Posted by: Ann Treacy | March 10, 2013

Definitions matter: A rose by any other name, might not get funding!

What is broadband? That was a popular question at the East Central Minnesota Broadband Summit in February. Many of the people asking were new to the topic and were looking for basic definitions– but those of us who aren’t so new understood that the definition of broadband was important.

The definition of broadband has been used to calibrate funding mechanisms. So even though the topic is dry and wonky – the outcome is important to folks on the street, especially in rural areas, because it defines the speeds that the government (state or federal) might subsidize. For example, Minnesota is shooting for ubiquitous broadband at speeds of 5-10 Mbps upstream and 10-20 Mbps down. The National Broadband Plan is looking for 100 million homes to have access to 100 Mbps; and 1 Mbps upstream and 4 Mbps down for the rest.

Now the USDA is looking at redefining rural. They are recommending that rural be measured at 50,000 people. The Daily Yonder puts the change in succinct perspective…

Over two years past that due date, the Department has chosen to better target funds by recommending a dilution of the definition of rural to its highest level – 50,000 people – arguing that having a consistent definition will streamline program delivery and ensure predictability for the constituent communities. The Department argues that the existing different population thresholds set up “arbitrary barriers to regional strategies” and harm their ability to provide integrated program delivery.

A shift to this population level from the population caps that exist currently (10,000 for rural water/wastewater programs, 20,000 for community facility programs) means additional seats at the table for programs distributing ever smaller pots of money.  House Agriculture Committee Chairman Frank Lucas (R-OK-3) and Ranking Member Collin Peterson (D-MN-7) expressed similar concerns in a press release issued this week.

In response to this concern, USDA Rural Development suggests that it will be able to ensure that those smaller communities currently eligible will retain priority over larger communities by allocating those smaller areas priority points.  When applications come into the agency, they are vetted for eligibility and then scored based on a set of criteria.  The higher you score, the better your chance for receiving funding.

Here is what the USDA report outlines as definition of rural in terms of telecommunications…

For the Telecommunications Program, Section 201 of the Rural Electrification Act of 1936 gives preference to applicants operating in rural areas, defined in Section 203(b) as anywhere except an incorporated or unincorporated area with a total population in excess of 5,000. An updated definition reflecting current market conditions for these larger utility loans was included in the American Recovery and Reinvestment Act for broadband loans, grants, and loan guarantees, as follows:

For an additional amount for the cost of broadband loans and loan guarantees, as authorized by the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) and for grants (including for technical assistance), $2,500,000,000: Provided, That the cost of direct and guaranteed loans shall be as defined in section 502 of the Congressional Budget Act of 1974: Provided further, That, notwithstanding title VI of the Rural Electrification Act of 1936, this amount is available for grants, loans and loan guarantees for broadband infrastructure in any area of the United States: Provided further, That at least 75 percent of the area to be served by a project receiving funds from such grants, loans or loan guarantees shall be in a rural area without sufficient access to high speed broadband service to facilitate rural economic development, as determined by the Secretary of Agriculture: Provided further, That priority for awarding such funds shall be given to project applications for broadband systems that will deliver end users a choice of more than one service provider: Provided further, That priority for awarding funds made available under this paragraph shall be given to projects that provide service to the highest proportion of rural residents that do not have access to broadband service . . . . (Emphasis added.)

Now on the one hand, we’ve seen steady and successful progress in broadband planning shift from towns, to counties to multi-county approaches in Minnesota. Lifting the focus to a regional level has allowed for economies of scale that help get infrastructure to the areas between cities and towns. On the other hand, I don’t know that changing the definition of rural helps to cover those gap areas. Again, the Daily Yonder does a nice job of laying out the argument…

USDA argues that regional initiatives will blossom once the population limit is lifted, since smaller communities will work with larger nearby communities – all of whom will now be eligible – and greater cooperation will be achieved, since the entire system will be eligible for funding.  However, what incentive will larger communities have to work with smaller communities when those larger areas will now be eligible for grants and low-interest loans regardless of whether they develop an integrated system or not?

It’s a wonky topic, it is mired down in details and seems like something many practitioners might leave to the theory/policy folks BUT like the definition of broadband, I think the definition of rural will determine who gets funding in the future. So folks on the front lines and far corners will want to be paying attention.


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