U.S. Treasury Clarifies American Rescue Plan Broadband Funding

Today, the U.S. Treasury Department released an updated FAQ clarifying many of the concerns and questions raised by numerous community broadband advocates and members of Congress about the Interim Final Rules (IFR) on how Coronavirus relief funds in the American Rescue Plan Act (ARPA) could be spent on broadband infrastructure.

The day after the rules were first released in May we wrote about how it appeared the IFR, if finalized as is, would significantly limit local communities’ ability to invest in needed broadband infrastructure as the rules initially suggested communities were expected to focus on areas that do not have 25/3 Megabits per second (Mbps) wireline service “reliably available.” While broadband experts might have felt comfortable with that language, it would almost certainly confuse lawsuit-leery city attorneys that have to sign-off on projects in areas with widespread gigabit cable broadband access.

Clarification to Make Community Broadband Advocates Clap

What does the requirement that infrastructure “be designed to” provide service to unserved or underserved households and businesses mean?

The updated FAQ sticks to the 25/3 benchmark, stating: “Designing infrastructure investments to provide service to unserved or underserved households or businesses means prioritizing deployment of infrastructure that will bring service to households or businesses that are not currently serviced by a wireline connection that reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed.”

However, the FAQ goes on to say, “to meet this requirement, states and localities should use funds to deploy broadband infrastructure projects whose objective is to provide service to unserved or underserved households or businesses. These unserved or underserved households or businesses do not need to be the only ones in the service area funded by the project (emphasis added).”

The updated Treasury document further clarifies that “it suffices that an objective of the project is to provide service to unserved or underserved households or businesses” and that “doing so may involve a holistic approach that provides service to a wider area in order, for example, to make the ongoing service of unserved or underserved households or businesses within the service area economical. Unserved or underserved households or businesses need not be the only households or businesses in the service area receiving funds (emphasis added).”

The FAQ also clarifies whether middle-mile networks – a key component in bringing last-mile connectivity into local communities – are eligible to use the funding. “Under the Interim Final Rule, recipients may use payments from the Funds for ‘middle-mile projects,’ but Treasury encourages recipients to focus on projects that will achieve last-mile connections—whether by focusing on funding last-mile projects or by ensuring that funded middle-mile projects have potential or partnered last-mile networks that could or would leverage the middle-mile network.”

“Reliably Available” Now Clearly Defined

One big question around two small but important words in the IFR when they were first published was what exactly was meant by wireline service needing to be “reliably available.”

The updated FAQ answers, in part, as follows:

The IFR defines ‘unserved or underserved households or businesses’ to mean one or more households or businesses that are not currently served by a wireline connection that reliably delivers at least 25 Mbps download speeds and 3 Mbps of upload speeds.

The use of ‘reliably’ in the IFR provides recipients with significant discretion to assess whether the households and businesses in the area to be served by a project have access to wireline broadband service that can actually and consistently meet the specified thresholds of at least 25Mbps/3Mbps—i.e., to consider the actual experience of current wireline broadband customers that subscribe to services at or above the 25 Mbps/3 Mbps threshold. Whether there is a provider serving the area that advertises or otherwise claims to offer speeds that meet the 25 Mbps download and 3 Mbps upload speed thresholds is not dispositive.

The document further elaborates on how that assessment should be made, noting that “recipients may choose to consider any available data, including but not limited to documentation of existing service performance, federal and/or state-collected broadband data, user speed test results, interviews with residents and business owners, and any other information they deem relevant.”

On that score, it would be prudent for cities to include data from local school districts about where it was necessary to deploy hotspots or gap networks as evidence of a lack of reliable 25/3 service being available.

Furthermore, in evaluating that data, recipients may take into account multiple factors, “including whether users actually receive service at or above the speed thresholds at all hours of the day, whether factors other than speed such as latency or jitter, or deterioration of the existing connections make the user experience unreliable, and whether the existing service is being delivered by legacy technologies, such as copper telephone lines (typically using Digital Subscriber Line technology) or early versions of cable system technology (DOCSIS 2.0 or earlier).”

Beyond that, in what will be music to the ears of city leaders who asked Treasury to give municipal officials more latitude, “the IFR also provides recipients with significant discretion as to how they will assess whether the project itself has been designed to provide households and businesses with broadband services that meet, or even exceed, the speed thresholds provided in the rule.”

It should also be noted that the updated FAQ also says that projects using the funds do not need prior approval: “Recipients do not need approval from Treasury to determine whether an investment in a water, sewer, or broadband project is eligible under CSFRF/CLFRF. Each recipient should review the Interim Final Rule (IFR), along with the preamble to the Interim Final Rule, in order to make its own assessment of whether its intended project meets the eligibility criteria in the IFR.”

The rules also make it clear that “local government recipients similarly do not need state approval to determine that a project is eligible under CSFRF/CLFRF,” even as the rules caution communities to be “cognizant of other federal or state laws or regulations that may apply to construction projects.” 

Affordability Not Addressed but IFR Vastly Improved

Although questions raised about whether affordability can be taken into account, as many community broadband advocates and members of Congress implored, were not addressed, the updated FAQ is a vast improvement of what was initially published a month ago and is evidence that Treasury officials are responsive to the concerns of community advocates.

As the IFR has not been officially finalized, we still strongly encourage our readers to submit comments to the Treasury electronically through the Federal eRulemaking Portal here on or before the filing deadline of July 16, 2021.