The Affordable Connectivity Program

One of the programs to come out of the Infrastructure Investments and Jobs Act is the Affordable Connectivity Program (ACP) which will replace the Emergency Broadband Benefit (EBB) program as the funding source to provide discounts on broadband for low-income households.  This program is being funded for $14.2 billion, which is part of the $65 billion aimed at broadband issues.

There are differences between the two programs. The biggest change for most participants is that the $50 discount under the EBB plan will be reduced to $30 per month in the ACP. There is also a change in eligibility requirements. The EBB plan was eligible for households with incomes of 135% or less of the federal poverty level. The new ACP plan allows homes with incomes up to 200% of the federal poverty level. To put that into perspective, the ACP discount could be claimed by a household of three with a total household income up to $44,000 (using the 2021 definition of poverty).

The existing EBB plan will stay in effect temporarily. Households can still enroll in the EBB and will get the $50 discount through the end of February 2022. There will be an automatic conversion to the new Affordable Connectivity Plan for those that are eligible for both plans. There are some household that are eligible for the EBB due to being unemployed due to Covid-19 that might not qualify for the new plan.

One of the principles in the new plan is that ISPs must allow households to apply the $30 discount to any broadband product at the same price and terms available to other customers. The new rules have a direct rebuke of Verizon and a few other ISPs and prohibit upselling – forcing customers to buy a more expensive plan to get the discount. The ACP rules also prohibit requiring customers to sign long-term contracts to get the discount.

There are a few new rules that ISPs are not going to like. An ISP may not require a household to submit to a credit check to get the discount. It also appears that the new rules stop ISPs from disconnecting customers for non-payment until after 90 days.

It doesn’t appear that any ISP that enrolled in the EBB program will have to take any extra steps to be part of the new ACP program – it looks like the change will be made automatically on March 1, 2022. ISPs still would have to take the needed steps to join the EBB or ACP.

There is no set ending for the plan, and if not renewed, would expire when the $14.2 billion of funding has been spent. There is also nothing in the new law that defines what happens to the $2.2 billion that remains in the EBB program. There are already a few in Congress lobbying that the leftover funding should be added to the ACP funding.

The big $42.5 billion federal BEAD grant requires that any grant winners have a low-income broadband solution, and joining this program is the easiest way to meet that requirement. ISPs that elect not to join the ACP will need to have some similar internal discount plan to get the federal grants.

A lot of ISPs didn’t enroll in the EBB program because they viewed it as temporary and transitory. While there is no guarantee that the new ACP plan will survive for the long haul, there is enough funding in this plan to last for many years. ISPs really should consider this.

Grants for Low-Income Apartments

There is one section of the $42.5 billion Broadband Equity, Access, and Deployment  (BEAD) grants that cities should find interesting. These grants can be used for installing internet and Wi-Fi infrastructure or providing reduced-cost broadband within a multi-family residential building, with priority given to a residential building that has a substantial share of unserved households or is in a location in which the percentage of individuals with a household income that is at or below 150 percent of the poverty line applicable to a family of the size involved (as determined under section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)) is higher than the national percentage of such individuals.

The BEAD grants are mostly aimed at solving the rural digital divide, but this is an open invitation for cities to seek grant funding to bring better broadband to low-income apartment complexes.

As is usual with most new laws, this one has one interesting incongruity. The BEAD grants establish a priority for States to follow – States should first use BEAD grants to bring broadband to unserved locations with broadband under 25/3 Mbps, then underserved locations with broadband slower than 100/20 Mbps, and finally to anchor institutions. My reading of the language is that serving low-income housing shares top priority along with rural unserved locations – the language says that grants can be used for unserved apartment buildings OR for low-income apartment buildings. This language seemingly gives low-income apartment buildings a higher priority than underserved locations. This language also implies that there is no speed requirement for low-income apartments to qualify for grant funding – the only requirement is the level of poverty.

It’s going to be interesting to see how States interpret this. States with big cities could see huge demand for broadband grants from cities that see this as the chance to solve the urban digital divide. I know that $42.5 billion is a lot of money, but it’s not going to stretch as far as Congress might have believed if every major city sees this as a chance to bring fiber to low-income neighborhoods.

The language is interesting in that it allows for bringing either Wi-Fi or reduced-cost broadband. The term Wi-Fi suggests what I call centralized Wi-Fi that floods hallways and common areas in apartment buildings. It’s a nice thing to have, but it is not the future-looking broadband that is needed for the next twenty years. I’d hate to see a lot of grants asking to install Wi-Fi instead of bringing real broadband to apartment units.

Bringing broadband to apartments will require an ISP. That could be almost anybody under the BEAD grants. Cities could be the ISP in a state that allows municipal ISPs. Cities could partner with the large incumbent ISPs or with smaller commercial ISPs. The most interesting idea is to partner with a non-profit ISP. It would even be possible for cities to hand these networks off to an urban cooperative. Anybody interested in the last two possibilities needs to be moving quickly to have the non-profit or cooperative formed by the time the grant requests are filed in a year.

A year is not a lot of time for cities to capitalize on this possibility. The specific apartments to be served should be identified. Somebody has to design and price out a technical solution. A city will have a better chance of winning funding if it has identified the ISP partner. And cities need to get active over the next few months to make sure that States build this option into the broadband plan that must be approved by the NTIA.

This $42.5 billion grant program is extraordinary in its size and scope – and it’s a once-in-a-lifetime chance to solve persistent broadband gaps. Cities need to marshal their resources quickly to make this happen because there probably won’t be another funding program for a long time aimed at solving the urban digital divide.

My Thoughts on the BEAD Grants

I’ve had some time to think about the $42.5 BEADA grants that will infuse a huge amount of money into building broadband networks. I summarized the most important rules in an earlier blog, and today follows up with some observations and predictions about how these grants will probably work.

Not the Same Everywhere. These grants will be awarded through the states. The NTIA will set the overall guidelines, but it’s inevitable that states will have a huge say in who wins the grants. If a state is determined to give these grants to giant ISPs, that state will be able to maneuver within the rules to do so – as will states that don’t want to fund big ISPs. States will definitely put their own stamp on who gets the funding.

Mostly for Fiber. WISPA and other trade associations lobbied hard to set the speed requirement for new grant-funded technology to 100/20 Mbps. This makes fixed wireless and cable company HFC networks eligible for grant funding. This might have been a hollow victory, and I believe that most states are going to give a huge preference to building fiber and will be hesitant to award funding to any technology other than fiber. Undoubtedly, some states will fund other technologies, but my prediction is that most states will give most of the money to fiber projects.

Defining Served / Unserved Areas Will be a Mess. The grants attempt to improve broadband in areas with existing speeds under 25/3 Mbps. This insistence in sticking with measuring speeds will create a huge mess. Communities know that rural speeds are slower less than this, but if the broadband maps remain wrong, they will have to somehow prove it. It would have been so much simpler for the grants to be eligible to overbuild DSL with no speed test. I’m sure these requirements came from lobbying from big telcos, and we also don’t seem able to break away from the dreadful FCC broadband map databases.

A smart state might base grant awards upon state-generated broadband maps, but even that is going to be controversial since incumbent telcos will have a chance to challenge any grant request. Huge parts of the country have been wrongfully locked out of federal grants in the past due to the FCC database, and this is the one big chance to put that behind us. Unfortunately, there will still be communities that get behind by these grants.

Many States are Not Ready for This Funding. A lot of the states only recently started to form state broadband offices, and the size of these grants and the sheer volume of paperwork will overwhelm the people who award grants. There is also a disturbing trend right now of the existing employees of broadband offices bailing to take jobs in the industry. Handling these grants properly is going to require grant reviewers with a lot of expertise to wade through the many grant requests. In this over-busy industry, I don’t know where states will find the experienced people needed to do this right.

Overlapping Grant Requests. The dollar amount of the grant pool is so huge that the states are going to get multiple grant requests that ask to serve the same areas. I’m predicting states will face an almost unsolvable puzzle trying to figure out who to fund in these situations. Just to give an example, I live in North Carolina, and I won’t be surprised if Charter files a grant request to serve most of the state. In doing so, Charter will conflict with most other grant requests – many of which will also overlap with each other.

Big ISPs Want to Be Major Players. Many big ISPs have been recently signaling that they will be seeking huge funding from these grants. AT&T alone said it hopes to use these grants to pass five million new homes. Big ISPs have some major advantages in the grant process. They will have no problem guaranteeing matching funds. They will likely ask for grants that cover large areas, which is going to be tempting for grant offices trying to award the funds. The push by big ISPs creates a dilemma for states since citizens clearly prefer local ISPs run by local people over the corporate indifference of giant ISPs.

Broadband Labels

There is one quiet provision of the Infrastructure Investment and Jobs Act that slipped under the radar. Congress is requiring that the FCC revamp broadband labels that describe the broadband product to customers, similar to the labels for food.

The Act gives the FCC one year to create regulations to require the display of a broadband label similar to the ones created by the FCC in Docket DA 16-357 in 2016. A copy of the FCC’s suggested broadband label from 2016 is at the bottom of this blog. The original FCC docket included a similar label for cellular carriers.

ISPs are going to hate this. It requires full disclosure of prices, including any special or gimmick pricing that will expire. ISPs will have to disclose data caps and also any hidden charges.

As you can see by the label below, it includes other information that big ISPs are not going to want to put into writing, such as the typical download and upload speeds for a broadband product as well as the expected latency and jitter.

To show you how badly big ISPs don’t want to disclose this information, I invite you to search the web for the broadband products and prices for the biggest ISPs. What you are mostly going to find is advertising for special promotions and very little on actual prices and speeds. Even when it’s disclosed it’s in small print buried somewhere deep in an ISP website. And nobody talks about latency and jitter.

What is even harder for ISPs is that they often don’t know the speeds. How does a telco describe DSL speeds when the speed varies by distance from the hub and by the condition of the copper wire on each street. I’ve seen side-by-side houses with different DSL speeds. Cable companies can have a similar dilemma since there seem to be neighborhoods in every city where the network underperforms – most likely due to degradation or damage to the network over time.

The sample label asks for the typical speed. Are ISPs going to take the deceptive path and list marketing speeds, even if they can’t be achieved? If an ISP tells the truth on the labels, shouldn’t it be required to submit the same answers to the FCC on the Form 477 data-gathering process?

I’m sure that big ISPs are already scrambling trying to find some way out of this new requirement, but that’s going to be hard to do since the directive comes from Congress. It’s going to get interesting a year from now, and I can’t wait to see the labels published by the biggest ISPs.

Being an ISP

Over time, this blog has talked about everything broadband, but I don’t think I’ve ever talked about being an ISP. In the simplest terms, an ISP is somebody that connects to a home or business and routes broadband traffic to and from the Internet. ISPs do a lot more these days. For example, they protect customers against hacking and bad behavior on the web.

We all know the big ISPs like Comcast, Charter, AT&T, and Verizon since these four ISPs serve over 75% of all broadband customers in the country. All of the other ISPs you hear about collectively serve the other one-fourth of the U.S. market.

The heyday of the ISP industry, in terms of the total number of ISPs, was probably in the late 1990s when anybody could be a dial-up ISP by buying a modem bank, some telephone lines, and a connection to the Internet. It seems like every small town and even many neighborhoods had one or more ISPs who competed with the few big nationwide players like AOL and CompuServe.

ISPs come in every shape and size. The ones we most think about as ISPs own networks that reach people’s homes, either through wires or wirelessly. Satellite companies like Viasat and Starlink are ISPs. But there are other kinds of ISPs. For example, some ISPs lease fiber connections from a city or somebody else that owns a network. There are still some ISPs delivering broadband over leased telco copper wires. A lot of people don’t think of cellular carriers as ISPs, but most people today have smartphones and connect to the Internet using apps. In many of the surveys we conduct, we see that as many as 10% of households only connect to the Internet over a cellular connection.

ISPs are somewhat regulated, but it gets complicated. The FCC under Ajit Pai largely deregulated broadband by wiping out the FCC’s Title II authority to regulate ISPs except for a handful of regulations specifically required by Congress. In doing so, Chairman Pai constantly referred to his deregulation as light-touch regulation, but the FCC eliminated 90% of the ways that the agency might theoretically be able to regulate ISPs. Consequently, the current FCC has very little regulatory authority over ISPs.

This doesn’t mean that ISPs are fully unregulated. ISPs are supposed to comply with a few regulations. For example, they are supposed to register with the FBI and describe the steps needed if the FBI wants to surveil a customer on an ISP network. An ISP has to officially register with the FCC if it wants to participate in receiving any funding from the Universal Service Fund. Many states expect ISPs to register as carriers – mostly, so the state knows who they are.

The FCC requires ISPs to use the Form 477 process to report the location of customers by Census Block, along with a description of the technology being used and the speeds delivered. But broadband regulation is taken so lightly that a lot of ISPs ignore this completely. For example, in almost every county I’ve ever worked in, there is a least one ISP that doesn’t report customers to the FCC. There doesn’t seem to be any penalty for not reporting or at least any that I’ve ever seen. Some of the ISPs that skirt regulation are sizable and sell fiber connections to large businesses in multiple markets.

ISPs are also theoretically regulated by the Federal Trade Commission. But that is truly light regulation because the FTC can’t easily establish rules or policies that affect all ISPs. Instead, the agency occasionally punishes a specific ISP for bad behavior, mostly centered on mistreating customers in some manner.

There are a lot of entities that don’t even realize they are ISPs. Governments often build fiber networks to connect various government buildings into a local network. But when cities then connect all of the government locations to the Internet, they have become an ISP. Cities also often branch out and provide a fiber connection to a few large businesses in a community – often without realizing this makes them an ISP like any other.

The big ISP industry believes that broadband regulation will be coming back when the FCC finally gets a fifth Commissioner. Companies with monopoly powers in all industries would love to be unregulated, and so far, the only two groups of companies that have largely been able to pull this off are ISPs and the giant web content companies. The need for some regulatory oversight is obvious. For example, the FCC is currently investigating the response efforts of big ISPs after a major storm. But without explicit regulatory authority, I’m not sure the agency has any authority to compel ISPs to do more to be ready for disaster recovery.

Broadband Adoption Grants

The recently enacted Infrastructure Investment and Jobs Act (IIJA) created two new grant programs to address digital equity and inclusion. This section of the IIJA recognizes that providing broadband access alone will not close the digital divide. There are millions of homes that lack computers and the digital skills needed to use broadband. The grant programs take two different approaches to try to close the digital divide.

The State Digital Equity Capacity Grant Program will give money to States to then distribute through grants. The stated goal of this grant program is to promote the achievement of digital equity, support digital inclusion activities, and build capacity for efforts by States relating to the adoption of broadband. I haven’t heard an acronym for this grant program – it’s likely that each state will come up with a name for the state program.

The Act allocates $1.5 billion to the States for this program – that’s $300 million per year from 2022 through 2026. Before getting any funding, each state must submit a plan to the NTIA on how it plans to use the funding. States will have to name the entity that will operate the program, and interestingly, it doesn’t have to be a branch of government. States could assign the role to a non-profit or other entity.

The amount of funding that will go to each state is formulaic. 50% will be awarded based upon the population of each state according to the 2020 Census. 25% will be awarded based upon the number of homes that have household incomes that are less than 150% of the poverty level, as defined by the U.S. Census. The final 25% will come from the comparative lack of broadband adoption as measured by the FCC 477 process, the American Community Survey conducted by the U.S. Census, and the NTIA Internet Use Survey.

The second new grant program is called the Digital Equity Competitive Grant Program. These are grants that will be administered by the NTIA and awarded directly to grant recipients. The budget for this grant program is $1.25 billion, with $250 million per year to be awarded in 2022 through 2026.

These grants can be awarded to a wide range of entities, including government entities, Indian Tribes, non-profit foundations and corporations, community anchor institutions, education agencies, entities that engage in workforce development, or a partnership between any of the above entities.

This will be a competitive grant program, with the rules to be developed by the NTIA. While the broadband infrastructure grants in the Act include a long list of proscribed rules, Congress is largely letting it up the NTIA to determine how to structure this grant program.

That’s going to make for some interesting choices for entities involved in digital inclusion. They can go after funding through the state or compete for nationwide grants. I doubt that anybody can make that decision until we see the specific grant rules coming out of each program.

I’ve been hearing about digital inclusion at every conference I’ve attended for the last fifteen years. For many years we talked about this as finding ways to solve the digital divide. We’ve known for all these years that there are homes that don’t have broadband because they can’t afford a broadband connection. We’ve known that homes can’t afford computers or other devices. And we’ve known for a long time that a lot of people don’t have the digital skills needed to use broadband.

There have been efforts over the years to address the issues, mostly done at the local level and mostly through non-profits. This is the first time that real funding is being aimed at solving these issues. It’s going to be interesting to see what comes out of this funding. I’m sure there will be some dazzlingly successful programs as well as some that will fizzle – but these grants will provide the grand experiment to find out what works the best. I like that these grants make new awards each year for five years – and I hope Congress pays attention because some of the best programs that get this funding will deserve to be funded when these grants are over.

We are only going to best thrive as a nation when everybody comes along for the ride, and this is the first set of grants that will take a serious shot at bringing broadband to those who are not benefitting from broadband technology.

BEAD – The $42.5 Billion Infrastructure Grants

The new acronym used in the title of this blog refers to the official name of the new $42.5 billion grant program just approved by Congress last Friday – The Broadband  Access, Equity, and Deployment program. Another new acronym is IIJA, for Infrastructure Investment and Jobs Act – the name of the bill just passed by Congress. Today’s blog will talk about a few high-level rules governing the BEAD grants. I’ll cover other issues of the IIJA in upcoming blogs – things like middle-mile grants and broadband adoption. Since the following provisions are in the legislation they will be in the grant – but there are always tweaks made for final grant rules that will emphasize some points and downplay others.

  • You don’t need to rush to be ready to file for BEAD grants. This funding is going to flow between the NTIA and the States before going to specific grant projects. The Act gives the NTIA 180 days to come up with a plan for inviting states to apply for the funding. After the NTIA approves state plans, the states will have to develop and announce grant programs. I find it highly unlikely that there will be any grant applications due to states until the end of 2022, more likely in early 2023. States will get at least $100 million each, with the rest distributed based upon the number of unserved households in each state. This is a good time to remind those who think that the lousy FCC maps don’t matter that the States with the worst FCC maps are going to lose funding.
  • Cross your fingers that your State is competent because there are several crucial steps that states must adhere to before funding is provided.
  • As expected, grants must adhere to two key definitions of broadband. Unserved are places with broadband speeds under 25/3 Mbps. Underserved are areas with speeds between 25/3 and 100/20 Mbps. Grants must first go to unserved areas before being used for underserved areas. Funding for anchor institutions is only to be considered after serving underserved areas.
  • Grant projects must provide speeds of at least 100/20 Mbps, but faster broadband speeds must be given priority. States must give priority to grants that are deployed in counties with persistent poverty. Projects that are shovel-ready will be given priority. Projects that pledge to pay Davis-Bacon wages will get priority.
  • States will likely not award all of the grants immediately, and the Act asks states to provide a 5-year plan for the use of the funds.
  • Grants don’t have to all go for broadband to unserved and underserved areas. States can use the money for data collection, broadband mapping, and planning. Funding can be used to bring low-cost broadband or WiFi to qualifying multi-family apartments.
  • Unlike the recent NTIA grant program, BEADA doesn’t give priority to any class of grant recipients. The grants can’t exclude cooperatives, nonprofit organizations, public-private partnerships, private companies, public or private utilities, public utility districts, or local governments from eligibility – but none get a preference.
  • There is a challenge process where incumbent ISPs can challenge the validity of a grant area. Interestingly, the NTIA can override States in these challenges.
  • Grant applications must provide at least a 25% matching for the cost of the project. Matching funds can include CAREs funding and ARPA funding – so hang on to those funds for a while! Matching can also come from state grants.
  • Deployed technology must only meet two 9’s reliability, meaning that a network can be out for two days per year and still be considered adequate – that’s a low standard for the industry.
  • Grants must cover every home in a grant coverage area within four years of receiving the grant.
  • Grant recipients must provide at least one low-cost broadband option for eligible households. The NTIA is expressly forbidden to regulate rates in any manner.
  • Interestingly, any fiber built along highways must include access points at regular and short intervals. This money is not for middle-mile fiber.
  • Grant recipients must carry out public awareness programs in grant areas extolling the benefits of better broadband.
  • There is plenty of paperwork. Grant recipients must file semiannual reports tracking the effectiveness of the grant funding.

This grant program dwarfs all previous grant programs combined, so there is going to be a lot of money coming to every State. What is still to be determined is how States will administer these grants – and there will be differences. But the legislation provides enough detail for communities and ISPs to start looking at how to be positioned for these grants.

ReConnect Grants – Not for Everybody

Yesterday’s blog listed the major rules for eligibility for this year’s ReConnect grant. Today’s blog is going to point out important aspects of the programs that you should be aware of before deciding to apply.

Grant Application is a Bear. These grants require far more effort than any other broadband grant program. The required paperwork for filing is more like a formal loan application than a simple grant application. You cannot casually file for these grants, and if you omit documentation, you will likely quickly fall out of consideration.

Probably Large Awards. Past experience with this program would suggest that the RUS tends to make a small number of larger grants rather than a large number of smaller grants.

Awards Will Likely Include RUS Loans. Awards can be made as 100% grants, 50% grants/50% loans, or 100% loans. Applicants should be aware that 100% grants will be exceedingly difficult to win, so grant applicants should be prepared to accept an RUS loan. While RUS loans are at a good interest rate, many applicants cannot accept RUS loans. RUS loans will likely require a full asset pledge from a borrower, which is often impossible if you have other non-RUS debt. While these grants favor local governments, many local governments are unable to accept RUS loans because they can’t meet the pledge requirements. Standalone entities like government-owned utilities have a better chance. The loans are also made on the same basis as any bank loan, and an applicant must have a solid and solvent balance sheet and financial history.

Grant Scoring Will Eliminate Most Projects. Most potential applicants aren’t going to get out of the gate due to not scoring high on the grant rating scale. An applicant that fails in even a few scoring categories will likely not be considered. Study this scoring list carefully and be honest about your eligibility:

  • Rurality. 25 Points. Grant areas must be at specified distances from existing towns.
  • 25/3 Mbps. 25 Points. The grant allows serving areas that have existing speeds greater than 25/3 Mbps, but you are penalized in this scoring for serving underserved locations.
  • Poverty. 20 points. Points awarded based upon the level of poverty in the grant area as measured by the U.S. Census Small Area Income and Poverty Estimates (SAIPE) program.
  • Affordability. 20 points. Retail broadband rates must be affordable compared to existing area rates. Participants must offer a low-income product and be willing and able to participate in both the FCC Lifeline and Congress’s EBB programs. Note that an ISP must become an Eligible Telecommunications Carrier (ETC) to participate in Lifeline – not everybody is able or willing to do that.
  • Labor Standards. 20 Points. While the grants don’t require paying Davis-Bacon prevailing wages, there is a hefty scoring penalty for not doing so.
  • Tribal Lands. (15 points). Tribal entities or projects that are at least 50% on Tribal land will get the 15 points.
  • Non-Profit Entities. (15 points) Governments, non-profits, and cooperatives get extra scoring points. For public-private partnerships to get these points, the applicant must be one of these entities and be willing to own the assets and take on any RUS loans. You can’t partner with a city in name only.
  • Socially Vulnerable Community. (15 points) 75% of the proposed service area must meet the RUS’s definition of Socially Vulnerable Communities. This is related to poverty but favors communities that are economically stressed for reasons other than poverty.
  • Net Neutrality. (10 points) To get these points the applicant must pledge to accept the definition of net neutrality that the FCC scrapped in 2017.
  • Wholesale Services. (10 points). This is awarded to grant recipients willing to sell wholesale access to the network to other ISPs. This is generally described as open access.

That’s 175 total points to determine the most eligible projects. If you are not a tribe, aren’t partnered with a non-profit entity, or aren’t willing to offer open-access you’d already be 40 points down on the scale. If your project is too close to an existing city or town or includes some homes that have speeds greater than 25/3 Mbps, you could be down 50 more points. If you want to serve farmers instead of poor communities, you could be down 35 more points. These grants are definitely not for everybody. I recommend a realistic assessment of your likely score before you do any work towards chasing this grant. As is usual with federal grants, there will be desperate communities that will spend the time and money to pursue this grant with no chance of winning.

Require Extra Effort. These grants will also require an environmental and historic preservation review.

The ReConnect Grant Basic Rules

The USDA’s Rural Utilities Service (RUS) released the rules for this year’s Rural eConnectivity Program (more commonly called ReConnect grants). This is the first of a two-part blog. Today’s blog will cover the basic grant rules. If you’re at all interested in ReConnect, wait for tomorrow’s blog because these grants have a lot of restrictions that should eliminate a lot of potential applicants.

Speeds. This is the first grant that will consider as grant eligible any area not served today by 100/20 Mbps broadband. The grants can be used to overbuild DSL and fixed wireless. But note that there is a big grant scoring penalty for serving areas with existing speeds greater than 25/3 Mbps. This means the grant allows serving areas with existing speeds greater than 25/3 but penalizes an applicant for doing so – that’s a nuance press coverage of the grant rules seems to have missed. The grants also do not automatically adhere to FCC mapping data, but an applicant needs to be prepared to demonstrate why an area is eligible. To challenge the FCC mapping requires an opinion from an engineer who has examined technology in the field or a rigorous online survey that demonstrates slow speeds.

Eligible Entities. Almost anybody is eligible to apply, but a big preference is given to tribes and to “local governments, non-profits, and cooperatives as applicants and additional points to those applications (including for projects involving public-private partnerships where the local government, non-profit, or cooperative is the applicant)”.

Must be Rural. Grant serving areas must be rural and remote. There is a ReConnect mapping tool that will tell you if an area is eligible. To be eligible for funding, the grant area must be “15 minutes or more from an urban area of 2,500-9,999 people; 30 minutes or more from an urban area of 10,000-24,999 people; 45 minutes or more from an urban area of 25,000-49,999 people; or 60 minutes or more from an urban area of 50,000 or more people”. Additionally, there is a density test.

Pandemic Matters. Applicants must be prepared to demonstrate how the grant area was hit particularly hard by the pandemic.

Economic Need. The grants favor bringing broadband to Socially Vulnerable Communities, which means not only low-income but also economically disadvantaged in some way. On first reading, this looks like it’s going to take some effort to meet this test.

Prefers Open Access. Retail rates must be affordable and non-discriminatory. There are grant points awarded to those willing to offer ‘wholesale rates”, which is another way of describing open access. Most network owners are not going to be willing to invite a competitor to compete with them in a rural area.

Strong Labor Standards. While the grant doesn’t require Davis-Bacon prevailing wages, there are grant points awarded for agreeing to pay the prevailing wages or higher.

Net Neutrality. Applicants must be willing to adhere to net neutrality. I don’t know any smaller ISPs that don’t automatically do this, but this could discourage larger ISPs from applying.

Can be Used in RDOF Areas. This is one of the more confusing rules and will need clarification. It seems likely that this will allow somebody already getting RDOF to use these funds if it accelerates the construction timeline. I doubt that the funding will be awarded to overbuild an RDOF award area.

Can Overbuild an RUS Borrower. This is new and has never been allowed by the RUS before. It’s hard to think that the RUS will really give funding to overbuild an existing borrower that still owes money to the RUS.

It’s important to digest these rules thoroughly. For example, if your proposed grant area is not sufficiently rural or the residents are not poor, then you’re likely wasting time making an application. Tomorrow’s blog lists a bunch of gotchas in the grant rules and in the grant process.

Why No New FCC Commissioner?

I’ve put off writing a blog on this question since early summer. For some perplexing reason, the Biden administration has not yet named a nominee to fill the vacant fifth seat on the FCC and has not named a new FCC Chairman. It’s perplexing because the President called for expanded broadband both before and after his election.

To those who don’t follow the FCC closely, a vacant seat matters because many FCC issues are decided on party lines. It’s been traditional for every president to put in commissioners from the same party. What makes it even more perplexing is that the term of current Acting-Chair Jessica Rosenworcel expired this summer, and she will be forced to leave at the end of the year unless the White House acts to extend her seat. If she leaves, the agency would have only three commissioners, with a Republican majority.

One of the reasons that new presidents often act quickly to name a new Chairman is due to the slow grinding processes at the FCC that must be navigated to make any changes to policy. President Trump named the past Chairman Ajit Pai in January 2017, and it took until December of that year for the FCC to vacate net neutrality. That’s almost a world speed record in terms of the FCC being able to enact a new policy.

By not filing the fifth FCC seat, the agency just spent the year since the election with two democrats and two republicans. The FCC still had a busy year, mostly due to pandemic issues, tackling robocalling, and the ongoing work to revise the use of spectrum. But no new policy questions have been raised. By losing a year, it will now take until the end of the second year of the administration to see any changes in broadband policy. As you might imagine, this lack of action is making policy wonks crazy.

Washington D.C. is rife with rumors on who might eventually be named to the FCC. I’m not naming any names, because what I’ve seen in the past is that almost every nomination to the FCC has been a surprise. Nobody saw Tom Wheeler being named as FCC Chairman under President Obama. As might be expected, there are names being suggested by different faction of the democratic party.

Part of me is not unhappy with a balanced FCC that sticks to the basics. For example, a balanced FCC is not as likely to give out billions in subsidies to the big ISPs. But there are policy issues that really need to be tackled.

Chief among them is the question of whether broadband should be regulated. This is an industry that cries for regulation. Broadband is one of the key drivers of the U.S. economy. The industry is ruled by huge carriers with immense market power, with the top four ISPs serving over three-quarters of all broadband customers in the country. This is the textbook example of an oligopoly industry that must be regulated. For some reason, we keep talking about how Ajit Pai got rid of net neutrality when what he really did was eliminate all but a few vestiges of broadband regulation. If we aren’t going to bother regulating broadband, then perhaps we don’t need the FCC at all.

The broadband industry is the only major industry that has no obligation to disclose the details of the products sold to customers. Big ISPs are free to make any claims they want about speeds, latency, and quality of broadband. Big ISPs are free to overbill customers and refuse to correct mistakes. There is no regulatory body able to scold them, much less demanding more disclosure and better behavior.

I’ve held off asking this question all year, assuming that an announcement must be imminent. As these things always work out, an announcement will probably hit on the afternoon that I post this blog. It can’t be soon enough.