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Regulation - What is it Good For?

ARPA is Not Just for Rural Broadband

FCC Commissioner Brandon Carr released an extraordinary statement the other day that is worth reading. Carr is taking exception to the final rules from the Treasury Department concerning how communities can use the $350 billion in funding from the American Rescue Plan Act (ARPA). Carr is asking states to somehow intervene in the way that cities, counties, and towns elect to use these funds.

As a reminder, the $350 billion he is talking about is funding that is being given directly to states, cities, counties, and townships. The money is not just for broadband and is intended to help local governments combat issues related to the pandemic.

Broadband is listed as an acceptable use of these funds since most communities had broadband-related problems during the pandemic as many millions were sent to work and school from home. But the money can also be used for many other purposes such as supporting the public health response to the pandemic, addressing negative economic impacts, replacing lost local government tax revenues that came as a result of the pandemic, covering premium pay for essential workers, and making investments in water and sewer infrastructure. The large majority of this funding is going to go to needs other than broadband.

Commissioner Carr starts with the statement that “the Administration’s rules green-light spending to overbuild existing, high-speed networks in communities that already have fast Internet service, rather than directing those dollars to the rural and other communities that lack access to any broadband service today.”

I take exception to this sentence for several reasons. First, I think the final Treasury rules are following the intent of Congress that wrote the enabling legislation. Congress included broadband as a possible use for the funds. If Congress had intended this funding to be used only for rural broadband, the legislation would have said so. But broadband is listed as an acceptable use for every community, including cities. I’m not sure how Commissioner Carr thinks that ARPA money given to Detroit, Baltimore, or New York City could be used to support rural broadband.

A lot of the funding is going to rural communities and I know many communities are aiming this funding to help areas with poor broadband. But I think cities contemplating using this funding also think they are helping to solve the digital divide. In every city, there are places where cable companies never built broadband, and there are many millions more homes that can’t afford broadband. Most of the urban initiatives I’ve seen for using ARPA funding are aimed at building infrastructure to serve public housing or for bringing broadband to students that don’t have home broadband. Commissioner Carr says those kinds of projects deviate from the intent of ARPA, and I have to disagree.

Commissioner Carr also doesn’t think this money should be used for overbuilding. I always get my hackles up when I hear that word, because the big ISPs have been using the word overbuilding as a pejorative for many years. Looking back to the days when there were federal grants that were earmarked to bring better broadband to areas with broadband speeds under 10/1 Mbps, the big ISPs fretted that the money would be used to overbuild existing rural ISPs. The big ISPs don’t think any federal funding should be used to ever overbuild any existing ISP – the big ISPs are in favor of maintaining monopolies. Whenever I see the word overbuild coming from a big ISP I just substitute the correct word – competition. When Congress added broadband as an acceptable use for the ARPA funding, it obviously intended that the money could be used to compete (overbuild) against ISPs that weren’t delivering the broadband households needed during the pandemic.

I must admit that I got a good laugh out of Commissioner Carr’s warning that “the Treasury rules allow these billions of dollars to be spent based on bad data.” The final Treasury rules allow the exact opposite by allowing communities to ignore the FCC’s notoriously bad broadband data when determining where to spend the money.

I opened the blog by calling this an extraordinary statement because I’m not sure why he wrote it. Commissioner Carr’s plea to the states doesn’t mean much since local communities are free to use the ARPA funds without any approval from the states. It’s just a guess, but perhaps Commission Carr is upset that the FCC has no role in this spending. This funding was created by Congress and given to the Treasury Department and to communities directly in what looks like a deliberate snub of the FCC. The FCC got snubbed again more recently when Congress decided to send the $42.5 billion in BEAD grants to the states to spend.

2 replies on “ARPA is Not Just for Rural Broadband”

It’s not enough for FCC to completely hose the broadband mapping and funding (RDOF) process, now they take potshots at Treasury for implementing reasonable funding rules. The Commissioner’s lack of understanding what’s needed to close the digital divide is disappointing.

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