Treasury Releases Broadband Grant Rules

Earlier this week the Department of the Treasury released an Interim Final Rule that defines how the $350 billion of pandemic relief funding from the American Rescue Plan Act can be used. The money is being sent to states and localities to use in a wide variety of ways that include broadband.

I must admit that on first reading that I was unhappy with the Treasury ruling. The strictest reading of the rules is that the money is intended to be used in areas that don’t have broadband speeds of at least 25/3 Mbps, which can be updated with technologies that deliver speeds of at least 100/20Mbps, but more preferably 100/100 Mbps. We just went through the RDOF grant that supposedly allocated funds to most places in the country where the FCC thinks speeds are less than 25/3 Mbps. I first envisioned having trouble finding places to use this money.

But I read it a few more times, and my 35 years of reading government regulatory orders kicked in. The more I read this, the more I started seeing some ways that localities can use the money in creative ways. The first thing I noticed after a few re-readings is there is no shall language in the broadband rules. Government lawyers are always careful to use shall for anything that is mandatory and the work ‘shall’ is not included anywhere in the broadband guidelines.

Next, I realized that localities don’t have to ask anybody how to use the funds for broadband. There is no application process for grants – no need to write a grant request to justify how to use the money. There also are no implied penalties for not using the funding in a specific manner. The CARES funding from last year included strongly worded claw-back language that threatened to take back any funding that States didn’t use properly. There is no claw-back or penalties associated with this funding that I can find.

There is also what I would call soft regulatory language – the kind of language that causes just enough ambiguity to indicate that the authors of the language want loopholes. Localities are provided ‘flexibility’ in choosing the parts of the community to serve. While there is an indication that the money can only be used in areas with 25/3 Mbps or slower broadband, that rule is modified to say areas that are “reliably” delivering 25/3 Mbps. There are a whole lot of urban networks that don’t reliably deliver good speeds.

The order goes on to ‘encourage’ behavior by localities. Communities are encouraged to consider broadband affordability. Communities are encouraged to concentrate on last-mile connections. And communities are encouraged to use the funding for projects that are operated by or affiliated with local government, non-profits, and cooperatives.

The big kicker for me is the last paragraph of the broadband discussion the broadband section that “Under sections 602(c)(1)(A) and 603(c)(1)(A), assistance to households facing negative economic impacts due to COVID-19 is also an eligible use, including internet access or digital literacy assistance.” I’ve read this many times and I conclude that this is a second separate use for the funds – the funds can be used to bring broadband to areas that don’t have 25/3 Mbps OR the funds can be used to assist households hurt by the pandemic. I read this as giving full cover to use the funding in cities for broadband for neighborhoods that need help.

I’m not lawyer, and my reading of the language could be wrong, and perhaps the cable company lobbyists think the language is restrictive.   But I’ve been reading regulatory rulings for decades and I just can’t find the kind of language in this ruling that demands using the money in only a subscribed way. Additionally, I keep coming back to the language that sprinkles advice in the ruling to be flexible.

It’s worth noting that this document is not final and could still change. The big ISP lobbyists will be trying to add stronger language to a final order while rural and municipal proponents will want to clarify even more that localities have a lot of options on using the money. It’s going to be an interesting several months while the industry dissects and parses the language in this document. I sure hope my reading is right because I see the flexible ways for communities of all sizes for using this funding to tackle the digital divide.