Grants and Other Funding

Opportunities for Broadband and

Telecommunications Companies Under
the Economic Stimulus Act
A Bingham McCutchen Private Webinar

PRESENTERS:
Andrew D. Lipman, Senior Partner and Practice Group Leader
Frank G. Lamancusa, Of Counsel
Telecommunications, Media and Technology Group

andrew.lipman@bingham.com
frank.lamancusa@bingham.com

February 18, 2009

Highlights

• Legislation enacted on February 17

• Harmonizes Senate and House versions

• Bill actually increases money for broadband to

$7.2 billion -- split between NTIA ($4.7 billion)
and RUS( $2.5 billion) -- mostly grants

• More favorable than earlier versions, as to

process, speeds, broadband standards,
requirements, and eligibility 1
Highlights

• Encourages broad array of applicants

• Public-private partnerships no longer required

for NTIA grants

• Funding available until September 30, 2010

• Agencies already working on process

2
Highlights

• Must complete projects within 2 years of

award

• No rush to allocate 50% of funds this year, but

timing will be a factor for grant awards

• Broadband deployment investment tax credits

not included in final bill

3
Overview of Funding

• NTIA -- $4.7 billion

• RUS -- $2.5 billion
• Health Information Technology -- $1.5 billion
• Electricity Delivery and Energy Reliability --
$4.5 billion
• Department of Labor -- $250 million
• Tax Investment Incentives
4
Broadband Technology Opportunities (BTO)
Program
• NTIA to establish a national broadband service
development and expansion program

• NTIA to consult with FCC

• NTIA drafting grant guidelines and will seek

public comment

• NTIA will hold public meetings, some outside

of DC
5
NTIA -- BTO Program Funding

• 4.7 billion appropriated

• $350 million for broadband inventory map
• $250 million for programs to encourage adoption
of broadband services
• $200 million for expanding computer center
capacity
• $140 million for administration costs and FCC
• $10 million for monitoring and auditing

• $3.75 billion left for NTIA grants

6
NTIA -- Grant Availability

• Funding available until September 30, 2010

• Broadband deployment project must be

completed within two years of award

• The Federal share limited to 80%

• NTIA may increase share above 80%

• if the applicant petitions for a waiver; and
• NTIA determines that the petition demonstrates
financial need
7
NTIA -- BTO Program Purpose

• Provide access in unserved areas

• Improve access in underserved areas

• Provide broadband education, awareness,

training, access, equipment, and support

• Improve access for public safety agencies

• Stimulate demand for broadband, economic

growth, and job creation 8
NTIA -- Uses of Funding

• Acquire equipment, instrumentation, net

working capability, hardware and software,
digital network technology, and infrastructure
for broadband services

• Construct and deploy broadband service

related infrastructure

• Ensure access to broadband service by

community anchor institutions
9
NTIA -- Uses of Funding

• Facilitate access of broadband services to

vulnerable populations for educational and
employment opportunities

• Construct and deploy broadband facilities that

improve public safety broadband
communications services

• Any other projects NTIA finds to be consistent

with the BTO program
10
NITA -- Eligibility

• State, political subdivision, District of

Columbia, a U.S. territory, an Indian tribe or
native Hawaiian organization
• Nonprofit organizations
• Entities, including a broadband service or
infrastructure providers, that NTIA finds to be
in the public interest
• NTIA grants to be awarded on technologically
neutral basis -- no minimum data speeds
11
NITA -- Eligibility

• Intent for as many entities as possible to be

eligible:
• wireless carriers
• wireline carriers
• backhaul providers
• satellite carriers
• public-private partnerships
• tower companies

12
NTIA -- Application

• Explain in detail how funds will be used to

carry out purposes
• Show that without grant the project would not
have been implemented
• Demonstrate capability to perform project
• Disclose other funding sources
• Assure that funds will be used and accounted
for in an appropriate manner
13
NTIA Award Considerations

• Award at least one grant in each State

• Applicant is a socially and economically
disadvantaged small business concern
• Will infrastructure deployment for the greatest
population of users in the area:
• increase the affordability of service
• provide the greatest broadband speed
• enhance service for health care delivery,
education, or children
14
NTIA/State Interaction

• NTIA may consult with States to

• identify unserved and underserved areas
• allocate grant funds affecting the State

• States encouraged to
• coalesce stakeholders and partners
• assess community needs
• aggregate demand for services
• evaluate demand for technical assistance

• NTIA sole authority to approve the awards

15
NTIA -- Reporting

• Grant recipients report to NTIA on use of

assistance and progress fulfilling the
objectives quarterly

• Reports are public and will be accessible via

the Internet

• Report on the status to Congress every 90

days

16
NTIA -- Network Obligations

• Hot topic -- NTIA to coordinate with FCC, the

non-discrimination and network
interconnection obligations that shall be
contractual conditions of grants

• FCC’s broadband policy statement is the

minimum requirement

17
FCC’s Broadband Policy Statement

• Consumers are entitled:

• to access the lawful Internet content of their
choice
• to run applications and use services of their
choice, subject to the needs of law enforcement
• to connect their choice of legal devices that do not
harm the network
• to competition among network providers,
applications, and service providers, and content
providers
18
NTIA -- Broadband Inventory

• NTIA to develop and maintain a

comprehensive nationwide inventory map of
existing broadband service capability and
availability

• Inventory map to become public within 2 years

• Opportunities for database providers

19
Rural Utilities Service (RUS)
• $2.5 billion in additional funding for broadband loans,
loan guarantees, and grants

• Triples total 2008 RUS funding

• Available until September 30, 2010
• Projects receiving RUS funding cannot get funding from NTIA
• Funding is available in any area of the U.S. but at least 75%
must go to rural areas without sufficient access to high speed
broadband

• Loans will leverage the amount of investment

20
RUS - Funding

• Funding priorities include:

• Projects that will deliver a choice to end users of more than
one service provider - underserved areas
• Projects that provide service to the highest proportion of rural
residents without access to broadband - unserved areas
• Applicants who are borrowers or former borrowers
• Projects that will be fully funded by award
• Projects that can be completed by award
• Projects that can commence promptly upon approval

21
RUS - Broadband Programs
• Community Connect Grant Program
• Provide broadband service on a “community-oriented
connectivity basis” to the most rural and economically
challenged communities

• Rural Broadband Access Loan and Loan Guarantee

• Provide loans for the cost of construction, improvement, and
acquisition of facilities and equipment for broadband services
in eligible rural communities

22
RUS - Broadband Programs

• Eligible Entities: incorporated organization, Indian tribe or

tribal organization, state or local unit of government,
cooperative, private corporation, limited liability company

• Ineligible Entities: individuals, partnerships

• Any entity that serves more than 2% of telephone subscriber
lines in U.S is ineligible for Loan and Loan Guarantee program

• Required Broadband Transmission Speed: currently 200

kbps down/up

• No network neutrality requirements

23
RUS - Community Connect Grant Program
• Annual Notice of Funding Availability announces:
• Application deadline (e.g., March 28 for FY2008)
• Minimum and maximum funding amounts (e.g., $50,000
and $1 million for FY2008)
• Scoring Criteria used to rank and award grants:
• Rurality - population of community
• Rural area: any area not located within the boundaries of
any incorporated or unincorporated city, village or borough
having a population in excess of 20,000

• Economic Need - median household income of community

as percentage of state average MHI
• “Community-oriented connectivity benefits” - includes
local community involvement in plan and implementation 24
RUS - Community Connect Grant Program
• Eligibility Requirements
• Serve a rural areas throughout which broadband transmission
services does not currently exist
• Serve one and only one Community recognized in the latest
Bureau of Census or Rand McNally Atlas
• Provide a Community Center with at least 10 Computer Access
Points free of charge to users for at least 2 years
• Deploy basic broadband transmission service free of charge
for at least 2 years to Critical Community Facilities
• Offer Basic Broadband transmission service to residential and
business customers
• Demonstrate at least 15% matching contributions (e.g., cash,
in-kind contributions) 25
RUS - Community Connect Grant Program
• Eligible Purposes
• Construction, acquisition or leasing of facilities needed to
offer broadband service to residential & business customers
• Improvement, expansion, construction or acquisition of a
Community Center - cannot exceed 5% of requested amount
or $100,000
• End-user equipment needed to carry out project
• Operating Expenses incurred to provide broadband to
Community Center for first 2 years of operation and to provide
training - cannot exceed $250,000
• Purchase of land, buildings, or building construction needed
to carry out project
• Ineligible Purpose: Finance duplication of existing
26
broadband service provided by another
RUS - Rural Broadband Loan & Loan Guarantee

• Types of Loans
• Direct cost-of-money loans: interest rate equal to Treasury
cost of borrowing
• Direct 4% loan: available for community with a population of
less than 2,500 inhabitants and no broadband services, and
located in county with per capita income less than or equal to
percent of national average to be published annually by RUS
• Private Loan Guarantees: interest rate set by lender; RUS
guarantees no more than 80% of principal

• Applications are accepted year-round and processed

on a first-come, first-serve basis

• Average processing time is 6-7 months 27

RUS - Rural Broadband Loan & Loan Guarantee

• Minimum funding amount is $100,000

• Loan and Loan Guarantee Program reauthorized by

Congress in 2008 with changes

• RUS has issued proposed rules which could alter

eligibility and application requirements for the loan
and loan guarantee program

28
Health Information Technology
• Health Resources and Services:
• $1.5 billion for grants for construction, renovation and
equipment and for the acquisition of health information
technology for health centers
• “Health Information Technology” includes hardware,
software, intellectual property, packaged solutions sold as
services for the electronic creation, maintenance or exchange
of health information
• Legislation allows award of competitive grants to States or
Indian tribes to establish a loan program
• To be used for loans and loan guarantees to health care
providers to purchase electronic health record technology
among other things

29
Electricity Delivery and Energy Reliability

• Department of Energy -- $4.5 billion

• Purpose:
• Modernization of electric grid
• Inclusion of demand responsive equipment
• Enhance security of infrastructure
• Facilitate recovery from disruptions
• Energy storage research and development

• Funding up to 50% of costs

30
Electricity Delivery and Energy Reliability

• Funding to support “smart-grid” projects in

urban, suburban, tribal, and rural areas

• Department of Energy to establish application

procedures within 60 days

• Funding available until September 30, 2010

• Goal of using at least 50% of funds for

activities initiated by June 15, 2010
31
Department of Labor

• $250 million allocated for training

• Training for wireless and broadband

deployment is an activity eligible for grants as
a high growth and emerging industry sector

• No firm application process yet developed

32
Tax Investment Incentives

• No broadband infrastructure deployment tax

credits in legislation

• Extension of Bonus Depreciation

• Businesses allowed to recover costs of capital
expenditures made in 2009 under accelerated
depreciation schedule
• Businesses permitted to write-off 50% of
depreciable property acquired in 2009 for use in
the United States

33
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