Last fall, we reported on the large number of community-owned broadband networks among the applicants for the first round of the U.S. Department of Agriculture’s (USDA’s) ReConnect broadband program, which awards grants and loans to expand rural connectivity.
Since then, the USDA has distributed more than $620 million to 70 providers in 31 states as part of ReConnect round one. Just over half of the awardees are community networks, including rural cooperatives, local governments, community agencies, and a tribal provider. The other ReConnect awardees are locally owned providers. Almost all grant and loan recipients plan to build high-quality fiber networks with the funds.
While the impact will be limited by the relatively modest size of the program and restrictive eligibility requirements, the ReConnect awards will nevertheless lead to improved economic opportunity and quality of life in rural areas. These investments will enable more rural Americans to take advantage of precision agriculture, online education, and telehealth visits — services that are now more important than ever as the nation finds itself in the grips of a pandemic.
Co-ops, Munis Win Big
Approximately 30 rural telephone and electric cooperatives in 16 different states are taking home ReConnect grants and loans from the first round of funding. Co-op awards include a nearly $19 million grant for Alaska-based Cordova Telecom Cooperative, a $28 million grant and loan for Central Virginia Electric Cooperative, and a $2.73 million grant for Emery Telecom for projects in Colorado and Montana.
Several municipal networks are also recipients of ReConnect funding. One of the awardees, Osage Municipal Utilities in Iowa, accepted a modest grant to expand it’s broadband network to homes, farms, and businesses outside of the small city. Another, the Town of Arrowsic, Maine, is working with two nearby communities to invest in a new fiber network, financed by a $1.2 million combined grant and loan. Orangeburg County, South Carolina, will use the nearly $10 million grant it received to expand its long-standing Fiber-to-the-Home network to connect more county residents.
These loans and grants will help put more rural Americans in charge of their own connectivity because the elected officials and co-op boards that operate community-owned broadband networks are more accountable to their subscribers. And the ReConnect funds going to local companies, instead of cooperative or municipal providers, will still benefit rural communities. Since they’re connecting friends and neighbors and not faceless customers states away, locally-rooted networks are likely to continue to invest in their rural infrastructure and provide top-notch customer service, unlike national monopolies like Frontier Communications.
Round one of the USDA’s ReConnect program already has resulted in a better outcome than the early phases of the Federal Communications Commission’s Connect America Fund, which gave billions of dollars to national monopolies to waste on decrepit rural DSL networks. However, there are still facets of the ReConnect program that could be improved to ensure all rural communities have a fair shot at accessing financing.
Only the most disconnected rural areas are eligible for funding. Eligible areas must have at least 90 percent of the population unserved at speeds of 10 Megabits per second (Mbps) download and 1 Mbps upload, far lower than the FCC’s definition of broadband, 25 Mbps download and 3 Mbps upload.
Additionally, areas already receiving subsidies from the FCC are excluded from the ReConnect program. This will leave behind the rural communities where geostationary satellite company Viasat is receiving subsidies to provide expensive, unreliable satellite access. Local official Nick Green shared with us how the rules will arbitrarily impact the residents of Grant County, Oregon, which partnered with Oregon Telephone Corporation on a ReConnect-funded fiber project:
We have to tell the residents in those areas we can’t use this federal funding to connect you because according to the rules you’re already connected via satellite. And their response is, “Are you kidding? I can see the fiber optic cable running in front of my property.”
In February, Oregon Senators Jeff Merkley and Ron Wyden urged the USDA to address this issue and other concerns with the ReConnect program, including eligibility requirements and the accessibility of the application process. “Many local ISPs feel as if [applying] is more akin to a high-stakes gamble rather than soliciting funding for a fiber-to-the-premises project,” they explained in a letter to the federal agency.
More Funding in the Pipeline
Currently, the USDA is in the process of distributing an additional $550 million in grants and loans for the second round of the ReConnect program. Because of the pandemic, the agency pushed the application deadline for this round of funding back to April 15, and Congress allocated another $100 million for ReConnect grants as part of the federal response effort.
Also on the federal level, the FCC is preparing to auction off up to $16 billion in subsidies at the end of this year as part of the Rural Development Opportunity Fund (RDOF). We expect to see another strong showing from community-owned networks, similar to the FCC’s earlier Connect America Fund reverse auction in which electric cooperatives won over $250 million.
With families across the country stuck at home for many more weeks, Jonathan Chambers, partner at Conexon, has proposed expediting some of the RDOF funding to speed up broadband deployment and address the digital divides being exacerbated by the national emergency. Listen below to Chambers on Community Broadband Bits podcast episode 402 to learn more about RDOF and about his proposal.