The Broadband Telecommunications Opportunities Program

Want To Get In On $7.2 Billion Of Stimulus Money? Here's An Interesting News Story!

For several years, broadcasters have been advised that streaming is becoming a necessity. The Internet is rapidly becoming a major, if not the preferred, distribution medium for a significant new population of viewers and listeners who have grown up in the age of the Internet -- and broadband Internet will expand significantly over the next several years.

During the campaign of 2008, President Obama advocated an aggressive program to extend and improve broadband access to every American. According to a 2008 report of the Information Technology and Innovation Foundation, the United States ranks 15th out of 30 countries in broadband access, speed and price. The Organization for Economic Cooperation and Development (OECD) also reports that the United States ranks 15th and continues to drop further in the global rankings, though we still have the most overall broadband subscribers among OECD countries.

The President's broadband platform became a critical component of the first legislation introduced and passed by the 111th Congress, S. 1 and H.R. 1, the American Recovery and Reinvestment Act (the "Stimulus Act") by including the Broadband Technology Opportunities Program (BTOP). On February 17th, 2009, President Obama signed the Stimulus Act into law. Designed to stimulate our economy and to create new employment, it allocates a total of $7.2 billion to broadband investment under grants from agencies in the Departments of Commerce and Agriculture. This presents an interesting opportunity for broadcasters to expand their reach as the delivery vehicle for information and communication in their communities with government subsidized capital expense that can turn a negative business plan positive.

If you're not interested in being the grantee and becoming the broadband provider to your community, this program still makes for an interesting news item. Here's a summary.

National Telecommunications & Information Administration Grants

Among the $7.2 billion devoted to broadband investment, the Stimulus Act allocates $4.7 billion to the National Telecommunications & Information Administration (NTIA), an agency of the U.S. Department of Commerce. The funds are to be used primarily for the establishment of the BTOP, which is charged to provide grants that will deploy broadband in areas that are currently "unserved" and "underserved" and to extend broadband to low-income communities. NTIA has significant experience in administering facilities grant programs. When NTIA was formed by President Carter, the grant program charged with building out the public broadcasting system was moved to NTIA -- and that agency has been administering it ever since.

The overriding purpose of BTOP is to deploy broadband services and infrastructure. The BTOP's goals are not only the raw deployment of broadband but its use in a manner that will facilitate greater service by "low-income, unemployed, aged and otherwise vulnerable populations." The Stimulus Act encourages NTIA to make grants for broadband and wireless eligible entities for the infrastructure costs of deploying broadband. The program will pay for up to 80% of the infrastructure costs of the system. A series of policy priorities are set out that will be crucial to securing the grants.

From the $4.7 billion allocated to NTIA, $350 million is to be used to implement the Broadband Data Improvement Act, $200 million is to be allocated for institutions of higher learning and community center computer expansion, and a minimum of $250 million is to be available in grants for adoption of broadband services. The term "unserved areas" is not defined and there is no specification to prefer rural over urban areas. There are preferences for states, political subdivisions, Indian tribes and non-profits, all of which point to public/private partnerships receiving a priority. There is also a preference for providing grants to facilitate and support distance learning projects, libraries and telemedicine.

All of the NTIA money must be placed into grants by September 2010, so the grant process should begin very soon.

Rural Utilities Service Grants

The Stimulus Act also appropriates $2.5 billion to the Rural Utilities Service (RUS) at the U.S. Department of Agriculture, for broadband loan and grant programs. This is the agency that has funded the rural electrification, telephone and rural broadband programs in the past. RUS is directed to fund projects where at least 75% of the area to be served is rural without sufficient access to high-speed broadband service, so as to facilitate rural economic development.

While there are some preferences for existing loan grantees in the RUS legislation, there is also the stated goal for RUS and NTIA to provide at least two choices of broadband service to every American.

Facilities And Business Know-How

Several equipment suppliers to the broadband industry are gearing up to provide turn-key, scalable systems for those applying for grants at NTIA and RUS. Some of these companies will develop the model system for a given community or area, assist in creating a sustainable business plan, install the system and help provide service delivery and maintenance.

Lessons for Broadcasters:

Broadcasters can benefit from this information in at least three ways:

1. Apply for the grant yourself. Form a partnership with a local public institution and apply for a grant. Create a new business opportunity for your broadcasting business and a new economic resource for your community. With CapEx support from the BTOP, this can be a profitable expansion and diversification for a media and service business.
2. Publicize the BTOP program to your community to be sure it and its public officials are aware of the program and the opportunities it offers for your community, even if you are not interested in applying yourself.
3. Cover the Stimulus Act and the BTOP in your news and highlight the ways your community and its institutions are organizing to seek this funding and improve economic, cultural and educational resources as a part of our national effort to regroup and prepare for the challenges of the future.

Our firm, Womble Carlyle, has created a Broadband Stimulus Program Strike Team to assist our clients with evaluating the benefits of the Stimulus Bill and BTOP. Please feel free to call on us for additional information as you consider participating and developing news stories about this program.

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.