RUS Proposes Changes to Broadband Loan Program
The Rural Utilities Service (RUS) released a long- awaited proposal to improve its broadband lending program by barring applicants seeking to serve areas with significant existing broadband coverage and easing equity demands of providers wanting to serve areas with little broadband access. But critics questioned whether the changes go far enough to target rural areas with little or no access to broadband services.
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RUS seeks comments by July 10 on a proposed rulemaking that would: (1) Bar loans for any community with 4 or more broadband service providers, defined as serving 10% each of households passed. (2) Put limits on service to communities technically qualifying as rural but within urban areas. (3) Change a requirement that applicants have a 20% “credit support contribution” to a “straightforward equity requirement,” still 20% but “mirroring private industry” practices. The agency would make it easier for applicants to get money for “less lucrative” rural markets by reducing the equity requirement to 10% for areas in which 40% of households have no broadband access or have only one broadband provider. (4) To increase the program’s “transparency,” RUS would post legal notices on its Web page 30 days after an application is received. The notices would describe applicants’ proposed service areas and whether they plan voice and video service, in addition to broadband data. Incumbent providers would have 30 days to respond with the number of their customers that have available broadband access and the number who buy it. The number of incumbents responding would determine how many broadband service providers the community has and whether the applicant is eligible for funding.
The broadband loan program, in place since 2003, “has encountered significant challenges,” RUS said in the proposal, published May 11 in the Federal Register. The problems stem from “the fierce competitive nature of the broadband market, the fact that many companies proposing to offer broadband service are start-up organizations with limited resources, continually evolving technology, and economic factors such as the higher cost of serving rural communities,” the proposal said. Members of Congress recently criticized RUS for not targeting underserved areas with its broadband loans (CD May 2 p4). RUS said its “most intractable problem” is finding loan applications proposing service only to rural areas that don’t already have broadband service. “The cost of building out a broadband system coupled with low rural population density in unserved areas has consistently yielded loan proposals which cannot be supported by project revenues,” it said. As a result, in 4 years the agency has certified only one applicant to serve such an area.
The proposal doesn’t go far enough to target unserved areas, particularly a plan to finance entrants to communities that already have 3 providers, said USTelecom Vp-Policy David Cohen. “It’s unfair to incumbents to provide government money to competitors planning to overbuild” places with broadband service, he said. In some areas RUS’s hands are tied by an underlying law that’s “difficult to implement,” Cohen said. Congress needs to revise the statute; “even the best written proposal” wouldn’t go far enough without reforms, he said.
RUS has “strayed from the rural focus Congress intended,” said Sen. Roberts (R-Kan.), an Agriculture Committee member. “RUS has used its limited funds in urban areas, suburban developments and towns that already have access to high-speed Internet,” he said.