Broadband Grant Rules Likely to Draw ‘Serious’ Applicants
The administration’s broadband grant rules are likely to attract a sizable number of qualified applicants, said lawyers, analysts and advocacy groups Thursday. But many held off on commenting on the rules until they could study the detailed notice of funding availability released Wednesday (WID July 2 p5) in more depth. Several praised the rules for setting criteria that will ensure projects are financially viable, and will funnel services to areas most in need of broadband.
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“We are still reviewing the rules, which as expected, track the legislative language,” including a mandate that applicants show projects could not be done without federal money, said a Stifel Nicolaus report. That requirement helps ensure serious applicants will apply for the grants, said attorney Andy Lipman, who represents competitive and rural phone companies that may be interested in applying for grants: “I think the rules will attract a diversity of players.” Stifel analyst David Kaut agreed.
Coordinating the rulemaking between two different agencies was a challenge, especially since each had different requirements imposed upon them in the Recovery Act. NTIA was ordered to impose network nondiscrimination requirements on its grants, following at a minimum the FCC’s existing broadband policy principles. RUS had no such mandate. But the NOFA imposes nondiscrimination rules on both agency grant programs. One of the five nondiscrimination requirements directs applicants to offer interconnection “on reasonable rates and terms,” including the ability to connect to the public Internet and physical interconnections for the exchange of traffic.
The interconnection requirement is “very significant,” said Public Knowledge Legal Director Harold Feld. It’s the first time in many years that interconnection has been raised in the regulatory arena, he said. Other countries that have imposed some type of interconnection requirements have “leapfrogged” over the U.S. in broadband deployment, he said. Lipman said the nondiscrimination principles provide a “window into the FCC’s thinking about where network neutrality is headed.” Essentially the NOFA takes the terms imposed upon AT&T in its merger with BellSouth and applies them across the board to the broadband grant program, he said.
Overall, Feld said he was pleased with the NOFA: “It’s important to recognize that this isn’t perfect and there is no way it could be.” Feld had no qualms about the NOFA’s setting broadband speed at the existing FCC standard of 768 kbps, saying it reflects the realities of the marketplace where it could be impractical to build out higher speeds in the extremely rural areas the government wants to reach. Feld also praised the NOFA’s point system for evaluating applications, which will work to give incentives to companies that offer more than the minimum requirements. “There is an incentive to get applicants to put their best offers on the table,” he said.
Stifel said the speed requirement was “low,” but noted that the grant requirements give preference to projects offering higher speeds. The minimum connection speed “is easily attainable,” said Washington Research Group analyst Paul Gallant. “Applicants get bonus points for committing to higher speeds, but RLECs clearly won’t be disqualified for proposing somewhat lower speeds than are available in large metro areas.”
Gallant said rural telcos like Windstream, Frontier, CenturyLink, Iowa Telecom, Fairpoint and Consolidated Communications could be positioned well to “capture a share of the broadband funding.” Wireless Internet service providers “could win some of these funds, but we think RLECs’ relative financial soundness and deep management expertise will give them a clear advantage in final funding decisions,” he said.