United States: Department Of Agriculture And Department Of Commerce Announce $4 Billion In Funding For First Round Of Broadband Technology Deployment

On July 1, 2009, the Department of Agriculture's Rural Utilities Service (RUS) and the Department of Commerce's National Telecommunication and Information Administration (NTIA) announced the availability of $4 billion in grants and loans for the development of broadband service across the United States.  This announcement initiates the first round of competition for broadband funding under the American Recovery and Reinvestment Act (ARRA), which allocated a total of $7.2 billion to RUS and NTIA for the deployment of broadband technology. 

Applicants will compete for funding through two programs established under ARRA.  The RUS will provide grants, loans and grant/loan combinations through its Broadband Initiatives Program (BIP) for broadband projects in rural areas.  The NTIA will provide grants through its Broadband Technology Opportunities Program (BTOP) for broadband projects in unserved and underserved areas of the United States.  Additional information on both programs is available at Broadband USA.

In this Update, we describe the funding opportunities under the BIP and BTOP programs, including eligibility requirements, deadlines, and the process for reviewing applications.

What Is BIP?

The objective of BIP is to provide and increase broadband service to unserved and underserved rural areas.  Applicants proposing broadband infrastructure projects for rural service areas that are at least 75 percent unserved or underserved are required to submit their application to BIP but may also submit an application for funding under BTOP.  Projects simultaneously submitted to BIP and BTOP are required to meet the additional eligibility requirements for BTOP applications and will be reviewed under a separate merit criteria outlined by NTIA.

Broadband infrastructure projects under BIP will be divided into three subareas:  (1) Last Mile Remote Area projects, for proposed broadband service to premise and end users in completely remote areas; (2) Last Mile Non-Remote Area projects, for proposed broadband service to premise and end users in both remote and non-remote areas; and (3) Broadband Infrastructure Middle Mile projects, for projects that connect at least two points without predominantly providing broadband service to premise and end users.

Priority will be given to projects that give end users a choice of providers, serve the highest proportion of rural residents presently lacking broadband service, are proposed by current or former RUS borrowers and are fully funded and ready for implementation.  Only one project per geographic area will be funded under BIP.

How Much Funding Is Available Under BIP For The First Round Of Funding?

In total, ARRA provides $2.5 billion in funding for BIP.  Nearly all of this funding – approximately $2.4 billion – is available in this first round of funding.  The RUS has subdivided the BIP funding as follows:  $1.2 billion for Last Mile projects; $800 million for Middle Mile projects; and an additional $325 million for a national reserve to supplement funding provided under BIP.  Awards under this program will be provided in the form of loans, grants and loan/grant combinations.  Grants under this program are reserved for projects targeted at remote, unserved areas, while loan and loan/grant combination awards will be allocated to projects proposing to serve non-remote and underserved rural areas and projects serving remote and non-remote areas.  The grant portion of any grant/loan combination award may not exceed the amount allocated for the loan.  In addition, projects that propose a higher percentage of loans will be favored.

Applicants to the Last Mile Remote Area will be considered for grant funding of up to 100% of all eligible project costs.  However, awardees receiving greater than 80% in grant funding must exhibit a specific financial need for the additional funding.

What Is BTOP?

Eligible projects under BTOP must advance one of the five program objectives:  (1) providing broadband service to unserved areas of the United States; (2) providing broadband service to underserved areas of the United States; (3) providing broadband access, education, training and awareness, among other things, to disadvantaged populations; (4) improving broadband access and use by public service agencies; and (5) stimulating demand for broadband, economic growth, and job creation.

BTOP is divided into three categories of projects:  (1) Broadband Infrastructure; (2) Public Computer Centers; and (3) Sustainable Broadband Adoption.  The Broadband Infrastructure category is divided into two subareas:  (a) Last Mile, which consists of projects in unserved and underserved rural areas for the purpose of providing broadband service to end users and "end-user devices", such as homes, schools and libraries; and (b) Middle Mile, which consists of projects that are for unserved or underserved areas and that have a predominant purpose other than providing broadband service to end users and "end-user devices".  The Public Computer Centers category consists of projects that will provide broadband access to the general public or a disadvantaged portion of the population, such as low-income or unemployed populations, and the Sustainable Broadband Adoption category consists of projects that demonstrate a sustainable increase in demand for and subscribership to broadband services and propose innovative solutions to overcome current barriers to adoption in a specific area.  Funding will be provided in the form of grants.

How Much Funding Is Available Under BTOP For The First Round Of Funding?

In total, ARRA provided $4.7 billion in funding for BTOP.  Less than one-third of that amount – approximately $1.4 billion – is available in this round.  The NTIA has subdivided this funding as follows:  Broadband Infrastructure projects will receive $1.2 billion; Public Computer Center projects will receive no more than $50 million; and Sustainable Broadband Adoption projects will receive $150 million.  Additionally, up to $200 million of a national reserve is allocated to supplement BTOP funding.

In addition, awardees of BTOP are required to provide a cost share of at least 20 percent, unless granted a waiver.  Applicants that provide a cost share of 20 percent or more will be favored in the application review process.

Who Is Eligible For BIP And BTOP Funds?

Examples of eligible applicants under BIP and BTOP include, but are not limited to, states and local governments, Indian tribes; non-profit and for-profit organizations, limited liability companies and cooperative organizations.

To be eligible, applicants must also propose projects that can be substantially completed within two years of receiving the award and fully completed no later than three years after receiving the award.  Applicants may submit applications for projects that fit within one or more of the categories under BIP and BTOP.  In order to receive funds awarded, successful applicants are required to demonstrate evidence of funding for all project costs not covered by BIP and BTOP to ensure that all project costs are fully funded. 

What Are The Application Deadlines And Ways To Apply?

Applications for both BIP and BTOP will be accepted between July 14, 2009 and August 14, 2009, with the intent that all awards will be made no later than September 30, 2010.

Applicants requesting more than $1 million are required to submit their applications electronically.  Applicants seeking less than $1 million may submit paper applications to avoid any hardship imposed by filing electronically.   

What Is The Evaluation Process For Applications?

Applications for both BIP and BTOP will be evaluated by RUS and NTIA, respectively, based on a two-step approach.  Applications will be reviewed in step one for completeness and eligibility.  Eligible applications will be evaluated and ranked based on the merit review criteria identified in the funding announcement, with the highest scoring applications advancing to step two, the "due diligence phase," of the evaluation process.  In step two, the governor's office for each state will receive a list of applicants and may prioritize and recommend certain projects for funding.  Applicants selected to advance to step two will be announced on or after September 14, 2009.

Applications for both BIP and BTOP will be evaluated and scored based on four categories:  (1) project purpose; (2) project benefits; (3) project viability; and (4) project budget and sustainability.

RUS and NTIA anticipate announcing awards around November 7, 2009.

All applicants must have a DUNS number and must be registered in the Central Contractor Registration (CCR) database to be eligible for an award under BIP and BTOP.  A DUNS number is a unique nine-digit identification number issued by Dunn and Bradstreet that can be obtained by accessing http://fedgov.dnb.com/webform.  Registration in the CCR database can be completed by visiting http://www.ccr.gov/.  The Department of Energy recommends that applicants allow 21 days to complete the registration process.

For additional information, please refer to our Federal Grants & Loans practice description, which includes a background paper with tips for potential applicants.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.