Broadband stimulus fund applicants sharpen their proposals for the second round
Federal dollars are finally trickling into broadband stimulus projects, and a few trends are emerging that will serve as the blueprint for the second round of funding — in particular, a preference for private-public partnerships that involve state and local governments and a slant towards fiber projects.
The American Recovery and Reinvestment Act, the National Telecommunications and Information Administration (NTIA), along with the Department of Agriculture’s Rural Utilities Service (RUS) program, are granting and loaning $7.2 billion in stimulus money to bring broadband to unserved and underserved areas. The first-round recipients will receive $4 billion, but only a fraction has been doled out. Meanwhile, both NTIA and RUS have issued rules for applying for the second round of stimulus money. The deadline is March 15.
Just before the Christmas holiday, NTIA awarded $182-million for 15 projects, and in January, NTIA and RUS announced awards worth $63 million and $310 million respectively. Middle-mile fiber-based projects, that connect wireless base stations to a fiber or other terrestrial backbone network, make up the bulk of those awards. The reasoning: These middle-mile projects are positioned to serve as the backbone network that other providers can interconnect with to expand broadband services to the masses.
For instance, the nonprofit Merit Network received a $33.3 million infrastructure grant with an additional $8.3 million in matching funds to build a 955-mile advanced fiber-optic network through 32 counties in Michigan’s Lower Peninsula. The project also intends to directly connect 44 community anchor institutions and will serve an area covering 886,000 households, 45,800 businesses, and an additional 378 anchor institutions. In Missouri, an electric cooperative received a $19.1 million grant and loan to build a fiber-optic network that will reach nearly 5,000 homes, businesses, public-safety entities and community organizations in rural Ralls County.
The emphasis on building the middle-mile makes sense, says Craig Settles, head of Successful.com. “I don’t have to administer a bunch of small last-mile projects. I can do several middle-mile projects that can result in hundreds of miles of unserved areas getting broadband coverage.”
Not everyone agrees with that assessment. Daniel Hays, partner with PRTM, says the emphasis on middle-mile projects might actually hinder broadband adoption because there has to be an incentive for providers to connect to those projects.
“I question whether middle-mile projects are really going to satisfy the needs of those that are underserved by broadband. The middle-mile projects are going to take a long time to come to fruition themselves and even longer to deliver broadband,” Hays says. “If I was to describe the typical middle-mile applicant, it appears to be a public-private partnership looking to extend the reach of fiber into their local region … Most appear to be approved more for redundancy and expansion rather than new access.”
Meanwhile, the vast majority of 2,200 applicants that applied for funding are those entities looking to provide last-mile broadband access. That is, delivering broadband services directly to end users. Hays believes many of those applicants are in for a major disappointment.
NTIA and RUS are mailing rejection letters to those that applied for first-rounding funding. The agencies are under a tight timeline to do so to give round 2 applicants a fair shot at applying for funds. First round winning service areas are ineligible for second round funding.
Some last-mile applicants are scrambling to change their focus in the second round. If his first proposal is rejected, Robert Anderson, CEO of WindTalk, intends to propose a middle-mile project, deploying wireless gear and fiber capable of serving as a vehicle for other providers to roll out wireless broadband services in places that aren’t economically feasible to do so.
“We think we were clever but we might have gone too big,” Anderson says. ” Our obligation is to show them why we may not be the safest but that it makes the most sense for the taxpayer.”
And, while the NTIA has indicated it is focusing on middle-mile projects, RUS will look more at funding last-mile projects. The problem for those with last-mile ambitions is that NTIA is giving out more money than RUS.
Perhaps more encouraging for local governments in the second round is the removal of the requirement that infrastructure projects must be located in unserved or underserved areas. That means cities that already have broadband access can play but unserved and underserved communities will still have priority.
Experts, however, believe there are cases for applications in more economically disadvantaged areas of cities, and it may be very likely local governments will see a large number of private partner suitors from which to choose.
Lynnette Luna is a contributing writer to Urgent Communications, a sister publication to Government Product News.