Last week, the Commerce Department’s National Telecommunications and Information Administration (NTIA) and the Department of Agriculture’s Rural Utilities Service (RUS) jointly issued a press release with preliminary aggregated information about the applications submitted for the first round of broadband stimulus funding. NTIA and RUS (the “Agencies”) announced that they received approximately 2,170 applications requesting nearly $28 billion in funding, or approximately seven times the total amount allocated for this round.

As yet, very little information is available about the applications that were filed other than the aggregated data described by the Agencies. The sustainable broadband and public computer programs were more oversubscribed than broadband infrastructure, but demand far exceeds supply in all categories.

This advisory provides an overview of the applications that were filed and anticipated next steps in the funding process, including a discussion of possible challenges to broadband infrastructure applications.

Background and overview of the application process

As we have noted in previous advisories, the American Recovery and Reinvestment Act (ARRA) provided a total of $7.2 billion to the Agencies to expand access to and adoption of broadband services. NTIA was allocated $4.7 billion to deploy broadband infrastructure in unserved and underserved areas, expand public computer center capacity, and encourage sustainable adoption of broadband service, while RUS was allocated $2.5 billion to facilitate broadband deployment in primarily rural areas.

In the first round of funding, approximately $2.4 billion in grants and loans is available from RUS and up to $1.6 billion in grants is available from NTIA. The first round application deadline (after two extensions) was Aug. 24.

The Agencies will employ a two-step application review process. In the first step, applicants not meeting eligibility requirements will be rejected and remaining applicants will be awarded a point score based on their satisfaction of criteria in four categories: project purpose, project benefits, project viability and project sustainability. Those applicants that are deemed “most highly qualified” after this screening process will be informed “no earlier than” Sept. 14, and will advance to a step-two “due diligence” phase, during which they will be required to submit additional information as early as Oct. 15.

The first grant awards are expected about Nov. 7, 2009. If an application is not successful in the first round, the applicant may resubmit a revised proposal for the next application filing window, scheduled for sometime this winter.

Challenges to applications

The Agencies indicated in their press release that sometime “in the coming weeks” they will post online a searchable database containing each applicant’s 500-character summary of its application and a notice of the proposed funded service areas asserted by applicants to be "unserved"1 or "underserved."2 Once this information is placed on public notice, existing broadband service providers will have 30 days to submit information regarding their service offerings to rebut showings that the areas are unserved or underserved. Such information may be used by the Agencies to reclassify or reject an application. The Agencies have previously indicated that information submitted by existing service providers will be treated as proprietary and confidential to the extent permitted under applicable law.

The Public Notice announcing the opening of this comment period may provide further clarification regarding the scope of permissible submissions. For example, it is not known whether other entities besides “existing service providers” may comment on an application; whether the Agencies will accept other comments supporting or opposing applications (note that the applications will not be made publicly available from the Agencies); whether applicants will have the ability to respond; how the Agencies will administer confidential and proprietary subscriber data; and whether only broadband infrastructure applications are subject to comment.

State and local government broadband applications

Several state and local governments, including West Virginia, Massachusetts, Pennsylvania, Missouri and a consortium of Maryland cities and counties, recently announced that they filed applications for broadband stimulus funds under the Recovery Act. The full applications filed by Pennsylvania and West Virginia and the Maryland cities and counties consortium already have been made publicly available, and we anticipate that other applications filed by state or local governments eventually will become publicly available, either voluntarily (for public relations purposes), because of transparency requirements or through Freedom of Information Act requests.

During step two of the NTIA application review process, states will be given an opportunity to make recommendations concerning the allocation of funds for qualifying projects in or affecting their individual states. Specifically, the governor’s office of each state will receive a list of the applications under consideration, and will have 20 calendar days to provide a list and prioritization of recommended projects, along with an explanation of the reasons for their prioritization. States are of course likely to support their own public projects, but some are expected to support favored private projects as well. The Agencies have stated that states “will not have the ability to veto a particular project.”