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The $1 Billion Middle Mile Grant Program Opportunity

Part 2 of the Keller and Heckman Infrastructure Act Blog Series

Keller and Heckman’s Telecommunications Practice Group is publishing a series of Blog Posts to explore various provisions of the Infrastructure Investment and Jobs Act (“the Act”), which allocates $65 billion to support various types of broadband initiatives.  The first substantive post in our series, on November 12, examined the $42.45 billion Broadband Equity, Access and Deployment (“BEAD”) program to fund a last-mile broadband development grant program

This blog post – Part 2 of our series – dissects a portion of the Act allocating an additional $1 billion for middle mile broadband infrastructure projects (see Div. F, Title IV, “Enabling Middle Mile Broadband Infrastructure”).

Background

Middle mile infrastructure does not provide service directly to end users but is critical for expanding reliable broadband service into unserved and underserved areas.  A way to maximize the likelihood of securing federal funding for middle mile projects is to enter into creative partnerships with entities that have existing infrastructure and expertise to provide an end-to-end solution.

The energy sector – utilities, electric cooperatives, oil & gas companies – and public entities could serve as invaluable partners on these projects.

We are not the only ones who think so.  Last week, the National Association of Regulatory Utility Commissioners (“NARUC”) issued a Resolution Supporting Energy Company Communications Infrastructure for Broadband Expansion.  It encourages, “energy companies to consider sharing wired and wireless ‘middle mile’ communications infrastructure to support expansion of consumer broadband access and, with respect to any wireless networks, coordinate to reduce equipment costs and enable provision of network services to other utilities with overlapping service territories.”

The NARUC Resolution dovetails nicely with the unique requirements of the middle mile program, which encourages partnerships and identifies critical infrastructure companies as desirable partners for several reasons.   First, the middle mile program explicitly prioritizes projects that are able to, “leverage existing rights-of-way, assets, and infrastructure to minimize financial, regulatory and permitting challenges.” (emphasis added).  Second, eligible applicants include a virtually unlimited range of public and private entities.  In light of the 30% matching requirement (discussed further below), owners of existing infrastructure or rights-of-way that can be used to support network development have an opportunity to provide a meaningful contribution toward a middle mile application.

In the coming months, NTIA will adopt application rules and procedures providing more specificity and timelines for the middle mile program.  For now, though, let’s explore the key statutory provisions:

Program Purpose.   The purpose of the middle mile funding program is twofold: (i) to expand and extend infrastructure to reduce the cost of connecting unserved and underserved areas to the backbone of the Internet; and (ii) to promote broadband resiliency through the creation of alternative network connection paths designed to prevent single points of failure on a broadband network.  These twin objectives of: (a) enhancing connectivity for last-mile un/underserved networks; and (b) promoting network resiliency, inform the overall structure of the program and its requirements.

Eligibility.  Entities eligible to participate in the program include State and local governments, Tribal governments, technology companies, electric utilities, utility cooperatives, public utility districts, telecommunications companies, telecommunications cooperatives, nonprofit foundations, corporations, nonprofit institutions, nonprofit associations, regional planning counsels, Native entities, or economic development authorities.

Partnerships of two or more of these types of entities are also explicitly permitted and encouraged.

Administration.  The Program will be administered by NTIA.   Unlike the BEAD Program, the middle mile program will not flow through the States; applicants will apply directly to NTIA for funds.

Priority.  The Act requires the agency to prioritize projects that: (i) leverage existing rights-of-way, assets, and infrastructure (as noted above); (ii) enable the connection of unserved anchor institutions, including Tribal anchor institutions; (iii) facilitate the development of carrier-neutral interconnection facilities; and, (iv) improve redundancy and resilience while reducing regulatory and permitting barriers.

NTIA also is required to prioritize any project in which the applicant has done two or more of the following:

  • adopted fiscally sustainable middle mile strategies;

  • committed to offering non-discriminatory interconnection to wired and wireless last mile broadband providers and any other party making a bona fide request;

  • identified in the application specific terrestrial and wireless last mile broadband providers that have expressed written interest in interconnecting and demonstrated sustainable business plans or adequate funding;

  • identified supplemental investments or in-kind support (such as waived franchise or permitting fees) that will accelerate the completion of the planned project; and

  • demonstrated that the middle mile infrastructure will benefit national security interests of the United States and the Department of Defense.

Connections to Anchor Institutions.  To the extent feasible, an entity that receives a middle mile grant “using fiber optic technology” must ensure the network is capable of providing 1Gbps service to anchor institutions and must offer direct interconnection to anchor institutions located within 1,000 feet of the middle mile facilities.

Interconnection and Nondiscrimination.   Middle mile grant recipients that use fiber optic technology must also “offer interconnection in perpetuity, where technically feasible, without exceeding current or reasonably anticipated capacity limitations, on reasonable rates and terms to be negotiated with requesting parties.”   The nature of the interconnection must include the ability to connect to the public Internet, as well as physical interconnection for the exchange of traffic.

Determining Need and Expending Funds.  Funds should be spent to provide service to unserved and underserved areas and facilitate broadband resiliency and redundancy.  In determining whether a particular area is unserved or underserved, the applicant should rely on recent broadband mapping data from: (i) the FCC fixed broadband map; (ii) the State in which the area to be served by the middle mile infrastructure is located; or, (iii) speed and usage surveys of existing broadband service conducted by an eligible entity and demonstrating that more than 25% of respondents display a broadband service speed slower than speeds required for an area to qualify as unserved.  It is likely that NTIA’s final rules will permit funds awarded under this program to be used for a host of projects, including laying fiber to expand and extend existing networks, leasing dark fiber, connecting data centers, building wireless microwave backhaul infrastructure and other similar projects.

Matching Funds and Timeline.  The amount of a middle mile grant awarded to an eligible entity may not exceed 70% of the total project cost.  This is where critical infrastructure companies can contribute to a successful application by providing in-kind assets, including rights-of-way, existing fiber capacity, tower space and radio equipment infrastructure to support the middle mile project.  The contribution of existing infrastructure also will help the applicant meet statutory deadlines.   A winning applicant must complete its buildout of the middle mile infrastructure within five years of the date the grant is made available.

Notably, unlike the BEAD Program and other broadband-related programs established under the Act, the statute does not task NTIA with promulgating rules or issuing a Notice of Funding Opportunity for the middle mile program within a particular timeframe.   While it would seem logical to do so, whether NTIA will attempt to stand up the middle-mile program in a similar timeframe as the BEAD last-mile broadband program is unknown.

***Next up in the blog series:  Focusing on Partnerships***

© 2022 Keller and Heckman LLPNational Law Review, Volume XI, Number 320
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About this Author

Keller and Heckman’s Telecommunications practice represents major domestic and multinational companies, start-ups, associations, cooperatives, municipalities, and other government entities on a wide range of regulatory, administrative, legislative, and judicial matters involving wireless communications, broadband and telecommunication services, and infrastructure. Working regularly with engineering, financial, and other specialists, we help our clients formulate and implement comprehensive telecommunications plans, develop advanced communications systems, deploy new...

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