RURAL UTILITIES SERVICE
TELECOMMUNICATIONS PROGRAM
Telergee Alliance 2009 CFO & Controllers
Conference
Oct. 16, 2009
David J. Villano
Assistant Administrator
Telecommunications Program
Rural Utilities Service
The Rural Utilities Service Telecommunications Program loan
and grant programs
• Infrastructure Loan Program: Loans to local telephone
companies for improving telecommunications service in rural
communities
• Broadband Access Loan Program and Community Connect
Grant Program: Loans and grants for local telephone
companies and other service providers who offer Broadband
(high-speed Internet) services in eligible communities
• Distance Learning/Telemedicine Loan and Grant Program:
Loans and grants for providing Distance Learning and
Telemedicine services to rural residents
•American Recovery and Reinvestment Act of 2009 (ARRA)
Broadband Initiatives Program: Loans, grants and loan/grant
combinations for broadband in rural communities
2
Telecommunications
Loan Program Budget
Infrastructure
2008
2009
2010 Proposed
• Hardship 5%
$ 143,985,000
$ 145,000,000
$ 145,000,000
• Direct, Treasury
Rate
$ 248,250,000
$ 250,000,000
$ 250,000,000
• Direct, FFB
$ 292,935,000
$ 295,000,000
$ 295,000,000
• Total Telecom
$ 685,170,000
$ 690,000,000
$ 690,000,000
3
Loan Program Budget
Farm Bill Broadband:
2008
2009
2010(Proposed)
• Treasury Rate
$ 792,000,000 $ 406,231,179 $ 531,698,895
• Grants
$ 13,405,000 $ 13,813,145 $ 13,406,000
• Total Broadband
$ 805,405,000 $ 420,044,324 $ 545,104,895
4
Loan Program Budget
DLT and Public TV:
2008
2009
2010 (Proposed)
• Treasury Rate
Loans
$ 28,265,000
$
• DLT Grants
$ 29,790,000
$ 29,790,000
$ 29,790,000
• Public TV Grants
$ 4,965,000
$ 4,965,000
$
• Total DLT
$ 63,020,000
$ 34,755,000
$ 29,790,000
0
$
0
0
5
Telecom Program
FY2009 Obligations
Infrastructure Loans:
Broadband Loans:
DLT Grants:
DLT Loans:
Community Connect
Grants:
Public TV Grants:
$690,000,000
$ 6,652,000
$ 36,287,654
$ 16,265,779
$ 13,385,526
$ 5,086,460
6
Telecom Loan Investment
Infrastructure:
• $690 million in loans made in
FY 2009
• $3.7 billion in principal
outstanding; 503 borrowers
• 92% of borrowers are
providing Broadband service
• 90% of loans made in the last
2 years have been for fiberto-the-home projects
Farm Bill Broadband:
• 96 loans have been
made, for $1.2 billion, in
1,865 communities
• More than 835 thousand
households will receive
broadband access under
loans made
7
Broadband Program
Revised Farm Bill Broadband Loan Program
Regulations (under final departmental review):
• Promote deployment to rural areas with little or
no service
• Limit funding in urban areas and areas where a
significant share of the market is served by
incumbent providers
• Clarify equity and marketing survey requirements
8
Broadband Program
Revised Farm Bill Broadband Loan Program
Regulations (continued):
• Increase the transparency of the application
process
• Promote a better understanding of application
requirements
• Ensure that projects funded are keeping pace
with increasing demand for bandwidth
9
American Recovery and Reinvestment Act
of 2009 (“ARRA”)
10
ARRA Broadband Funding
USDA Rural Utilities Service:
$2.5 billion total budget authority authorized under the
ARRA in the form of loans, grants and loan/grant
combinations for broadband infrastructure
The RUS Broadband Initiatives Program (BIP)
First NOFA: $2.4 billion program level funding
• Up to $1.2 billion for Last Mile projects
• Up to $800 million for Middle Mile projects
• Up to $325 million for a National Reserve
11
ARRA Broadband Funding
Department of Commerce – National
Telecommunications Information Administration:
$4.7 billion total budget authority authorized under the ARRA in
the form of grants
The Broadband Technologies Opportunities Program (BTOP)
First NOFA: $1.4 billion program level funding
• Up to $1.2 billion for broadband infrastructure projects
• Up to $50 million for Public Computer Center projects
• Up to $150 million for Sustainable Broadband Adoption
projects
(Separate NOFA issued for $350 million in funds available to
states for broadband mapping)
12
RUS BIP Project Requirements
• 75 percent of the areas to be served by a project receiving
funds from such grants or loans shall be in a rural area
without sufficient access to high speed broadband service
to facilitate rural economic development;
• Priority shall be given to:
– Projects that will deliver end users a choice of more than one
service provider;
– Projects that provide service to the highest proportion of rural
residents that do not have access to broadband service;
– Current or former RUS Title II borrowers
– Projects that commence immediately upon approval.
13
Creating the ARRA Broadband Programs – Joint
Endeavor between RUS and NTIA
• A joint Request for Information was published by RUS and
NTIA in March and public comments were solicited on
how the program should be developed
– Examples of issues: How should broadband be defined? What
should be the role of the state governments? How can broadband
help in the economic development in rural communities?
• Public meetings were held in Washington DC, Las Vegas,
NV and Flagstaff, AZ.
• Public comments were reviewed and were considered
during the development of the program
14
First Round of Funding under ARRA for BIP and BTOP
•
•
•
First Notice Of Funds Availability (NOFA) was announced by Vice President
Biden, Agriculture Secretary Vilsack and Commerce Secretary Locke on July 1,
2009.
The joint BIP/BTOP NOFA was published in the Federal Register on July 9,
2009
Application window opened July 14
Electronic application portal available from July 31-August 20, 2009
•
Outreach and Training:
•
–
–
–
Ten how-to-apply workshops were held jointly by RUS and NTIA from July 7-24, 2009
FCC also participated in the workshops
2,474 non-Federal government attendees
– Pre-workshop seminars targeted to minorities and tribes
•
•
•
•
Applications are currently being reviewed
Awards are expected to be announced in November 2009
All funds must be awarded by September 30, 2010
All projects must be substantially completed in two years and fully completed
in three years
15
Key Definitions in the First NOFA :
•
•
•
•
BB - 2-way data transmission w/ advertised speeds of at least 768 KBPS down + at least 200
KBPS up to end users, OR providing sufficient capacity in a middle mile project to support
provision of BB service to end users.
REMOTE - an unserved, rural area 50 miles from limits of a non-rural area.
RURAL - any area, as confirmed by the latest decennial census, NOT located within: 1) a city,
town, or incorporated area w/ pop. greater than 20,000 people; or 2) an urbanized area
contiguous and adjacent to a city or town w/ pop. greater than 50,000 people -- URBAN - a
densely populated territory as defined in the latest decennial census.
UNDERSERVED - a proposed service area, composed of one or more contiguous census
blocks meeting certain criteria -- Specifically, proposed service area may qualify as
underserved for Last Mile projects if at least one of following factors is met:
–
–
–
No more than 50% households in proposed service area HAVE ACCESS to facilities-based, terrestrial
broadband service at greater than minimum BB transmission;
NO fixed or mobile BB provider w/advertised BB speeds of at least 3 MBPS downstream; or
BB subscribership for proposed service area = 40% of households or less -- A proposed service area
may qualify as underserved for Middle Mile projects if one interconnection point terminates in a
proposed funded service area that qualifies as unserved or underserved for Last Mile projects.
16
Key Definitions in the First NOFA (continued):
• UNSERVED - proposed service area, composed of 1 or more contiguous
census blocks, where at least 90% of households lack access to facilitiesbased, terrestrial BB service, either fixed or mobile, at minimum BB
speed. A household has access to BB service if household can readily
subscribe to service upon request.
• LAST MILE – Last Mile project means any infrastructure project the
predominant purpose of which is to provide broadband service to end
users or end-user devices (including households, businesses, community
anchor institutions, public safety entities, and critical community
facilities).
• MIDDLE MILE - Middle Mile project means a broadband infrastructure
project that does not predominantly provide broadband service to end
users or to end-user devices, and may include interoffice transport,
backhaul, Internet connectivity, or special access.
17
Applications Received – Disclaimer:
statistics are based on
applicant-provided information (pending verification)
• Information on the applications received is available on
www.broadbandusa.gov, including a searchable database of the
applications and access to maps of the proposed service areas; the public
has the opportunity to comment on the description of the proposed
service areas as being unserved or underserved
• Applicants proposing to serve rural areas had to apply to BIP but could file
jointly with BTOP
• 401 BIP only broadband infrastructure applications were received, for $4.9
billion in requested funding
– Last Mile Remote: 214 applications, requesting $1.4 billion
– Last Mile Not Remote: 131 applications, requesting $2.9 billion
– Middle Mile: 56 applications, requesting $710 million
18
Applications Received continued
• 833 joint BIP/BTOP broadband infrastructure applications were received,
for $12.8 billion in requested funding
– Last Mile Remote: 169 applications, requesting $2.4 billion
– Last Mile Not Remote: 502 applications, requesting $5.8 billion
– Middle Mile: 162 applications, requesting $4.6 billion
19
Timeline for Next Round of Funding
• One additional round of funding is planned
• A joint NTIA/RUS Request for Information will be published later this
month
– Seeking comments on the first NOFA, such as the requirements and the
processes
– NTIA and RUS will take comments into account in developing the NOFA
for the second round of funding
• A second NOFA will be announced in mid to late December 2009
• This date is subject to change
• The second NOFA may include modifications to the requirements,
definitions and processes of the first NOFA
• Application window is not known at this time
• Again, all awards must be obligated by September 30, 2010
20
Accounting, Monitoring and
Reporting Compliance Requirements
for ARRA Broadband Loan and Grant
Recipients
21
Loans and Grants
For profit – incl.
co-ops
Not for profit
State or Local
Government
Tribal Authority
<$500,000
>$500,000
7 CFR Part 1773
7 CFR Part 1773
No Audit
Required
No Audit
Required
No Audit
Required
Circular A-133
Circular A-133
Circular A-133
22
ARRA Accounting, Monitoring and Reporting
Requirements continued
Accounting requirements, which are specified in the award
documents, include, but are not limited to, the following:
• i. Awardees must adopt a GAAP system of accounts acceptable to
RUS;
• ii. Awardees must submit annual audited financial statements
along with a report on compliance and on internal control over
financial reporting, and a management letter in accordance with
the requirements of 7 CFR 1773.
23
7 CFR Part 1773
Annual audit prepared by an independent
auditor/audit firm must include:
• Auditor’s report
• Report on compliance and on internal control
over financial reporting
• Management letter
(Examples are found in
Appendices A & B of 7 CFR Part 1773)
24
ARRA Accounting, Monitoring and Reporting
Requirements continued
Reporting Requirements:
• There are general OMB reporting requirements and
RUS specific reporting requirements (see NOFA for
detailed requirements)
• OMB requirements:
– The awardee and each contractor engaged by the awardee must
submit the following information to the relevant agency:
• The total amount of Recovery Act funds received;
• The amount of Recovery Act funds received that were expended or
obligated to projects or activities;
• A detailed list of all projects or activities for which Recovery Act funds
were expended or obligated, including detailed information on any
subcontracts or subgrants awarded by the awardee to include the data
elements required to comply with the Federal Funding
25
ARRA Accounting, Monitoring and Reporting
Requirements continued
• BIP-Specific Reporting Requirements (see NOFA for detailed
requirements):
– Awardees must submit to RUS 30 calendar days after the end of each calendar
year quarter, balance sheets, income statements, statements of cash flow, rate
package summaries, and the number of customers taking broadband service
on a per community basis utilizing RUS’s Broadband Collection and Analysis
System (BCAS).
– Annually on January 31, starting the first January 31 after completion of the
project, awardees must submit to RUS, using the electronic reporting system
provided by RUS:
• Number of households and businesses subscribing to broadband service;
• Number of households and businesses subscribing to broadband service that
receive improved access; and
• Number of educational, library, health care, and public safety providers receiving
either new or improved access to broadband service.
– Awardees shall specifically state in the applicable quarter when they have
received 67 percent of the award funds. Reaching this threshold will indicate
that the awardee has substantially completed its project.
26
Functions of Field Accountants
• Compliance Reviews
– Verify receipt and disbursement of all loan and
grant funds
– Verify all loan and grant costs
27
Recordkeeping & Documentation
RUS shall have reasonable opportunity, at all times
during business hours and upon prior notice, to have
access to and the right to inspect the broadband
system, and any other property encumbered by the
mortgage or security agreement, and any or all books,
records, accounts, invoices, contracts, leases, payrolls,
timesheets, cancelled checks, statements, and other
documents, electronic or paper of every kind
belonging to or in the possession of the awardee or in
any way pertaining to its property or business,
including its subsidiaries, if any, and to make copies or
extracts therefrom.
28
Contact Information
Rural Development
Telecommunications Program
1400 Independence Ave.
Washington, DC 20250
www.usda.gov/rus/telecom
Telecommunications Program Headquarters Staff:
David J. Villano, david.villano@wdc.usda.gov; Assistant Administrator, 202-720-9554
Jonathan Claffey, jon.claffey@wdc.usda.gov; Deputy Assistant Administrator, 202-720-9556
Mary Campanola, mary.campanola@usda.gov; Outreach Coordinator, 202-720-8822
Ken Kuchno, kenneth.kuchno@usda.gov; Director, Broadband Division, 202-690-4673
Gary Allan, gary.allan@usda.gov; Acting Director, Distance Learning & Telemedicine Program, 202-720-0665
General Field Representatives:
Broadband Specialist GFRs: Tony Tindall, anthony.tindall@wdc.usda.gov; 612-721-6432; Randy Jenkins,
randy.jenkins@wdc.usda.gov; 316-733-7604
Other GFRs: http://www.usda.gov/rus/telecom/staff/gfr-state-list.htm
29
ARRA Compliance
Contacts
bipcompliance@wdc.usda.gov
kenneth.ackerman@wdc.usda.gov
james.murray@wdc.usda.gov
diana.alger@wdc.usda.gov
30