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Obama Administration Aims to Issue $400 Million in New Rural Broadband Funding
|18 марта 2011|
President Obama’s Secretary of Agriculture, Tom Vilsack, and his chief of Rural Develop- ment, Jonathan Adelstein, are working to issue a new funding round of upwards of $400 million for broadband networks in rural America. They are doing so within six months of issuing the last of their Department’s broadband stimulus awards.
What's a NOSA?
The $400 million ceiling number for 2011 appropriations to the USDA's Broadband Loan Program was recently published in an obscure (never so for grant writers) federal document.
New interim rules, called a Notice of Solicitation of Applications (NOSA), for this funding round were released as on Monday.
Secretary Vilsack announced the pending release last Thursday. The issued rules are open for public comment until May 13, while the funding window remains open until appropriated funds are expended.
The NOSA stands for what it is. The actual final current year appropriations for the program have not been finalized, so a Notice of Funding Availability (NOFA) can not legally be published. Instead, the NOSA is employed to solicit both comments and applications out quickly.
"We didn't want to delay the ability to ge these resources out into the countryside," said Vilsack on the media call of last Thursday. "We know there is a tremendous demand, as we saw this when we saw the applications filed for the Recovery Act resources."
$400 Million Target for Loans Only
The broadband capital subsidies will be issued only as loans. No grants are available in this funding tranche. The loans will be issued by USDA's Rural Utilities Service (RUS), based on authorizations within the 2008 Farm Bill.
As Secretary Vilsack and RUS Administrator Adelstein said during the call of last week, USDA specifically decided to wait for the end of the broadband stimulus funding rounds before issuing these new funds.
Final Negotiations with Congress
USDA managers wanted to review lessons learned from the agency’s work during the past two years as it awarded nearly $3.5 billion in stimulus loans and grants. The agency issued the last of its stimulus-funded loans and grants on September 30, 2010. RUS also spent months amending the rules for the Broadband Program, an effort mandated by Congress in the 2008 Farm Bill.
The approach by Vilsack and Adelstein to wait to award the 300 plus stimulus projects funded by USDA prior to releasing the Farm Bill-financed Broadband Loan package appears to have bipartisan support of the congressional appropriators who must give final approval to funding levels.
In the press release issued last Thursday by Vilsack’s office, USDA stated that the funding notice for the broadband loans “is being issued prior to passage of the final appropriations act to allow potential applicants time to submit proposals and give the agency time to process applications within the current fiscal year.” The statement continued, “Upon completion of a 2011 Appropriations Act, RUS will publish a subsequent notice identifying the amount of funding available for broadband loans.”
The credit worthiness and miniscule default rate of the RUS loan portfolio are the two assets which allow the possible full $400 million in broadband program loans to move ahead. According to last week’s press statement, “USDA's Farm Bill broadband loan program has invested over $1 billion over the past decade in more than 100 projects nationwide.” Currently RUS has $146 billion in rural development loans in its portfolio which spans a variety of infrastructures from water supply to broadband.
New Rules for Broadband Loan Program
Rules for the Broadband Loan Program issued yesterday provide for several important changes and reforms to the prior, and highly controversial, rules which dated back to the Administration of former President George W. Bush.
Higher broadband speeds offered by applicants in their loan proposals will be given competitive incentives. Importantly, proposed service areas of applicants cannot be adjacent to urban jurisdictions of greater than 50,000 under the new rules.
“The new rules for the RUS Broadband Loan program are thoughtful, competitive and extremely fair,” said rural telecom funding expert Ms. Liz Zucco. “We are already seeing significant interest among potential applicants.” Zucco, principal of Canton, GA-based MarketSYS USA told us that this interest within the sector is coming from both legacy borrowers of RUS funds, and from new entities expressing renewed interest in rural telecom opportunities. MarketSYS USA is an affiliated of the corporate parent of this publication.
Cleaning Up the Mess
During the administration of President George W. Bush, USDA came under heavy criticism from Congress, the General Accountability Office (GAO), and the media for mismanagement and misaligned spending priorities in the Broadband Loan Program. Broadband loans made to extend networks to wealthy gated “golf themed” communities in suburban areas of metro Houston, TX became an anecdotal focus of such criticism. The fact that some of the loans dropped into the home district of Tom DeLay, then the influence peddling Republican Majority Leader of the House, highlighted concerns.
Under the Obama Administration, Administrator Adelstein, a former FCC Commissioner, has set about correcting the faults in the program. As the broadband stimulus effort moved forward, Adelstein was credited with changing the rules between Round 1 and Round 2 of the program in order to better solicit more competitive applications from telephone carriers that had objected vehemently to Round 1 funding rules.
Building Consensus for Funding Going Forward
As this new money moves out to rural communities, we think the reforms made to USDA’s broadband program will bring further credit to Adelstein and his staff. By reforming the rules, the RUS managers help strengthen the bipartisan consensus on Capitol Hill that will continue to support rural broadband capital subsidies.