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Economic Stimulus Act and New House Bill Provide Boost to Broadband Infrastructure

Infrastructure Practice Alert

March 2009

The American Recovery and Reinvestment Act of 2009 (the Stimulus Act) outlines two programs that provide $7.2 billion in grants and loans to establish and improve broadband infrastructure, focusing on rural areas of the country. In addition, a new bill, introduced in the House of Representatives, seeks to extend this focus on broadband by allowing state and local governments to issue tax-credit bonds to finance certain new broadband infrastructure projects. According to the House of Representatives report on the Stimulus Act, every dollar invested in broadband brings a ten-fold return to the economy. Details of the measures include:

AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 - $7.2 BILLION FOR BROADBAND

  • Distance Learning,Telemedicine and Broadband Program $2.5 billion
    • Administered by the USDA Rural Utilities Service.
    • Funds in the form of grants, loans and loan guarantees for broadband infrastructure.
    • At least 75 percent of the area to be served by a project must be rural and without sufficient access to high-speed broadband service.
    • Priority is given to:
      • Broadband systems that would provide end users with a choice of more than one service provider
      • Projects that would serve the highest proportion of residents without broadband access
      • Borrowers or former borrowers under the Rural Electrification Act of 1936
      • Projects that can commence promptly
    • Areas receiving funding under this program may not also receive funding under the Broadband Technology Opportunities Program.
  • Broadband Technology Opportunities Program $4.7 billion
    • Administered by the Assistant Secretary of Commerce for Communications and Information in consultation with the FCC.
    • Purposes of the program:
      • Provide broadband access to unserved areas
      • Provide improved access to underserved areas
      • Provide access and support to educational institutions, vulnerable populations, job-creating facilities and public safety agencies
    • States, Indian tribes, nonprofit entities and any other entity, including broadband service providers, that the Assistant Secretary finds to be in the public interest are eligible for funds.
    • The Assistant Secretary will award grants to projects that provide the greatest broadband access and utility to an area and will seek to award at least one grant in each state.
    • The federal share of any project may not exceed 80 percent without special approval.
    • All funds should be awarded by the end of Fiscal Year 2010, and all projects should be completed two years after award.
    • Set asides include:
      • Up to $350 million for developing and maintaining a broadband inventory map
      • At least $250 million for competitive grants for innovative programs to encourage sustainable adoption of broadband service
      • At least $200 million for competitive grants for expanding public computer center capacity
      • $10 million for Department of Commerce audit and oversight of funds

H.R. 760 – TAX CREDIT BONDS

H.R. 760, introduced by Rep.Anna G. Eshoo (D-CA), is currently under consideration in the House Ways and Means and Energy and Commerce Committees. Under the initiative, state and local governments could issue up to $1 billion in tax-credit bonds per year through 2011, and other entities could issue up to $10 billion per year in order to fund qualified advanced broadband infrastructure projects.

All broadband projects funded by these bonds would need to be approved by the Administrator of the National Telecommunications and Information Administration. To qualify, the projects must provide residential or small business consumers with access to the internet on an open-access basis at speeds of 50 MB/sec downstream and 20 MB/sec upstream. Non-government entities seeking to participate in the bond program would need to first obtain a certificate of public convenience and necessity from the state or local government, or otherwise have the state or local government nominate the project for consideration. State and local governments seeking to participate in the bond program would need to first allow the private sector 30 days to bid to allow the same services.

PRIVACY

The use of large-scale broadband and wireless networks can raise privacy concerns. Many municipalities use wireless networks to implement public video-surveillance systems and further public safety agendas.

For more information about this Alert, contact Alan Wohlstetter, chair of the Infrastructure Practice, at 215.299.2834 or awohlstetter@foxrothschild.com or Glen Fewkes at 215.299.3831 or gfewkes@foxrothschild.com.

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Attorney(s)

Wohlstetter, Alan F.

Practice Area(s)

Infrastructure

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