U.S. Broadband Infrastructure Funding Explained
By Nokia | October 1, 2023
Read Time: 7 Minutes
Do you know your BEAD from your RDOF? Or the Middle Mile Program from ReConnect Round 4? If not, this explainer is for you. Akin to the rush to build the railroads 150 years ago which opened up America, operators across the country are laying the fiber access networks which will connect everything, everywhere. The big story is the one-time investment the government is making to ensure this network doesn’t miss anyone. A total of $97 billion has been pledged for operators to build networks where connectivity either doesn’t exist or where speeds are under the minimum 100 Mbps download and 20 Mbps upload threshold that the U.S. government has targeted for all American homes to reach by 2027. So how is this money being allocated and by whom? This explainer tells all.
There are over a hundred different federal programs that touch funding opportunities related to broadband. These programs provide funding for everything from rural healthcare, rural community broadband planning, digital equity, to distance learning, broadband for schools, funding for devices, workforce training and infrastructure for the building of broadband networks.
The largest funding opportunities for broadband infrastructure, however, are found in a handful of programs that are largely funded through legislation passed by Congress as part of the U.S recovery response to the pandemic. These programs will distribute approximately $97 billion of funding for broadband infrastructure over the next three to five years.
Primary US Broadband Infrastructure Programs
In March of 2020, Congress passed the Broadband DATA Act which requires the FCC to establish a process to collect granular data from broadband providers in order to generate publicly available coverage maps of a common dataset that include all the residential and business locations across the United States. The new maps will replace and phase out a bi-annual service provider broadband availability reporting process that is mostly commonly referred to as “477 data”. The 477 refers to the FCC Form 477 that providers have been using since 2000 to submit coverage data based on census blocks to the FCC.
These new maps – also known as – “Fabric” will be the single point of truth for determining funding eligibility for certain programs including the BEAD program. NTIA utilized the data published in version 2 of the Fabric to calculate the funding allocations to the states for the BEAD program.
Build America, Buy America (BABA)
The Build America Buy America Act, part of President Biden’s Bipartisan Infrastructure Law, says that when the government provides money for building things like broadband networks, the materials used to build them should be made in the United States. The Build America Buy America requirement applies to all programs that are part of the Infrastructure Investment and Jobs Act (IIJA) including BEAD. The Buy America designation consists of two criteria:
- The item is manufactured in the United States
- A minimum of 55% of the components (by cost) are sourced directly from the United States.
Any funds granted from BEAD must be used to purchase products that meet the Buy America laws. In accordance with BABA, on August 22, 2023, the Department of Commerce (DOC) issued a proposed, limited, general applicability, nonavailability waiver (“waiver”) of the Buy America Domestic Content Procurement Preference (Buy America Preference) to recipients of Federal financial assistance under NTIA’s BEAD Program.
The waiver does the following key things:
- Fully waives both criteria of the Buy America requirement for all broadband electronics EXCEPT OLTs, OLT line cards, OLT optics modules and ONTs.
- Waives the 55% criteria for OLTs, OLT line cards, OLT optics modules and ONTs but requires these products to be manufactured in the US and meet manufacturing process definitions detailed in the proposed waiver.
- Waives the 55% criteria for enclosures but requires these products to be manufactured in the US and meet manufacturing process definitions detailed in the proposed waiver.
- Requires other low-cost non-electronics equipment to be sourced and manufactured in the U.S.
- Establishes a process for manufacturers to voluntarily self-certify Buy America compliance with NTIA for products that are required to be manufactured in the U.S.
Download the waiver and learn more on the Build America Buy America page of the Department of Commerce.
Rural Digital Opportunity Fund (RDOF) - $20 billion
The RDOF program otherwise known as Auction 904 is a reverse auction whereby the FCC awards census blocks to providers based on the lowest bids submitted. The FCC is authorized to spend up to $20 billion of funding through multiple rounds of auctions. However, at this time future rounds of RDOF are not expected. Round 1 winners are in the process of building out their projects in accordance with program milestones.
NTIA will be responsible for the distribution of approximately $45 billion of infrastructure funding through three distinct programs:
Middle Mile Program (MMP) - $1 billion
The MMP is being administered directly from NTIA. The purpose of the program is to “encourage the expansion and extension of middle mile infrastructure to reduce the cost of connecting unserved and underserved areas.” See Middle Mile NOFO page 5. Eligible applications include all types of entities and partnerships including states, tribes, local governments, providers, nonprofits, and others. Awards were released in May of 2023.
Tribal Broadband Connectivity Program (TBCP) - $3 billion
The TBCP is currently in process and will be administered directly from NTIA. Eligible entities are tribal governments. The TBCP provides funding for broadband infrastructure deployment on tribal lands as well as for projects that include but are not limited to promote adoption and use of broadband services such as distance learning, telehealth, and digital inclusion efforts. Awards are being released on a rolling basis.
The Broadband Equity Access and Deployment Program (BEAD) - $42.5 billion
The Infrastructure Investment and Jobs Act (IIJA) charged the National Telecommunications and Information Administration (NTIA) with establishing the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program and ensuring that BEAD-funded broadband infrastructure projects comply with the Build America, Buy America Act (BABA). BEAD will be administered by NTIA but funded and passed through the states. States will make funds available to subrecipients, through grant programs wherein all types of entities and partnerships including states, tribes, local governments, providers, nonprofits, and others will be eligible to apply. The BEAD program has multiple layers of complexity. First, the amount of money that will be allocated to each state will depend on how many unserved locations exist in each state pursuant to the new FCC mapping fabric. The allocation to the states was announced on June 30, 2023. The “Allocation Date” was also the trigger for the states to begin their process of submitting plans to the NTIA in order to receive funding. Here is a high-level overview of the State planning processes.
- Action plan - States that request planning money from NTIA must submit a five-year Action Plan 270 days after receipt of the funds. All states are expected to submit their Action Plans by December 2023 pending the granting of any extensions.
- Initial proposal - All states must prepare and submit an initial Proposal within 6 months of the Allocation Date. States have six months to complete the Initial Proposal. Once it is submitted to NTIA, the Initial Proposal will be published for a public review and challenge process. Once NTIA approves a state’s Initial Proposal – NTIA will release 20 percent of the funding that is allocated to that State.
- Final proposal - Once a state’s Initial Proposal is approved, a state has a year to prepare and submit a Final Proposal. Once a state’s Final proposal is approved, NTIA will release the remaining 80 percent of the funding to that state.
American Rescue Plan Act (ARPA) - $20 billion
Over $350 billion of funding was pushed out to the states in 2021. Broadband infrastructure investment is an allowable purpose of these funds. Almost $20 billion of these funds are being used by localities for broadband projects and by states to fund state-run broadband grant programs. These programs are ongoing.
Capital Projects Fund (CPF) - $10 billion
Funded by the American Rescue Plan Act, CPF allocates $10 billion by a formula allocation to the states for projects related to the pandemic response. A key focus of the program is on broadband infrastructure, but funds can also be utilized for other broadband purposes. Treasury must approve a state’s plan before releasing CPF funds to that state. It is expected that all state CPF plans will be approved by the end of 2023.
ReConnect Round 4 - $1.15 billion
The Rural Development Broadband ReConnect Program is directly administered by USDA. The program has different combinations of grants and grant/loans available. ReConnect Round 4 awards will be released on a rolling basis through 2023. A ReConnect Round 5 is expected sometime in 2024.
Nokia’s Commitment to Rural America
In response to BABA requirements associated with many government funding programs, Nokia will be onshoring the manufacturing of multiple fiber broadband products to the United States. The products selected have the best performance, cost and flexibility for the potential recipients for the BEAD program and these are the products required by the federal government to be manufactured in the U.S.
The products are as follows:
- Optical line termination (OLT) card for a modular access node
- A small form factor OLT
- OLT optical modules
- An “outdoor hardened” optical network terminal (ONT)
Based on these manufacturing plans, Nokia is compliant with the proposed waiver.
Helping utilities and municipalities provide fiber networks and broadband service to customers and rural communities.
ABOUT THE SPONSOR
This article was brought to you in partnership with Nokia.
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