The earlier series of blogs looked at a number of ideas on how the FCC could create the most effective federal grant program for the upcoming $20.4 billion of announced grants. Following is a summary of the most important conclusions of those blogs:
Have a Clearly Defined Goal. If a federal grant’s program goal is something soft, like ‘improve rural broadband’ then the program is doomed to failure and will fund solutions that only incrementally improve broadband. The grant program should have a bold goal, such as bringing a permanent broadband solution to a significant number of households. For example, done well, this grant could bring fiber to 4 – 5 million homes rather than make incremental broadband improvements everywhere.
Match the Grant Process with the Grant Goals. Past federal grants have often had grant application rules that didn’t match the goals. Since the results of grants are governed by the application rules, those are all that matter. Stated goals for a grant are just rhetoric if those goals are not realized in the grant application requirements. As an example, if a grant goal is to favor the fastest broadband possible, then all grant application rules should be weighted towards that goal.
Match Speed Requirement with the Grant Construction Period. The discussion for the proposed $20.4 billion grant contemplates a minimum speed goal of 25/3 Mbps. That’s a DSL speed and is already becoming obsolete today. A goal of 25/3 Mbps will be badly outdated by the time any grant-funded networks are built. The FCC should not repeat their worst decision ever that gave out $11 billion for CAF II funding to build 10/1 Mbps networks – a speed that was obsolete even before the grants were awarded. The FCC should be requiring future-looking speeds.
Make the Grants Available to Everybody. FCC grant and loan programs often include a statement that they are available to every kind of entity. Yet the actual award process often discriminates against some kinds of applicants. For example, grants that include a loan component make it generally impossible for most municipal entities to accept the awards. Loan rules can also eliminate non-RUS borrowers. Grant rules that require recipients to become Eligible Telecommunications Carriers – a regulatory designation – discriminate against open access networks where the network owner and the ISP are separate entities. If not written carefully, grant rules can discriminate against broadband partnerships where the network owner is a different entity than the operating ISP.
Reverse Auction is not a Good Fit. Reverse auctions are a good technique to use when taking bids for some specific asset. Reverse auctions won’t work well when the awarded area is the whole US. Since reverse auctions favor those who will take the lowest amount of funding a reverse auction will, by definition, favor lower-cost technologies. A reverse auction will also favor parts of the country with lower costs and will discriminate against the high-cost places that need broadband help the most, like Appalachia. A reverse auction also favors upgrades over new construction and would favor upgrading DSL over building faster new technologies. From a political perspective, a reverse auction won’t spread the awards geographically and could favor one region, one technology or even only a few grant applicants. Once the auction is started the FCC would have zero input over who wins the funds – something that would not sit well with Congress.
Technology Matters. The grants should not be awarded to technologies that are temporary broadband band-aids. For example, if the grants are used to upgrade rural DSL or to provide fixed cellular broadband, then the areas receiving the grants will be back at the FCC in the future asking for something better. It’s hard to justify any reason for giving grants to satellite providers.
States Need to Step Up. The magnitude of the proposed federal grant program provides a huge opportunity for states. Those states that increase state grant funding should attract more federal grants to their state. State grants can also influence the federal awards by favoring faster speeds or faster technologies.
This blog is part of a series on Designing the Ideal Federal Broadband Grant Program.