New Treasury ARPA FAQ: Broadband Spending

The US Department of the Treasury today released a revised Frequently Asked Questions document that provides clarifications on key questions related to the broadband provisions of the Coronavirus State and Local Fiscal Recovery Funds’ Interim Final Rule.

As previously reported on Conduit Street, the Recovery Fund, authorized under the American Rescue Plan Act, is providing $65.1 billion in direct, flexible aid to every county in America, as well as other crucial investments in local communities.

Today’s update provides answers to questions raised by a number of stakeholders, including county officials, on eligible areas for broadband infrastructure investment. It clarifies that states and local governments may invest in areas where not all households or businesses are unserved or underserved, as long as one objective of the project is to provide service to unserved or underserved households or businesses. Further, the update clarifies that the use of “reliably” in the IFR provides states and local governments with significant discretion to assess the actual experience of users on the ground.

FAQs on the Broadband Provisions of the Interim Final Rule – Coronavirus State and Local Fiscal Recovery Funds

For broadband infrastructure investments, what does the requirement that infrastructure “be designed to” provide service to unserved or underserved households and businesses mean?

  • Designing infrastructure investments to provide service to unserved or underserved households or businesses means prioritizing deployment of infrastructure that will bring service to households or businesses that are not currently serviced by a wireline connection that reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed. To meet this requirement, states and localities should use funds to deploy broadband infrastructure projects whose objective is to provide service to unserved or underserved households or businesses. These unserved or underserved households or businesses do not need to be the only ones in the service area funded by the project.

For broadband infrastructure to provide service to “unserved or underserved households or businesses,” must every house or business in the service area be unserved or underserved?

  • No. It suffices that one objective of the project is to provide service to unserved or underserved households or businesses. Doing so may involve a holistic approach that provides service to a wider area in order, for example, to make the ongoing service of unserved or underserved households or businesses within the service area economical. Unserved or underserved households or businesses need not be the only households or businesses in the service area receiving funds.

For broadband infrastructure investments, what does the requirement to “reliably” meet or exceed a broadband speed threshold mean?

  • In the Interim Final Rule, the term “reliably” is used in two places: to identify areas that are eligible to be the subject of broadband infrastructure investments and to identify expectations for acceptable service levels for broadband investments funded by the Coronavirus State and Local Fiscal Recovery Funds. In particular:
    • The IFR defines “unserved or underserved households or businesses” to mean one or more households or businesses that are not currently served by a wireline connection that reliably delivers at least 25 Mbps download speeds and 3 Mbps of upload speeds.
    • The IFR provides that a recipient may use Coronavirus State and Local Fiscal Recovery Funds to make investments in broadband infrastructure that are designed to provide service to unserved or underserved households or businesses and that are designed to, upon completion: (i) reliably meet or exceed symmetrical 100 Mbps download speed and upload speeds; or (ii) in limited cases, reliably meet or exceed 100 Mbps download speed and between 20 Mbps and 100 Mbps upload speed and be scalable to a minimum of 100 Mbps download and upload speeds.
  • The use of “reliably” in the IFR provides recipients with significant discretion to assess whether the households and businesses in the area to be served by a project have access to wireline broadband service that can actually and consistently meet the specified thresholds of at least 25Mbps/3Mbps—i.e., to consider the actual experience of current wireline broadband customers that subscribe to services at or above the 25 Mbps/3 Mbps threshold.  Whether there is a provider serving the area that advertises or otherwise claims to offer speeds that meet the 25 Mbps download and 3 Mbps upload speed thresholds is not dispositive.
  • When making these assessments, recipients may choose to consider any available data, including but not limited to documentation of existing service performance, federal and/or state-collected broadband data, user speed test results, interviews with residents and business owners, and any other information they deem relevant. In evaluating such data, recipients may take into account a variety of factors, including whether users actually receive service at or above the speed thresholds at all hours of the day, whether factors other than speed such as latency or jitter, or deterioration of the existing connections make the user experience unreliable, and whether the existing service is being delivered by legacy technologies, such as copper telephone lines (typically using Digital Subscriber Line technology) or early versions of cable system technology (DOCSIS 2.0 or earlier).
  • The IFR also provides recipients with significant discretion as to how they will assess whether the project itself has been designed to provide households and businesses with broadband services that meet or exceed the speed thresholds provided in the rule.

May recipients use payments from the Funds for “middle mile” broadband projects?

  • Yes. Under the Interim Final Rule, recipients may use payments from the Funds for “middle-mile projects,” but Treasury encourages recipients to focus on projects that will achieve last-mile connections—whether by focusing on funding last-mile projects or by ensuring that funded middle-mile projects have potential or partnered last-mile networks that could or would leverage the middle-mile network.

While the US Department of the Treasury plans to release additional FAQs in the coming weeks, the National Association of Counties (NACo) strongly suggests counties submit comments for the record in response to Treasury’s Interim Final Rule on the Fiscal Recovery Fund to ensure that counties have a voice in the public comments when it comes time to finalize the rule.

The deadline to submit comments is July 16, 2021.

Read NACo’s FAQs on the Recovery Fund.

Read NACo’s analysis of Treasury’s Interim Final Rule.

Stay tuned to Conduit Street for more information.

Useful Links

US Department of the Treasury Revised FAQ Document: Coronavirus State and Local Fiscal Recovery Funds’ Interim Final Rule (June 17, 2021)

Previous Conduit Street Coverage: Hot off the Press: New Treasury Guidance on ARPA Funding

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