Funding Also Should Be Used to Address the Adoption Gap
PITTSBURGH, July 19, 2021 – In comments submitted on July 16 to the Department of the Treasury, ACA Connects urged that Treasury maximize use of American Rescue Plan Act block grants for State, local, and Tribal Governments to close both the broadband availability and adoption gaps. This means providing support only where a location lacks minimal (25/3 Mbps) broadband service and then building gigabit networks. It also means spending funding to help low-income households subscribe where broadband service is already available.
“The enormous amount of funding given to State, local, and Tribal governments by the American Rescue Plan Act provides a great opportunity to close the digital divide, but to achieve this goal, the Treasury Department and the governments must first adopt a data-driven approach to determine the nature and extent of the availability and adoption gaps and then implement cost-effective policies that target these problems,” said Ross Lieberman, Senior Vice President of Government Affairs, ACA Connects.
Lieberman continued, “We can make real progress in closing the digital divide by using limited funds wisely. We need to appreciate the substantial size of the adoption gap and allocate sufficient funds to address it. It means only spending money to deploy broadband to unserved locations and building future-proof networks to connect those locations. It requires that we not prioritize support for any provider to build those networks, especially those entities that are inexperienced. And we should award support through distribution mechanisms that are efficient and facilitate participation by smaller providers, who are often best positioned to serve unserved areas.”
The Treasury Department issued Interim Final Rules for the program on May 17, 2021 and set a July 16, 2021 deadline for comments.
ACA Connects comments first discussed its recent report with the business consulting firm Cartesian, which not only identified the size of the broadband availability and adoptions gaps but found that the adoption gap, because of its size and persistence, requires greater attention by governments at all levels. The report also examined how much government support is required to close these gaps for various scenarios dependent upon governments’ goals. The report can be accessed here.
In its comments, ACA Connects then discussed five key issues:
1. What should be the definition of an unserved area eligible for support? ACA Connects recommended that Treasury direct funds to support the deployment of fixed broadband service in census blocks where locations do not receive 25 Mbps/3 Mbps broadband service because these areas are the most in need of high-performance broadband service. Further, the likely amount of funding that the governments will dedicate for broadband infrastructure – which we expect to be approximately $20-$30 billion – is only enough to provide future-proof service to these areas. By contrast, it would be a waste of funding to provide support to locations with higher speeds, and it would undermine private investment expected in such areas. Moreover, permitting the spending of money in areas with at least 25/3 Mbps service would siphon away funding from locations without it, resulting in such areas continuing to be stranded. Accordingly, including served locations in any area eligible for support should be the exception, and the onus should be placed on governments to justify inclusion of any served location in an eligible area. Further, the Treasury Department should adopt, as part of the Final Rules, a requirement that served locations at most should not make up more than 10% of any eligible area.
2. What should be the minimum broadband performance that funding recipients should provide? ACA Connects supported the proposed requirement that recipients of funding should offer 100/100 Mbps service except where it is not practical, in which case the network should be scalable to provide this level of performance. This will ensure that residences, businesses, and institutions in unserved areas will get the same reliable, high performance infrastructure that is being deployed in served areas. Governments can afford to build such networks to all areas without 25/3 Mbps service based on expected funding levels. Further, funding anything less – and then having to fund it again in the near future – is a bad investment.
3. How should funds be expended to ensure that in-need households are connected? Given that the broadband adoption problem is so great and is present in both unserved and served areas, ACA Connects recommended the final rules include a requirement that the governments spend funds on broadband adoption programs, in any area, that amount to at least 33% of the amount spent on deployment.
4. Should any classes of providers be given a priority? The Treasury Department proposed that the governments prioritize support for local governments, non-profits, and co-operatives because they have “less pressure to turn profits” and have “a commitment to serving entire communities.” ACA Connects doubts the merits of prioritizing these entities only or on these grounds alone. Indeed, we believe Treasury should refrain from providing any preferences. ACA Connects represents all types of providers, municipally owned and co-operative providers as well as private providers. As such, we know first-hand that all have a deep commitment to serving their entire communities and take a long-term approach to building networks and providing services. If the Treasury Department does provide priorities, it also should encourage governments to provide any small entity that is an experienced broadband provider with the highest level of priority.
5. What mechanism should the governments use to award support? On this issue, the Treasury Department was silent, even though the mechanism for awarding support makes a large difference in whether we can close the digital divide. Using auctions to award support has proven to be a much more efficient distribution mechanism than grants, and as such, they will result in more unserved areas becoming served. ACA Connects therefore recommended that the Treasury Department require the user of auctions to award support. If the Treasury Department permits governments to use grants, then it should at least capture some of the benefits of auctions, such as by directing governments to prioritize applications that would most cost effectively deploy broadband infrastructure, and by requiring them to set aside funds for providers that seek to serve smaller, more remote or more isolated unserved areas.
About ACA Connects: America’s Communications Association – Based in Pittsburgh, ACA Connects is a trade organization representing more than 600 smaller and medium-sized, independent companies that provide broadband, phone and video services to nearly 8 million customers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA Connects’ members work together to advance the interests of their customers and ensure the future competitiveness and viability of their businesses. For more information, visit: https://www.acaconnects.org