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5 ways local governments should think about broadband grant programs

Doug Dawson is the Founder of CCG telecommunications consulting firm, one of the most well-respected companies in the industry.

He joined Broadband.money recently for our “Ask Me Anything” series, where he gave us an enlightening – and sometimes counterintuitive – perspective on how local governments should think about getting their communities wired. He also previewed some of the difficulties that projects and broadband grant programs are likely to encounter. 

Here are 5 bullet points from the discussion. We highly recommend that you watch the whole thing. 

 

1. The ‘Buy American’ provisions of the Infrastructure, Investment and Jobs Act will hold up broadband deployment

Dawson said that the National Telecommunications and Information Administration will have to seek waivers from the White House from the ‘Buy American’ provisions of the IIJA. Otherwise, broadband projects may not be able to get off the ground in a timely fashion. 

“This one says fiber, conduit they spelled it out -- they have to be 100% American made. And then there's a very high threshold for the percentage of electronics in some cases, those things don't exist. If they truly enforce that, we're going to have some major problems.  I'm 100% in favor, because the point is: Let's stimulate American manufacturing,” he said.

But like other telecom industry experts, Dawson noted that American companies making fiber are working at full capacity, and Americans simply don't make some electronic components. 

“There's a giant fiber factory in Mexico. But you can't use that. It has to be 100% fiber from America. And not that I'm saying you should buy Mexican fiber, but the fact is, if you can't get fiber, it's awfully  tempting to do that …  Once these grants are awarded and people tried to buy, it's going to become a major issue.”

2. How local governments can prepare to win broadband grants

Don't wait to be approached by an internet service provider looking for a grant. Local governments should figure out their communities' goals and then actively search for, and vet local internet service providers to partner with when applying for broadband grants. If local governments take a passive stance and wait to be approached, they're not likely to get what their communities want. 

The other advantage to this approach is that local governments may then match federal grant funding programs to their communities' needs. It may be the case, for example, that a local government only relies on American Rescue Plan Act funding so that they don't have to comply with all the provisions in the IIJA. 

“I work with the county right now who's not going to need IIJA because they're going to actually 100 percent funded. They have enough ARPA money to get the broadband solved. They don't have to worry about this. That's why everyone is different,” he said. 

3. Look into using private activity bonds to finance broadband expansion

The IIJA contains language that enables state and local governments to borrow money on a tax-free basis for qualified broadband projects in rural areas. 

Dawson described the benefits of using PABs for ISPs and other entities with healthy balance sheets. 

  • Lower interest rates  
  • Skip the bank, skip the drama! Companies can go directly to private lenders

4. Use your own data

States and the Federal Communications Commission have created broadband maps, but Dawson doesn't trust them. 
“We don't believe anybody's maps. So as part of our feasibility studies, we create our own maps. We start with the FCC maps, we do field visits, we actually look at the stuff that's actually out there,” he said. “What we are giving the community is the facts they need. If there's a challenge, they can try to get those [state and federal] maps changed. Because the local people know what they know. They know the street the cable company stops, they know all that stuff. They know that here's a pocket where nothing works.”

5. States and localities should look local

Dawson recently wrote  a blog post about public telecom companies' stock buyback programs. He questioned why they should be receiving taxpayer-funded grants when the companies are using company money to buy back shares to boost their stock value instead of building out broadband networks to places that need them.

“I believe the state of rural broadband is where it is because those big companies are the ones who put us there. They stopped taking care of their copper networks in the 80s. If you look at the little independent telephone companies, they didn't get their networks fall apart. Those areas are fine today. Do local communities really want to give the big companies all this money to start the cycle again?”

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