Tag Archives: ReConnect

Broadband Grant Deadlines

The industry and the press have been laser-focused on BEAD grants for the last few years. It’s easy to forget that there are a lot of federal broadband grants that have been issued under other grant programs, many of which are facing completion deadlines. This includes grants from programs like CAF II, RDOF, ReConnect, the Capital Projects Fund, ARPA grants funded through SLFRF, NTIA middle-mile grants, and the NTIA Tribal Grants.

A lot of projects under these grants have a deadline to be completed this year or in 2027. Today’s blog looks at the consequences of not finishing a grant project by the legislative deadline.

The grants that face the most immediate deadlines at the end of 2026 include State grants that were funded by the Capital Projects Fund or through SLFRF. These grants would have been awarded through individual State broadband grant programs, but the underlying money came from federal legislation. ARPA grants might have also come from counties or cities. These grants have a hard completion deadline of December 31 of this year.

I’ve been hearing from State Broadband managers that the Federal government has no appetite for any extensions of this funding. This is not news, and they’ve been saying the same thing for the last year, but lately, they have been reminding states of this.

It’s been routine in the past for ISPs to get extensions for grant construction as long as they had a good story of why they needed the extra time. In today’s environment, there are a lot of reasons why construction might be delayed. It could be due to challenges in getting permits, rights-of-way, or easements. It might mean having problems getting onto poles because of recalcitrant pole owners. It might be due to supply chain problems in receiving needed materials. It might come from labor shortages that slow construction vendors. If the federal agencies behind the grants enforce the legislative deadlines, none of these excuses will matter.

Grant recipients need to do everything in their power to finish construction this year. With no extensions, any work done after the deadline will not be reimbursed. I’ve been hearing rumors that failure to complete a federal grant program on time might also make an ISP ineligible for any future federal broadband funding.

If hard deadlines are enforced, this could also be coupled with a hard deadline for submitting grant paperwork quickly. Most grant programs in the past have allowed grantees some leniency after construction is completed to submit invoices. Hard deadlines might result in rejection of invoices sent after the deadline. Most grants also require some kind of close-out reporting to document that the project construction is completed, and ISPs need to get any such report completed quickly.

Anybody working with a State Broadband Office needs to understand their specific requirements. For example, there might be states that want paperwork submitted and completed by the legislative deadline, meaning construction has to be completed even earlier than the end of the year. ISPs also need to push vendors to invoice for the grant-funded projects quickly to provide proof of the spending.

I am positive that some ISPs will be surprised if they don’t get reimbursed for work they have completed. Grant offices have sent out deadline warnings for years, but have often given routine exceptions for lateness. It sounds like, starting this year, that deadlines are firm with little or no room for exceptions.

The Future of ReConnect

I have to wonder if there is any practical future for USDA’s ReConnect grants. I raise this question after noting that the Senate Appropriations Committee recently approved the fiscal year 2026 budget for the Department of Agriculture. Buried within that budget is $100 million dollars for new ReConnect loans or grants. It’s still early in the federal budget process, and the $100 million slated for next year is a preliminary number, but it’s already lower than previous annual allocations to the program.

ReConnect has been a popular program, particularly with cooperatives and small telcos. ReConnect was launched in December 2018 by Congress with an initial budget of $600 million. Additional funds continue to be allocated, including $550 million in 2020 and $1.15 billion in 2021. USDA is still sitting on $980 million of remaining appropriated funds, but is also sitting on $3 billion in funding requests.

ReConnect has always been an interesting program. USDA can use the funding for grants, loans, or a combination of the two. The program is intended to bring broadband to unserved rural locations, and the ReConnect process gives extra consideration to locations that are not close to any towns or cities.

I ask if ReConnect will still be relevant in upcoming years for several reasons. First, if you believe the hype about BEAD grants, every location in the country will soon be slated to get broadband of at least 100/20 Mbps. According to the NTIA, every location that has been excluded from BEAD is already served by at least one ISP claiming 100/20 Mbps. That can be for any technology, including fiber, cable, DSL, fixed wireless, FWA cellular wireless, or satellite.

But ignoring that promise from BEAD, there will still be remaining unserved locations around the country. For example, there have been some recent defaults of RDOF subsidies that were defaulted too late to be included in BEAD, and there will be more. There will likely be defaults on funding commitments from other state and federal grant programs, including some from the BEAD program. It’s also possible ISPs could go out of business and leave rural customers with no option at 100/20 Mbps. This is certainly possible for WISPs if the FCC meddles with the CBRS and 6 GHz spectrum.

I’m also positive that there are a lot of locations where ISPs claim 100/20 Mbps or faster in the FCC maps but are delivering something slower. Perhaps future ReConnect grants will allow ISPs to ask for funding in areas where they can prove the FCC map is wrong.

Another issue with ReConnect is that the grant rules in the past have insisted on contiguous grant areas of unserved locations. Because of the odd rules of many of the existing grant and subsidy programs, particularly RDOF, there will probably be no big contiguous unserved areas after BEAD grants have been awarded. Any future ReConnect grant is going to require cobbling together scattered locations into a single grant request, and that will require changes in the ReConnect rules.

But I think the fundamental challenge for BEAD is that the FCC is likely to declare soon that the rural broadband gap has been solved and every rural home in the country is able to buy adequate broadband. I’m not sure the USDA will be able to overcome that presumption.

Eliminating Reconnect?

This is the third blog in a row about killing a federal broadband program – hopefully that’s it for a while. The most recent White House Budget proposes to eliminate the ReConnect grant program that is administered by the Rural Utilities Service (RUS), a branch of the U.S. Department of Agriculture. ReConnect has been a popular funding program in rural areas, and when it began was one of the few sources of federal broadband grants. ReConnect is an interesting program because awards include both grants and low-interest rate loans.

ReConnect has been funded in several different ways. The program was started in 2018 with a $600 million appropriation as part of funding the Department of Agriculture. Appropriations continued and provided $550 million in 2019, $655 million in 2020, and $437 million in 2022. In 2022, the program also got a giant boost of $1.926 billion through the Infrastructure Investment and Jobs Act, which also funded BEAD grants.

The rules for ReConnect have always focused on very rural places. Eligibility for the awards improve based on the distance between a grant area and the nearest significant population center. One criticism I’ve heard about the program is that it has favored ISPs who were already borrowers from the RUS loan program, and reviews of awards tended to show some validity of that assertion. I think this was aligned with the RUS’s desire to make safe awards to companies that will fulfill the projects they commit to build.

The stated reason for curtailing ReConnect is to consolidate federal broadband grant programs. There is also another reason. Once BEAD grants are finally awarded, it’s going to be increasingly difficult, and maybe impossible, to find any large tracts of unserved rural locations that fit the ReConnect criteria. A new iteration of ReConnect would require a significantly different definition of eligible areas.

ISPs have liked ReConnect because the staff at RUS is more knowledgeable about the issues of building broadband in rural America than folks at NTIA or the FCC. One of the aspects that doesn’t get discussed much is the administration of grant funding after awards are made. ISPs want to work with a grant office that understands the technology and the components of building a broadband network. I’m sure that ISPs who are currently working with RUS on existing ReConnect awards will be hoping that grant administration doesn’t change to another agency in midstream.

Congress purposefully put the ReConnect program at the RUS. The agency has been making loans for rural communications infrastructure since 1949. The loan program was one of the major funders for rural cooperatives and small telephone companies over the decades. The property units that a lot of industry engineers still use in designing networks were developed by the RUS many decades ago.

I don’t think we’re done with the need for broadband loans and grants. I think there will be many millions of rural locations that will still need better broadband after the dust settles from BEAD and other grant programs. The process of determining areas eligible for BEAD was a disaster. I could be wrong, and it’s possible that satellite broadband can beef up speeds and capacity to serve every rural home that wants good broadband. But if not, we’re still going to want additional future grants to finish what BEAD has started.

There is no guarantee that asking for the elimination of ReConnect in a budget means this is a done deal. But there is some sense in consolidating the federal effort focused on rural broadband. If this comes to pass, I’ll be a little sad that the folks who have been doing this since 1949 might not the ones to help finish the job.

Reinventing ReConnect

Your guess is as good as mine about whether Congress will ever pass the draft annual Agriculture Reauthorization Bill as written. It’s my understanding that the legislation includes new money for the ReConnect grant program that is administered by the Rural Utility Service (RUS), which is part of the Department of Agriculture.

This has been a successful grant program, and I know of quite a few rural projects that have been funded through these grants. The ReConnect grants only fund areas that are remote and include a test that gives priorities to grant areas that are the farthest distance from towns and cities.

There have been changes in the broadband industry that have made it harder each year to define a ReConnect grant area. The RUS grant rules favor grant requests that cover large contiguous areas. You can cobble together grant service areas that include multiple different geographic pockets of homes and businesses, but this involves a lot more paperwork.

It’s getting quickly harder to find big contiguous unserved areas. This started with the CAF II reverse auction and really came to fruition with the Rural Digital Opportunity Fund (RDOF). That subsidy program awarded subsidies by Census blocks, often widely scattered across a county. When I saw the first RDOF map, I quickly started thinking of RDOF as the Swiss cheese program. RDOF often chops rural areas into small pieces and leaves behind scattered pockets of homes that are not easy to aggregate into a grant like ReConnect.

This chopping up of grant areas continued as States and counties have been awarding broadband grants, often for grant areas that cherry pick the densest pockets of homes. This not only breaks the remaining unserved areas into more Swiss cheese, but it also makes it harder to justify somebody asking for a grant to serve the areas that are left over.

It’s going to get hard to find grant areas after BEAD grants start being awarded. The BEAD grants are supposed to bring broadband to all unserved locations in each state and hopefully also to the underserved. But I think everybody who understands the industry knows this will not happen as planned. There are already states that are saying that BEAD funding won’t cover everybody. There will be ISPs that don’t build everything they promised. There will be ISPs using technologies that won’t reach everybody as promised. There will be ISPs that financially fail and don’t finish the grant projects. And this won’t just be for BEAD – there are going to be plenty of areas supposedly covered by RDOF that won’t get the broadband they have been promised.

The biggest pile of places that won’t get broadband from BEAD are the millions of places that are still incorrectly identified on the FCC maps as served but which aren’t. These places won’t start to become apparent until after the BEAD grants are awarded and mapped and people living in areas with no good broadband start to make noise.

It’s very unlikely that the locations that get missed by RDOF and BEAD will easily fit into the current ReConnect grant template. ReConnect might be the only major ongoing grant program, and if ReConnect is going to reach the places left over from other federal grants, the RUS is going to have to make some significant changes.

First, it has to become easier to ask for funding for small pockets of homes. The RUS has purposefully given out a small number of large grants in each grant cycle to reduce its burden of monitoring the grant construction. But there are even more significant changes needed. For example, the RUS requires a substantial pledge of other assets to get an RUS grant. Unless somebody is already an RUS borrower, they are not likely to accept draconian collateral pledges for small grants.

Currently, the ReConnect grant is totally reliant on the FCC maps, and that has to change as well – because many of the places that will be missed with broadband will be incorrectly labeled as served by the FCC. The ReConnect process is complicated, it’s a challenge to input grant requests that must tie to penny while doing so in financial formats that nobody outside of the RUS understands.

In a post-BEAD world, any future grants are going to have to be creative, nimble, and able to bring solutions to small grant areas without a huge amount of paperwork. Unless the RUS is willing or able to change how it awards grants, this could be a grant program with very few future takers – and that would be a shame.

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.

Congress Ignores Rural Broadband

One of the biggest topics in rural America right now is the inability of employees to work from home and students to stay connected to schools from home due to the lack of broadband. Rural homes have struggled with poor broadband for many years, but the Covid-19 pandemic has brought the issue into a focus as rural residents are told to shelter in place, but don’t have the broadband needed to stay employed or to keep up with schoolwork.

I expected Congress to tackle this issue to some significant extent in the stimulus package that was just passed. However, the level of funding for broadband is disappointingly small in terms of finding any meaningful broadband solutions. The Senate bill contains the following:

  • $25 million to the RUS Distance Learning, Telemedicine & Broadband Program for the ‘‘Distance Learning, Telemedicine, and Broadband Program” (page 617).
  • $100 million for the USDA Reconnect program. This is a grant program administered by the USDA that provides grants and loans for bringing broadband to areas where at last 90% of households don’t have access to broadband of at least 10/1 Mbps. The money is to be prioritized to previous recipients of this grant (pages 622/623)
  • $50 million to the Institute of Museum and Library Services to prevent, prepare for, and respond to the coronavirus, including grants to States, territories, and tribes to expand digital network access (page 773).
  • Secretary of Veterans Affairs may enter into short-term agreements with telecommunications companies to provide temporary, fixed or mobile broadband service to provide mental health services to isolated veterans (page 807).

There is no such thing as bad grant money that brings better broadband, and all of the above allocations are welcome. However, none of this money is going to make more than a miniscule dent in the rural broadband issue. The only award that is likely to construct new broadband facilities is the $100 million for the ReConnect grant program. I’ve seen estimates over the years that it will take $100 billion to bring fiber to everybody in rural America. While a $100 million grant program might sound huge, if the need is $100 billion, then Congress just allocated one-tenths of one percent (0.1%) of the money needed to solve the rural broadband issue. It would take 1,000 years of grants at that level to bring fiber broadband to rural America.

Don’t get me wrong – the ReConnect grants have been going to independent telcos, electric cooperatives, and independent ISPs and any ISP that gets this extra money will be glad to get it. But when we map out the areas covered by this extra money you won’t be able to see it on a map of the US.

I think Congress is misreading rural America. My consulting firm does surveys and interviews in rural America and we have continued to do this during the pandemic. Rural America is pissed. They aren’t annoyed, they aren’t just sore – they are fuming mad that the government has been ignoring them for a decade by not bringing them broadband. They are mad at everybody – local politicians, state politicians, and federal politicians. Broadband isn’t a partisan issue, and I’m getting the sense that folks without broadband are ready to vote out anybody who is not bringing them a broadband solution, regardless of party.

You can’t blame them for being mad. One of the counties I’m working with right now is typical of much of rural America. We’ve done speed tests across the county and found almost nobody getting speeds faster than 5 Mbps, with many getting only a fraction of that. These homes mostly have DSL or fixed wireless broadband. These slow speeds are for the homes that can get at least some broadband – many homes have nothing. A large percentage of residents have tried satellite broadband and found it to be worthless. That’s understandable since we’re seeing latency of 700 to 900 milliseconds for satellite households – too much latency to connect to a corporate server or to connect to a school for remote classes or to do homework.

Almost every home we talk to has a story about how a lack of broadband costs them money when they have to drive 30 minutes each way to sit outside for a WiFi connection so their kids can complete their homework. Residents tell us of the inability to work from home or to start a home-based business. These folks are frantic and angry now that they are cut off from their jobs and schools.

It’s impossible not to sympathize with these rural residents. I am sitting in an office with good broadband. Sheltering in place is, at worst, a hassle for my wife and me. We’re able to work all day and we’re able to spend as much time on the Internet as we want when we’re not working. But what about people who have lost their paycheck because they are unable to work from home? What about students who feel they are losing a school year and are fearful they’ll have to repeat a grade? I find it impossible to believe that members of Congress aren’t hearing these same stories and I can’t understand how Congress ignored the millions of Americans without broadband in the stimulus plan.