The Agriculture Department's annual appropriation for rural broadband will jump to $50 million from $25 million if the farm bill becomes law. The legislation would allow the Rural Utilities Service to give out grants as well as loans and loan guarantees. Grants would be allowed to constitute up to 50 percent of development costs of individual projects -- and up to 75 percent with approval from the Secretary of Agriculture.
The raw numbers are a drop in the bucket when compared to the $7.2 billion in broadband infrastructure grants that were made available under the American Reinvestment and Recovery Act or the $4.5 billion being made available through the Universal Service Fund over the next six years. But for the small telecoms that serve rural communities, the RUS essentially functions as a bank, providing financing for broadband infrastructure that begins where the reach of larger wire-line providers ends.
An amendment to the broadband section proposed by Sen. Mark Warner, D-Va., and scheduled for a vote on Tuesday, would add some specificity absent from the version that passed committee.
The amendment would mandate that broadband providers deliver minimum download speeds of 4 megabits per second and upload speeds of 1 megabit per second. The amendment would also create a new competitive application system for RUS, instead of distributing grants on a case-by-case basis.
Despite the doubling of the appropriation in the farm bill, rural telecoms may have cold feet about investing resources in broadband infrastructure, said Tom Wacker, vice president for government affairs for the National Telecommunications Cooperative Association. This is more because of uncertainty due to cuts in intercarrier compensation rates (funds telecoms collect for allowing other carriers' traffic across their networks) and caps on line charges rural telecoms can claim under the Universal Service Fund. “People were already nervous about investment” before the proposed changes under the farm bill, Wacker said.
Provisions in the Warner amendment would impose another set of burdens on rural wire-line telecoms, Wacker said, including increased reporting requirements and the use of RUS grant and loan appropriations for oversight and administration. Cable and wireless companies apparently see some business opportunity in the Warner amendment -- it's backed by the Rural Cellular Association and the National Cable Telecommunications Association.