The U.S. Department of Agriculture’s Rural Utilities Service (RUS) has been funding infrastructure since its original inception in 1935 as the Rural Electrification Service. The agency is currently accepting ReConnect loan and grant applications for broadband projects with the latest round making available $750 million available in grant monies, $250 million available in a combination of loans and grants and another $200 million in loans available at a fixed 2% interest rate. Meanwhile, the agency has recently funded more miles of fiber than power line using electric funding.
Applications for round three of RUS’s Rural Development Broadband ReConnect Program (ReConnect) are now open through February 22, 2022, with Acting RUS Administrator and Assistant Administrator for Electrical Programs Chris McLean encouraging communities to apply.
“The number one rule for these competitions is you can't win if you don't enter,” said McLean. “We have significant resources available through appropriations for the ReConnect program. As soon as we close this funding round, we have right behind it funding from the bipartisan infrastructure bill, which is another $2 billion, which we're going to put to work to further close the digital divide in rural areas.”
As RUS funding has increased, so has the evolution of what broadband projects the agency will fund, with an eye towards higher-speed future-proof infrastructure.
“We want our borrowers or awardees to be able to do the very best they can,” McLean said. “Our engineering ethic is do it right the first time. You build your church for Easter Sunday because in rural America you get to do it at one time or you don't. Just-in-time bandwidth is not efficient when you're dealing with high cost, difficult to serve areas. One thing that is changing and sometimes is hard to explain to policymakers is that this is a moving goalpost for us. What has been defined as broadband has changed over time.”
During the first two rounds of ReConnect, the eligibility requirements for projects had a 10/1 Mbps or less existing broadband speed with a requirement to build a network to support 25/3 Mbps broadband. For round three, existing broadband networks could be up to 100/20 Mbps with the resulting network providing symmetrical 100 Mbps or faster speeds, recognizing the shift in real world requirements demonstrated in the pandemic.
“Without bandwidth, so much of our economy would have had to shut down,” McLean said. “I'm going on my second year working from home. We're running a major financial institution with our slippers on and our customers have not suffered. In fact, some of our productivity has increased because we have connectivity and the ability to work remotely. The pandemic made the case better than ever, we just have to do this right the first time, have a future-proof infrastructure and have universal broadband availability.”
Fiber provides a future-proof technology good for 20 or more years, with electronics upgradable every five years to provide additional speed increases. “We have a real shot at making transformational difference in large swaths of the country,” said McLean. “That's extraordinarily exciting.”
Electrical co-ops are taking advantage of RUS electric funding to invest in broadband, leveraging the monies to support Smart Grid applications. “My day job is to be the head of the US electric program, and we do about five plus billion dollars of investment a year in electric infrastructure,” said McLean. “The last two fiscal years, Fiscal Year 21, Fiscal Year 20, the electric program actually financed in miles of line, more miles of fiber than we did miles of power line for smart grid... this last Fiscal Year we did 25,000 miles of fiber, which is enough fiber to circle the globe.”
McLean presides over a $48 billion electric loan portfolio at RUS. In recent years, the RUS lending budget for new electric loans has exceeded $5 billion. The agency makes low interest loans for rural electric infrastructure, renewable energy generation, smart grid technology, grid modernization and energy efficiency. It also provides loans, grants and a combination of loans and grants to fund the costs of construction, improvement, or acquisition of facilities and equipment needed to provide broadband services in eligible rural areas.
Listen to the full discussion with Chris McLean on the Fiber for Breakfast Podcast.