Enormous sums of federal and state funding are now available to help the country’s unserved and underserved areas get access to fast, reliable internet connectivity. Experts point to the stark contrast between connected and unconnected areas during the COVID-19 pandemic as the thing that finally brought consensus among policymakers to close the digital divide once and for all.
“It really got people saying, ‘OK, we need to make a difference. We need to change this now,” said Brian O’Hara, NRECA regulatory affairs director and the association’s point person on broadband issues.
O’Hara sat down recently to discuss the breadth of available funding and how it’s changing the equation for electric cooperatives that are well-positioned to leverage these historic grant opportunities to help their communities.
Brian, can you start off by giving us a sense of the totality of federal money that's available right now for broadband and what some of those programs are?
O’Hara: Sure. The infrastructure bill had $65 billion for broadband. The biggest pot of that, $42.5 billion, is in what they’re calling the Broadband Equity Access and Deployment or BEAD program. So that’s going to go to the states. The National Telecommunications and Information Administration at the Commerce Department is going to set up some rules by mid-May, and then the states will have to come up with a broadband plan in line with that. So that’s where that money is.
There’s $2 billion going to a tribal program at NTIA; $2.5 billion going to digital equity and inclusion grants. There’s a billion in middle mile grants, which I think a lot of our members, maybe even the G&Ts, could be very interested in. There’s $14.2 billion going to the Affordable Connectivity Program, which is for low-income households and is already up and running. And then there’s a lot of our members that are using U.S. Department of Agriculture programs. There’s another $2 billion for them.
Then there’s still some other programs that are out there from earlier stimulus bills. The American Rescue Plan had two big pots of funds. There was the State and Local Fiscal Recovery Funds, and that was money that was sent directly to states and localities. That was a huge pot. That was $350 billion with the first half released last May and the second half going out this coming May. But broadband was just one of the eligible uses. It can be used for a lot of things. If they had lost tax revenue during the pandemic, they could use it to fill some of those holes. They could use it for roads and bridges. So there was a lot of competition there.
And then there was the $10 billion Capital Projects Funds, and that’s through the Department of Treasury. And there are a couple things that that can be used for, but broadband is definitely one of them. They’ve actually just started receiving applications for that.
So there’s a lot of money floating around.
And going forward, are there more funding opportunities on the horizon?
O’Hara: Oh, there definitely are. There were other funds that were proposed in the Build Back Better bill, and it was not a small amount. That wasn’t enacted, of course, but there’s been discussion of cutting it into piece parts and trying to pass them as one-offs. I have not seen any serious traction on those right now, but I would not doubt that we will see some of these smaller bills start to move.
You know, one thing that we’re seeing right now also in the 2023 proposed budget is more funding again for ReConnect at USDA. So there are some of these bubbling up, and I'm sure we’ll be seeing more.
And what about state and local level funding? Is that something that co-ops are tapping into and something that’s growing and in the same way that the federal money is?
O’Hara: Definitely. There are two things going on here. First, I mentioned some of these projects where money is going directly to the states, and they can give it out. They’re also partnering federal funding with some of their own money. So yeah, we’re definitely seeing that, and more and more states are getting involved.
The question that this sort of begs is, why is there such a groundswell of interest on broadband now? We talk about how we can never agree on anything in this country, but it seems like this is that rare thing that we can all agree is a national priority.
O’Hara: Yeah, people have been talking about the need for broadband for decades, and it’s only gotten stronger. But really, the pandemic has been the single largest event to move the needle. When everyone got forced to work from home, and all the kids went to online education, so many kids without broadband were denied that education. It really got people moving. It got people saying, “OK, yeah, we need to make a difference. We need to change this now.” We’ve been waiting for a long time, and that was it. Just seeing the impact on those that don’t have broadband was driven home.
In your talks with folks in the federal agencies and on Capitol Hill, how are they talking about electric co-ops as fitting into the model for fixing the digital divide?
O’Hara: A lot of the federal agency folks, they really see the electric co-ops as being a key player. We have a history of going to some of the hardest-to-reach places, and they know that even with federal dollars, some of the large for-profits still won’t want to go to a lot those areas. So we are definitely seen as a big savior here.
One thing I would say is, if you look at some of these rules for, say, ReConnect Round 3, there were bonus points given to any application that was filed by either a cooperative, a nonprofit or even a municipality. Companies that were viewed as not having a profit motive. And there were other programs where that was also given as an encouragement. So sprinkled throughout a lot of these is at least an encouragement for cooperatives and nonprofits to participate.
Do you have a sense of how many co-ops are currently running, building or considering a broadband project right now?
O’Hara: Yes, we do. And we’re trying to always get that data better all the time. Right now, of NRECA’s 830 or so distribution co-ops, over 200 are either providing broadband or deploying broadband. Because of the historic level of funding I mentioned, I would say another 100 to 200 are kicking the tires and looking at the feasibility of getting into the business either by themselves or through a partnership.
So in terms of what NRECA can offer these cooperatives, what are you hearing from them, and what are they asking you for? And how are we helping get them through?
O’Hara: First and foremost is the money—trying to figure out how to apply for it; what are the strings attached; and making sure they know what’s going on. There’s a the old saying that “There’s no such thing as a free lunch.” So if you’re going to get this federal money or state money, there’s going to be some strings attached. We need to educate our members as to all those strings and the regulatory requirements that come with it.
Also, we have a whole host of resources available. We have a broadband due diligence white paper that helps them sort through a litany of questions like what is their state law, what are their easements, things like that, that could be barriers that they need to make sure that they’ve addressed before they even get into this.
And then we also have put out a white paper on the key regulatory requirements that, if they get into broadband, these are the things they’re going to have to deal with. And we need to make sure that they know what they’re getting into, because that’s a whole other language, a whole other set of regulations that an electric utility obviously is not used to having to deal with.
So from where you sit, where is all this heading? It is there actually enough momentum at the federal level and the state level to solve this problem that’s been sort of intractable for the last 20-plus years?
O’Hara: Well, there’s a lot of desire for it. You know, this is going to be very interesting, because we have enough money out there where we could solve this problem. But as we all know, these programs are not always the most efficient. And there could be areas that are very hard to serve that may not have an electric co-op in their territory. So I would like to think that we’re going to get close. I don’t know if we’re going to get 100% there. And I think that’s why there’s going to be a need for funding down the road. There’s always going to be a few places left.
There’s a new push at the Federal Communications Commission to do better broadband mapping, and that’s really what all this is going to come down to. We need better data. So FCC is looking to take those steps, and we’re cautiously optimistic that the granularity and the veracity of those new maps when they come out will be good. We’re a little concerned that it may not be the case, but we are going to be watching that and looking to see where the holes exist.
Explore NRECA’s resources on broadband, and view a recent LiveWire episode on broadband funding.