The Senate has passed a Farm Bill whose broadband section reins in potential overbuilding of commercial broadband operators with government broadband subsidies.

The bill, which passed overwhelmingly (86 to 11), "establishes new broadband standards for projects financed through USDA. That translates to reforms to the USDA's Rural Utilities Service (RUS) broadband funding program to better target the funds to unserved areas where there is no high-speed broadband, rather than to underserved areas where the money could be used to overbuild existing commercial providers.

ISPs have long argued that government broadband funds should go to build out broadband, not overbuild it, and pushed the agriculture committees to square the RUS funds with that philosophy. Fans of the program argued that some overbuilding was necessary to make the more expensive unserved buildout portions sustainable.

"This legislation has important reforms to the USDA Rural Utility Service’s broadband programs so federal funding will focus more appropriately on bringing connectivity to unserved areas, rather than overbuilding existing networks," said NCTA-The Internet Television Association. "In addition, the legislation also directs the RUS to confer with the FCC and NTIA and includes transparency and notice processes, all of which will help provide the USDA with the latest information about broadband availability and guard against waste, fraud and abuse. We encourage the House and Senate to come together and produce a combined Farm Bill that includes these important reforms.”

The Senate Farm Bill must still be reconciled with a House-passed version, which won't happen until after the July 4 break.

"What began as connecting the country via telephone lines — which were, in those early days, sometimes fashioned from cattle wire — has evolved into the innovative broadband and fiber networks of the digital age." —Jonathan Spalter, USTelecom 

In a recent spending bill, Congress made $600 million available for additional broadband deployment to America’s rural areas. The U.S. Department of Agriculture’s Rural Utilities Service (RUS) has been tapped to administer these funds through a new pilot program.

Without question, this funding is a welcome and needed addition to the growing arsenal now aimed squarely at closing the digital divide to rural Americans once and for all. USTelecom members have led the way on connecting these communities for more than a century, through companies often run by generations of the same family. 

What began as connecting the country via telephone lines — which were, in those early days, sometimes fashioned from cattle wire — has evolved into the innovative broadband and fiber networks of the digital age.

Private investment from our nation’s broadband providers has placed them among the leading investors in the U.S. economy, putting, since 1996, more than $1.6 trillion of their own capital on the line to upgrade and expand the nation’s digital infrastructure. As a result, over the past 10 years, broadband in rural homes has risen 117%.

This private investment, paired with dedicated federal programs, will connect millions more in the coming years. That’s why great care must be taken to maximize the RUS program’s effectiveness.

Coordination Is Key

Unquestionably, coordination with existing rural broadband programs and guidance from agencies with a proven track record of supporting successful deployment are critical to ensuring broadband gets deployed to the communities and households that actually need it.

Related: FCC Rural Broadband Office Bill Introduced

I emphasize this point because some prior funding efforts have resulted in duplicative construction rather than maximizing coverage across truly unserved areas. Lack of coordination between agencies and existing programs not only led to the overbuilding of broadband networks, but also to the distortion of competition in the ongoing efforts to deploy broadband.

In a blog published in April, Federal Communications Commission member Michael O’Rielly made a reasoned argument for such collaboration, encouraging RUS to coordinate with the FCC and the National Telecommunications and Information Administration to ensure the funding prioritizes unserved areas and avoids overbuilding and duplicative construction.

Related: ISPs to Senate: Limit RUS Overbuilds

The smart coordination of RUS with existing programs we know already work, such as the Universal Service Fund, can best help providers extend and sustain broadband into our most rural communities. If this coordination doesn’t happen, projects selected by RUS could risk hollowing out the “Main Streets” of small communities, leaving another program, such as USF, to pick up the surrounding portions at much greater costs. 

New RUS funding should instead focus on areas not already reached, or not likely to be reached through programs such as the FCC’s High Cost and Remote Areas Funds, intended to bring service to many of the hardest-to-reach portions of the United States.

To that end, along with NCTA–The Internet & Television Association, the American Cable Association and ITTA (Independent Telephone and Telecommunications Alliance), we submitted a letter this week to the Senate Agriculture Committee which is considering the Farm Bill, asking them to modify the RUS Broadband Loan Program to better achieve its goal of helping truly unserved areas.

In a strapped budget climate, it is imperative that federal agencies work in lockstep to ensure that taxpayer dollars are stretched to their full potential. Rural Americans who are still waiting on fast and reliable broadband service to reach their front door can’t afford anything less.

Jonathan Spalter is president and CEO of USTelecom, the telecommunications industry trade association.

Cable operators and other broadband providers want to use the Farm Bill to remove a long-time thorn in their sides, broadband subsidies that allow for major overbuilding of existing providers.

In a letter to the chair and ranking members of the Senate Agriculture Committee, the heads of the National Cable & Telecommunications Association, the American Cable Association, USTelecom, and ITTA-The Voice of America's Broadband Providers, said that while they are considering the new Farm Bill, they should consider reducing the allowable overbuilding in the Rural Utility Service broadband loan program.

Helping light a fire under the push for change is that Congress, in the RAY BAUM's Act, made $600 million available for rural broadband deployment, which will be administered through RUS.

The RUS program only requires 15% of an applicants targeted service area to be unserved, meaning 85% of the funds could be used to build where therea are already up to two providers.

"This practice does nothing to help those in rural America who still don’t have broadband service. Additionally, this government subsidization of a competitor in a market already served by one or two providers is an inefficient use of scarce funding and puts a thumb on the competitive scale, undermining future efforts to sustain existing networks or to build out broadband networks in high-cost areas, especially when those networks are built with private risk capital," they told Sens. Pat Roberts and Debbie Stabenow, chair and ranking member, respectively, of the committee.

NCTA et al. want the Senators to use the bill to modify RUS to limit funding to areas where 100% of residents have no broadband service (defined as no service of at least 10 Mbps downstream, 1 Mbps upstream), or where at least 90% don't have such service.

Sens. Shelley Moore Capito (R-W. Va.) and Kirsten Gillibrand (D-N.Y.) have introduced a bill to boost rural broadband in rural and tribal areas.

The Broadband Connections for Rural Opportunities Program Act is meant to close the rural digital divide by providing new federal grants for high-speed broadband buildouts to supplement the money already available through the UDSA's Rural Utilities Service.

It would also double the RUS broadband program funding (to $50 million).

Capito and Gillibrand cited FCC stats saying that 40% of rural and tribal areas do not have access to broadband, but also suggested their bill was about competition, not just providing access where none existed.

"when high-speed broadband is available, consumers often have only one choice for service and pay more for high-speed plans than consumers in some other advanced countries," they said in a joint release announcing the bill.

ISPs have long argued that government funds should be targeted to areas without service first, not where government money underwrites competition to existing privacy investment and service.

In what could be an industry-wide “I-told-you-so” moment, the federal Rural Utilities Service much-ballyhooed rural broadband initiative appears to have stumbled badly, with about half of the projects funded through the program failing to fully draw the money available to them and a large number of existing projects facing a looming deadline to either spend the money allotted or forfeit it forever, according to a Politico report.

In a sweeping investigation, “Wired to Fail,” Politico found what cable operators have been saying for years – the RUS broadband program is inefficient and has done little to spread high-speed Internet service to the small, rural communities that need it.

Several prominent figures in the cable community tweeted links to the Politico piece, including National Cable & Telecommunications Association CEO Michael Powell; American Cable Association vice president of communicatons Ted Hearn; and Mediacom Communications vice president of legal and public affairs Tom Larsen.

According to Politico, about half of the 300 projects that RUS has approved as part of the American Recovery & Reinvestment Act of 2009 have not yet drawn on the full amounts awarded. Also, according to the Politic report, all of the infrastructure projects funded by the program were to be completed by June 30, but the RUS has declined to say whether they’ve been finished. About 40 projects funded by the program never were started in the first place – bringing into question RUS’ screening practices.  

For the projects that are still underway an even bigger deadline looms – if they don’t draw on all their available funds by Sept, 30 they risk forfeiting the balance, meaning that about $277 million in funding will be wasted. According to Politico, that money cannot be used in other neglected rural communities.

Cable operators have complained for years that the federal broadband initiatives were merely funding overbuilds of their existing territories, not extending service to so-called underserved communities. In its investigation, Politico found 64 communities near large cities that received loans and grants because they were easier to build – their proximity to denser areas with more people and higher demand for service made it easier to recover costs.

According to Politico, it’s not going to get any better. Even the RUS admits that it is not going to provide better broadband service to the 7 million rural households it once claimed. Instead, the number will be in the hundreds of thousands.