One of the hurdles faced by communities pursuing broadband grants is that many grant programs allow incumbent broadband providers to challenge the validity of a grant. The most common challenge is for an incumbent provider to claim that a grant incorrectly includes homes and businesses that already have fast broadband. Today’s blog includes a few examples of recent grant challenges and warns that communities need to be ready for challenges as part of seeking better broadband. It appears that the purpose of many challenges is to delay the process, with the ultimate hope to derail or cancel grant requests.
The first challenge story comes from northeastern Louisiana in East Carroll Parish for the state grants that have been dubbed GUMBO grants. In this case, the grant was to go to Conexon to bring fiber to the rural parts of the Parish. A challenge was filed by Sparklight, the incumbent cable company (which has rebranded from Cable One). Sparklight claimed that it serves 2,856 homes in the East Carroll Parish with 960/50 Mbps broadband – a dubious claim since the entire Parish only has 2,792 households. I talked to several residents of the county who say that Sparklight does not serve rural residents and that most of the parish has little or no broadband options.
This challenge is unusual in that it came after the grant was awarded. The grant process had included several months to file protests, and Sparklight had said nothing during that period. I’m not sure I have the facts entirely straight, but it seems like the Legislature allowed for a second 7-day challenge period that was not part of the original rules. In this case, the challenge came on the same day that the Parish had planned to kick off the process of asking residents to join a sign-up list to get service, and after the Governor had come to the Parish to announce the grant award. There were a lot of other challenges around the state as part of the Gumbo grant process.
Another well-publicized grant challenge came from an NTIA grant being sought to bring broadband to Grafton County, New Hampshire. In this case, the incumbents challenged 3,000 of the 4,000 Census Blocks covered by the grant. It’s difficult for any grant applicant to defend a challenge of this magnitude, even if the grant areas legitimately qualify for the grant funding. It turns out that most of the challenges were erroneous.
An interesting grant story comes from Washington State. I ran across an article talking about the challenge to a grant filed by the Grays Harbor Public Utility District, which is an electric and water utility serving the county. The PUD operates an open access network where it builds fiber and lets multiple ISPs compete to serve residents and businesses, and the grants asked to expand the open-access networks.
Grays Harbor PUD had asked for a grant to serve 922 homes in an area where both broadband and cellular coverage are almost nonexistent. The PUD would have used the grant money to bring fiber to this pocket of rural homes. In Washington State, grants and challenges are handled by the Public Works Board, a group of 14 volunteers appointed by the Governor. Comcast objected to the grant and said that 249 of the homes near one of the towns could already buy broadband from Comcast.
There was no investigation of the challenge claim, and the Public Works Board rejected the grant outright, along with eight other grants that had received similar objections. The PUD believes that almost all of the homes being challenged cannot buy broadband from Comcast, but the PUD was given no opportunity to dispute the objection. A better solution would have been to investigate the challenge and trim out homes that can already buy broadband. The Public Works Board thought it was obligated to toss out a grant that violates the grant rules, but has since examined its processes since it appears that State law would have allowed the Board to make a partial grant based on the homes that don’t have broadband.
These are just a few of the many hundreds of stories of challenges that have been filed against grants over the last year. These stories are important because they presage what might happen with the upcoming $42.5 billion BEAD grants that include a challenge process. The fact that challenges are allowed puts the burden on communities to do the homework to make sure that grant areas fit the grant rules. This means gathering speed tests and also getting testimonials from residents explaining the lack of broadband choices. Grant offices can get overwhelmed if huge numbers of challenges are filed – communities that can prove their story are going to fare the best.