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Rural Development1400 Independence Ave.Washington, DC 20250www.usda.gov/rus/telecom

Presenter:

Jacki Ponti-Lazaruk

Assistant Administrator

Jacki.ponti@usda.gov

202-720-9554

Rural Development Telecommunications Program Rural Development Telecommunications Program

Funding for BroadbandFunding for Broadband

W2i Digital Cities ConventionW2i Digital Cities Convention

December 12, 2007December 12, 2007

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Telecommunications Program

Rural America will have access to affordable, reliable, advanced communications services to provide a healthy, safe and prosperous place to live and work.

To improve health, safety, education, economic opportunity, and quality of life in rural America through leadership and investment in communications infrastructure and services.

Mission

Vision

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The Rural Development 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

Rural Development Utilities ProgramsRural Development Utilities Programs

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• Strong Local Leadership in Rural Development State Offices– State Directors and Office Staff work with local communities to identify potential

projects and state needs.– State Offices can be identified at: http://www.rurdev.usda.gov/recd_map.html

• Telecom Program Staff provide Financial and Engineering support and guidance in all 50 states.

– For Broadband Loan Program and Community Connect Grant Program Information, contact Ken Kuchno, Director, Broadband Division, at 202-690-4673, kenneth.kuchno@usda.gov

– 28 General Field Representatives monitor more than 1000 telecom and broadband loan and grant projects across the country.

• These same field representatives provide technical assistance to potential applicants and provide information to communities who are interested in broadband deployment.

• Identify your local field representative at: http://www.usda.gov/rus/telecom/staff/gfr-state-list.htm

– National outreach efforts are managed by Mary Campanola, at 202-720-8822; mary.campanola@usda.gov

Rural Development Utilities ProgramsRural Development Utilities ProgramsSupport for Telecommunications Loan and Grant ApplicantsSupport for Telecommunications Loan and Grant Applicants

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Rural Development Telecommunications Program

Community Connect

Distance Learning and Telemedicine

Broadband Loan Program

Infrastructure Program

• Since its inception, the program has provided 148 grants and invested almost $70 million to provide service to local communities.

• Awarded $8.9 million in grants in FY 2007.

• $306 million in DLT grants and loans have been awarded.

• In FY 2007, 78 grants and 11 loan/grant combinations were awarded. 699 educational centers and 512 health centers have gained access to improved services.

• 79 loans have been made, for $1.6 billion, for broadband deployment in more than 1900 communities.

• More than 1.1 million households will receive broadband access under loans made.

• Assists the private sector in developing and financing the construction of telecom infrastructure in rural America.

• $3.7 billion in principal outstanding; 550 borrowers.

• 92% of borrowers are providing Broadband service.

More than $6 billion invested in rural telecom infrastructure since 2001…

Weather Radio and Public TV Digital Grant Programs• 51 Public TV Station Digital Transition grants awarded, for $38,837,400

• 93 Weather Radio Transmitter grants awarded, for $5,733,703

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Broadband Loans… Purpose

To provide loans for the cost of construction, improvement, and

acquisition of facilities and equipment for broadband services in eligible rural communities.

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Broadband Loans… FY 2008 Budget

• FY 2008 budget not yet available

• $259 million in loans were made in FY 2007

• Under the Continuing Resolution, $495 million is available for FY 2008 loans

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Broadband Loans…Statistics

211 Applications Received Since the Beginning of the Program

Totaling $4,472,879,438

Applications Processed as of December 1, 2007

80 Approved $1,553,266,931

18 In Review $ 594,584,801

113 Returned $2,266,010,168

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Broadband Loans… Status and Results (as of 12/1/07)

• Established by the 2002 Farm Bill. 2007 Farm Bill reauthorization in process.

• Originally envisioned to fund $2 billion in rural broadband deployment by 2007.

• To date, 80 loans have been made for approximately $1.5 billion to finance facilities in 47 states.

– Projects proposing to serve more than 1.1 million subscribers

– 1,979 communities

• 10 projects completed in Kansas, Louisiana, Michigan, North Dakota, Nebraska, Oregon, South Dakota, Texas and Washington

13%

43%

32%

8%4%

Completed In Progress Not Started Rescinded Defaults/Workout

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Broadband Loans…Types of Organizations Funded

3%

53%36%

7% 1%

Municpalities Corporations LLCs Cooperatives Tribal Authority

As of 12/12007

One Size Does Not Fit All…

• Private/public partnerships

• Traditional telephone companies enhancing service offerings

• Local service providers serving one or a few local communities

• National service providers providing service to multiple communities, even multiple states

• Municipalities

• 33% of applications approved have been from startup companies

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1% 19%

26%18%

36%

Broadband OverPower Line (BPL)DSL

Fixed Wireless

Hybrid Fiber/Coax

Fiber to the Home

Broadband Loans…Types of Technologies Funded

As of 12/1/07

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Broadband Loans…Wireless Broadband

• Air Advantage– Broadband Loans:

2004: 43 communities, $1,500,000

2005: 12 communities, $1,028,000

2007: loan pending

– Community Connect Grants:

2003: Unionville, Michigan (Pop. 605) $214,532

2003: Port Hope, Michigan (Pop. 310) $219,176

– Today they are serving 55 Michigan communities and providing service to 2,174 rural Michigan customers

Twenty-six percent of the 80 loans made to date provide financing for wireless systems:

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Broadband Loans…Eligible Entities

• Corporations

• Limited Liability Companies

• Cooperative or Mutual Organizations

• Indian Tribes

• Public Body

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Broadband Loans…Ineligible Entities

• Individuals

• Partnerships (including LLPs)

• Any entity serving more than 2% of the telephone subscriber lines installed in the United States

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Broadband Loans…Direct Cost-of-Money Loans

Bear interest at the cost of money to theTreasury for comparable maturities.

The interest rate is set at thetime of each advance of funds

The current rates can be found at:

http://www.federalreserve.gov/releases/h15/update

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Broadband Loans…Application Information

The regulation, application, application guide, and all other relevant information is available on our website at:

www.usda.gov/rus/telecom/broadband.htm

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Broadband Loans…Application Information

Broadband Loans Search Tool

Listing of all approved and pending communities:http://broadbandsearch.sc.egov.usda.gov/SearchTabs.aspx

This search tool is regularly updated.

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Broadband Loans…Application Submission

• Prospective applicants should contact their respective General Field Representative (GFR) prior to submitting the application• List of the GFRs and the contact information is included

in Application Guide and at

http://www.usda.gov/rus/telecom/staff/gfr-state-list.htm

• There is no deadline to submit applications• Applications will be reviewed and processed on a

first-come, first-served basis

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Broadband Loans…Key Components of an Application

Credit Support

Business Plan

Market Survey

Financial Information

System Design

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Proposed Rule Published May 11, 2007; Public Comments Were Due July 10, 2007

Rural Development’s Goals:

Our Proposed Rules will… 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 and streamline the equity and marketing survey requirements Increase the transparency of the application process Promote a better understanding of all application requirements Ensure that projects funded are keeping pace with increasing demand for

bandwidth

2007 Farm Bill Will Also Impact Broadband Program

7 CFR Part 1738: Rural Broadband Access Loan and Loan Guarantee Program

Ensure that rural residents have access to affordable and reliable

quality broadband service in rural communities

Make sound lending decisions and to ensure positive investment of taxpayer

dollars

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Community Connect Grant Program

• A nationally competitive grant program to provide broadband service on a “community-oriented connectivity” basis to the most rural and economically challenged communities.

• Since its inception, the Community Connect program has provided 148 grants and invested almost $70 million to provide service to local communities.

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Community Connect Grant Program

• Serves one Community

• Community without Broadband

• Provides a Community Center

• Free service to Critical Facilities

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Community Connect Grant Program

New for 2008• Added Rand McNally as a community qualifier if

the Census does not recognize a community• Using MHI based on the state average rather than

PCI based on the national level• Clarified allowable operating expenses• No other changes are expected to be made to the

program rules for FY 2008

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Community Connect Grant Program

• FY 2008 Budget not yet available.• Under the Continuing Resolution, approximately

$8.9 million will be available for Community Connect grants.

• Notice of Availability of Funds will be published in the Federal Register to announce the opening of the grant application window (date TBD).

• We anticipate a 60-day grant application window.

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Jacki Ponti-Lazaruk, Assistant Administrator

Thank You

W2i Digital Cities Convention

12/12/07