NTIA/RUS BROADBAND GRANT AND LOAN PROGRAMS: PROCEDURES AND REQUIREMENTS

Transcription

1 NTIA/RUS BROADBAND GRANT AND LOAN PROGRAMS: PROCEDURES AND REQUIREMENTS The National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS) have released the first Notice of Funds Availability (NOFA) for their respective broadband grant programs. Under the first NOFA, NTIA is authorized to award up to $1.6 billion for broadband grants under its Broadband Technology Opportunities Program (BTOP). RUS is authorized to award up to approximately $2.4 billion for broadband grants and loans under its Broadband Initiatives Program (BIP) in areas that are deemed to be 75% rural. The remaining $3 billion of NTIA and RUS broadband funds allocated under the Recovery Act will be awarded during subsequent funding rounds expected in the coming months. Note that the procedures and requirements may change for these subsequent rounds. The NOFA contains specific details regarding the first round application process. Below is a brief overview of these requirements. Definitions of relevant terms (including broadband, unserved and underserved ) are at the end of this document. A. APPLICATION FILING PROCESS AND ELIGIBILITY 1. What is the filing deadline for submitting a funding application under the first NOFA? The filing deadline is August 14, 2009 at 5:00 p.m. ET 2. Does an applicant need to register with and have a Dun and Bradstreet Data Universal Numbering System (DUNS) number in order to submit a grant application? YES 3. Must applications be filed electronically? YES (but hardship exception available) 4. Will a common application form be used for all of the NTIA and RUS grant programs? YES 5. What types of entities are eligible to apply for assistance? Almost any type of entity is eligible including states, local governments, Indian tribes, non-profits (foundations, corporations, institutions, dioceses, associations), and for-profit corporations, among others. B. ELIGIBLE PROJECT CATEGORIES 1. NTIA: What are the eligible project categories for which funding can be obtained from NTIA and how much funding has been set aside for each category? Broadband Infrastructure category is for funding projects in unserved and underserved areas. This category consists of a Last Mile component (i.e., providing broadband service to end users or end-user devices) and a Middle Mile component (e.g., broadband service that provides interoffice transport, backhaul, Internet connectivity, or special access). Up to $1.2 billion, the largest amount for the first funding round, is set aside for this category. Public Computer Center category is for funding projects to expand public access to broadband services at public computing centers. Up to $50 million is set aside for this category. Sustainable Broadband Adoption category is for funding innovative projects that promote broadband demand (including projects focused on providing broadband education, awareness, - 1 -

2 training, access, equipment or support) especially where broadband technology has traditionally been underutilized. Up to $150 million is set aside for this category. A Reserve of up to an additional $200 million may be used to augment the funding in any of the above categories. 2. RUS: What are the broadband infrastructure project categories for which funding can be obtained from RUS and how much funding has been set aside for each category? Broadband Infrastructure Last Mile Remote Area category is for funding projects that involve the provision of broadband directly to the premises or to end users within completely remote areas. Up to $400 million is set aside for this category. Broadband Infrastructure Last Mile Non-Remote Area category is for funding projects that involve the provision of broadband directly to the premises or to end users that are not exclusively within remote areas. Up to $800 million is set aside for this category. Broadband Infrastructure Middle Mile category is for funding projects that connect at least two points without predominantly providing broadband service to the premises or end users, and must be capable of bringing broadband service to eligible service areas. Up to $800 million is set aside for this category. A Reserve of up to an additional $325 million may be used to augment the funding in any of the above categories. C. APPLICATION CONTENTS 1. What information must be included in an application for a Broadband Infrastructure project? The NOFA contains an extensive list of the required elements of applications for each NTIA and RUS project category (i.e., the Broadband Infrastructure, Public Computer Center and Sustainable Broadband Adoption categories). For a NTIA or RUS Broadband Infrastructure project, the application must include the following items, among many others: Executive summary of the project Congressional Districts affected by the project Description of the proposed funded service area Description of the proposed service offering including associated pricing plan Description of the system design and project timelines Resumes of key management and description of readiness to manage network Legal opinions on ability to enter into the award documents and on any pending litigation involving the applicant - 2 -

3 Financial analysis related to the sustainability of the project Itemized budget Historical financial statements A description of how the program enhances services for healthcare delivery, education or children (NTIA only) Identify partnerships with public, non-profit and private sector groups 2. What information must be included in an application for a Public Computer Center project or a Sustainable Broadband Adoption project? Variations of many of the above-requirements (often less burdensome variations) apply to applications for Public Computer Center and Sustainable Broadband Adoption projects. Applications for Sustainable Broadband Adoption and Public Computer Center projects must include specific information unique to such proposals. For example, if a Sustainable Broadband Adoption project proposes a training or educational program, the application must disclose how many people it will reach, the hours of training per person, the number of instructors to be employed, and planned equipment purchases and overall cost of these devices. Some of the above Broadband Infrastructure requirements do not apply to applicants for Sustainable Broadband Adoption and Public Computer Center projects. For example, such applicants are not required to provide an itemized budget nor are they required to provide historical financial statements. D. NTIA GRANT SELECTION PROCESS 1. What project objectives/elements will be considered favorably by NTIA in granting awards? Extending broadband service to unserved areas Improving access to underserved areas Expanding broadband access to vulnerable populations Offering potential for economic growth and job creation Providing benefits to education, health care and public safety Providing matching funds of greater than 20% and that are all cash - 3 -

4 2. How will NTIA screen and/or review submitted applications? Initial Screening. NTIA grant applicants will be subject to an initial screening review and must comply with the following requirements: * Submit fully completed application * Demonstrate project can be substantially completed within 2 years * Offer service that meets the definition of broadband (Broadband Infrastructure category applications) * Submit system design and project timeline with engineer certification in some cases * Commit to nondiscrimination and interconnection obligations (Broadband Infrastructure category applications). Note: In addition to providing the required connection to the Internet, awardees may offer managed services, such as telemedicine, public safety communications, and distance learning which use private network connections for enhanced quality service. * Provide documentation to support determination that a proposed service area is either unserved or underserved ( Last Mile Broadband Infrastructure category applications). Note: There is a presumption that applicants will provide service to the entire territory of each census block included in the proposed service area unless a waiver is filed. * Advance at least one of the statutory purposes of the NTIA grant program * Provide matching funds of at least 20% (with exceptions) and evidence of availability of such funds * Provide documentation to prove that the project would not have been implemented during the grant period without federal assistance * Demonstrate reasonableness of project budget Step One Review. Upon satisfaction of the initial screening review, an application will receive at least three independent reviews using the scoring criteria set forth in Paragraph F below. Those with the highest scores will advance to the Step Two Review. Step Two Review. The remaining applicants will be asked to submit additional information (e.g., more detailed plans, supporting documents, etc.), as appropriate, that will be reviewed by NTIA staff and external engineering, business and other experts. The start of this phase (which is most applicable to Broadband Infrastructure category) will be announced no earlier than September 14, 2009 and applicants will have at least 30 days to provide the additional information. IMPORTANT: Each state will be given an opportunity to make recommendations (within 20 calendar days of notification) concerning the allocation of funds for qualifying projects in such state, including prioritization of recommended projects in such state. NTIA staff may contact an applicant to discuss the application

5 Review and Approval of BTOP Director and Associate Administrator for the Office of Telecommunications and Information Applications (OTIA Associate Administrator). BTOP Director will provide grant award recommendations to OTIA Associate Administrator for review and approval. Awards Granted by Assistant Secretary of NTIA. Based on the recommendations of BTOP Director and OTIA Associate Administrator, Assistant Secretary of NTIA will select applications for grant awards on a rolling basis. E. RUS GRANT SELECTION PROCESS 1. What project objectives/elements in proposals will be considered favorably by RUS in granting awards? Give end users a choice of Internet service providers Serve highest proportion of rural residents that lack access to broadband services Projects of current and former RUS Title II borrowers Fully funded and ready to start once stimulus funding is received Applications which propose a higher percentage of loan funds 2. Will RUS award grants, loans and loan/grant combinations? YES RUS grants will fund applications that propose to exclusively serve remote, unserved, and rural areas RUS loans and loan/grant combinations will fund applications that propose to serve non-remote and underserved rural areas Projects that include both remote and non-remote areas will be funded by RUS loans or loan/grant combinations 3. How will RUS screen and/or review submitted applications? Step One Review. Submitted applications will be evaluated by RUS for completeness and eligibility (e.g., service area qualifies as rural, project is financially feasible and/or sustainable, etc.). Eligible applications will be evaluated and ranked based on the applicable scoring criteria set forth in Paragraph F below. Those with the highest scores will advance to the Step Two Review. Step Two Review. The remaining applicants will be asked to submit additional information, as appropriate, and their applications will be evaluated

6 F. PROJECT EVALUATION CRITERIA The two charts below summarize the scoring criteria that NTIA and RUS will use in evaluating grant applications. Each application will be scored using the four categories listed below (purpose, benefits, viability and budget/sustainability), and not against other applications. While the RUS scoring criteria specifically describes the point allocations of each element of each category, the NTIA scoring criteria gives reviewers more discretion in assessing the relative importance of each element in a category. SCORING CRITERIA FOR NTIA PROGRAMS (Maximum: 100 points) PROJECT PURPOSE PROJECT BENEFITS PROJECT VIABILITY PROJECT BUDGET AND SUSTAINABILITY 30 points 25 points 25 points 20 points * Fit with statutory purpose For Last Mile Projects: * Cost effectiveness * Technical feasibility * Reasonableness of budget * Recovery Law and other governmental collaboration * Performance of service * Affordability of service * Applicant s organizational capability * Sustainability of the project * Non-discrimination, interconnection * Enhanced service for healthcare, education and children * Disadvantaged small businesses For Middle Mile Projects: * Impact on the area * Level of need * Network capacity * Affordability of services * Non-discrimination, interconnection For Public Computer Center Projects: * Availability to the public * Training and educational programs offered * Staff availability and qualification For Sustainable Broadband Adoption: * Number of new users * Cost per new user * Innovation * Level of community involvement * Shovel ready * Leverage of outside resources (e.g., contribute more than 20%) - 6 -

7 SCORING CRITERIA FOR RUS PROGRAMS (Maximum: 100 points) PROJECT PURPOSE PROJECT BENEFITS PROJECT VIABILITY PROJECT BUDGET AND SUSTAINABILITY 25 points 25 points 25 points 25 points * Percentage of residents in * Performance minimums * Organization capabilities * Reasonableness of budget unserved areas (5 pts) (10 pts) (12 pts) (5 pts) * More rural areas (5 pts) * More remote areas (5 pts) * Title II borrowers (5 pts) * Coordination with other stimulus projects (5 pts) * Affordability of Offered Service (5 pts) * Permitting Choice of Providers (5 pts) * Service to critical community facilities (5 pts) * Community support letters (2 pts) * Shovel ready (10 pts) * Disadvantaged small business (1 pt) * Leverage of outside resources (10 pts) * Extent of grant (vs. loan) funding (10 pts) G. ROLE OF STATES 1. What type of role will states play in evaluating and/or awarding grant NTIA funds? Consulting with NTIA? YES Ranking in-state applications? YES State approval of in-state applications required? NO 2. Will the status of a state s broadband mapping impact funding opportunities for projects in that state? NO H. ELIGIBLE AND INELIGIBLE EXPENSES 1. What are eligible expenses for NTIA and RUS Broadband Infrastructure projects? Funds can be used to pay the following expenses: Construction or improvement of all facilities required to provide broadband service and, for RUS grants/loans only, including facilities required for providing other services over the same facilities Cost of leasing facilities required to provide broadband service if such lease qualifies as a capital lease under GAAP Reasonable pre-application expenses (not to exceed 5% of the award) if they are incurred after the publication date of this NOFA and prior to the date on which the application is submitted For NTIA only, other projects/activities as determined by Assistant Secretary of NTIA - 7 -

8 2. What are ineligible expenses for NTIA and RUS Broadband Infrastructure projects? Funds cannot be used to pay the following expenses (and applications that propose to do so will be rejected): Operating expenses of the project Costs incurred prior to the date on which the application is submitted (except for the eligible pre-application expenses described above) Broadband facilities leased under the terms of an operating lease Costs incurred in acquiring spectrum as part of an FCC auction or in a secondary market acquisition Others enumerated in the NOFA 3. What are eligible expenses for NTIA Public Computer Center projects? Funds can be used to pay the following expenses: To acquire broadband-related equipment, instrumentation, networking capability, hardware and software, and digital network technology for broadband services To develop and provide training, education, support and awareness programs or web-based resources To facilitate access to broadband services including making public computer centers accessible to the disabled Other projects/activities as determined by Assistant Secretary of NTIA 4. What are eligible expenses for NTIA Sustainable Broadband Adoption projects? Funds can be used to pay the following expenses: To acquire broadband-related equipment, hardware and software, and digital network technology for broadband services To develop and provide training, education, support and awareness programs or web-based content To conduct broadband-related public education, outreach, support and awareness campaigns To implement innovative programs to facilitate greater access to broadband service, devices, and equipment Other projects/activities as determined by Assistant Secretary of NTIA - 8 -

9 5. What are ineligible expenses for Public Computer Center and Sustainable Broadband Adoption projects? Funds cannot be used for purchases that are not predominantly for the provision of broadband education, awareness, training, access, equipment and support (and applications that propose to do so will be rejected). 6. Can in-kind/non-cash contributions count towards satisfying an applicant s obligation to provide at least 20% of the funding? YES (Subject to satisfying certain criteria) I. EQUIPMENT 1. Are the following types of equipment and materials covered by the NTIA and RUS Buy American waivers (and, therefore, stimulus funds can be used to purchase such equipment regardless of where the equipment is manufactured)? Broadband switching equipment? YES Broadband routing equipment? YES Broadband transport equipment? YES Broadband access equipment? YES Broadband customer premises equipment and end-user devices? YES Billings/operations systems? YES Fiber optics and coaxial cables? NO Cell towers? NO 2. Can equipment vendors be grant applicants? YES (Note: Although the NOFA does not specifically refer to equipment vendors, the NOFA states that for-profit corporations that are willing to promote the goals of the Recovery Act and comply with the statutory authority are eligible for a grant.) J. REPORTING AND AUDITING REQUIREMENTS Are award recipients subject to any reporting and/or audit requirements? There are extensive and rigorous accounting, monitoring and reporting requirements applicable to award recipients

10 K. DEFINITIONS 1. What is the definition of unserved area? An unserved area is one or more contiguous census blocks, where at least 90% of households in the area lack access to facilities-based, terrestrial broadband service (fixed or mobile) at the minimum broadband transmission speed. 2. What is the definition of underserved area? An underserved area is one or more contiguous census blocks meeting certain criteria which vary for Last Mile and Middle Mile projects. Last Mile Underserved. A funded service area may qualify as underserved for Last Mile projects if one of the following factors is met: (i) no more than 50% of the households have access to facilities-based, terrestrial broadband service at greater than the minimum broadband transmission speed; (ii) no broadband service provider advertises transmission speeds of at least 3 mbps downstream in the proposed service area; or (iii) the rate of broadband subscribership for the proposed service area is 40% of households or less. Middle Mile Underserved. A funded service area may qualify as underserved for Middle Mile projects if one interconnection point terminates in a proposed service area that qualifies as unserved or underserved for Last Mile projects. 3. What is the definition of broadband? Broadband means providing two-way data transmission with advertised speeds of at least 768 kilobits per second (kbps) downstream and at least 200 kbps upstream to end users, or providing sufficient capacity in a middle mile project to support the provision of broadband service to end users. 4. What is the definition of rural area? Rural area means any area, as confirmed by the latest decennial census of the Bureau of the Census ( Census ), which is not located within: (i) a city, town, or incorporated area that has a population of greater than 20,000 inhabitants, or (ii) an urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 inhabitants. For purposes of this definition, an urbanized area means a densely populated territory as defined in the Census. Questions or Comments? Contact Jay S. Newman, Esq. at (202) or newman@fr.com The above information is not intended as a comprehensive guide to, or analysis of the NTIA and RUS rules and requirements, or any particular program associated with the Recovery Act. It is intended as a general summary of relevant provisions of the NTIA and RUS rules and requirements to help identify potential funding opportunities. You should consult with legal counsel to determine the applicable legal requirements that apply in a given situation