The State of New York recently awarded $140 million in grants to support publicly-owned open-access networks. These projects will cover more than 60,000 homes with broadband.
The funded projects include $30 million for fiber to pass 4,000 locations in Schoharie County, $26 million for fiber to pass 6,600 locations in Cayuga and Cortland Counties, $30 million for fiber to pass 14,000 locations in the City of Jamestown, $30 million for fiber and a wireless tower to pass 22,000 locations in Sullivan County, $13 million for fiber and fixed wireless to pass 1,500 locations in Franklin County, and $11 million for fixed wireless to serve 11,000 locations in Orleans County.
The grant funding comes from $228 million provided to New York by the Capital Projects Fund that was created by the American Rescue Plan. That program was administered by the U.S. Treasury and sent money directly to states to make broadband and related infrastructure grants. The grants are specifically being awarded by New York’s ConnectALL’s Municipal Infrastructure Program. These new grants will construct 1,200 miles of fiber and wireless assets to cover 60,000 locations with broadband. This program, in total, has funded over 2,000 miles of fiber that covers 87,000 locations.
The projects are all being touted as public-private partnerships because the local governments will own the infrastructure, and ISPs will provide service to customers. This arrangement is generally described as open-access, because the goal of the network owner is to bring multiple ISPs to a market. In an open-access network, no ISP has a technical advantage since they share a network and ISPs must compete for customers with price and service.
Every federal infrastructure grant I’ve worked with lists municipalities as grant candidates. Some, like BEAD, even stress the goal of making grants to local governments. And yet, broadband infrastructure grants to local governments are rare.
There are several reasons for this. The primary issue might be the timeline. Unless a local government has already done all of the homework, planning, and engineering to know if a grant makes sense and if a business plan is feasible, then it’s hard to submit a grant in what is usually a fairly short time window. A second reason is local governments typically use bond funding to pay for any matching requirements. Bond funding can be slow to obtain and complicated, particularly for non-traditional uses like funding a broadband network. It’s also hard to sync the timing of grants and bond issues since bonds are not guaranteed until the day the bonds are sold, while bank loans can be arranged contingent on winning a grant.
Probably the main reason why it’s hard for a municipality to get a broadband grant is that grant scoring rules generally heavily reward past performance as an ISP. It’s not easy for any startup to get grant funding, not just a municipal startup. Most grant rules are heavily biased towards not making a bad grant award since there are past horror stories of grants made to entities that weren’t capable of fulfilling the grant.
New York eliminated most of these roadblocks. This particular grant program is aimed specifically at local governments. The grant program gave local governments plenty of time to find ISP partners and plan for the grant filing.
These particular grants are interesting because, while the grants are made to local governments, in the long-term, most of the profits on an open-access networks go the ISPs that operate on the networks. You would think it would be harder for opponents of municipal broadband to oppose projects that ultimately benefit for-profit ISPs – but many even oppose these public-private partnerships.