US agencies require net neutrality with broadband grants

New funding notice for billions in broadband deployment funding released

Two U.S. agencies tasked with distributing about US$7.2 billion in broadband deployment grants and loans over the next 15 months have released an official list of funding rules, imposing net-neutrality clauses on grant applicants.

The 121-page notice of funds availability (NOFA) sets out general rules of how to apply for the funding, but largely ducks larger questions such as how the U.S. Rural Utilities Service (RUS) and the National Telecommunications and Information Administration (NTIA) will determine how much money will go to areas "unserved" or "underserved" by broadband.

In conjunction with the notice, U.S. Vice President Joe Biden announced the availability of $4 billion in loans and grants, the first wave of funds available under a huge economic stimulus package passed earlier this year. The notice gives applicants from July 14 to Aug. 14 to apply.

The notice requires that grant applicants "not favor any lawful Internet applications or content over others," often referred to as net neutrality. "Without a non-discrimination condition, network operators could give preferential treatment to affiliated services, or charge some application and content providers for 'fast lanes' that would put others at a competitive disadvantage," the notice said.

Applicants can deploy nondiscriminatory network management methods, and they can offer managed services that use private connections, such as telemedicine, public safety communications and distance learning, the notice said.

The notice also defines "unserved" and "underserved." In the economic stimulus package, the U.S. Congress required the funds go to unserved and underserved areas.

The agencies define an unserved area as one where at least 90 percent of households lack access to "facilities-based, terrestrial broadband service, either fixed or mobile," with a minimum broadband speed of 768K bps (bits per second) downstream. The NTIA and RUS did not want to define unserved as an area that has no broadband service, they said in the notice.

"An area should not be considered served merely because one or two households in that area have access to broadband service," the notice said.

The two agencies also discounted satellite broadband service, although some satellite services might be fast enough, the notice said. "Because the general reach of satellite service can extend to the entire country, it is excluded as a factor in the unserved definition to avoid a finding that no area in the United States would be considered unserved," the notice said. "Such a finding would render the term meaningless."

The definition of "underserved" is more complicated and depends on whether applications are made for so-called last-mile network funding or for middle-mile funding. For last-mile project to get funded, an area must have one of these scenarios: no terrestrial broadband service with 768K bps downstream speeds, no fixed or mobile broadband provider with advertised transmission speeds of 3M bps or more, or broadband subscriber rates of 40 percent or less.

Craig Settles, an analyst and president of consulting firm Successful.com, called the notice an important step toward universal broadband deployment in the U.S.

"This NOFA is more than a tick list of items that grant proposals must contain, or requirements to which applicants must adhere. It's the big step off on the long march toward a [hopefully] successful national broadband strategy," Settles wrote on his blog. "It creates a framework for what U.S. broadband looks like as the next decade begins, who benefits from the technology and how strong a foundation is created for [the U.S. Federal Communications Commission's] eventual strategy. "

The Wireless Communications Association International and the National Cable and Telecommunications Association both applauded the release of funding, but didn't comment on the specifics in the notice.

Public Knowledge, a digital rights group, said it was happy to see the NTIA continue to emphasize network interconnection and content nondiscrimination rules that were originally required in the economic stimulus legislation.

"These conditions will help consumers and create vitality in the services created by the program," said Gigi Sohn, Public Knowledge's president.

However, Public Knowledge is concerned that the NTIA will allow carriers to offer managed services, Sohn said in a statement. "The point of the stimulus program is to ensure widespread access to the broadband Internet," she said. "We are concerned that carriers may use 'managed services' to cannibalize content from, and shrink the available network capacity to, the Internet, for customers of the new networks."

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