” .......................... 14
Role of the States ................................................................................................................ 15
Eligible Entities .................................................................................................................. 16
Broadband Data Gathering .................................................................................................. 17
Evaluation and Transparency............................................................................................... 17
Concluding Observations .......................................................................................................... 18

Tables
Table 1. Selected Comparison of BIP and BTOP Provisions in NOFA ......................................... 5
Table 2. First Round Applications to BTOP and BIP.................................................................... 9
Table 3.State Broadband Data and Development Grant Awards.................................................. 10

Contacts
Author Contact Information ...................................................................................................... 19

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Broadband Infrastructure Programs in the American Recovery and Reinvestment Act

Introduction
Broadband infrastructure refers to networks of deployed telecommunications equipment and
technologies necessary to provide high-speed Internet access and other advanced
telecommunications services for private homes, businesses, commercial establishments, schools,
and public institutions. In the United States, broadband infrastructure is constructed, operated,
and maintained primarily by the private sector, including telephone, cable, satellite, wireless, and
other information technology companies. Currently deployed broadband technologies include
cable modem, DSL (copper wire), wireless systems (mobile and fixed), fiber, and satellite.
Although broadband is deployed by private sector providers, federal and state regulation of the
telecommunications industry as well as government financial assistance programs can have a
significant impact on private sector decisions to invest in and deploy broadband infrastructure,
particularly in underserved and unserved areas of the nation.
The American Recovery and Reinvestment Act (ARRA, P.L. 111-5) provided $7.2 billion
primarily for broadband grant programs to be administered by two separate agencies: the National
Telecommunications and Information Administration (NTIA) of the Department of Commerce
(DOC) and the Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA). Of
the $7.2 billion total, the ARRA provided $4.7 billion to establish a Broadband Technology
Opportunities Program (BTOP) at NTIA, and $2.5 billion for broadband grant, loan, and
loan/grant combination programs at RUS. The ARRA also directed the Federal Communications
Commission (FCC) to develop a national broadband strategy. In comparison with previously
existing federal broadband programs in the United States,1 the broadband grant and loan
programs established and funded by P.L. 111-5 are unprecedented in scale and scope.
The impetus behind broadband provisions in the ARRA was two-fold: in the short term, to create
jobs through the construction and deployment of broadband infrastructure, and in the long term,
to address concerns over economic and societal impacts of inadequate broadband availability,
access, and adoption, particularly in rural and lower-income areas of the nation.2 The
unprecedented scale and scope of the ARRA broadband programs, coupled with the short time
frame for awarding grants, presents daunting challenges with respect to program implementation
as well as Congressional oversight.
American Recovery and Reinvestment Act of 2009,
P.L. 111-5

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

1 See CRS Report RL30719, Broadband Internet Access and the Digital Divide: Federal Assistance Programs, by
Lennard G. Kruger and Angele A. Gilroy.
2 See ibid., pp. 1-4.
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organizations; think tanks; and others unveiled a multitude of specific proposals for government
support of broadband infrastructure.3
The House and Senate approved the Conference Report on H.R. 1 (H.Rept. 111-16) on February
13, 2009. On February 17, 2009, President Obama signed P.L. 111-5, the American Recovery and
Reinvestment Act (ARRA). Broadband provisions of the ARRA provided a total of $7.2 billion,
primarily for broadband grants. The total consists of $4.7 billion to NTIA/DOC for a newly
established Broadband Technology Opportunities Program (BTOP) and $2.5 billion to
RUS/USDA broadband grant, loan, and loan/grant combination programs.4
NTIA/DOC
Of the $4.7 billion appropriated to NTIA:
• $4.35 billion was 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 DOC Office of Inspector
General for audits and oversight;
• $350 million was 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; and
• Funds deemed necessary and appropriate by the Secretary of Commerce, in
consultation with the FCC, 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:
• Established a “national broadband service development and expansion program”
with purposes to include providing access to broadband service to consumers
residing in unserved and underserved areas; providing broadband education,
awareness, training, access, equipment and support to various institutions;
improving access to, and use of, broadband service by public safety agencies; and
stimulating demand for broadband, economic growth, and job creation.
• Directed 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.

3 See CRS Report R40149, Infrastructure Programs: What’s Different About Broadband?, by Charles B. Goldfarb and
Lennard G. Kruger.
4 For information on stimulus funding directed to the 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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• Directed NTIA, to the extent practical, to award not less than one grant in each
state.
• Did 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.
• Directed 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).5
• Directed 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.”
• Defined 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.
• Required NTIA to consider whether a grant applicant is a socially and
economically disadvantaged small business as defined under the Small Business
Act.
• Directed 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.
• Directed that the federal share of any project cannot exceed 80% unless the
applicant petitions NTIA and demonstrates financial need.
• Directed that grant applicants must demonstrate that the grant project would not
have been implemented during the grant period without federal grant assistance.

5 See CRS Report R40616, Access to Broadband Networks: The Net Neutrality Debate , by Angele A. Gilroy
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RUS/USDA
The $2.5 billion appropriated to RUS was designated as additional amounts for RUS grant and
loan programs. The ARRA did not specify how the $2.5 billion is to be divided between grants
and loans. Regarding projects applying for ARRA funding, the law stated that:
• at least 75% of the area to be served by a project receiving these funds shall be in
a rural area without sufficient access to high-speed broadband service to facilitate
economic development, as determined by the Secretary of Agriculture;
• priority shall be given to projects that will deliver end users a choice of more
than one broadband service provider;
• priority shall be given to projects that provide service to the highest proportion of
rural residents that do not have access to broadband service;
• priority shall be given to borrowers and former borrowers of rural telephone
loans;
• priority shall be given to projects demonstrating that all project elements will be
fully funded, that can commence promptly, and that can be completed; and
• no area of a project may receive funding to provide broadband service under the
Broadband Technology Opportunities Program at NTIA/DOC.
Implementation of ARRA Broadband Programs
ARRA broadband programs encompass three distinct programs or activities: (1) grants, loans, and
loan/grant combinations to expand broadband services and infrastructure (NTIA and RUS); (2)
the State Broadband Data and Development Grant Program (NTIA); and (3) development of a
national broadband plan (FCC). “Broadband USA,” the official web portal to apply for ARRA
broadband funding, is located at http://broadbandusa.sc.egov.usda.gov/. Agency websites tracking
the latest ARRA broadband program developments are located at NTIA,6 RUS,7 and the FCC.8
Grants, Loans, and Loan/Grant Combinations for Broadband
Expansion

On July 1, 2009, NTIA and RUS jointly released the first Notice of Funds Availability (NOFA)
detailing requirements, rules, and procedures for applying for ARRA grants, loans, and loan grant
combinations.9 The total amount available in this first funding round is $4 billion. This total
consists of $2.4 billion (program level) under the RUS Broadband Initiatives Program (BIP),
which will extend loans, grants, and loan/grant combinations to facilitate broadband deployment
in rural areas; and $1.6 billion (budget authority) under the NTIA Broadband Technology
Opportunities Program (BTOP), which will make available grants for deploying broadband

6 http://www.ntia.doc.gov/broadbandgrants.
7 http://www.usda.gov/rus/telecom/index.htm.
8 http://www.fcc.gov/recovery/broadband/.
9 Available at http://www.ntia.doc.gov/frnotices/2009/FR_BBNOFA_090702.pdf.
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infrastructure in unserved and underserved areas, enhance broadband capacity at public computer
centers, and promote sustainable broadband adoption projects. Table 1 compares the NOFA
provisions for BTOP and BIP with respect to funding; definitions of “unserved,” “underserved,”
and “broadband;” definitions of “rural area;” and financial obligations of applicants.
Table 1. Selected Comparison of BIP and BTOP Provisions in NOFA
Broadband Technology Opportunities Program
Broadband Initiatives Program (BIP), Rural
(BTOP), National Telecommunications and
Utilities Service
Information Administration
Funding
$2.4 billion total for first round (program level), includes
$1.6 billion for first round (budget authority), includes up
up to:
to:
—$1.2 billion for Last Mile projects ($400 million in
—$1.2 billion for broadband infrastructure grants (Last
grants for Remote Area projects, $800 million in loans
Mile and Middle Mile projects);
and loan/grant combinations for Non-Remote projects);
—$50 million for Public Computer Center grants;
—$800 million in loans and loan/grant combinations for
Middle Mile projects; and
—$150 million for Sustainable Broadband Adoption
grants; and
—$325 million for reserve fund.
—$200 million for reserve fund.
Definition of “Unserved” and “Underserved”
Same as NTIA/BTOP definition. Additionally defines
Eligible “unserved areas” defined as where at least 90%
“Remote Area” as an unserved, rural area 50 miles from
of households lack access to terrestrial broadband
the limits of a non-rural area.
service.

Eligible “underserved areas” for last mile projects if at
least one of the following factors is met: (1) no more
than 50% of the households in the proposed funded
service area have access to facilities-based, terrestrial
broadband service at greater than the minimum
broadband transmission speed; (2) no broadband service
provider advertises broadband transmission speeds of at
least 3 megabits per second (Mbps) downstream; or (3)
the rate of broadband subscribership for the proposed
funded service area is 40% of households or less.
A proposed funded service area may qualify as
underserved for middle mile projects if one
interconnection point terminates in a proposed funded
service area that qualifies as unserved or underserved for
last mile projects.
Definition of “Broadband”
Same as NTIA/BTOP definition.
Two-way data transmission with advertised speeds of at
least 768 kbps downstream and at least 200 kbps

upstream to end users, or providing sufficient capacity in
a middle mile project to support the provision of
broadband service to end users.
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Broadband Technology Opportunities Program
Broadband Initiatives Program (BIP), Rural
(BTOP), National Telecommunications and
Utilities Service
Information Administration
Definition of “Rural Area”
Any area, as confirmed by the latest decennial census of
Same definition as used by BIP/RUS. Applications to fund
the Bureau of the Census, which is not located within:
broadband infrastructure projects in areas which are at
(1) a city, town, or incorporated area that has a
least 75% rural are required to be submitted to BIP.
population of greater than 20,000 inhabitants or (2) an
BTOP may make awards to such applications NTIA
urbanized area contiguous and adjacent to a city or town
determines to be meritorious after RUS has reviewed
that has a population of greater than 50,000 inhabitants.
the application and determined not to fund it. All other
For purposes of the definition of rural area, an urbanized
applications for Broadband Infrastructure projects, as
area means a densely populated territory as defined in
well as applications for Public Computer Centers or
the latest decennial census of the U.S. Census Bureau.
Sustainable Broadband Adoption projects, must be
submitted to BTOP.
Financial Obligation of Applicant
For grants (Last Mile Remote Area projects): funding up
Required to provide matching funds of at least 20%
to 100%. For grants receiving greater than 80% of eligible toward the total eligible project cost. Applicants must
costs, the Administrator must determine that the
document their capacity to provide matching funds.
awardee has a specific financial need that justifies funding
NTIA will provide up to 80% of total eligible project
greater than 80%; all applicants must be able to generate
costs, unless the applicant petitions the Assistant
a minimum current ratioa of one by the end of the
Secretary for a waiver of the matching requirement and
forecast period and demonstrate a positive cash balance
that waiver is granted by the Assistant Secretary based
for each year of the forecast period.
on the applicant’s demonstration of financial need. In-
kind contributions, including third party in-kind
For loans: the applicant must be able to generate
contributions, are non-cash donations to a project that
sufficient revenues to cover expenses, have sufficient
may count toward satisfying the non-federal matching
cash flow to service debts and obligations as they come
requirement of a project's total budget. In-kind
due, and meet the minimum Times Interest Earned Ratio
contributions must be al owable project expenses.
(TIER)b requirement of one by the end of the forecast
period, as determined by RUS.
a. “Current ratio” is defined as the applicant’s current assets divided by the current liabilities.
b. TIER is defined as the ratio of an applicant’s net income (after taxes) plus (adding back) interest expense, al
divided by interest expense (existing and any new interest expense including the interest expense associated
with the proposed loan).
BIP Grants, Loans, and Grant/Loan Combinations
The ARRA requires that areas served by BIP-funded projects be at least 75% rural.
Predominantly non-rural areas are therefore not eligible for BIP funding. A rural area is defined as
any area not located within a city, town, or incorporated area that has a population of greater than
20,000 inhabitants; or not located within an urbanized area contiguous and adjacent to a city or
town that has a population of greater than 50,000 inhabitants.
Grants under BIP can only be used to fund applications proposing to exclusively serve remote,
unserved, rural areas. Terms are defined as follows:
• “Remote area” is a rural unserved area at least 50 miles from a non-rural area;
• “Unserved area” is an area where at least 90% percent of households lack access
to terrestrial (non-satellite) broadband service; and
• “Broadband” means two-way data transmission with advertised speeds of at least
768 kbps downstream and at least 200 kbps upstream to end users. According to
the NOFA, this speed encompasses all current major wired and wireless
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technologies and is sufficient for applications such as voice service over the
Internet (VOIP), web browsing, and one way video.
Loans and loan/grant combinations are available for applications proposing to serve non-remote
and underserved rural areas. Loan/grant combinations can consist of up to 50% grant money. For
an area to be considered “underserved,” at least one of the following three statements must be
true:
• 50% or more of households don’t have any terrestrial broadband access;
• No provider in the area is advertising broadband speeds of at least 3 or more
megabits per second (Mbps); or
• Broadband subscribership is 40% or less.
Available first round funding for BIP grants, loans, and loan/grant combinations is $2.5 billion.10
Funding is available for Last Mile Projects11 and Middle Mile Projects.12 Last Mile Projects ($1.2
billion available) include:
• Up to $400 million in grants for projects exclusively serving remote unserved
rural areas.
• Up to $800 million in loans and loan/grant combinations for projects serving
non-remote rural areas (both unserved and underserved).
Up to $800 million in loans and loan/grant combinations are available for Middle Mile Projects.
Additionally, $325 million is directed to a reserve fund, which may be used to either augment the
above categories or be carried over to the next funding round.
BTOP Grants
BTOP grant funds are available through three categories of eligible projects:
• Broadband Infrastructure ($1.2 billion available);
• Public Computer Centers ($50 million available); and
• Sustainable Broadband Adoption ($150 million available).
Additionally, $200 million is directed to a reserve fund, which may be used to either augment the
above categories or be carried over to the next funding round.
Broadband Infrastructure grants are available for both Last Mile and Middle Mile projects, and
must support projects that serve either unserved or underserved areas (see above definitions). The
Public Computer Center category funds projects that expand public access to broadband service

10 The $2.5 billion represents program level. Corresponding budget authority is $1.3 billion. Program level exceeds
budget authority because a portion of budget authority goes towards subsidizing loans.
11 Last Mile project means any infrastructure project the predominant purpose of which is to provide broadband service
to end users or end-user devices.
12 Middle Mile project means a broadband infrastructure project that does not predominantly provide broadband service
to end users or to end-user devices, and may include interoffice transport, backhaul, Internet connectivity, or special
access.
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and enhance broadband capacity at entities, such as community colleges and public libraries, that
permit the public to use these computing centers. The Sustainable Broadband Adoption category
funds innovative projects that promote broadband demand, including projects focused on
providing broadband education, awareness, training, access, equipment or support, particularly
among vulnerable population groups where broadband technology has traditionally been
underutilized.
BIP and BTOP Application and Evaluation Process
All applications for projects serving areas that are at least 75% rural are required to be submitted
to the Broadband Initiatives Program at RUS. Those applications may subsequently be considered
by NTIA if RUS decides not to fund them. Thus for broadband infrastructure project applications
proposing to serve rural areas, applicants have the choice of either applying to BIP only, or to BIP
and BTOP simultaneously. All other applications – broadband infrastructure for non-rural areas,
public computer centers, and sustainable broadband adoption projects – are submitted directly to
the Broadband Technology Opportunities Program at NTIA.
Both NTIA and RUS are evaluating and scoring each application based on the proposed project’s
purpose, benefits, viability, and budget and sustainability. Both agencies employ a two-stage
application evaluation process in which lower scoring applications are eliminated after stage one,
and further documentation is required from applications reaching the second stage. Additionally,
each state and territory has the opportunity to provide recommendations on which projects they
feel are most deserving of funding.
NTIA is utilizing volunteer “expert reviewers” to rate applications during the first phase, while
RUS is relying solely on staff and contractors for its review process. On September 28, NTIA and
RUS posted online service area maps for proposed projects. During the 30-day period after those
maps were posted, existing service providers and the public had the opportunity to inform the
agencies if they believe those proposed service areas are not unserved or underserved. RUS and
NTIA will make the final decision as to whether those applications are genuinely seeking to serve
unserved or underserved areas.
First Funding Round
Applications for the first funding round were accepted between July 14 and August 20, 2009.
While initially NTIA and RUS had expected to begin announcing awards in November, because
of the volume and complexity of the applications received, award announcements are expected to
begin by December 15, 2009.
On September 9, NTIA and RUS released preliminary data on applications received during the
first round application period. In total, over 2,200 applications requested nearly $28 billion in
funding for proposed projects reaching all 50 states, five territories, and the District of Columbia.
The total amount of federal funding requested is seven times the amount available ($4 billion) in
the first funding round. Table 2 summarizes preliminary application data.13


13 A searchable database is available at http://www.ntia.doc.gov/broadbandgrants/applications/search.cfm.
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Table 2. First Round Applications to BTOP and BIP
Submitted To
Number of Applications
Federal Funding Requested
Infrastructure (grants, loans, and grant/loan combos)
BTOP solely
260 $5.4
billion
BIP solely
400
$5 billion
Both BTOP and BIP 830
$12.8 billion
Sustainable Broadband Adoption (grants)
BTOP 320
$2.5
billion
Public Computer Centers (grants)
BTOP 360
$1.9
billion
Source: NTIA. Preliminary data as of 9/9/2009.

Second Funding Round
The second funding round will likely open in early 2010. NTIA and RUS are considering whether
to eliminate the third round altogether, and award the remainder of funds in the second round. The
rationale behind combining the second and third rounds is reduced administrative costs,
completion of the awards process by summer 2010, additional time for applicants to provide input
on first round experiences, and additional time for applicants to prepare their applications. Prior
to the second round, NTIA and RUS will collect public comment on “lessons learned” and on
what changes should be reflected in the second round NOFA. Controversial issues, such as the
RUS definition of “remote unserved areas,” will likely be reexamined as part of the second NOFA
process.
State Broadband Data and Development Grant Program
On July 2, 2009, NTIA released a NOFA and solicitation of applications for the State Broadband
Data and Development Grant Program.14 The program will provide approximately $240 million
in grants to assist states or their designees to develop state-specific data on the deployment levels
and adoption rates of broadband services. These data, including publicly available state-wide
broadband maps, will also be used to develop the comprehensive, interactive national broadband
map that NTIA is required by the ARRA to create and make publicly available by February 17,
2011.
Grant awards will also include funding for state broadband planning. Up to $500,000 may be
awarded for the planning portion of each project. Planning projects may include, for example,
efforts to identify barriers to broadband adoption in a state and creation of local technology
planning teams. Awardees will be required to provide at least 20% non-federal matching funds
toward project costs, either cash or in-kind contributions. Applications were accepted from July
14 through August 14, 2009.

14 Department of Commerce, National Telecommunications and Information Administration, “State Broadband Data
and Development Grant Program,” 74 Federal Register 32545-32565, July 8, 2009.
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On September 9, 2009, NTIA announced that it had received applications representing all 50
states, 5 territories, and the District of Columbia. NTIA also announced that it had decided to
initially fund state mapping and data collection efforts for a two-year period, rather than the five-
year period originally intended. This will allow NTIA to assess lessons learned and best practices
prior to awarding funds for subsequent years. Applications requested totals of approximately
$100 million for mapping and $26 million for state broadband planning. On October 5, 2009,
NTIA announced its first four awards. Subsequent awards are being announced throughout the
fall. Table 3 provides a listing of announced state broadband data and development grants.

Table 3.State Broadband Data and Development Grant Awards
$millions
Data
Collection and
Planning
State Applicant Mapping Grant
Grant Total
AR Connect
Arkansas
1.6
0.5
2.1
CA
California Public Utilities
1.8 0.5
2.3
Commission
DC
District of Columbia Office of
1.0 0.5
1.5
the Chief Technology Officer
IN
Indiana Office of Technology
1.3

1.3
NC Rural
Economic
Development
1.6 0.4
2.0
Center, The e-NC Authority
NY
New York State Office of
2.0 0.5
2.5
Cyber Security & Critical
Infrastructure
VT
Vermont Center for
1.2 —
1.2
Geographic Information
WV
West Virginia Geologic and
1.2 0.2
1.4
Economic Survey
Source: Compiled by CRS from NTIA press announcements.
Note: Current as of November 5, 2009. More state grants will be announced in subsequent weeks.


Development of National Broadband Plan
On April 8, 2009, the FCC adopted and released a Notice of Inquiry15 to gather data, expertise,
and public input in preparation for its effort to develop a national broadband plan by February 17,
2010, as mandated by the ARRA. As part of this process, the FCC is collecting comments on a
wide range of issues including:

15 Available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-31A1.pdf.
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• the most effective and efficient ways to ensure broadband access for all
Americans;
• strategies for achieving affordability and maximum utilization of broadband
infrastructure and services;
• evaluation of the status of broadband deployment, including the progress of
related grant programs; and
• how to use broadband to advance consumer welfare, civic participation, public
safety and homeland security, community development, health care delivery,
energy independence and efficiency, education, worker training, private sector
investment, entrepreneurial activity, job creation, and economic growth, and
other national purposes.16
In an effort to gather further data, information, and perspectives on a national broadband plan, the
FCC held a series of public workshops on a variety of broadband-related topics during August
and September of 2009. The FCC has established a website on the national broadband plan at
http://www.broadband.gov.
Issues Related to Implementation
The Broadband Technology Opportunities Program (BTOP) is newly authorized and established
at NTIA, while the Broadband Initiatives Program (BIP) significantly expands the scope and size
of RUS broadband loan and grant programs. The ARRA gives NTIA and RUS considerable
flexibility to implement the BTOP and BIP. According to the Conference Report:
The Conferees intend that the NTIA has discretion in selecting the grant recipients that will
best achieve the broad objectives of the program. The Conferees also intend that the NTIA
select grant recipients that it judges will best meet the broadband access needs of the area to
be served, whether by a wireless provider, a wireline provider, or any provider offering to
construct last-mile, middle-mile, or long haul facilities.
Implementation decisions made by NTIA and RUS have a significant impact on how the program
is shaped and targeted, and the extent to which the program meets the goals and purposes set forth
by the ARRA. On March 12, 2009, NTIA and RUS released a joint request for information (RFI)
and notice of public meetings designed to gather public input into many of the implementation
decisions which the agencies make as they develop rules and regulations for the program.17 A
series of public meetings were held in March 2009. The RFI solicited public comments from all
interested parties on the following topics:
• the purposes of the BTOP program;
• the role of the states;

16 FCC, News Release, “FCC Launches Development of National Broadband Plan,” April 8, 2009, available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-289900A1.pdf.
17 Department of Commerce, National Telecommunications and Information Administration, and Department of
Agriculture, Rural Utilities Service “American Recovery and Reinvestment Act of 2009 Broadband Initiatives,” 74
Federal Register
10716-10721, March 12, 2009.
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• eligible
grant
recipients;
• the establishment of selection criteria for grant awards;
• grant
mechanics;
• grants for expanding public computer center capacity;
• grants for innovative programs to encourage sustainable adoption of broadband service;
• broadband
mapping;
• financial contributions by grant applicants;
• timely completion of proposals;
• coordination between BTOP and the RUS grant program;
• how terms set out in relevant sections of the ARRA should be defined;
• how the success of the BTOP program should be measured;
• any other issues NTIA should consider in creating the BTOP;
• the most effective ways RUS could offer broadband funds;
• how RUS and NTIA can best align their activities;
• how RUS can evaluate whether a particular level of broadband access and service is
needed to facilitate economic development;
• how RUS should consider priorities set out in the ARRA in selecting applications; and
• what benchmarks should be used to determine the success of RUS ARRA broadband
activities.
Below is a discussion of selected issues that were ultimately addressed in the NOFA that was
released on July 1, 2009.
Defining “Underserved” and “Unserved”
As specified in the ARRA, the purpose of BTOP is to provide broadband service to consumers
residing in unserved and underserved areas of the United States. The issue of which areas should
be defined as “underserved” with respect to broadband service has long been controversial. There
is no generally accepted definition of “underserved.” Factors such as a minimal number of
existing providers, a lack of adequate market competition, unaffordable consumer prices for
existing broadband service, or substandard download and upload available speeds may singularly
or in combination lead some to define an area as “underserved.” The definition of “unserved” is
also not uniformly accepted. For example, should unserved be defined only as an area with no
terrestrial (nonsatellite) broadband service, or should areas with some terrestrial but no mobile
wireless service also be considered “unserved?”
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The ARRA does not define either “unserved” or “underserved.” The law directs NTIA to consider
whether a grant application would increase broadband affordability and subscribership, and
provide the greatest broadband speeds possible to the greatest population of users in the area
served. The ARRA directs NTIA to consult with the states (plus the District of Columbia and the
territories) to identify unserved and underserved areas within that state. The Conferees instructed
NTIA to coordinate its understanding of the terms “unserved area” and “underserved area” with
the FCC.
In approaching an understanding of these terms, the NTIA (and the states with which the NTIA
will consult on this issue) must balance competing policy concerns, particularly when developing
or embracing a definition of “underserved.” For example, too narrow a definition may make it
more difficult for rural areas in need of adequate broadband service to receive grants. On the
other hand, too broad a definition of “underserved” may inappropriately confront existing
broadband providers with government-funded competitors and may divert funding from projects
in unserved areas with no broadband service whatsoever.
In the NOFA, both BTOP and BIP use identical definitions of “unserved” and “underserved.”
“Unserved” includes areas with a very small number of households served by terrestrial (non-
satellite) broadband (10% or less). RUS and NTIA stated their belief that “a definition requiring
that 100 percent of households lack access to broadband service could prove overly restrictive
and risk inadvertently excluding populations,” and that “establishing a 90 percent threshold
acknowledges that a de minimis level of broadband service may exist in portions of the area,
while also seeking to minimize the risk of unintentionally excluding an entire area from
funding.”18
RUS also designated separate categories of “remote” and “non-remote” areas. A remote area is
defined as an unserved rural area at least 50 miles from the limits of a non-rural area. For Last
Mile projects, only remote unserved rural areas are eligible for BIP grants.
The NOFA’s definition of “underserved” encompasses not only relatively low broadband
availability (no more than 50%), but also low adoption (40% or less) and the lack of available
higher-end advertised broadband speeds (3 Mbps or more). NTIA and RUS pointed out that the
underserved definition “includes a broadband speed criterion to recognize that a proposed funded
service area can have the minimum level of broadband service available (defined as 768 kbps
downstream and 200 kbps upstream), but still be considered ‘underserved.’”19 NTIA and RUS
declined to define “underserved” in terms of pricing, median income, or demographic
characteristics, arguing that the broadband adoption threshold would encompass those factors.
Defining Broadband
The term “broadband” is typically characterized or defined by minimum download and upload
speeds, specific technologies (i.e., cable modem, fiber-to-the-home, wifi), or specific applications
(e.g., telemedicine, distance learning). The ARRA broadband provisions do not specify minimum
download/upload speed thresholds, are technology neutral, and cite a wide variety of applications
eligible for funding.

18 Rural Utilities Service and National Telecommunications and Information Administration, Notice of Funds
Availability (NOFA) and Solicitation of Applications, Online Version, July 1, 2009, p. 106.
19 Ibid., p. 109.
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The issue of speed thresholds is particularly controversial. While a high speed threshold has the
benefit of encouraging the construction of next generation networks (such as fiber or next
generation cable systems), it also runs the risk of excluding current generation technologies that
may be uniquely suitable for some unserved or underserved areas. The Conferees acknowledged
this dilemma, stating in the Conference Report 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. The Conferees instructed
NTIA to “seek to fund, to the extent practicable, projects that provide the highest possible, next-
generation broadband speeds to consumers.”20 Thus, NTIA has the flexibility to balance the
sometimes competing goals of constructing next generation networks with providing broadband
to unserved and underserved areas.
In the NOFA, RUS and NTIA concluded that “broadband service” should be defined as the
provision of two-way data transmission with advertised speeds of at least 768 kbps downstream
and 200 kbps upstream to end users, or providing sufficient capacity in a Middle Mile project to
support the provision of broadband service to end users. RUS and NTIA favor this broadband
speed threshold because it conforms with the established FCC standard for minimum broadband
speed, allows the use of currently common broadband applications, allows for consideration of
cost-effective solutions for difficult-to-serve areas, and is the most technology-neutral option
because it encompasses all major wired and wireless technologies. In evaluating applications,
RUS and NTIA intend to provide additional consideration to applications exceeding the minimum
speed threshold or offering superior upgradeability.
Defining “Non-Discrimination and Network Interconnection
Obligations”

Congressional policymakers continue to debate and consider whether laws or regulations are
needed to ensure the “openness” of the Internet with respect to both content and access.21 The
debate over nondiscrimination (also commonly referred to as “net neutrality,” “open access,” and
“network management”) has shifted to a debate over the extent to which nondiscrimination
requirements or standards should be imposed on broadband networks funded by BTOP and BIP.
The ARRA directed NTIA, in coordination with the FCC, to publish “non-discrimination and
network interconnection obligations that shall be contractual conditions of grants awarded.” The
ARRA says that these obligations, at a minimum, should adhere to the principles contained in the
FCC’s broadband policy statement (FCC 05-15, adopted August 5, 2005) as follows:
To encourage broadband deployment and preserve and promote the open and interconnected
nature of the public Internet, consumers are entitled to access the lawful Internet content of
their choice.
To encourage broadband deployment and preserve and promote the open and interconnected
nature of the public Internet, consumers are entitled to run applications and use services of
their choice, subject to the needs of law enforcement.

20 U.S. Congress, Conference Report to Accompany H.R. 1, 111th Cong., 1st sess., February 12, 2009, H.Rept. 111-16
(Washington: GPO, 2009), p. 775.
21See CRS Report RS22444, Net Neutrality: Background and Issues, by Angele A. Gilroy.
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To encourage broadband deployment and preserve and promote the open and interconnected
nature of the public Internet, consumers are entitled to connect their choice of legal devices
that do not harm the network.
To encourage broadband deployment and preserve and promote the open and interconnected
nature of the public Internet, consumers are entitled to competition among network
providers, application and service providers, and content providers.22
In developing nondiscrimination and interconnection obligations for funded projects, NTIA,
RUS, and the FCC face the challenge of ensuring the “openness” of federally funded broadband
networks, while at the same time minimizing regulatory burdens on prospective grantees that,
some say,23 may constitute a disincentive for some entities to apply.
According to the NOFA, both BTOP and BIP require all applicants to commit to
nondiscrimination and interconnection obligations. BTOP applications are scored on the extent to
which the applicant exceeds the minimum requirements for interconnection and
nondiscrimination. At a minimum all applicants (both BTOP and BIP) are required to adhere to
the principles contained in the FCC’s Internet Policy Statement; not favor any lawful Internet
applications and content over others; display any network management policies in a prominent
location on the service provider’s web page and provide notice to customers of changes to these
policies; connect to the public Internet directly or indirectly, such that the project is not an
entirely private closed network; and offer interconnection, where technically feasible without
exceeding current or reasonably anticipated capacity limitations, on reasonable rates and terms to
be negotiated with requesting parties (this includes both the ability to connect to the public
Internet and physical interconnection for the exchange of traffic).
Role of the States
While the BTOP grants are competitive and will be awarded directly by NTIA, the states are
expected to play a significant role. The ARRA 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. States themselves (as well as
municipalities) are eligible to apply for broadband grants, and the ARRA specifies that NTIA, to
the extent practical, shall award not less than one grant to an entity within each state.
Regarding NTIA consultation with the states, the Conferees expressed the following:
The Conferees recognize that States have resources and a familiarity with local economic,
demographic, and market conditions that could contribute to the success of the broadband
grant program. States are encouraged to coalesce stakeholders and partners, assess
community needs, aggregate demand for services, and evaluate demand for technical
assistance. The Conferees therefore expect and intend that the NTIA, at its discretion, will
seek advice and assistance from the States in reviewing grant applications, as long as the
NTIA retains the sole authority to approve the awards. The Conferees further intend that the

22 FCC, Policy Statement on Broadband Internet Access, FCC 05-151, adopted August 5, 2005, available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-151A1.pdf. The FCC principles are not rules – rather they
are intended as general principles to be incorporated in FCC’s ongoing policymaking activities.
23 Stephanie Condon, “Telecoms Oppose Tighter Net Neutrality Rules for Stimulus Funds,” CNET News, February 26,
2009.
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NTIA will, in its discretion, assist the States in post-grant monitoring to ensure that
recipients comply fully with the terms and conditions of their grants.24
An issue will likely be to what extent the NTIA follows the recommendations of the states with
respect to award decisions.25 States vary widely with respect to their own broadband programs
and initiatives. Some states have embarked on state-wide broadband strategies and have been
extremely active in mapping broadband availability and identifying unserved and underserved
areas, while other states have not yet begun such an effort.26
According to the NOFA, for BTOP only, the states will receive a list of applications under
consideration during the second stage of the application evaluation process. States may provide
NTIA with a list and prioritization of recommended projects, along with an explanation of why
the selected proposals meet the greatest needs of the state. The final decision on whether the
application will or will not be funded rests with NTIA.
Eligible Entities
The ARRA defines eligible entities for BTOP 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
(required to be technologically neutral) to be in the public interest.
NTIA was thus directed to set the parameters of eligibility beyond states, political subdivisions,
and nonprofit organizations. The issue was the extent to which eligibility would be extended to
private sector for-profit broadband providers, be they large or small, incumbents or new entrants.
According to the ARRA Conference Report, 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.
Through the NOFA, NTIA found it to be in the public interest to permit for-profit corporations
and non-profit entities (not otherwise encompassed by the ARRA statute) to be eligible for BTOP
grants. According to NTIA, “many for-profit corporations have expertise in deployment and
sustainable operation of telecommunications facilities, which may lead to the creation of more
efficient and sophisticated broadband networks that consumers will be able to access in a shorter
period of time. In some cases, for-profit corporations also may have the resources to deploy new
infrastructure more quickly or efficiently than other types of entities.”27 For-profit corporations
are also eligible for RUS grants, loans and loan/grant combinations.

24 Ibid.
25 Some states have already set up their own ARRA websites and have begun soliciting proposals for grant funding,
including broadband projects. See http://www.recovery.gov/?q=content/state-recovery-page.
26 For more information, see State Broadband Initiatives: A Summary of State Programs Designed to Stimulate
Broadband Deployment and Adoption
, A Joint Report of the Alliance for Public Technology and the Communications
Workers of America, July 2008, 54 pages. State program database available at http://www.speedmatters.org/
statepolicy.
27 NOFA, p. 121.
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Broadband Data Gathering
There is widespread agreement that data regarding broadband deployment in the United States are
inadequate and that policymakers have an incomplete picture of where broadband service is
available (and at what speeds and prices). Broadband data are important, because the more
detailed and granular broadband data are, the more effectively government can direct broadband
assistance to areas with the greatest need.
The ARRA addressed broadband data by designating $350 million for funding the Broadband
Data Improvement Act (P.L. 110-385) and for the purpose of developing and maintaining a
national broadband inventory map. The Broadband Data Improvement Act (P.L. 110-385) was
signed into law on October 10, 2008, 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 data,
mapping, and planning initiatives.
Regarding the inventory map, the ARRA directed NTIA to develop and maintain a comprehensive
nationwide inventory map of existing broadband service capability and availability in the United
States that depicts the geographic extent to which broadband service capability is deployed and
available from a commercial provider or public provider throughout each state. Not later than two
years after enactment of the ARRA, the NTIA is directed to make the national inventory map
available online to the public in a form that is interactive and searchable.
A continuing and controversial issue related to broadband data is striking a balance between
making available broadband deployment data to the public that is sufficiently detailed to be
useful, without revealing what some providers may consider to be proprietary information.
According to the State Broadband Data and Development Grant program NOFA, entities
receiving grants must agree to protect sensitive commercial and financial information from public
disclosure except as otherwise mutually agreed to by the entity and the broadband service
provider. Grant recipients may execute nondisclosure agreements to ensure confidentiality, but
such agreements may not restrict a grant recipient from providing collected data to NTIA.
Evaluation and Transparency
Given the large amounts of grant money to be awarded within tight deadlines (by September 30,
2010, for the BTOP grants), there is considerable interest in the issue of transparency and how the
programs will be evaluated and monitored in order to avoid waste, fraud, and abuse. To address
this issue, the ARRA:
• required the Secretary of Agriculture to submit a report to the House and Senate
Appropriations Committees on planned spending and actual obligations
describing the use of ARRA funds ($2.5 billion) for the RUS broadband
programs not later than 90 days after enactment, and quarterly thereafter until all
funds are obligated;
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• transferred $10 million to the Department of Commerce Office of Inspector
General for audits and oversight of funds provided for the Broadband Technology
Opportunities Program;
• directed NTIA to report every 90 days on the status of BTOP to the House and
Senate Appropriations Committees, the House Committee on Energy and
Commerce, and the Senate Committee on Commerce, Science and
Transportation;
• directed NTIA to require grant recipients to file quarterly reports (which will be
publicly available) on the grantee’s use of the grant money and progress on
fulfilling the objectives for which the funds were granted;
• authorized NTIA, if it chooses, to establish additional reporting and information
requirements for any grant recipient;
• authorized NTIA, in addition to other authority under applicable law, to
deobligate awards to grantees that demonstrate an insufficient level of
performance, or wasteful or fraudulent spending, as defined in advance by NTIA,
and award these funds competitively to new or existing applicants; and
• directed NTIA to create and maintain a fully searchable database, accessible on
the Internet at no cost to the public, that contains at least a list of each entity that
has applied for a grant, a description of each application, the status of each
application, the name of each entity receiving funds, the purpose for which the
entity is receiving funds, each quarterly report submitted by the entity, and other
information sufficient to allow the public to understand and monitor grants
awarded under the program.
The NOFA implements the ARRA requirements with respect to transparency and program
evaluation. According to the NOFA, while RUS and NTIA will protect confidential and
proprietary information from public disclosure to the fullest extent authorized by applicable law,
the ARRA requires RUS and NTIA to make publicly available on the Internet a list of each entity
that has applied for a grant, a description of each application, the status of each application, the
name of each entity receiving funds, the purpose for which the entity is receiving the funds, each
quarterly report, and other information.
Concluding Observations
The broadband programs in the ARRA, funded at $7.2 billion, are unprecedented in scope and
scale compared with previously existing federal broadband assistance programs. Policy decisions
made by NTIA, RUS, and the FCC could have major impacts on the implementation of the
program and the extent to which it meets the goals set by Congress for short-term job creation
and long-term improvement of the nation’s broadband infrastructure.
The NOFA released on July 1, 2009, sets forth eligibility requirements, application rules and
procedures, and evaluation criteria for broadband grants, loans, and loan/grant combinations
offered by NTIA and RUS. Depending on the agencies’ experience in the first funding round,
rules, regulations, and funding allocations developed for the second and third rounds could be
modified as long as they remain consistent with the statutory requirements in the ARRA.
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The ARRA broadband provisions are only one component in the nation’s overall broadband
strategy. Among other issues which may be addressed as part of a national broadband policy
(likely to be formulated by the Administration and the FCC) are universal service reform, tax
incentives to encourage private sector broadband rollout, and spectrum policy to spur roll-out of
wireless broadband services. As Congress continues to monitor broadband stimulus programs,
while considering various additional options for encouraging 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.

Author Contact Information

Lennard G. Kruger

Specialist in Science and Technology Policy
lkruger@crs.loc.gov, 7-7070




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