Five sources of federal funding that are fueling broadband investment

Show me the money: The biggest broadband investment cycle ever

Broadband funding is, by and large, one of the few issues with reliable, bipartisan support. It has become an increasingly high priority, as evidenced by the more than $100 billion in federal, state and local funding that are being invested both in the short term and over the next decade.

It’s a long-term boom, not a broadband bubble: While some of the funds currently being disbursed are still from pandemic relief and/or recovery measures, other programs have funding spread out over five to 10 years.

All of this is being supplemented by private investment, which is also at record levels amid ongoing expansion of both fiber and 5G services from both small and large providers. According to industry group US Telecom’s annual report, broadband providers invested at least $86 billion in capital expenditures in 2021, a “staggering” number that was up 8.3% from 2020 and tops the previous high-water mark of $80.8 billion in 2019.

Here is an overview of the major federal funding vehicles for broadband that are helping to fuel the broadband investment cycle and are aimed at closing the digital divide so that all Americans have access to high-speed, reliable, affordable broadband.

Consolidated Appropriations Act, 2021 directed NTIA to implement three new grant programs for broadband: $288 million in Broadband Infrastructure Deployment Grants, to be distributed with a focus on public-private partnerships to serve rural areas; $980 million for the Tribal Broadband Connectivity grant program; and a pilot program to connect community institutions that traditionally serve minorities, such as Historically Black Colleges and Universities (HBCUs).

American Rescue Plan Act (ARPA), a coronavirus relief package. ARPA allocated just over $65 billion in direct aid to counties, boroughs and parishes across the country and gave them several options on how to spend the money to assist in recovery from the impacts of the Covid-19 pandemic. That included the option to invest in infrastructure, including water systems or broadband. Analysis of ARPA plans by the National Association of Counties found that 33% of counties planned to spend some of their ARPA funds on broadband, compared with 79% intending to make expenditures related to health programs and 57% planning to make investments in water, sewer or transportation infrastructure. NACo cited the examples of Dallas County, Texas, using $35 million in ARPA funds to make sure its residents had access to a minimum of 100 Mbps upload/download speeds, and El Paso County, Colorado investing $6 million in ARPA funding toward “middle-mile” infrastructure that would enable local providers to expand “last-mile” connections.

ARPA also included the Coronavirus Capital Projects Fund, with $10 billion in direct payments to government entities through the U.S. Treasury Department for projects including broadband. According to Treasury, the fund has awarded nearly $4.5 billion to states for broadband infrastructure that, it is estimated, will reach more than 1.2 million home and businesses. Some of the most recent awards include state plans to support broadband deployments of at least 100/100 Mbps speeds. Awards from that fund are ongoing; last month, the Treasury Department announced funding of $794 million to Alabama, Kentucky, Nevada, and Texas to increase access to “affordable, reliable high-speed internet” to more than 292,000 homes and businesses. Other awards include $90 million to connect nearly 14,000 locations in Vermont, and about $444 million to connect more than 170,000 locations in Illinois, Indiana and North Carolina.

Rural Digital Opportunities Fund, finalized in early 2020, a $20.4 billion program through the Federal Communications Commission over 10 years to bring fixed broadband service to rural homes and small businesses that lack it. The first phase of the program, going on now, makes available up to $16 billion, to be followed by a second phase making another $4.4 billion available. So far, the Federal Communications Commission has awarded more than $6 billion from the program to extend broadband in 47 states, for more than five million homes and businesses which were “entirely unserved” by any service offering 25/3 Mbps speeds. The most recent distributions of DROF funding cover $791 million to six providers for new broadband deployments in 19 states, connecting more than 350,000 locations. “This funding will connect more households throughout the country with high-speed broadband as part of our ongoing work to close the digital divide,” said Chairwoman Jessica Rosenworcel. “We are confident these projects can bring quality service to currently unserved areas.” While the minimum service tier for RDOF is 25/3 Mbps, there are three faster tiers which are also covered: Baseline, with speeds of at least 50/5 Mbps; “above baseline” at 100/20 Mbps and Gigabit, with speeds of at least 1 Gbps/500 Mbps.

The ReConnect Program through the U.S. Department of Agriculture. This program awards both grants and loans for broadband projects in rural areas, and it has boosted its required minimum speeds in a major way. Prior to 2020, ReConnect projects focused on connecting people who didn’t have access to a service option of at least 10/1 Mbps speeds—but the Infrastructure Investment and Jobs Act of 2021 brought a refreshed stream of $2 billion to the program and shifted the metric to focus on where most people don’t have 100/20 Mbps service. Applicants now also have to commit to building out infrastructure that will support symmetrical 100/100 Mbps speeds (something that can only currently be achieved via wired infrastructure) and to participate in the Affordable Connectivity Program. Among the recent grants: $17.5 million to connect 100 businesses, 76 farms and 22 educational facilities in Halifax and Warren counties in North Carolina; $12.6 million to deploy fiber to 171 farms, 103 businesses and an educational facility in Douglas, Otter Tail, St. Louis, Stearns and Todd counties in Minnesota; and $18.7 million for a fiber network to connect 898 farms, 110 businesses and 17 educational facilities in Colorado’s Adams, Arapahoe, Cheyenne, Crowley, Elbert, Kiowa, Kit Carson, Lincoln and Washington counties. The USDA says that during the course of 2022, it announced $1.6 billion in Reconnect funding.

-Broadband Equity, Access, and Deployment (BEAD) Program: This is also a result of the Infrastructure Investment and Jobs Act of 2021 (IIJA), in which Congress appropriated $42.45 billion for states, territories, the District of Columbia (D.C.), and Puerto Rico (P.R.) to utilize for broadband deployment, mapping, and adoption projects. Each state, D.C., and P.R. will receive an initial allocation of $100 million — and $100 million will be divided equally among the United States Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands — to support planning efforts including building capacity in state broadband offices and outreach and coordination with local communities. States, territories, D.C., and P.R., leveraging initial planning funds that will be made available through the program, will submit a 5-year action plan.

The National Telecommunications and Information Administration (NTIA) is overseeing the BEAD program, which is essentially the centerpiece of the effort to finally close the digital divide and connect every American. Not only is it the largest program, dollar-wise, that is dedicated solely to broadband, but it is funding that is almost entirely ahead of the industry. While some funds have been disbursed to the states for planning purposes and to bolster their broadband offices, the state-level broadband deployment awards are not slated to be announced until June of this year. The states have to then take that money and go through their own processes to award it, in order to get it into the hands of the companies that will actually build the networks—a process that will take at least a year. Each state will then work its way through the five-year action plan—meaning that some of the most sustained local and regional spending has yet to even be tapped.

Looking for more perspective on the state of the digital divide in the U.S. and if/when it will finally be closed? Register for the upcoming RCR Wireless News webinar “Getting to ubiquity: The urban and rural digital divide” featuring A10 Networks and Ericsson.

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