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ACA Urges NTIA, RUS to Modify $7.2 Billion Broadband Stimulus Program To Attract ACA Members With Deep Roots In Rural America

The American Cable Association called on the Obama Administration to reform the $7.2 billion broadband stimulus program by modifying rules and application criteria that have deterred many small and midsized cable operators from seeking federal loans and grants that are needed to ensure that as many unserved and underserved communities as possible reap the benefits of the program.

"At least 83 ACA members applied for broadband stimulus funding for 127 last-mile and middle-mile projects totaling more than $1.3 billion in grants and loans under the two programs. More ACA members would have applied but for funding restrictions and cumbersome barriers in the program's original rules," American Cable Association President and CEO Matthew M. Polka said. ACA has close to 900 members, and more than half serve fewer than 2,000 subscribers.

Under the American Recovery and Reinvestment Act of 2009, the U.S. Commerce Department's National Telecommunications and Information Administration (NTIA) and U.S. Agriculture Department's Rural Utilities Service (RUS) were charged with distributing the $7.2 billion by the end of next September.

At the request of ACA and other stakeholders, NTIA and RUS agreed to consider modifying previously announced funding criteria that applicants had to meet or accept in order to qualify for grants, loans or grant/loan combinations.

Key U.S. House lawmakers are also urging NTIA and RUS to revamp the program to make it more inviting to ACA members, who have many years of experience providing state-of-the-art communications services in some of the most economically and geographically challenging locations in the United States.

In Oct. 28 testimony before the House Committee on Small Business, ACA board member and NewWave Communications President & CEO James Gleason, while praising the decision to provide billions of dollars for new broadband infrastructure, asked lawmakers to be certain that NTIA and RUS will allocate the funds in a fair and cost-efficient manner so small cable operators can continue in their role as leading broadband access providers to consumers located in the most rural areas of the country.

In a Nov. 30 filing with NTIA and RUS, ACA urged the government departments to make several important changes to the broadband stimulus program, many of which were discussed by Gleason in his House testimony and echoed by House Small Business Committee Chairwoman Rep. Nydia M. Velázquez (D.-N.Y.) and the panel's ranking member Rep. Sam Graves (R-Mo.) in a letter to RUS and NTIA on Nov. 17.

ACA's top recommendation sought the elimination of a rule that banned the sale of any NTIA- or RUS-funded project for a period of 10 years. ACA said the 10-year holding period was too long of a commitment for many ACA members.

"A 10-year prohibition on a sale is too great a restriction for many small companies to accept, especially given the uncertainty in an ever changing industry. This is especially true for many ACA members that are family owned or privately owned and operated businesses," Polka said.

ACA recommended changing the rigid decade long no-sale rule to allow sales at any time after the award of federal funds, provided the purchaser agrees to all terms and conditions related to the funded project.

Under the law, NTIA is overseeing the $4.7 billion Broadband Technology Opportunities Program (BTOP), distributing funds in the form of grants. The RUS program, called the Broadband Initiatives Program (BIP), has $2.5 billion and is funding projects with loans and loan/grant combinations. BTOP grants will in most cases support up to 80% of a project's cost and BIP loan/grant combinations require the loan portion to equal at least 50% of the federal money awarded.

In its comments, ACA agreed with the House Small Business Committee letter that NTIA and RUS should change the rules so that some applicants in rural, unserved areas are not required to seek a loan or a loan/grant combination from BIP in the first instance. ACA said its members want direct access to BTOP grant money to fund worthy projects in rural areas because loans, unlike grants, would fail to yield enough of an economic return to justify the risk associated with rural broadband deployment.

"Rural ACA applicants should have the option of seeking funds directly through a BTOP grant and foregoing the BIP process," Polka said.

ACA also called for the elimination of a rule that gives RUS the first-lien on all assets purchased with loan or loan/grant funds. Many ACA members did not seek RUS funding because the federal government's insistence on holding the first lien would have violated terms and conditions contained in many of their existing bank loan agreements. In the filing, ACA said that if the first-lien rule isn't relaxed or abolished, it will be impossible for many ACA members to seek BIP loans.

In other recommendations, ACA said that grant recipients should be able to use some of the grant money to pay taxes owned on the grant, that previous RUS borrowers should not be given a preference over ACA members borrowing for the first time, and that both NTIA and RUS should rely on public sources and the Federal Communications Commission to help locate areas that meet BTOP and BIP's definitions of unserved and underserved areas.

Links to Related News Stories
Broadband Stimulus Moves At Dial-Up Speeds (San Jose Mercury News, 12/7)
NTIA, RUS Receive Flood of Advice on Fine-Tuning Broadband Stimulus Rules (TMCNET, 12/4)

ACA, TIA Weigh In On Improvements For Second Round of Broadband Stimulus Funding (Broadcasting & Cable, 11/30)

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