Understanding Broadband Grants

by Ken Fellman, Of Council, Helmer, Conley and Kasselman, PA

Ken Fellman

As Americans have spent a significant amount of time on the internet during the pandemic, the federal government has created several programs addressing broadband deployment.  Here, we address two major Congressional initiatives that provide significant funding to expand broadband networks.  On March 11th, Congress passed the American Rescue Plan (ARP), which allocates funding to state, county, and municipal governments, and establishes that state and local governments receiving this funding may use it “to make necessary investments in water, sewer, or broadband infrastructure.”  As of this writing (August 12, 2021), the House will be considering the Infrastructure Investment and Jobs Act passed by the Senate, which establishes a $42,450,000,000 grant program to states who in turn award subgrants to local governments and other entities for broadband and other infrastructure projects.

On May 11th, the Treasury Department released interim regulations describing the allowable use of ARP funds.  These regulations define “broadband infrastructure” as infrastructure designed to provide service to unserved or underserved households and businesses that reliably meets or exceeds symmetrical 100 Mbps speeds. [1] The regulations also define “unserved and underserved households or businesses” as one or more households or businesses that are not currently served by a wireline connection that reliably delivers at least 25 Mbps download speed and 3 Mbps upload speed.  Thus, local governments may use ARP funding to provide broadband infrastructure to households that do not currently receive reliable service of at least 25 Mbps download and 3 Mbps upload speeds, so long as that broadband infrastructure is designed to reliably support symmetrical 100 Mbps speeds.

These regulations also provide flexibility to local governments: “Understanding that States, territories, localities, and Tribal governments have a wide range of varied broadband infrastructure needs, [these regulations] provide award recipients with flexibility to identify the specific locations within their communities to be served and to otherwise design the project.”  The Treasury Department notes that local governments have the discretion to determine whether 25/3 Mbps service is being “reliably delivered” in an area, and the discretion to determine whether ARP funds may be expended on improving broadband infrastructure in that area.

To receive ARP funding, counties and metropolitan cities (municipalities with a population of 50,000 or more) must request money directly from the Treasury Department; smaller cities (which the ARP calls “non-entitlement units of local government” or “NEUs”) receive ARP funding from their state.  To apply for funding, local governments must have a valid DUNS number as well as an active registration with the federal government’s System for Award Management (SAM) database.  According to the Division of Local Government Services of the New Jersey Department of Community Affairs (the “Division”), funds for NEUs are distributed through the State Treasury.  These local governments must execute an Award Terms and Conditions Agreement and submit a Local Fiscal Recovery Fund Distribution Request and Certification Form to the Division to request payment. Unlike ARP funding to state and local governments, the Infrastructure Act (assuming the House approves it without major changes) will create a grant program run by the National Telecommunications and Information Administration (NTIA) for broadband projects.  NTIA will award grants to states who will then award subgrants to local governments and other political subdivisions for broadband projects.  10% of this grant money is set aside for high-cost areas based on the proportion of unserved locations in high-cost areas in the state compared to those in all states, with the remaining amount allocated to states based on the proportion of unserved areas in the state relative to the unserved areas in all states. [2] The Act defines “unserved location” as a broadband-serviceable location that either has no access to broadband service or lacks access to 25 Mbps download/3 Mbps upload service.  States may award subgrants for a variety of reasons, including unserved and underserved areas, connecting eligible community anchor institutions like public housing authorities and healthcare providers, and for broadband project planning and data mapping.

[1] In areas where it is not practicable to build out networks that meet these speeds for reasons such as excessive cost or geography or topography of the area, the network must meet or exceed 100 Mbps download speed and between 20 Mbps and 100 Mbps upload speed and be scalable to 100 Mbps symmetrical.

[2] States must apply for funding; if a state fails to apply, a political subdivision or consortium of political subdivisions of the state may apply instead.