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The United States still suffers from the digital divide, which is the gap between urban and rural residents’ access to broadband services. For more than two decades, various US government agencies have attempted to address this problem through broadband funding initiatives.
Just as the government was able to bring electricity – and then telephony – to rural America, these programs effectively offer rewards to telecommunications companies to encourage them to build expensive broadband infrastructure in areas where it would otherwise be too expensive
In 2017, 24% of Americans (78 million people) in rural areas were not covered by fixed terrestrial broadband networks offering 25 Mbps. Another 14 million had no access to a fixed broadband service.
In recent years, the FCC has made rural broadband a priority. In April 2019, FCC Chairman Ajit Pai announced a new fund to support the construction of gigabit broadband services for rural residents. Here’s a look at the current federal broadband funding programs that are helping to bridge the digital divide across America.
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The US Department of Agriculture’s Rural Utilities Service (RUS) administers three ongoing broadband financing programs: the Rural Broadband Loan and Guarantee Program, the Grant Program of Community Connection, and the ReConnect Program. RUS also administers a telecommunications infrastructure loan and guarantee program and distance learning and telemedicine (DLT) grants. DLT grants are not specifically targeted at broadband deployment, but instead fund equipment and software for telemedicine and distance learning applications.
Funding for RUS Broadband is provided through the Agricultural Account, which is reauthorized every five years, and the Annual Appropriations Account. The 2018 US Farm Bill included $600 million in funding for rural broadband programs. The Consolidated Appropriations Act of 2019 provided $30M for Community Broadband Grants, $47M for DLT Grants, an additional $5.83M for the Rural Broadband Subsidy Loan for $29,851 million and $1.73 million in grants of loans for a total loan level of $6,690 million for the Telecommunications Infrastructure Loan and Guarantee Program. It also committed $550 million to the ReConnect program.
This program provides loans and loan guarantees to telephone companies and cooperatives, municipalities, tribes and non-profit organizations to install telecommunications infrastructure for broadband service in rural communities. Eligibility is limited to rural communities in US states or territories that are not located in a city or incorporated city with a population greater than 20,000.
RUS is prohibited from favoring one technology over another in broadband loan applications. This means that it needs to leverage newer and faster technologies like DOCSIS and fiber as much as older technologies like DSL. However, RUS has some discretion in setting the minimum data transfer rate for broadband projects under the loan program. This speed is currently set to 10 Mbps downstream and 1 Mbps upstream.
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These grants provide funding for broadband services through one-time donations to tribes, co-ops, universities and private companies. The money is used to build a broadband infrastructure that can contribute to the development and improvement of the community. Funds can be used to support the construction, acquisition (and spectrum acquisition) and leasing of facilities necessary to deploy broadband services in critical community facilities. Funds may also be used to provide broadband services to residents and businesses in the proposed service area. Grantees must provide “basic broadband” to all critical community facilities in the proposed area for two years free of charge. Rural areas are only eligible if they do not have an existing broadband speed of at least 10 Mbps downstream and 1 Mbps upstream.
Established in 2018, the ReConnect program provides loans and grants to help cover the costs of building, upgrading or purchasing broadband facilities in eligible rural areas. The proposed service area must have at least 90 percent of households that do not currently have sufficient broadband access at speeds of 10 Mbps. Currently, the program has up to $200 million in grants available.
This program provides long-term guaranteed loans to qualified telephone companies or cooperatives, non-profit organizations, limited dividend associations, mutuals, or public agencies for the purpose of providing telecommunications services in rural areas . Eligible rural areas must not be within the boundaries of any incorporated or unincorporated city, town or municipality with a population greater than 5,000. Applications are accepted throughout the year and are not competitive.
They provide loans and grants to rural community facilities such as schools, tribal offices, libraries and hospitals for specialized telecommunications systems that can support educational and health applications in rural areas. Funding is only available to organizations that currently provide or propose to provide distance learning or telemedicine services.
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Therefore, the Universal Service Fund aims to promote the availability of quality telecommunications services to all consumers, including those living in low-income, rural, island and high-cost areas , at “fair, reasonable and affordable prices”. ” in force. according to what urban consumers pay.
The fund supports qualified telecommunications companies (ETCs) in deploying broadband services in unserved or underserved areas of the United States.
The Universal Service Fund includes the Connecting America Fund, the Universal Service Schools and Libraries Program, the Rural Health Care Program and the recently announced Rural Digital Opportunity Fund .
Loans and grants issued through the Universal Service Fund are paid for by contributions from fixed, mobile and cable companies based on their revenues, which then pass these costs on to their subscribers. This means that the fund is essentially paid by consumers through their phone bills. The Universal Service Administration Company administers loans by order of the FCC.
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The Connect America Fund provides funding to ETCs to help defray the cost of deploying broadband service in high-cost, rural or island areas where market conditions do not favor intrusive deployment of the government. CAF was originally proposed in 2010 as part of the FCC’s National Broadband Plan.
The first phase of the CAF involved a total of US$9 billion in grants awarded between 2012 and 2015 to ETCs committed to building broadband services in unserved and underserved areas. In the first phase of the CAF, the ETCs must offer services of at least 4 Mbps. In 2014, the FCC approved Phase II of the CAF, which allocated an additional $1.8 billion annually. The FCC also increased minimum speeds to 10 Mbps. But it wasn’t until 2018 that the FCC held a reverse auction to allocate funds to eligible areas in the United States. During the auction, 103 bidders received a total of $1.49 billion in funding over 10 years to provide broadband services to more than 700,000 locations in 45 states.
Also known as E-Rate, this program offers discounts on telecommunications and broadband services to schools and libraries. E-Rate was first launched in 1996 and helped the United States achieve a near-universal rate of broadband access in schools.
In 2014, the FCC updated the E-Rate program to include Wi-Fi networks. Eligible schools must have endowments of no more than $50 million, and eligible libraries must be non-profit and have budgets completely separate from the school.
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Discounts range from 20 to 90 percent and are available to eligible entities based on the poverty level of the community served, with different rates for urban and rural areas. Funding for the E-rate program is demand-based, offering up to an annual cap of $4.1 billion set by the Commission in 2019.
This program provides funding to qualified health care providers (HCPs) for telecommunications and broadband services in support of telemedicine applications. Under the program, health care providers apply for discounts and USAC coordinates with telecommunications providers and Internet Service Providers (ISPs) to provide broadband services. USAC then reimburses the ISPs. The program is capped at $400 million per year. It currently includes four programs: the Healthcare Connect Fund, the Telecommunications Program, the Internet Access Program and the Rural Health Pilot Program.
The FCC recently announced the creation of a third broadband initiative under the Universal Service Fund: the Digital Rural Opportunity Fund (see our article here). The FCC expects the fund to connect up to 4 million rural homes and businesses to gigabit-speed broadband services. The funds will be redirected to allocate $20.4 billion in grants over 10 years to telecommunications companies through an auction process.
The National Telecommunications and Information Administration (NTIA), an agency of the US Department of Commerce, administers two broadband concession programs, both funded by the Recovery Act and the -US reinvestment: the Broadband Technology Opportunities Program (BTOP) and the State Broadband Access Initiative (SBI Program). NTIA oversees $4.3 billion in broadband infrastructure projects across the country. These projects support the improvement of broadband access
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