Joanne Hovis, President
Heather Mills, Funding Strategies Team Lead

Earlier this year, Congress made the first major appropriation for broadband infrastructure deployment in a decade. The following is our preliminary high-level analysis and strategic guidance for counties, towns, states, and public utilities regarding that funding—the e-Connectivity Pilot—a U.S Department of Agriculture program that will fund last-mile broadband infrastructure deployment in rural areas.[1]

In short, we anticipate that substantial funding for last-mile rural broadband will be made available early in 2019, and that experienced public ISPs, as well as collaborative public-private efforts, will be well positioned to compete for these funds.

USDA has not yet released the detailed rules for the program, so most of what we know about the e-Connectivity Pilot is very preliminary and based on RUS’s public statements and its track record with other broadband programs.

If you are considering applying for the new funding, the time to prepare is now, in anticipation of an application deadline in early 2019. We recommend you work now to build the necessary partnerships and develop the business and technical models you will need for an application. You should also develop key documents that are likely to serve as essential components of the grant application, including an assessment of existing service, an engineering plan, a cost estimate, and a long-term business plan that demonstrates financial viability.

Realistically, any application will face considerable competition and long odds, simply because of the large number of applications that will likely be submitted. At the same time, the new program represents a potential opportunity that could enable not just last-mile service, but also important economic and community development. An additional benefit is that the planning you do now will put you in position to apply for other programs as well. For example, the annual window is likely to open early next year for USDA’s excellent Community Connect program, a long-time and successful program that awards modest grants for deployment of rural last-mile broadband. Much of the work you do now to prepare for an e-Connectivity Pilot application will be useful for that program, both in 2019 and in subsequent years.

The following is our preliminary analysis of the e-Connectivity Pilot opportunity.

What Types of Funding Are Likely to Be Available?

The new program is in development at the USDA’s Rural Utilities Service (RUS) and will consist of broadband deployment grants and loans. The funds were appropriated by the Consolidated Appropriations Act of 2018 (known colloquially as “the Omnibus”) and include a total appropriation of $600 million for the program.[2] Some of the funding will likely be used by USDA to secure loan authority for a larger amount—meaning that the combined loan-grant awards could well exceed $600 million and may approach a total of $1 billion. That said, at a recent broadband conference, Acting RUS Administrator Christopher McLean suggested that many of the awards will be weighted toward grants, in recognition that the challenging economics of rural broadband can be shifted more effectively through capital grants than through loans.

What Are the Eligibility Requirements?

The e-Connectivity Pilot targets unserved or largely underserved rural areas. Congress directed in the legislation that, to be eligible, a service area must meet these criteria:

• Broadband service eligibility: At least 90 percent of the households lack sufficient access to broadband service that delivers at least 10 Mbps (downstream)/1 Mbps (upstream) speeds.[3] Intriguingly, Acting RUS Administrator McLean recently suggested that RUS is considering whether affordability will be part of RUS’s definition of service eligibility; in other words, the agency is considering whether 10/1 service that is unaffordable should still qualify as “sufficient access.” Full details on how RUS defines this criterion will be available only once the rules are released.
• Geographic eligibility: The service area must be rural, which would mean a community of 20,000 or fewer residents, per Acting RUS Administrator McLean.
• RUS overbuilding eligibility: No other RUS loan recipient may be offering service in the area.[4]

We note that RUS has historically been extremely rigorous in verifying that the areas for which an applicant seeks funding actually meet the criteria for unserved and underserved residents. Beyond reviewing data provided with an application (e.g., FCC Form 477 data), RUS has been known to perform field testing in an applicant’s proposed service area to ensure that the available service levels do not exceed the program’s requirements. As a result, it will be very important to carefully and thoughtfully define the service area for which you seek funding.

What Is the Likely Timeline?

Minimal RUS guidance currently exists for the program. We understand that once the rules are released and an application window is posted (which we assume will happen relatively early in 2019 or, less likely, late in 2018) applicants likely will have 60 or 90 days to apply for the program.

What Kinds of Applicants Are Likely to Be Successful?

Generally, we anticipate that RUS will prioritize experienced applicants and public-private collaborations; in its public statements on the program, USDA has clearly stated that it hopes to “catalyze private investment” and “leverage federal funds to increase private investment in broadband.”[5] RUS will almost certainly consider public (or private) providers without extensive experience to be startups and will disfavor them.

Acting Administrator McLean has also stated publicly that RUS is likely to encourage “unique partnerships” and will look for applications that are clearly supported by the local community.

Given all these factors, we encourage localities and other public entities that are not themselves experienced ISPs to build relationships with experienced providers, either public or private, to work toward a competitive collaboration for funding. And we suggest that provider applicants work closely with their local communities to demonstrate considerable local support for their plans, as a means of demonstrating to RUS that the plan is viable and grounded in local needs.

What Size Awards Are Likely to Be Made?

Our educated guess is that USDA will make grant/loan combinations in the $3 million to $10 million range. This is quite a bit more than Community Connect grants, which are annual grants in the $1 to $3 million range awarded by RUS to unserved areas. The funding pool is also considerably larger in total dollars than Community Connect. In addition, the new program may not have the low-income scoring criteria of Community Connect, making it a more flexible program.

How Can Potential Applicants Prepare Now?

RUS has not yet released the detailed rules for the program, so most of what we know about the e-Connectivity Pilot is based on the statutory language, RUS’s track record with other broadband programs, and our sense of how things are done at RUS (particularly with the earlier Broadband Initiatives Program). Other than the framework provided by the statue, all of the program’s detailed requirements will be subject to RUS’s rules—including the specific technologies RUS prefers (if any); minimum service speeds; minimum number of premises served;[6] scoring prioritization for certain kinds of entities, service speeds, and network capacity; and requirements for applicants’ financial documentation.

That said, there is considerable preparatory work that you can start now if you are interested in pursuing this opportunity—because once the rules are released, likely in early 2019, you will have a relatively short time to prepare an extensive application. Among the tasks to begin undertaking now are the following:

• Define the proposed service area. It will be critical to provide documentary evidence of the fact that the area is unserved under the statutory definition. The 90 percent unserved metric will be difficult to meet because many areas have uneven service; you must carefully draw a service area boundary that captures the most underserved residents. To that end, there exist analytical technical tools for identifying the reach of DSL and mobile broadband services, as well as for documenting actual pricing (in order to demonstrate that services may be “available” but are not actually accessible to many members of the community because of cost). Quantifying and qualifying the service level in your proposed service area will be essential; it will be a wasted effort for you to file an otherwise excellent application, only to be disqualified by RUS because there is a higher level of service available.
• Develop a business plan. Applications to this program will require a detailed business plan and pro forma. We anticipate that business planning will require robust, reliable, and non-speculative revenue projections, and a show of expected profitability within a relatively modest period of time. RUS is famously (and appropriately) conservative about making loans and awarding grants; it seeks viable, sustainable business plans and is deeply skeptical about more speculative or incomplete business models.
• Develop a technical plan. Applications to this program will require a network design with sufficient detail to ensure delivery of specified speeds to the target population. The network design will also enable cost estimation, which will be a critical element of the network financial analysis and application for funding.
• Identify potential private partners. As mentioned above, we anticipate that applications from experienced private ISPs and public-private collaborations will be more competitive than those from public sector entities that are not already experienced ISPs. Given that, public applicants that do not already serve as broadband providers will be more likely to succeed if they collaborate with an experienced private (or public) partner. In this scenario, the public entity can either provide significant support for a collaborative application to RUS with its experienced partner—or can be a co-applicant with a focus on building out infrastructure while its ISP partner provides service. Now is the time to develop those partnerships, either through informal discussions or formal competitive processes.

Preliminary Checklist for Planning an e-Connectivity Application

We recommend considering the following issues now in preparation for filing a competitive application next year:

1. Geographic eligibility: Are you rural under the statutory definition?
2. Broadband eligibility: Are you eligible for funding based on the existing broadband service in your area?
3. Organizational strength: Are you an existing, proven service provider (either public or private)—or are you partnered with one?
4. Technical plan: Do you have a fleshed-out design and cost estimate for your network, with a demonstrated capability to provide robust broadband speeds?
5. Business plan: Do you have a sustainable business model with strong evidence of the viability of your planned network? Does the business plan include a robust pro forma with reasonable and grounded revenue projections?
6. Community support: Can you demonstrate, through letters and other forms of approval, widespread support from local interests, including public entities, businesses, and representatives of the business community (such as the local Chamber of Commerce), major employers, and residents?

[1] “Broadband e-Connectivity Pilot Program: A Notice by the Rural Utilities Service,” Federal Register, July 27, 2018, https://www.federalregister.gov/documents/2018/07/27/2018-16014/broadband-e-connectivity-pilot-program (accessed October 2018).

[2] “H.R. 1625 – 115^th Congress (2017-2018): Consolidated Appropriations Act, 2018,” U.S. Congress, https://www.congress.gov/115/bills/hr1625/BILLS-115hr1625enr.pdf (accessed October 2018).

[3] “H.R. 1625 – 115^th Congress (2017-2018): Consolidated Appropriations Act, 2018,” Title VII, Sec. 779.

[4] “H.R. 1625 – 115^th Congress (2017-2018): Consolidated Appropriations Act, 2018,” Title VII, Sec. 779.

[5] “USDA Invites Comments on the Implementation of the e-Connectivity Pilot Program,” Press Release, USDA, July 27, 2018, https://www.usda.gov/media/press-releases/2018/07/27/usda-invites-comments-implementation-e-connectivity-pilot-program (accessed October 2018).

[6] USDA has noted its intent to use this funding to enable “broadband services for as many rural American homes, businesses, farms, schools and health care facilities as possible.” (“USDA Invites Comments on the Implementation of the e-Connectivity Pilot Program.”)

Andrew Afflerbach, PhD, P.E.
CEO & Chief Technology Officer

Future public safety operations will rely on advanced mobile broadband networks featuring priority or even preemptive use of available bandwidth, the use of video to enable situational awareness, and a high degree of security.

To ensure they have the network functionality they need—including access to evolving applications—police, fire, and other public safety agencies at the state and local levels face important procurement, policy, and cost decisions. These include choosing carriers and independently verifying and comparing performance levels.

In addition to other service choices, AT&T is starting to approach public safety agencies to offer the company’s services over the Nationwide Public Safety Broadband Network (NPSBN).

The NPSBN is a next-generation public safety network conceived after the terrorist attacks of Sept. 11, 2001 exposed serious communications problems. For years, public safety stakeholders and others have been deeply involved in trying to solve these problems. In 2012, Congress created a federal organization called FirstNet and tasked it with creating the NPSBN. AT&T won the contract to build the network.

All 50 states and the District of Columbia “opted in” or accepted AT&T’s plan for deployment and operation. (You can read my recent posting about FirstNet—and how localities can plan for the new radio towers and small cell radio equipment installations—here.)

However, the adoption of FirstNet is not required by the federal government. Other major carriers are also offering services with similar capabilities, giving state and local public safety agencies a choice. We cannot yet say whether FirstNet is the best technical solution, or the best solution for all first responders.

It is now up to public safety agencies to decide whether the value of FirstNet is worth the transition. Here are some major considerations:

• Understand the impact of using FirstNet and develop relevant policy

AT&T is offering discounts on equipment, but public safety users should think about other factors. One is an analysis of what all these changes—in both the dispatch center and in emergency vehicles—would cost, as well as what operational and management changes would be required. CTC has deep experience in performing these kinds of analyses. As one example, for the District of Columbia, we assessed the wireless communications needs of all public safety departments and agencies. And we are working with the State of Delaware to define policy for broadband interoperability (including LMR/LTE communications), data sharing, and application selection and use.

• Independently review performance

You may want to investigate how well a carrier is serving all areas of your jurisdiction. Public safety agencies—perhaps in concert with jurisdictions or other state agencies—have every reason to undertake an independent analysis of any network they are considering using. Certain grant funds are available to check the performance of AT&T’s NPSBN deployment in particular.

CTC has been engaged by the State of Delaware to conduct such analyses. To do so, we start with commercially available “crowdsourced” data gleaned from consumer mobile devices. We then perform independent field tests in areas where coverage is weak, analyze the implications for public safety operations, and make recommendations for addressing the gaps.

AT&T is required to make commitments about coverage as part of its FirstNet contract. Still, public safety jurisdictions may want to independently monitor AT&T’s performance as it progresses, conduct a detailed comparison of its performance against that of other carriers, and conduct ongoing testing on various gap areas to assess progress.

Alternatively, jurisdictions may want to work with their states on such an effort.

• Understand your service agreement

Take the time to understand all features of your agreements with carriers and, in the case of AT&T, of its performance contract with FirstNet. Current and emerging areas of concern include guarantees on performance of devices and network resilience during emergencies, operator responsiveness to faults, provision of additional capacity such as truck- or drone-based mobile network devices for service at large events and incidents, access to public safety applications, and service to fixed devices as well as mobile ones.

• Ensure application interoperability

Keep in mind that the driver of the FirstNet effort was the communications chaos of Sept. 11, 2001. Great progress has been made on interoperability since 9/11. But now, as applications are becoming central to first responder operations, it’s important that these applications be truly interoperable. We must avoid creating “silos” that set the stage for future problems.

• Protect citizen network use

Public safety networks give first responders priority access to networks, and even block or preempt consumer use if necessary. But public safety officials need to be sure that network preemption for public safety won’t inadvertently put private citizens at risk if those citizens can’t call for emergency help when needed.

Heather Mills, Senior Analyst & Funding Strategies Team Lead, CTC Technology & Energy

Around the country, many local governments deliver broadband services to their public schools and libraries under the federal E-rate subsidy program (formally known as the Schools and Libraries Program and run by the Universal Service Administrative Company). If your organization is one of those providers, you’re probably breathing easy right about now. The fiscal year began July 1^st—meaning that the competitive procurement process and paperwork are behind you, and you’re well into the funding year.

Don’t relax too much. Even though the school year is just starting, it’s time for current and potential future providers to start strategizing through the next two (if not three) E-rate funding cycles. Why? Because the further in advance you engage with your customers regarding their future needs and anticipate their broadband strategies, the better prepared you’ll be to help those schools and libraries potentially maximize their E-rate service requests. The more robust the services you deliver, the better your customers will be able to deliver the connectivity their students, teachers, and library patrons need to teach and learn.

Likewise, if your organization is thinking about responding to an E-rate program RFP and providing broadband services to schools and libraries in your jurisdiction, it is never too early to start planning your approach to the RFP. E-rate is an excellent opportunity to infuse federal funding into your jurisdiction but complying with E-rate requirements requires a lot of organization and paperwork!

When the FCC “modernized” E-rate in late 2014—the first change in 18 years—it prioritized funding to allow schools and libraries additional flexibility and options for purchasing services. As a result, maximizing E-rate funding means:

• Considering how changing curricula or patron needs may increase bandwidth needs in the coming years
• Understanding which options (e.g., lit services, dark fiber) you can offer to your school and library customers and how you can be competitive in your pricing for those options
• Ensuring you are as responsive as possible to requests for services

For example, school districts that are seeking dark fiber service options will need to do a lot more than sign a simple contract. They’ll need to issue procurement requests, compare their options, make a viable business case, and have detailed conversations with USAC about their choices. The better job you do at providing the necessary information in your bid, the easier it will be for schools and libraries to make a sound selection.

Even in the case of responding to requests for conventional lit services, you’ll need to be prepared to submit comprehensive proposals by deadlines that may cut very close to the end of the next funding application window (typically in mid-spring). Some schools and libraries may wait until January to file their RFPs for a complicated procurement—which means less time for providers to respond.

Your organization might have other, internal barriers that will need to be addressed before you can make commitments. If you are a new service provider, you should take time to review the forms and accounts that will be required as part of the E-rate process. There may be other internal process barriers unique to government providers that you may need to navigate. It’s important to take those into consideration as part of your overall strategy for bidding on E-rate procurements.

CTC has deep experience in helping municipal and non-profit providers chart effective E-rate strategies. We suggest you consider doing the following as you embark on your next round of strategic E-rate planning:

• Create a detailed timeline that considers all potential barriers.
• Make sure that you have taken care of the basic requirement of obtaining a SPIN.
• Understand what contracts you already have in place (e.g., service types and terms). Do the current contracts allow the services you provide to grow? Were the contracts forward thinking regarding your customers’ future needs?
• Determine whether you need help drafting your RFP responses. Most municipal providers are somewhat familiar with issuing and evaluating RFPs, but not necessarily with drafting a comprehensive RFP response.
• Prepare proposals that respond directly to the services requested; you’ll make the schools’ and libraries’ jobs easier if you enable them to compare apples to apples.
• Understand the difference between “lowest cost” and “most cost-effective.” That will make all the difference in how you respond to RFPs!

Sublette County, Wyoming, has issued a Request for Proposals (RFP) to solicit proposals from private sector entities that have an interest in working with the County to address gaps in middle-mile connectivity and enable high-quality broadband service to businesses throughout the County.

The County hopes this initiative will support and accelerate private providers’ efforts to improve broadband service options in the County by utilizing County-owned fiber or conduit assets.

Response are due to the County by 4:00 PM MST on Friday, November 9, 2018.

Read the RFP here.

The Delaware Department of Technology and Information (DTI) has issued a Request for Proposals (RFP) to identify private sector firms that will deliver affordable broadband access to unserved and underserved parts of the state.

Acting on its commitment to achieving the state’s policy goals for rural broadband, DTI will provide a capital grant to one or more qualified respondents as startup funding for the construction and operation of wireless broadband networks. The RFP identifies several target areas that comprise approximately 127,700 homes and businesses in the rural portions of Kent and Sussex counties.

DTI’s innovative funding approach aims to lower some of the common barriers to broadband market entry in rural areas, particularly the capital investment required to begin offering service in areas with low population densities. DTI aims to bolster service availability by building a public-private partnership in which the private sector has the opportunity to enter markets that are not otherwise attractive for investment. In return, the private partner will make pricing and service commitments that further the state’s broadband goals.

DTI seeks bids from potential partners that will commit to developing and maintaining wireless broadband networks for at least seven years, with an option for three one-year extensions. Following the grant period, ownership of the assets will transfer to the private partner(s).

Responses are due to DTI by 2:00 P.M. local time on Thursday, October 8, 2018.

The RFP is available here.

Jacob Levin, Analyst

Libraries’ primary mission—as centers of knowledge in communities large and small—is well understood. But libraries are also community hubs, and in that role they often serve as a refuge, a source of trusted information, and a link to the outside world during and after crises. That second role magnifies libraries’ need for robust and resilient broadband connections.

Major natural disasters like wildfires, mudslides, and earthquakes can temporarily place entire communities on the wrong side of the digital divide at a time when access to connectivity may be a matter of life and death. Damage to cell towers and utility poles can sever individuals from the networks that allow them to communicate and access information and resources.

As residential internet connections and mobile devices fail, people flock to their local library branches in search of power and a Wi-Fi connection. In the wake of California’s wildfires in Napa and Mendocino counties in 2017, for example, libraries saw a huge spike in demand for broadband services. During that crisis—and following other disasters elsewhere in the country—libraries’ public technology services allowed affected individuals to report themselves safe, locate loved ones, apply for FEMA relief, and plan their next steps.

Libraries rise to the needs of their community during crisis. After observing the critical role that libraries played in the aftermath of Hurricane Sandy, for example, the New Jersey State Library decided to help libraries lean into their role as “information First Responders,” publishing a “Librarian’s Disaster Planning and Community Resiliency Guidebook,” as well as a workbook library staff can use to prepare to support their communities during and after a crisis.

In practice, preparing a library to provide connectivity during and after a catastrophic event will also better equip the library to address gaps in connectivity at all other times. The technology requirements are largely the same for both tasks.

With good planning and hardened communication infrastructure, libraries can serve as beacons of connectivity when their communities need it the most. To make their broadband connections more resilient, libraries can seek to add path diversity to their networks, keep redundant network components on hand for emergency deployment, and install a backup power supply.

For more insight, see the two white papers we recently prepared for the John S. and James L. Knight Foundation: “Technical Guidance Regarding Broadband Infrastructure for Libraries” and “Connecting Libraries to the Future.” CTC also recently developed an estimate of the cost to build fiber to connect all unserved libraries and other anchor institutions nationwide; that report, prepared for the Schools, Health and Libraries Broadband Coalition (SHLB), was part of SHLB’s effort to develop a concrete strategy for addressing the rural digital divide.

CTC President Joanne Hovis testified today before a House subcommittee about the important role that the National Telecommunications and Information Administration (NTIA) plays in broadband policy, in expanding broadband service and device availability, and in expanding digital literacy.

Joanne’s full testimony—delivered to the Committee on Energy and Commerce, Subcommittee on Communications and Technology as it considers the NTIA Reauthorization Act of 2018—can be downloaded here.

CTC Technology & Energy is proud to have prepared two white papers for the John S. and James L. Knight Foundation—both aimed at helping libraries with technical and financial guidance as they navigate their needs for broadband today and in the future.

Our first report, “Connecting Libraries to the Future,” is intended to help library professionals strategically plan for their broadband needs. Because libraries serve entire communities, their bandwidth should, ideally, be far greater than the connections residents can access or afford in a coffee shop, at home, or anywhere else. One key recommendation in this report is to quantify the capacity a library needs—creating a bandwidth target that will enable the library not just to meet the public’s information needs, but to support such mission-advancing services as business incubators and telepresence. Read the full report here.

Our second report, “Technical Guidance Regarding Broadband Infrastructure for Libraries,” recognizes that despite the critical importance of broadband connections at public libraries, many community libraries simply do not have sufficient staff resources or technical expertise to secure adequate and competitively priced high-speed connections and network services for their institutions. This paper is designed to aid library staff in making knowledgeable decisions about how to improve their broadband connectivity and create robust networks. Read the full report here.

Tom Asp, Principal Engineer and Analyst
Michael O’Halloran, Staff Analyst
CTC Technology & Energy

CTC congratulates the city of Salisbury, North Carolina, and Hotwire Communications on their successful negotiation of a lease of Salisbury’s fiber-to-the-premises (FTTP) network, known as Fibrant. This agreement is yet another example of a public–private partnership offering a “win-win” approach to broadband in America. The final agreement enables the City to maintain ownership of the fiber assets, while Hotwire will assume operations and maintenance of the network.

Like many municipal governments that have deployed FTTP, Salisbury “invested in building Fibrant as a municipal utility to encourage economic development, increase competitive opportunities for … existing businesses and provide citizens globally competitive access” to state-of-the-art broadband, according to the City.

However, faced with significant competition from ever-larger national players (the result of merger and acquisition activity in the industry), Fibrant found itself struggling. In January 2017, the City released and heavily promoted a formal request for proposals (RFP) to convey its interest in entering into a contractual arrangement with a third-party provider. Its goal was to enhance the operations, sales, marketing, and delivery of Gigabit-class broadband service to the community.

The RFP asked respondents to articulate their proposed business models; describe their technical, transitional, and operational capabilities; affirm Fibrant’s goals; and present details on their proposed financing, funding, and payments.

After extensive consultation with the City’s advisory committee and CTC, the City Council selected Hotwire’s proposal as the most promising option. Negotiations began in September 2017 and were finalized in March 2018. This week, voters approved the deal.

The Hotwire lease will generate a positive revenue stream for the City that will reduce its required draw from the general fund. The agreement also:

• Brings Hotwire’s scale and expertise to the City
• Offers enhanced services to Salisbury residents and businesses
• Maintains Fibrant’s network performance and customer service standards
• Upgrades Fibrant’s existing electronics and delivery platform
• Lets the City avoid an estimated $5 million equipment refresh that will be required in the next five to seven years

Read more about Salisbury, Fibrant, and the lease negotiation process here.

Sublette County, Wyoming, has issued a Request for Information (RFI) to solicit ideas and informal proposals from private sector entities that may have an interest in working with the County to address gaps in middle-mile connectivity and enable high-quality broadband service to businesses throughout the County.

The County hopes this initiative will support and accelerate private providers’ efforts to improve broadband service options in the County, potentially by utilizing County-owned fiber or conduit assets—or by building their own infrastructure with County financial support.

Response are due to the County by June 8, 2018.

Read the RFI here.