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USDA to Initiate Rulemaking to Implement Changes to the Rural Utilities Service Broadband Loan Program
December 18, 2006
The USDA plans to initiate a rulemaking as soon as this month to implement changes to the Rural Development Broadband Loan and Loan Guarantee Program (the "Broadband Loan Program") administered by the Rural Utilities Service.
The agency has indicated that it continues to face significant challenges in administering the Broadband Loan Program due to factors such as fierce competition in the broadband market, the fact that broadband loan applicants typically are start-up organizations with limited resources, and the high costs associated with providing broadband service to rural communities. Thus, the agency has determined that modifications are necessary to accelerate the deployment of broadband service to rural areas, which suggests that the proposed changes may result in relaxed standards in order to facilitate the issuance of loan funding to program applicants.
We understand that the rulemaking will propose changes to regulations affecting:
- Funding in competitive markets;
- The definition of an Eligible Rural Community;
- The minimum data transmission rate standard;
- Equity requirements;
- Loan purposes;
- Market survey requirements; and
- Time limits for build-out and deployment of broadband facilities.
Unfortunately, it does not appear that the rulemaking will address concerns expressed by some cable operators regarding transparency of, and the need for a meaningful opportunity for outside parties to participate in, the Broadband Loan Program process, or efforts by the agency to ensure that loans are distributed in accordance with Congressional objectives. Cable operators may nonetheless want to file comments raising these and other issues.
With legislative and executive approval of the USDA's 2007 budget, the amount of available Broadband Loan Program funding will likely surpass $850 million. In view of the Broadband Loan Program's increased budget and the agency's efforts to improve its administration of the program, established cable operators may want to consider applying for funding through the program to extend their plant to rural areas outside the communities they already serve.
We would be pleased to respond to any questions regarding this matter.