The rules have been simplified and the competition will likely be stiffer for this round of federal broadband funding.

[imgcontainer left] [img:foot-race320.jpg] [source]Metropolitan Museum of Art[/source] The rules have been simplified and the competition will likely be stiffer for this round of federal broadband funding. [/imgcontainer]

The new rules are out for the second round of broadband stimulus funding – and with them comes good news and bad news for applicants.

The good news is the rules have been streamlined, so it’s likely more communities and companies will apply. The bad news? More people will be chasing a slightly smaller pot of gold.

More good news is that The National Communications and Information Administration (NTIA) and Rural Utilities Service (RUS) got a divorce, and now each can award grants in a way that makes the best sense for the respective agencies; we can hope that in the long run, having these two routes to funding will make grant-making more sensible. The bad news? There are two sets of rules, one set for each agency. In the short run, applicants have nearly 200 pages to sift through and a March 15th deadline for submiossions.

Yes, applicants really do need to read both sets to figure out which Notice of Funds Availability (NOFA) to pursue. To minimize brain damage, the public policy institute New America Foundation has written a good comprehensive summary of NOFA 2 that’s less than 30 pages long. Grab a drink, prop up your feet, put on some smooth jazz, country or hard rock, and dig in.

NTIA hopes to get a bigger bang for its buck by focussing primarily on middle-mile projects (The term “middle mile” describes technology infrastructure that, for example, connects data centers to each other but that doesn’t primarily deliver broadband service to end-users. For more on NOFA definition, click here.)

[imgcontainer left] [img:middlemileproject320.jpg] [source]California PUC[/source] Middle-mile project before the California Public Utilities Commission: to extend fiber from Shasta County to Modoc County, California. [/imgcontainer]

By funding middle-mile projects, NTIA hopes to benefit large geographical areas through each award more easily than it might through granting a greater number of smaller awards. Plus, there’s less administrative hassle since NTIA has to manage each funded project to completion. Middle mile projects also offer communities notable benefits.

RUS, mercifully, eliminated the “remote, non-remote” qualifications combined with different, and confusing, grant-versus-loan options that have driven people absolutely crazy. Now it’s a straight up 75/25 grant-to-loan ratio for all projects. Their final definition of “rural” remains what it was pre-stimulus in terms of population size and proximity to big cities. (RUS deems “rural” any area outside a city or town with population over 20,000; it excludes “urbanized” areas adjacent to cities with populations over 50,000.)

RUS focus is on last-mile projects, that is, on delivery of broadband service to end-users. Though it’s time-consuming to address a lot of individual communities on the proposal-review side, at least RUS has 400 field offices — unlike NTIA’s smaller staff in just a couple of locations; RUS has people spread across the U.S. who can more manageably oversee large numbers of awardees.

[imgcontainer] [img:last-mile-530.jpg] [source]California PUC[/source] A last-mile project before the California Public Utilities commission: to bring broadband Internet to Lassen County, California. [/imgcontainer]

RUS’s last-mile focus actually could become a negative for communities wanting to band together for countywide or other larger-scale networks. You can’t create a uniform last-mile system for several dozen towns without some serious backhaul action, requiring middle-mile infrastructure, and RUS isn’t funding middle-mile. Communities that do want to work together, and also to apply for RUS funding, may choose to build hybrid wired-wireless networks, in which the fiber functions doubly, to serve both last and middle mile purposes.    
Small towns may consider going it alone and not worrying about getting tripped up on the middle-mile technicality. But alas, the reality is there may be no “end” in sight for RUS if they have to wade through over a billion dollars worth of individual small town applications by Sept 10. (I do more handicapping of NOFA 2 over at my blog.)

“If broadband is to be, then it is up to me”

Your burning question at this point may be, “should we even bother?”
It may be a week before the people now on the sidelines watching Round 1 unfold decide if they join this next Dash for Dollars. People who applied in Round 1 but haven’t received invitations to make to due diligence reviews are losing hope; without feedback, it will be difficult for them to make adjustments for their next move.
One of the truly unfair unintended consequences of the attempt to allocate so much money so quickly is that logic and clear direction in the grant process were early casualties (along with any semblance of a normal life for those directly involved). Given what’s gone before, is it really a bad thing to consider walking away from the stimulus game? Well, it depends.

Hunter Goosmann is General Manager of ERC Broadband, a nonprofit in rural North Carolina with a grant proposal in the hopper still waiting for the call. I’ve talked to several people who asked for waivers of the 20% matching funds requirement, and I get the impression these proposals are getting a lower priority (unofficially) in the queue. This situation certainly doesn’t encourage applicants to jump into NOFA 2.

“Most rural communities, and in particular municipal or nonprofit networks that operate in rural areas, simply do not have monies set aside that can be used for matching funds,” says Goosmann. “I mean, if funds were available to these communities, there would be greater infrastructure in the first place. It’s a Catch-22.” The bottom line is, if you see a more practical path to get broadband in your community faster, then explore it, aggressively.
Last week, after presenting one alternative to stimulus grants (economic development fundraising), I received feedback that indicates this is a viable option, including a comment in my LinkedIn group from Dale Gregory, Executive Vice President at Cherrystone Management Consultants. “We are discussing partnerships with a number of organizations and investors,” states Gregory, “and have determined that the BTOP path is not the best choice given the uncertainty of the process, likely opposition by incumbent carriers, and low probability of success given the volume of grant applications.”
Goosmann sees local investors as a logical path forward. “A 300+ mile fiber network was built in rural western North Carolina with funds from two local investors, the Eastern Band of the Cherokee Indians and Drake Enterprises. It becomes more difficult when one reaches out to a county that has little in the way of a community partner (or partners) who can invest. At that point, one must be creative to find a solution that works.”
There’s a lot to consider, but it you plan to go for NOFA 2, strap on your thinking cap now. The Ides of March isn’t that far away. Here are some tips to help you form a NOFA 2 strategy.

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