Federal and State Broadband Subsidies

Frequently Asked Questions About Federal and State Broadband Subsidy Programs

The federal government and many state and local governments have established programs to provide subsidies, grants, and loans for service providers to build out broadband networks in unserved and underserved communities. Related programs provide discounted broadband service and connected devices to low-income households and to defray the costs of providing telehealth services. Below we address some common questions about these programs.

What are the federal programs for broadband service providers?

The Federal Communications Commission (FCC), the U.S. Department of Agriculture (USDA), and the National Telecommunications and Information Administration (NTIA) at the U.S. Department of Commerce administer significant subsidy programs.

The 2021 Infrastructure Act provides $42.45 billion for the Broadband Equity, Access, and Deployment (BEAD) program for states to promote the buildout of broadband networks serving communities that are currently unserved or underserved. NTIA oversees the BEAD program. NTIA programs also include the Tribal Broadband Connectivity Program, the Broadband Infrastructure Program, and the Connectivity for Minority Institutions Pilot Program.  

FCC programs include the Rural Broadband Opportunity Fund (RDOF), the E-Rate Schools and Libraries Program (E-Rate), the Affordable Connectivity Program (ACP), the Emergency Connectivity fund, the Healthcare Connect Fund, and the Covid-19 Telehealth Program.

USDA programs include the ReConnect Pilot Program, the Community Connect Grants Program, the Rural Broadband Access Loan and Loan Guarantee Program, Telecommunications Infrastructure Loans and Loan Guarantees Program, and the Distance Learning and Telemedicine Program.

• What is the BEAD Program?

The BEAD program will provide $42.45 billion in subsidies for the network buildout and provision of broadband services (defined as 100/20 Mbps) to communities currently underserved and underserved, with a minimum of $100 million allocated for each state. The program is administered jointly by the NTIA and the states. The NTIA last year issued a Notice of Funding Opportunity (NOFO) setting out the process and requirements of the program, as well as FAQs providing guidance on certain issues raised in the NOFO.  NTIA has granted funds to all fifty states and Puerto Rico to develop a statewide five-year broadband plan.

The remaining stages before funds are actually allocated to service providers include:

• • By May 2023, each state must develop (with public input) a five-year action plan, which NTIA then must approve.
  • NTIA will announce the maximum amount of funds available to each state, based on the results of the FCC's Broadband Data Collection and National Broadband Map.
  • Once NTIA has announced the amount of funds available, each state has 180 days to submit an initial proposal to NTIA, which must include a plan for competitive selection of broadband service providers to receive BEAD funding.
  • After submitting the initial proposal and before allocating BEAD funding, a state must conduct a challenge process, allowing members of the public, including government entities and broadband competitors, to challenge whether a given home or anchor institution is unserved or underserved for purposes of BEAD funding. A state must submit successful challenges to NTIA for review and approval.
  • After NTIA reviews and approves a state's initial proposal, it will allocate 20% of the grant amount for each eligible entity.
  • A state then will have up to one year to competitively select broadband service providers eligible for funding.
  • Once a state has selected the service providers and implemented its Initial Plan, it must submit a Final Plan to NTIA and, once approved, NTIA will provide the remaining 80% of that state's funding.

Given the number of steps required, we expect that the initial 20% funding will be available to service providers by late 2023 at the soonest. Further, we note the NOFO limits the types of technologies that service providers may deploy to fiber-optic technology; cable modem/hybrid fiber-coaxial technology; digital subscriber line technology; or “terrestrial fixed wireless technology utilizing entirely licensed spectrum or using a hybrid of licensed and unlicensed spectrum.” Thus, the NOFO would not permit a wireless provider relying entirely on unlicensed spectrum to deliver broadband service to qualify for BEAD funding; however, this requirement has been challenged.

• What is the FCC's RDOF program?

RDOF will provide a total of $20.4 billion to broadband providers that build out networks to provide services in unserved and underserved areas.

The Phase I RDOF reverse auction closed in November 2020 with auction winners eligible for $9.2 billion in subsidies. The FCC has since addressed most of the applications of the auction winners, and has approved significantRDOF funding. Not all of the auction winners, however, were able to obtain final approval for subsidies in all areas where they were the winning bidders, including Starlink, GeoLinks, and LTD Broadband.

The FCC has not yet adopted rules for the Phase II RDOF auction, which could allocate up to an additional $11.2 billion in subsidies for broadband network buildout in census block groups that are underserved, as well as to unserved locations that were not funded in Phase I. Given that the BEAD program and other federal and state subsidy programs are now in place, it is unclear whether the FCC will proceed with RDOF Phase II.

• What is the FCC's Affordable Connectivity Program?

The ACP reimburses service providers that furnish discounted broadband service and devices to qualifying low-income and Tribal area households. The program subsidizes:

• up to a $30 per month discount for broadband services to low-income households;
• up to a $75 per month discount for broadband services for households on Tribal lands; and
• up to a $100 one-time discount for a laptop, desktop computer, or tablet.

To be eligible, a broadband provider must  have offered broadband service on December 1, 2020, and either has been designated as an “eligible telecommunications carrier” (ETC) or obtained FCC approval to participate in the ACP. Eligible providers must then file an election to participate in the ACP with the Universal Service Administrative Company. Participating providers also must meet a number of ongoing regulatory obligations, including those related to marketing, subscriber notifications, and verification of a household's eligibility.

• What are the FCC's programs for Schools and Libraries?

The FCC's E-Rate Schools and Libraries Program allows schools, school districts, libraries, and consortia to receive discounts ranging from 20% to 90% of the pre-discount rates for category one services (consisting of telecommunications, telecommunications services (including data transmission services), and Internet access) and category two services (consisting of internal connections, basic maintenance services, and managed internal broadband network services). Service providers are chosen through a competitive bidding process. USAC pays the discount to either the school or library directly if it pays for the pre-discount rates of the services, or to the selected service provider if the school or library pays the discounted rates for the services. The discount percentages are based on the level of poverty in the community and whether the school or library is located in an urban or rural area. 

Under the FCC's Emergency Connectivity Fund (ECF), qualifying schools and libraries may obtain funding of up to 100% of the costs of eligible equipment and/or advanced telecommunications and information services, except that reimbursement may not exceed a reasonable amount as determined by the FCC. Eligible equipment includes Wi-Fi hotspots, modems, routers, and connected devices (laptops, tablets, and similar end user devices). Eligible equipment and services may be used on school premises and other locations, and libraries may use eligible equipment and services for patrons on library premises or other locations. The ECF program will end on the June 30^th one year after the U.S. Department of Health and Human Services determines that the COVID-19 pandemic emergency has terminated, which is expected to occur on May 11, 2023; thus, the ECF program is expected to end on June 30, 2024.

• What are the FCC's Telehealth programs?

The Rural Healthcare Connect Fund and Telecommunications Program (HCF) and the COVID-19 Telehealth Program provide funding and discounts to eligible health care providers for the purchase of high-speed broadband capacity, telecommunications and information services, and certain devices necessary to provide telehealth services to healthcare providers and their patients. Under both programs, eligible health care providers must apply to the Universal Service Administrative Company (USAC) for funding. The process is subject to FCC regulations and oversight.

• What are the USDA's programs for broadband service providers?

The USDA has several programs to provide funding for service providers to deliver broadband to communities in rural and unserved areas.

• • The ReConnect Loan and Grant Program provides low-interest loans, grants, and 50% loan-50% grant combinations to service providers, states, and non-profits for the construction, improvement, or acquisition of broadband networks in eligible areas. Awardees must meet a 100 Mbps symmetrical minimum service requirement in all proposed service areas.
    
    
  • The Community Connect Grants Programprovides funding for the construction, acquisition, or leasing of facilities, spectrum, land, or buildings used to deploy broadband service to residential and business customers and to critical community centers. Grants are provided only for rural areas without an existing broadband service offering of 10 Mbps/1 Mbps, and at least 15% of the funding must be from non-federal sources.
    
    
  • The Rural Access Loan and Loan Guarantee Programprovides low-interest loans and loan guarantees to finance the costs of construction, improvement, lease, or acquisition of broadband networks in rural areas where 15% or more of the households are unserved.
    
    
  • The Telecommunications Infrastructure Loans and Loan Guarantees Program offers low-interest loans and loan guarantees for the construction, maintenance, acquisition, refinancing, and expansion of networks that provide telephone and broadband services. Eligible providers must serve a rural area or town with a population of 5,000 or less.
    
    
  • The Distance Learning and Telemedicine Program provides grants and low-interest loans for providers to deliver broadband service and computer equipment, inside wiring, and software to connect households in rural areas with schools and medical facilities. Grant recipients must provide at least 15% of the project costs.
    
    
• What are the NTIA's grant programs for broadband service providers?

The NTIA administers three broadband programs:

• • The Tribal Broadband Connectivity Program provides grants totaling $980 million for projects that expand access to and adoption of fixed broadband service, distance learning, telehealth, broadband affordability, and digital inclusion. While only Tribal organizations are eligible for the grants, they may sub-contract with non-Tribal providers. 
  • The Broadband Infrastructure Programprovides $288 million to partnerships between state or local governments and fixed wireless broadband providers to deploy broadband networks in rural and unserved areas.
  • The Connecting Minority Communities Pilot Programprovides a total of $268 million to fund pilot programs for historically Black or Tribal colleges and universities to purchase broadband service or IT-related expenses.
• Are there also state and local government broadband subsidy programs?

Yes. Many states and local authorities have broadband subsidy programs based, in part, on federal funding obtained through the American Rescue Plan Act of 2019. The programs and the level of subsidies vary. A few examples include:

• • The California Last Mile Federal Funding Account has a $2 billion budget of state and federal funds to support last mile broadband infrastructure projects connecting unserved and underserved Californians with high-speed broadband service. The program is administered by the California Public Utilities Commission.
  • The Georgia Capital Projects Grant Program provides $240 million for broadband infrastructure projects to unserved homes and businesses in Georgia. Grant applications were due in October 2022.
  • The Michigan Realizing Opportunity with Broadband Infrastructure Networks (ROBIN) Grant Program is a high-speed internet last-mile and middle-mile infrastructure competitive grant program with $238M in project funds. Applications for the ROBIN program will be accepted through March 14, 2023.
  • The New York ConnectALL is a $1 billion initiative, announced in 2022, which will establish three grant programs to provide funding to local municipalities and other entities to plan, engineer, and construct accessible broadband infrastructure.
  • The Wisconsin Broadband Expansion Grant Program provides $14.3 million in 2023 for the deployment of advanced telecommunications capability in underserved areas of the state. The application deadline is February 22, 2023.

The information provided in this page is not legal advice, and should not be relied on as such. The content on these pages is for informational purposes only, and is meant as a starting point on your search for answers to your legal questions.