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June 1, 2009
For Broadband Stimulus Funding, Full Speed Ahead, Public Power Magazine, June 2009
| For More Information |
Tim Blodgett
Hometown Connections
tblodgett@hometownconnections.com
303-526-4515
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Writing Funding Applications to Match Government Priorities
For years now, many public power systems have been eager to expand broadband Internet communications in their communities, but the cost of servicing the debt required to invest in broadband facilities has been prohibitive in many cases where community size, density, or other geo-demographic factors have limited financial potential. However, for municipal utilities that take advantage of the economic stimulus funding soon to be distributed by the Obama Administration, there exists a golden opportunity to secure grants or loan guarantees to finance construction and deployment of broadband Internet systems. The key will be writing funding applications that meet the immediate deadlines and match the priorities of the federal government.
President Obama signed the American Recovery and Reinvestment Act (ARRA) into law on February 17, 2009. ARRA includes $7.2 billion for Federal stimulus programs aimed at expanding broadband deployment to rural and underserved areas and improving access to broadband by public safety agencies, hospitals, libraries, and schools. About $4.35 billion of the funding will be allocated in the form of grants through the Broadband Technologies Opportunities Program (BTOP) of the National Telecommunications and Information Administration (NTIA). The agency is required by the stimulus bill to award at least one grant per state. In addition, the Department of Agriculture’s Rural Utilities Service (RUS) will support the expansion of broadband infrastructure through $2.5 billion in grants, loans, and loan guarantees. Finally, the Federal Communications Commission (FCC) has been given $350 million to create a mapping program showing what broadband Internet services are provided in every geographic region of the nation. The FCC must also come up with a plan within one year to bring broadband Internet to all Americans.
The overarching goal of the stimulus provision for broadband Internet networks is to generate new jobs quickly through “shovel ready” projects as workers dig trenches, run fiber cables, and raise cell towers. The program also assumes that deployment of high speed data systems will boost commercial activities and long-term growth in regions hit hard by the current economic downturn.
Designed to have an immediate impact, President Obama's economic stimulus package dictates that all of the money set aside for broadband development will have to be allocated to worthy projects by September 30, 2010. At the time of this writing, it is anticipated that NTIA and RUS will have published the first notices of availability for grant and loan applications by June 2009. All of the projects receiving grants must be substantially completed in two years.
All of this means that the U.S. Government plans to spend more than $ 7 billion on broadband services in about 17 months in all 50 states. In the process, NTIA and RUS will review as many as 10,000 applications. The speed with which this program is moving makes it impossible for public power systems to take a long period of time to analyze the rulemaking notices and mull over the writing of grant and loan applications. Each utility must immediately begin building a detailed business case explaining to NTIA or RUS why their Internet program expansion cannot move forward without stimulus funding.
Above all, each utility should consider the grant or loan application to be a sales document that convinces the review teams that this broadband project is a perfect fit with the intentions and goals of the Obama Administration. For example, given the Administration’s focus on health care and education, broadband projects that include new services for hospitals, medical campuses, libraries, and colleges will stand out. In addition, successful applications will include a business plan and financial data to address the ARRA requirements. This covers:
--Definition of Service Area
--Broadband service definition
--Technology solution and capital budgeting
--Operating plan
--Cash flow analysis
--Organizational qualifications
--Community services and benefits
Because the government will fund a maximum of 80 percent of a program’s costs, the utility will have to show how it would fund the remaining 20 percent of the construction and deployment costs. In other words, the utility must demonstrate its willingness to have “skin in the game” and commit to delivering broadband services in the long term if it can receive 80 percent relief on the capital investment.
Furthermore, it is critical that applicants understand that BTOP funds are intended to be a one time infusion of capital for construction of infrastructure and facilities, to get new broadband services up and running. Because BTOP funds will not fund the projects on an ongoing basis, each municipal utility must present detailed financials to demonstrate that it can commit to funding and maintaining the program as an ongoing business. Also, the Administration’s commitment to transparency in government will require broadband stimulus funding applicants to pledge to publish online detailed progress reports and results.
In short, this one-time infusion of cash from the federal government presents an excellent opportunity but not a free lunch. A successful application for a municipal utility will demonstrate a major commitment to expanding broadband Internet infrastructure and service. Utilities are being asked to present a business case based on real-world field deployment data. We recommend, therefore, that public power systems utilize available vendor or consulting resources with municipal broadband deployment and implementation experience to assist in the preparation of their ARRA applications.
Written by Neil Shaw and Dave Stockton
Neil Shaw and Dave Stockton are Principals of Uptown Services LLC. Affiliated with Hometown Connections, Uptown Services is a broadband consultancy preparing stimulus funding applications and delivering planning, engineering, and implementation support services to public power utilities.
Visit the Uptown Services Web site for more information.
• Uptown Services, LLC
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