Cybertelecom Federal Internet Law & Policy An Educational Project

Federal Funding for Information Technology

USDA Rural Utility Service

• Stimulus Broadand Funding
• Distance Learning and Telemedicine Program Grants
• Website
• Derived From: Lennard Kruger, CRS Report to Congress, Broadband Loan and Grant Programs in the USDA's Rural Utilities Service (May 15, 2008)

  "Given the lagging deployment of broadband in rural areas, Congress and the Administration acted to initiate pilot broadband loan and grant programs within the Rural Utilities Service of the U.S. Department of Agriculture. While RUS had long maintained telecommunications loan and grant programs (Rural Telephone Loans and Loan Guarantees, Rural Telephone Bank, and more recently, the Distance Learning and Telemedicine Loans and Grants) none were exclusively dedicated to financing rural broadband deployment. Title III of the FY2001 agriculture appropriations bill (P.L. 106-387) directed USDA/RUS to conduct a "pilot program to finance broadband transmission and local dial-up Internet service in areas that meet the definition of 'rural area' used for the Distance Learning and Telemedicine Program.""

  "Subsequently, on December 5, 2000, RUS announced the availability of $100 million in loan funding through a one-year pilot program "to finance the construction and installation of broadband telecommunications services in rural America."12 The broadband pilot loan program was authorized under the authority of the Distance Learning and Telemedicine Program (7 U.S.C. 950aaa), and was available to "legally organized entities" not located within the boundaries of a city or town having a population in excess of 20,000.

  "The FY2001 pilot broadband loan program received applications requesting a total of $350 million. RUS approved funding for 12 applications totaling $100 million. The FY2002 agriculture appropriations bill (P.L. 107-76) designated a loan level of $80 million for broadband loans, and on January 23, 2002, RUS announced that the pilot program would be extended into FY2002, with $80 million in loans made available to fund many of the applications that did not receive funding during the previous year.

  "Meanwhile, the FY2002 agriculture appropriations bill (P.L. 107-76) allocated $20 million for a pilot broadband grant program, also authorized under the Distance Learning and Telemedicine Program. On July 8, 2002, RUS announced the availability of $20 million for a pilot grant program for the provision of broadband service in rural America. The program was specifically targeted to economically challenged rural communities with no existing broadband service. Grants were made available to entities providing "community-oriented connectivity" which the RUS defined as those entities "who will connect the critical community facilities including the local schools, libraries, hospitals, police, fire and rescue services and who will operate a community center that provides free and open access to residents."

  "In response to the July 8, 2002, Notice of Funds Availability, RUS received more than 300 applications totaling more than $185 million in requested grant funding. RUS approved 40 grants totaling $20 million. The pilot program was extended into FY2003, as the Consolidated Appropriations Resolution of 2003 (P.L. 108-7) allocated $10 million for broadband grants. On September 24, 2003, 34 grants were awarded to eligible applicants who did not receive funding during the previous year."

• USDA Distance Learning and Telemedicine Program Grants and Loans Apps due April 30, 2004, USDA 3/11/2004
• Advanced telecommunications services play a vital role in the economic development, education and health care of rural Americans. The Rural Utilities Service’s (RUS) Distance Learning and Telemedicine (DLT) Program is specifically designed to meet the educational and health care needs of rural America through the use of advanced telecommunications technologies. With DLT loans, grants, and loan-grant combinations, RUS helps rural communities enjoy enhanced educational opportunities, improved health care services and greater economic development.
• FY 2005: $56.4 Million
• For FY 2004, $15 million in 100% grants is available for DLT projects serving rural America.
  • Minimum grant request: $50,000
  • Maximum grant request: $500,000
• To be eligible for a grant, your organization must meet three qualifications:
  1. Currently deliver or propose to deliver distance learning or telemedicine services.
  2. Be legally organized as an incorporated organization or partnership; an Indian tribe or tribal organization; a state or local unit of government; a consortium; or other legal entity, including a private corporation organized on a for profit or not-for profit basis. Please see 7 CFR 1703.103(i) for specific legal definitions and citations.
  3. Operate a rural community facility or deliver distance learning or telemedicine services to entities that operate a rural community facility or to residents of rural areas at rates calculated to ensure that the benefit of the financial assistance passes through to such entities or to residents of rural areas.
• Serving Rural communities of 20k or less. Min grant $50k, Max grant $500k. 15% matching contribution required.

Rural Broadband Loan and Loan Guarantee Program

Derived From: Lennard Kruger, CRS Report to Congress, Broadband Loan and Grant Programs in the USDA's Rural Utilities Service (May 15, 2008)

"Building on the pilot broadband loan program at RUS, Section 6103 of the Farm Security and Rural Investment Act of 2002 (P.L. 107-171) amended the Rural Electrification Act of 1936 to authorize a loan and loan guarantee program to provide funds for the costs of the construction, improvement, and acquisition of facilities and equipment for broadband service in eligible rural communities.15 Section 6103 made available, from the funds of the Commodity Credit Corporation (CCC), a total of $100 million through FY2007 ($20 million for each of fiscal years 2002 through 2005, and $10 million for each of fiscal years 2006 and 2007). P.L. 107-171 also authorized any other funds appropriated for the broadband loan program.

Beginning in FY2004, Congress annually blocked mandatory funding from the CCC. Thus - starting in FY2004 - the program was funded as part of annual appropriations in the Distance Learning and Telemedicine account within the Department of Agriculture appropriations bill. Every fiscal year, Congress has approved an appropriation for the loan program which is used to subsidize a specific loan level (the total amount of lending authority). Table 1 shows - for the life of the program to date - loan subsidies, loan levels (lending authority), and actual funds announced by RUS yearly for loan applications. Announced available funding typically exceeds yearly loan levels because large balances of unobligated money have been carried over from year to year.

Table 1: Funding for the Rural Broadband Access Loan and Loan Guarantee Program

	Budget Authority (subsidy level)	Loan Level (lending authority)	Announced Available Funding for Loans and Loan Guaranteesa
FY2003	$40 millionb	$1.455 billion	$1.455 billion
FY2004	$13.1 million	$602 million	$2.211 billion
FY2005	$11.715 million	$550 million	$2.157 billion
FY2006	$10.75 million	$500 million	$1.085 billion
FY2007	$10.75 million	$500 million	$0.998 billion
FY2008	$6.45 million	$300 million	$0.7929 billion
FY2009 (req)	$11.619 million	$300 million	Not yet available

"The Rural Broadband Access Loan and Loan Guarantee Program is codified as 7 U.S.C. 950bb. Specifically, Treasury rate loans, 4% loans, and loan guarantees are authorized for entities providing broadband service for "eligible rural communities," defined as any area of the United States that is not contained in an incorporated city or town with a population in excess of 20,000 inhabitants.16 RUS is required to be technologically neutral in determining whether or not to make a loan, and is instructed to give priority to rural communities with no existing residential broadband service. Loans are used for financing new or improved existing broadband provider facilities. Loans cannot be used to finance installations or equipment at customers' premises.

On January 30, 2003, the RUS published in the Federal Register the regulation (7 C.F.R. part 1738) establishing the Rural Broadband Access Loan and Loan Guarantee Program, as authorized by P.L. 107-171.17 According to the regulation, entities eligible to receive loans include corporations, limited liability companies, cooperative or mutual organizations, Indian tribes, and public bodies. Specifically not eligible are individuals, partnerships, and any entity serving 2% or more of the telephone subscriber lines in the United States. All applicants are required to demonstrate adequate credit support - a minimum of 20% of requested loan amount, including cash on hand equivalent to one full year of operating expense.

"To be eligible for 4% loans, applicants must be proposing to serve a community with no existing broadband service, a population of 2,500 or less, and a service area with population density of no more than 20 persons per square mile. Additionally, the community must be located in a county with a per capita income of less than or equal to 65% of the national per capita income.

"As of February 1, 2008, the broadband loan program received 212 applications, requesting a total of $4.496 billion in loans. Of these, 79 applications were approved (totaling $1.3 billion), 19 were in review (totaling $887 million), and 113 had been returned (totaling $2.26 billion). RUS estimates that 653,000 households in 1,438 rural communities will receive broadband service as a result of approved loans. Of loans approved, 53% were made to corporations, 36% to LLCs, 7% to cooperatives, 3% to municipalities, and 1% to a tribal authority. Ten projects have completed in Kansas, Louisiana, Michigan, North Dakota, Nebraska, South Dakota, Oregon, Texas, and Washington.

"Subsequently, on March 25, 2008, RUS announced its largest loan ever, $267 million to Open Range Communications. The $267 million loan, accompanied by an over $100 million investment from the private sector, will enable Open Range to provide wireless broadband (Wi-Max technology) and satellite connectivity to 518 rural communities in 17 states.

"Applications for the Rural Broadband Access Loan and Loan Guarantee program are accepted at any time. The maximum loan amount for 4% loans is $7.5 million. There is no maximum for treasury rate loans, and the minimum level for all loans is $100 thousand. In 2003, the average loan was $11.2 million, while in 2006, the average loan was $44 million.21 Loans are made for the term equal to the expected service life of financed facilities. Further information, including application materials and guidelines, is available at [http://www.usda.gov/rus/telecom/broad band.htm]."

Deadline July 31, 2003
"On January 29, 2003, Secretary of Agriculture Ann Veneman announced the new Rural Broadband Loan and Loan Guarantee Program. For FY 2003, RUS has made available $1.4 billion in loans and loan guarantees to provide broadband services in rural communities. These loans will facilitate deployment of new and innovative technologies to provide two-way data transmission of 200 kbps or more, in communities with populations up to 20,000. Details on loan types and amounts, eligibility, and application procedures are available in 7 CFR 1738, the Notice of Application Deadline, and RUS Bulletin 1738-1, Rural Broadband Access Loan and Loan Guarantee Program Application Guide."


• Notes March 24, 2003 presentation of Roberta D Purcell, Assistant Administrator, RUS US Dept Ag
• Broadband - tech neutral - provide high quality data - 200 kbps bidirectional
• Eligible:
• Community 20k or less;
• not located in an area designated as a standard metropolitan statistical area (MSA) (not close to a city center - very rural)
• Has sufficient authority to enter into a contract with RUS and carry out the purpose of the loan
• State or local govts are elibible only if, no later than 90 days after (Jan 1 2003) publication of 7 CFR Part 1738, no other eligible entity applied
• Eligible purposes
• New construction and improvements to existing facilities
• Broadband facilities leased under terms of a capital lease limited to 2 years
• facilites that RUS determines are necessary to serve subs located in eligible rural communities that are located outside of eligible rural communities - not an issues of where hardware is, issue is where are you trying to serve
• Acquisitions (buy a sys that is up and running as long as it is nec and incidental to those who do not have sevice now) and
• Refinancing exisitng telecom program debt made under the RE Act
• Annual review and revision
• At the beginning of each fiscal year, RUS will public a notice of application deadlinie covering:
• loan levels in each type of loan
• rate of data transmission criteria
• density and income requirements (4% loans) and
• the dollar amounts avail in the state allocation process

Derived From: Lennard Kruger, CRS Report to Congress, Broadband Loan and Grant Programs in the USDA's Rural Utilities Service (May 15, 2008)

"The Consolidated Appropriations Act of 2004 (P.L. 108-199) appropriated $9 million "for a grant program to finance broadband transmission in rural areas eligible for Distance Learning and Telemedicine Program benefits authorized by 7 U.S.C. 950aaa." On July 28, 2004, RUS published its final rule on the broadband grant program, called the Community Connect Grant Program (7 C.F.R. part 1739, subpart A).22 Essentially operating the same as the pilot broadband grants, the program provides grant money to applicants proposing to provide broadband on a "community-oriented connectivity" basis to currently unserved rural areas for the purpose of fostering economic growth and delivering enhanced health care, education, and public safety services.

"Funding for the broadband grant program is provided through annual appropriations in the Distance Learning and Telemedicine account within the Department of Agriculture appropriations bill. Table 2 shows a history of appropriations for the Community Connect Broadband Grants (including the pilot grants of FY2002 and FY2003).

Table 2. Appropriations for the Community Connect Broadband Grants

Fiscal Year	Appropriation
FY2002	$20 million
FY2003	$10 million
FY2004	$9 million
FY2005	$9 million
FY2006	$9 million
FY2007	$9 million
FY2008	$13.5 million
FY2009 (req)	0

"Eligible applicants for broadband grants include incorporated organizations, Indian tribes or tribal organizations, state or local units of government, cooperatives, private corporations, and limited liability companies organized on a for profit or notfor- profit basis. Individuals or partnerships are not eligible.

"Funded projects must: serve a rural area of 20,000 population or less23 where broadband service does not exist, serve one and only one single community, deploy free basic broadband service (defined as 200 kbps in both directions) for at least two years to all community facilities, offer basic broadband to residential and business customers, and provide a community center with at least ten computer access points within the proposed service area while making broadband available for two years at no charge to users within that community center.

"Since the inception of the RUS broadband grant program, $65.4 million in grant money has been awarded to 141 awardees. Awardees must contribute a matching contribution equal to 15% of the requested grant amount.

"RUS typically publishes an annual Notice of Funding Availability (NOFA) in the Federal Register, which specifies the deadline for applications, the total amount of funding available, and the maximum and minimum amount of funding available for each grant. Further information, including application materials and guidelines, is available at [http://www.usda.gov/rus/telecom/commconnect.htm]."

"The notice announces a pilot grant  program for the provision of broadband transmission service in rural America. For fiscal year 2002, $20 million in grants will be made available through a national competition to applicants proposing to provide broadband transmission service on a "community-oriented connectivity" basis. The "community-oriented connectivity" approach will target rural, economically-challenged communities and offer a means for the deployment of broadband transmission services to rural schools, libraries, education centers, health care providers, law enforcement agencies, public safety organizations as well as residents and businesses. This all-encompassing connectivity concept will give small, rural communities a chance to benefit from the advanced technologies that are necessary to foster economic growth, provide quality education and health care opportunities, and increase and enhance public safety efforts.
Applications for grants will be accepted as of the date of this notice through November 5, 2002. All applications must be delivered to RUS or bear postmark no later than November 5, 2002.
Notice of Funds Availability: [.doc] [.pdf]
Application Guide: [.doc] [.pdf]"
$20 million FY2003?  Schools get 2 years of free service?
FY 07 $15 M funding
FY 09 $13 M funding

NASA

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