The Consolidated Appropriations Act of 2021 includes billions of dollars to expand the deployment of broadband internet networks, consumer subsidies for service and equipment, as well as non-monetary provisions that could affect broadband service providers' businesses.
The broadband provisions alone of the massive Appropriations Act are dense and raise many questions about how they will ultimately be implemented. In the meantime, we offer this summary of key provisions related to broadband network deployment.
Emergency Broadband Benefit Program
The Act establishes a temporary $3.2 billion Emergency Broadband Benefit (EBB) program that will reimburse participating providers up to $50 per month ($75 in tribal areas) for providing discounted broadband service to an eligible household. Under the terms of the legislation, the program will sunset six months after the Department of Health and Human Services declares the end of the COVID-19 public health emergency.
Although many details of the program are set forth in the legislation itself, it also directs the FCC to adopt more detailed rules to govern the program within 60 days of enactment of the new law, i.e., February 25, 2021. The FCC's Wireline Competition Bureau issued a Public Notice on January 4, 2020, seeking comments on some of the specific details of how the program would be administered. The analysis below highlights some of the more notable issues teed up in the FCC's rulemaking proceeding.
The Act states that a household is eligible for the EBB program if at least one of its members:
- Qualifies for the existing federal Lifeline subsidy (which the household may receive in addition to the EBB benefit);
- Has been approved to receive benefits under the federal free and reduced price school meal programs;
- Has experienced a "substantial loss of income" since February 29, 2020;
- Has received a Federal Pell Grant; or
- Meets the eligibility criteria for a participating provider's low-income or COVID-19 program that meets certain criteria, including that the program was in existence as of April 1, 2020.
Providers must verify that a household meets one of these income-based eligibility criterion. They may do so by submitting the applicant's information to the existing Lifeline program databases or an alternative verification process of the provider that is approved by the FCC. The FCC has proposed, however, that any such process must be at least as stringent as that employed by the Lifeline National Verifier.
Providers may also rely on a school to verify the eligibility of a household based on participation in the discounted meal programs, and also seeks comment on how to determine individual household eligibility in school districts where all students are automatically enrolled in the meal programs. Finally, the FCC also seeks comment on how to define the loss of income standard, which is arguably the most ambiguous standard to meet among the eligibility criteria for the program.
The program will be subject to audits, with potentially significant penalties for failure to properly verify a household's eligibility. That being said, it also includes a "safe harbor" provision prohibiting the FCC from bringing an enforcement action against a provider that can demonstrate that it relied in good faith on information provided to it in making eligibility determinations pursuant to one of the approved determination methods, such as consulting the National Verifier. Veterans of the Lifeline program may be skeptical of the practical meaning of the safe harbor provision.
The EBB funding itself is a monthly discount for an eligible household applied to the actual amount charged for broadband service. For providers that elect to participate in the program, the pre-discount amount charged must be no more than the standard rate for the provider's broadband service offering and associated equipment, and the subsidy may not exceed $50 (or $75 for residents of tribal lands).
Any covered broadband service offering must be offered in the same manner and on the same terms as the provider offered on December 1, 2020. The standard rate for reimbursement purposes is the provider's monthly retail rate for the applicable tier of broadband service as of December 1, 2020.
If a participating provider also supplies the household with a connected device (laptop or desktop computer), it may be reimbursed up to $100 if the charge to the household is more than $10 but less than $50 for the device. A provider may receive reimbursement for no more than one connected device per eligible household.
Notably, unlike Lifeline, this program is not limited to providers who are Eligible Telecommunications Carriers (ETCs) but is also open to additional providers approved by the FCC to participate in its pending rulemaking. The FCC must establish an expedited process to approve other broadband providers that had an established, private low-income program by April 1, 2020, that is widely available and offers broadband service to eligible households and maintains verification processes sufficient to avoid waste, fraud and abuse.
Broadband Connectivity Grants
The Act directs the Department of Commerce's National Telecommunications and Information Administration (NTIA) to manage two new grant programs for broadband infrastructure construction: one program for Tribal broadband connectivity and another for partnerships between providers and state or local governments. While both programs prioritize awards to provide service to currently unserved areas, there is no prohibition on using the funds to build in areas that are already served. Funds awarded under both programs must be spent within one year after the awards.
- Tribal Broadband Connectivity Grants: Congress designated $1 billion for grants to expand access to and adoption of broadband service on Tribal lands, including reservations, pueblos, Rancherias, and other lands held for the benefit of an Indian tribe, land located within regions established under the Alaska Native Claims Settlement Act, Hawaiian Home Lands, and areas or communities designated near or adjacent to reservations where federal financial assistance and social service programs are provided.
Non-tribal entities can partner with eligible tribal entities in using any grant for approved purposes. Although funds must be prioritized for connecting unserved households, any grant may also be used to provide free or reduced-cost broadband service, prevent disconnection of existing service (i.e., to pay delinquent amounts), distance learning, telehealth, digital inclusion efforts, and broadband adoption activities.
- State and Local Government Partnerships: The Act appropriates $300 million for NTIA to award to eligible partnerships between state and local governments and private service providers. NTIA must create an application process for these grants and prioritize awards according to a series of preferred projects, particularly projects designed to provide broadband service to the greatest number of households in an eligible service area (defined as any census block in which broadband service is not available to one or more households or businesses). The Act assigns priority also to projects designed to provide broadband service outside of and not adjacent to local governments that have 50,000 or more residents.
- Community Connect Grant Funding: The Act appropriates $35 million to provide new funding for the USDA's existing Rural Utilities Service Community Connect grant program. That program allows eligible applicants to apply for grants to be used in the construction and operation in rural, economically challenged communities where service does not exist.
Office of Minority Broadband Initiatives
The Act includes the Connecting Minority Communities Act, establishing within NTIA an Office of Minority Broadband Initiatives. The Office must collaborate with other agencies that carry out broadband internet access service support programs to determine how to bring those benefits to "anchor communities."
Anchor communities include areas near Historically Black Colleges and Universities (HBCUs) and other minority-serving institutions where the estimated median annual income is no more than 250 percent of the federal poverty line. The Office must also collaborate with HBCUs, state, local, and tribal governments, Tribal Colleges or Universities, and other minority-serving institutions to promote broadband internet connectivity and digital opportunities for these communities.
The Act appropriates $285 million for a Connecting Minority Communities pilot program to be conducted under the direction of the Assistant Secretary of Commerce for Communications and Information. Within 45 days of enactment, the Assistant Secretary must promulgate rules for the pilot program to provide grants to eligible recipients in anchor communities for the purchase of broadband access service, equipment, or to hire and train information technology personnel.
At least 40 percent of the $285 million fund must go to HBCUs, and at least 20 percent of the fund must go to other eligible recipients. The pilot program will continue until all funds are disbursed and all required auditing and reporting is completed.
Rip and Replace Funding
The Act Provides up to $1.9 billion to reimburse ETCs for their removal and replacement of certain equipment manufactured by Huawei or ZTE as required under the Secure and Trusted Communications Network Act of 2019. Additional discussion of these requirements can be found here, here, and here.
COVID-19 Telehealth Program
The Act appropriates a new funding round of $249.95 million for the FCC's use in administering and funding the existing COVID-19 telehealth program. Congress previously established the COVID-19 telehealth program in the 2020 CARES act, which we summarized here.
Office of Internet Connectivity and Growth
The Act includes the "ACCESS BROADBAND Act," which creates a new Office of Internet Connectivity and Growth within NTIA. The chief roles of the Office are to promote and track broadband growth and federal spending on broadband infrastructure projects that use any federal support.
The Office is required to develop a streamlined accounting mechanism for use by any agency offering federal broadband support and report annually to Congress on the number of residents provided broadband by various universal service or other federal broadband support programs. The Office is further required to consult with other agencies offering federal broadband support programs to streamline and standardize applications and process for financial assistance or grants.
The agencies are required to revise their applications and streamline and standardize their forms. To the extent possible, the Office is required to create a single application form for use across all federal broadband support programs. Ultimately, the Office is directed to coordinate with other agencies to ensure that federal broadband support is "distributed in an efficient, technology-neutral, and financially sustainable program, and that a program does not duplicate any other Federal broadband support program or any Universal Service Fund high-cost program."
A related provision of the Act incorporates the "Broadband Interagency Coordination Act of 2020," which requires the FCC, NTIA, and the Department of Agriculture to enter into an interagency agreement. The interagency agreement will require these agencies to coordinate for the distribution of funds for broadband deployment under the FCC's high-cost programs, programs administered by the Rural Utilities Service of the Department of Agriculture, and programs administered or coordinated under NTIA.
The Act requires the federal government to make an additional 100 MHz of spectrum available for wireless services. Specifically, the government must within 180 days of the Act "begin the process of withdrawing or modifying" current assignments of RF spectrum in the 3450 MHz to 3550 MHz band. The FCC must begin auctions of the reclaimed spectrum by the end of 2021.
Studies of Artificial Intelligence, Internet of Things, and Other New Technologies
The Act includes the "American COMPETE Act," which in turn requires the Secretary of Commerce, the FTC, and other agencies to conduct a series of studies on new technologies to make the United States more competitive in these areas. Studies are required to advance:
- Artificial Intelligence;
- Internet of Things in manufacturing;
- Internet of Things in general;
- Quantum computing;
- Blockchain technology;
- New and advanced materials (including synthetically derived or enhanced natural properties);
- Unmanned delivery services;
- 3D printing; and
- Use of Artificial Intelligence to combat online harms.
As the various federal entities begin to work on the mandatory provisions of the Act affecting broadband service and deployment, the Biden Administration supports yet another package of relief and stimulus to address various aspects of the COVID-19 emergency. We will be monitoring those developments and summarizing them as they materialize.