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Inside the new federal broadband fund: What will $65 billion actually buy?

The $1.2 trillion infrastructure bill devotes a historic amount to closing the digital divide. Now we get to find out if it actually works.

If the COVID crisis has proved nothing else, it's how important fast and reliable internet connections are to our economy, our well-being, and our future. From schooling to healthcare to jobs, the pandemic presented the digital divide in stark relief.

According to a study by Boston Consulting Group and Common Sense Media, nearly 16 million K-12 students lacked the connectivity and computing resources to engage in distance learning over the past 20 months. People living in rural or low-income areas had more limited access to telehealth services, per an analysis by RAND Corp. Further, researchers at UCLA found that people of color were less able to work from home, despite having comparable levels of income and education.

All of which is why the nearly $65 billion allocated for bridging that divide contained in the $1.2 trillion Infrastructure Investment and Jobs Act is such a monumental achievement, says Kathryn de Wit, project director for the Pew Charitable Trusts Broadband Access Initiative.

"Lawmakers are now seeing internet connections as a must-have, not a nice-to-have," says de Wit. "There is buy-in and awareness about why these investments need to be made."

While previous federal initiatives have attempted to bridge the digital divide, they've never been this large or this all-encompassing, she notes. Unlike the American Recovery and Reinvestment Act (ARRA) of 2009, for example, which allocated $7.2 billion to connecting underserved communities, the new bill involves much more than giving money to cable and telecom companies to dig more trenches. It includes funding for schools, community groups, and local governments; subsidies for low-income families; access to devices and digital skills training; and more.

In addition to funding, the bill also defines broadband as connections of at least 100 Mbps down and 20 Mbps up, significantly faster than the Federal Communications Commission's current standard of 25 Mbps down and 3 Mbps up.

"That's a floor, not a ceiling," adds de Wit. "Preference will be given to connections that offer faster speeds."

At the same time, however, many unknowns remain. How funds will be dispersed—and who will benefit most from them—is still to be determined.

Follow the money

The $65 billion broadband fund is broken into multiple parts, which will be distributed in different ways over the next five years.

The largest chunk, $42.5 billion, is allocated to the Broadband Equity, Access, and Deployment (BEAD) program, which will be distributed to individual states based on grant requests. Each state and some U.S. territories will receive a minimum of $100 million at the start.

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Another $4.25 billion will be used to provide broadband to remote, low-density, or low-income areas where the cost of providing high-speed access has proved too prohibitive for private carriers. The rest of this fund, or around $32 billion, will be allotted for providing access to unserved areas in each state, based on their needs.

In addition, Congress has set aside $1 billion for building middle-mile infrastructure to connect local networks to major internet backbones. Another $2.75 billion will go to ensuring digital equity among certain populations, such as seniors, veterans, and minorities. The final tranche, $14.2 billion, will establish a permanent Affordable Connectivity Program under the FCC, providing monthly subsidies for low-income families and other qualifying individuals to purchase internet services.

(These numbers add up to more than $65 billion. Laws like this are always complicated, but it appears that some of the moneys are reallocations of funds previously allocated in the Consolidated Appropriations Act of 2021, which is the COVID stimulus act passed at the end of 2020. In this way, $65 billion is the total of new funds allocated.)

"This is a once-in-a-generation investment that will definitely get us closer to closing the digital divide," says Greg Guice, director of government affairs at Public Knowledge, a public interest group devoted to issues of digital access and transparency. "There's still some work to be done around affordability and access in some of the harder to reach places, but it gets us a long way down the road."

A nation still divided

But how this money will be spent will be up to the individual states, which means the benefits for consumers and business will vary widely depending on their location.

That's not necessarily a bad thing, according to de Wit. A sparsely populated state like Alaska requires a different broadband strategy than California or Massachusetts.

"The digital divide is a local problem," she adds. "It's important to have state and local leaders at the table, and provide funding and support to build capacity within governments as well as their community-based partners."

She adds that infrastructure is one of the last true bipartisan issues. "We've worked with lawmakers in some of the most conservative states in the country," de Wit says. "All of them know that if people don't have affordable access in their communities, or the skills and devices to use those connections, these communities will disappear."

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But politics may still play a role in how the funds are dispersed. Only 13 Republicans in Congress crossed party lines to vote for the infrastructure bill (though some who voted against it are already touting its benefits and those who did are experiencing a backlash from other party members and constituents).

Bhaskar Chakravorti, dean of global business at Tufts University's Fletcher School of Law and Diplomacy, notes that there are two distinct digital divides: people who don't have access to internet services and those who could have access but can't afford it. That also often divides along party lines.

"The access gaps are largely in rural areas that are Republican leaning, so there will be a pull from that side to get money to those people," he says. Chakravorti's Digital Planet research project estimates the true cost of closing the divide at $240 billion. "The problem in urban areas is affordability. Most of those neighborhoods are Black and brown and tend to skew Democrat. So the conservative-liberal divide is likely to play a role in how this allocation gets done."

That, in turn, may also determine how efficiently the money is spent. More than a third of the $7.2 billion broadband fund in ARRA was devoted to connecting rural communities with very small populations, some of which were already served by existing providers. A 2011 study of the program showed that bringing new service to these communities cost an average of more than $30,000 per household.

Low bandwidth, high prices

The cost of internet service in U.S. cities is among the most expensive in the world. The new bill may not do much to change that.

One challenge to making broadband more affordable is that the infrastructure bill replaces the FCC's current $50-per-month emergency broadband benefit for low-income households, part of the American Rescue Plan response to the pandemic, with a $30 stipend.

"The new $30 subsidy won't be enough for many to buy decent access," says Dane Jasper, CEO of regional internet service provider Sonic. "While rural gets a lot of attention, there's a larger number of unconnected households due to the urban digital divide, and the reduction in the subsidy will only perpetuate that."

Those hoping that the infrastructure bill will spur competition in areas served by only one or two providers—and thus lead to lower prices overall—may also be disappointed. Local co-ops and municipally owned networks are eligible to compete for funds in the 32 states where such entities are allowed, but the bill doesn't give them any advantages over incumbents, notes Guice.

"When the bill was originally proposed, those entities were given priority," he says. "Now, they're just permitted to participate. We're hoping people will lean in on that and try to use those entities. They offer a valuable service, and they do it well."

The clock is ticking

Before any of this can get started, however, there are barriers to overcome. The biggest: We don't actually know who has access to broadband and who doesn't. FCC maps produced in 2020 estimate that approximately 14.5 million Americans lack access to high-speed internet.

But that's widely considered a woeful undercount, because it relies on forms submitted by service providers and reports by census block; if one household in a census block of a thousand is connected to broadband, that neighborhood is counted as served.

BroadbandNow, an ISP comparison site that conducted its own survey of more than 100,000 addresses using FCC data, puts the number of un- or underserved Americans at 42 million. Other estimates put the number closer to 60 million.

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The Broadband Deployment Accuracy and Technological Availability (DATA) Act of 2020 directs the FCC to create new, more granular maps that states can use to determine where their needs are greatest. The FCC has not released an update on its progress; it did not respond to multiple requests for comment.

The National Telecommunications and Information Administration (NTIA), which is tasked with issuing grants to the states, has 180 days after the bill's signing to issue a Notice of Funding Opportunity so states can apply for grants. But first, it needs the new FCC maps.

Currently, the FCC is split evenly 2 to 2, with appointees from Republican and Democrat administrations. President Biden has nominated Gigi Sohn, a longtime consumer advocate and former FCC adviser, to be the fifth and final commissioner, but Republicans like Sen. Lindsey Graham of South Carolina have vowed to fight her nomination.

Meanwhile, the NTIA is also lacking a top administrator. The Biden administration has nominated former Google and Mozilla executive Alan Davidson for the role, but no date for confirmation hearings had been set at publication time.

"The clock is ticking," says Guice. "The first deadline for the NTIA is six months from now. That's a very short time frame for an agency to move, particularly one without an administrator. These agencies need to be fully staffed and have leadership in place to make decisions before the end of the congressional calendar. That's not a lot of time."

A monumental task

The broadband fund is not the only money available for building out America's digital infrastructure. There are dozens of federal and state programs aimed at bringing the country's internet access up to speed with the rest of the planet; Connected Nation, a nonprofit dedicated to closing gaps in digital equity, puts the total at nearly $367 billion.

But it will be a long time before any of this comes to fruition, warns Guice.

"This is a monumental task," he adds. "People need to be patient."

Given the well-known history of delays and cost overruns associated with government-funded infrastructure projects, they may need to be very patient. But Pew's de Wit, who has worked closely with policymakers for the past few years on narrowing the digital divide, is optimistic about the changes the new bill makes possible.

"It's an exciting moment," she says. "This isn't about technology. It's about what you can do with the technology. And now we see it in law."

This article/content was written by the individual writer identified and does not necessarily reflect the view of Hewlett Packard Enterprise Company.