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Guidance for the infrastructure program says states must make affordable broadband available to the middle class, too, and cannot exclude cities from being considered for the funding.
The Biden administration on Friday made $45 billion in broadband funding from the bipartisan infrastructure act available to the states, emphasizing that they make sure any internet service that’s built is affordable not only to those with low incomes but to the middle class as well.
“The internet is absolutely essential to every American’s success,” Deputy Commerce Department Secretary Don Graves told reporters on a call. “That’s why it’s unacceptable that in 2022, millions of Americans are still without it.”
In addition, the department’s National Telecommunications and Information Administration emphasized in its notice of funding opportunity that states should make the dollars available to cities and nonprofits, like farm cooperatives, that want to start a broadband service to compete with private companies.
The move could set up conflicts with 18 states that have laws barring or setting up roadblocks to localities that want to offer broadband as a new form of public utility. Graves told reporters the administration is “strongly encouraging” the states to waive those laws.
The Infrastructure Investment and Jobs Act funds come just days after the Biden administration, which is struggling with skyrocketing inflation, announced agreements with 20 major broadband providers to offer internet plans for $30 a month, which combined with an existing $30 monthly federal subsidy, would make getting online free for millions of low-income households.
Speaking on a press call Friday, Biden’s infrastructure czar, Mitch Landrieu, echoed that with the availability of the infrastructure act dollars, the administration is hoping to “lower [internet] costs for American families.”
And indeed, the administration in its guidance went further than the infrastructure act, said Greg Guice, government affairs director for the liberal advocacy group Public Knowledge. The bipartisan act did not expressly require service be affordable to middle-class families, only that broadband built with the money offer customers an undefined “low cost” plan, which it left up to states and NTIA to define.
But beyond increasing broadband service to lower-income families, the NTIA said Friday it is requiring states applying for the largest of the broadband grant programs, the $42.5 billion Broadband Equity, Access, and Deployment Program, to create “a middle-class affordability plan to ensure that all consumers have access to affordable high-speed internet.”
The states’ approaches could differ, NTIA said. They could require broadband companies receiving the infrastructure dollars to offer low-cost, high-speed service. Or they could offer subsidies to customers to pay for internet service or use their regulatory authority to increase competition to drive down prices.
“The challenge now shifts to the states to develop their initial proposals for the NTIA’s review. States should closely follow the NTIA’s roadmap so they can arrive at the destination – a connected America,” Guice said.
NTIA stopped short of defining the low-cost option definition that states have to meet. States, when applying for the funds, will propose what the term means. “Different Eligible Entities face different circumstances,” the NTIA guidance said.
However, under the infrastructure act, the NTIA has to accept the states’ definition, and Guice was heartened that NTIA seemed to signal that it wants to see states essentially make getting online free for many people.
While not a mandate, NTIA offered an examples of what is the low-cost requirement. States could require that customers be offered a plan for $30 a month. When combined with the Federal Communications Commission’s existing $30 monthly Affordable Connectivity Program, that would make internet free for those qualifying for the low-income subsidy.
Households making 200% or less of the federal poverty level qualify for the monthly discount, as well as those who are eligible for other federal programs like the Supplemental Nutritional Assistance Program.
The $30 monthly rate would include all fees and provide internet service at fast download speeds of at least 100 Mbps and at least 20 Mbps for uploads, under the NTIA’s example.
However, coming up with a plan that meets the NTIA’s requirement for low-cost service could be a problem for some states.
A spokesman for NCTA – The Internet & Television Association, the lobbying group representing cable companies that offer broadband service, said it is still reviewing the NTIA guidance.
The group has said it will oppose attempts to be forced to charge a price set by the government, saying it would be illegal rate setting. Instead, it said companies should be meeting the low-cost requirement if they participate in the existing discount program.
In addition to the $45 billion, NTIA released notices for $1.5 billion in State Digital Equity Planning Grant Program grants to increase digital literacy among low-income people, seniors, the incarcerated, veterans, people with disabilities and language barriers, and minorities and rural residents.
NTIA also released $1 billion in Enabling Middle Mile Broadband Infrastructure Program grants. The funding is aimed at connecting local broadband networks with national and regional networks.
NTIA’s push to make Broadband Equity, Access, and Deployment dollars available to cities could also set up conflicts with states. The notice strongly emphasizes that states should make the broadband dollars available to cities and nonprofit groups.
Some cities like Chattanooga, Tennessee have created a service to try to lower prices by providing more competition with private companies or to build internet service in areas where the companies have not found it profitable to serve.
Governments competing with private entities, however, have been strongly opposed by the broadband industry, which sees them as inappropriate use of tax dollars. Overall, 18 Republican states have laws either prohibiting municipalities from offering broadband services or, like Minnesota, place obstacles such as requiring a supermajority of voters to approve the creation of public broadband.
However, NTIA did not say that broadband dollars have to go to municipalities, just that they cannot be excluded from consideration. The agency said that in reviewing applications, it “will consider whether the Eligible Entity … seeks to exclude or has the effect of excluding any potential providers from eligibility for its subgrant competition.”
For states that have restrictions around municipal broadband, NTIA said it “strongly encourages” them to waive all such laws. If they don’t, the agency said states will have to explain in their application how the laws will be applied when spending the money to build broadband.
In addition, NTIA in its guidance said it will emphasize doling out the dollars to build broadband in unserved locations and underserved areas, which it defined as having internet speeds of less than 100 Mbps for downloads and 20 Mbps for uploads.
It was unclear whether that would satisfy the concerns raised by the top Republicans on House and Senate committees that the infrastructure dollars go to areas without service before going to those with some service.
Spokespeople for the Republicans, Sen. Roger Wicker of Mississippi, and Rep. Cathy McMorris Rodgers of Washington, had no immediate comment.
Meanwhile, Democrats praised NTIA’s guidance.
“The NTIA has done superb work in kicking off the process to get Bipartisan Infrastructure Law funding out to states and communities across the country,” Rep. Frank Pallone of New Jersey, chairman of the House Energy and Commerce Committee and Rep. Mike Doyle of Pennsylvania, chairman of the Communications and Technology Subcommittee, said in a statement.
Pallone and Doyle called the guidance, “a road map for ensuring that everyone—regardless of income or zip code—can both access and afford reliable high-speed internet service and we’re grateful for the hard work that went into it.”
Kery Murakami is a senior reporter for Route Fifty.