Beware of Big Changes in Government Broadband Funding Rules

The Rural Utilities Service released its rules for the next round of the ReConnect grant and loan program, and the rules clearly reflect the Biden Administration’s broadband policy goals. Two of the new requirements were not surprising.

1. An increase the threshold for determining whether a location is unserved from 10/1 Mbps to 100/20 Mbps, which means that more locations will become unserved. This rule also gives a preference to deployments in more remote areas and locations where only lower speed service is available.
2. A 100/100 Mbps requirement for builds, which means unserved locations will get fiber. Somewhat similar requirements were included by the Treasury Department in the interim rules for using American Rescue Plan Act State and local government block grant funding for broadband.

But then the rules go in an entirely new direction—one signaled by the Biden Administration’s Executive Order on competition policy and its initial proposals in the infrastructure legislation. In deciding which providers will be awarded support, the rules give a preference to those that fall into certain categories. These include local government; not-for-profit and cooperative providers; providers that assure prices will be “affordable,” offer a low-cost service, and participate in the FCC’s adoption programs; providers that wholesale service at reasonable and non-discriminatory rates; and providers that comply with open internet requirements. Of course, the government is permitted to condition its award of government support, but is it smart policy?

By giving a preference to non-traditional providers, the government is downplaying the value of incumbent providers that have the expertise and experience to deploy networks more efficiently and expeditiously and that knowhow to operate networks providing quality service to consumers. As a result, fewer unserved locations will receive service. The government also will limit coverage of unserved locations by including many of the other costly preferences.

Moreover, the RUS turned a blind-eye to what consumers really value—great, reliable service. No provider receives a preference by making such a commitment.

With all that said, this is the Biden Administration’s communications policy DNA. You can expect to see it turn up at the FCC. You can expect to see it turn up when NTIA implements deployment funding programs. Be prepared.

Calix is here to help you stay on track with government funding. Stay informed by regularly checking the  Calix funding webpage. If you are thinking about applying for funding, please join this year’s ConneXions 2021 Learning Experience, where we are featuring the funding session entitled, “Winning Strategies for Broadband Funding with a Focus on USDA ReConnect Round III​” on Wednesday, November 17, 2021​, 3:00 PM – 3:45 PM.