Interview with Jonathan Adelstein on New $700 Million Broadband Program

The USDA’s Rural Utilities Services (RUS) recently announced they’re hoping to make $700 million available for broadband projects through the agency’s Farm Bill Broadband Program. While not as substantial as the BIP program, nevertheless this is a sizeable enough payload to make a big difference in a fair number of communities. However, the actual money hasn’t been appropriated yet, so RUS is doing a Notice of Solicitations of Applications (NOSA). NOSA = send us an application to hold your place in the queue so you get money when we get money.

This is strictly a loan program, no grants involved. Big plus – it’s open to everyone including communities and public private partnerships. Other good news is that the baseline for what constitutes broadband is 5 Mbps symmetrical for wireline networks, and 3 Mbps symmetrical for wireless. You can read details on the program here.

I caught up with RUS Administrator Jonathan Adelstein by phone to ask a few questions and get some additional insights into RUS’ latest efforts to bring broadband to unnerved communities. There are a couple of key differences between this and the BIP program, plus useful information to help you get a handle on how to approach the loan process. I’ll have my own analysis here tomorrow.

1. What are two or three of the major changes in application process (how I apply) and in eligibility requirements (what’s the priority)? (Assistant Administrator David Villano contributed to this answer)

In 2002, we started the Rural Broadband Access Loan and Loan Guarantee program after enactment of the 2002 Farm Bill.  Then Congress changed the law in the 2008 Farm Bill  to improve the program and target resources to unserved areas. What we’ve done here is draw from feedback received from the Inspector General, and lessons learned during the recent BIP program to make the loan program even more efficient and effective.

Probably the biggest change is that BIP was a competitive process in which we had to select from applicants who were all competing for funding. This is open, rolling, first-come, first-served process. If within our statutory and regulatory priorities someone with a $50 million proposal comes in first, they get first dibs, and if their application is approved they get the money. If ten $2 million proposal come to us first, they get dibs over any applications that come after them.

In the event there are overlapping territories, say we get a $2 million proposal and then a $50 million proposal that overlaps the first applicant’s proposed coverage area, we’ll ask the $50 million applicant to adjust their coverage area to work around the first. Unlike the BIP program in which people were prohibited from making any changes to applications once they were submitted, in the loan programs we can work with applications to fine tune their applications.

The same groups that were eligible for BIP funding are eligible for the loan program: local governments and nonprofits, tribal organizations, private companies and so forth. Every entity qualifies except individuals and individuals forming a partnership. We do want to target people who didn’t obtain a BIP award. Also, we have a priority for most un-served areas, beginning with areas with no service at the top of the list, then those with 75% un-served, 50% and finally 25%. We also have a discretionary priority related to underserved tribal communities.  There is no other priority based on geography.

2. If community networks are high on the priority list, how will their short (or lack of) track record in running a network be addressed?

Over one-third of what we funded in this loan program in the past have been startups, and we continue to be open to new entrants including communities. The BIP program placed a priority on the past telecom experience of the management team; and the Congress provided a statutory preference for existing RUS borrowers.  The loan program doesn’t have the same requirement. However, the applicant has to prove to us that the people managing the program know what they’re doing. They must have both the technology management capabilities and the right technology to get the job done.

The financial details have to show the applicant’s broadband plan is feasible and that they can repay the loan. There is not a single way in which we determine feasibility, but everyone has to have a strong, credible business plan. We have field reps in almost every state and they can assist applicants with developing a plan that makes sense. If in the end the applicant can’t make a convincing argument, we’ll deny the application.

3. Will the fund encourage public private partnerships, and if so, in what way?

All RUS programs encourage public-private, and this program is no exception.  We are also open to public entities that are seeking to bring broadband to rural unserved communities.

4. Will loan awards be subject to challenge from incumbents? On the flip side, will communities be able to successfully challenge the value and/or validity of proposals?

All applications will be subject to comments by both providers and communities. We’ll take into account what everyone has to say and any supporting documents they present.  We are the final decision-maker, though. We will make our online mapping tool available so the public can see what areas people are applying for, and this should prevent overlap of areas already covered.  And RUS staff will continue to validate the information presented by the applicant and anyone providing comments.

To determine an eligible service area, two standards are applied. At least 25% of the households in the service area may not have broadband service from more than one service provider AND broadband service is not provided in any part of the service area by three or more incumbent service providers.

5. How will this new program (and others that may be on drawing board) integrate with other programs (i.e. funding for smart grids, bbstim already awarded for middle mile or already awarded for last mile)? For example, would a community get a leg up for providing a last mile project to connect with a middle mile project awarded by NTIA?

We’re looking for proposals that are the most viable to be successful. Subsequently, teaming with other broadband-related projects would help for reinforce the technology feasibility. Any partnerships that give applicants sources for additional revenue and greater long-term financial feasibility increase our interest in funding them. We particularly want this loan program to impact educational outcomes. Therefore we’ll look closely, for example, at broadband projects that enable distance learning so rural areas become self-sustaining.

6. Are extra points given to applicants who come to the process with money committed from other sources? If so, are there any sources that carry more weight than others?

There is no matching funds requirement since these aren’t grants, but we do require applicants provide 10% equity [cash], which is a reduction from our previous requirement of 20% equity.

7. How will program balance “wireless as lead dog” philosophy vs “wireline is the one true future of broadband” philosophy?

We’re required by law to be technology neutral. There’s no bias. During the BIP program we funded wired and as well as wireless proposals. We’re not worried about which technology is proposed as long as the project works and provides service to rural Americans.

Be sure to check back tomorrow to read my overview on how to tackle this next grant program.

5 Responses

  1. The actual figure according to the NOSA is $700,000,000

    • Thanks for bringing this up. I forgot during the interview to ask Mr. Adelstein for clarification because I had read two amounts in different sources. I’ll update this post once I get final word from RUS.

  2. Good article!

  3. “[T]he actual money hasn’t been appropriated yet, so RUS is doing a Notice of Solicitations of Applications (NOSA). NOSA = send us an application to hold your place in the queue so you get money when we get money.”

    Note that application materials for the NOSA are not yet available but will be available at an unspecified future date, so it’s currently not possible to get a place in line.

    From the NOSA:

    Application Materials
    Applications for the Broadband
    Program will be available at http://www.
    rurdev.usda.gov/utp_farmbill.html.

    http://edocket.access.gpo.gov/2011/pdf/2011-5611.pdf

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