Proposal for the creation of a rural broadband fund

by Geoff Daily, AppRising

Over the last week I've been working with a first-rate team of experts in the field of rural fiber deployment on developing the concept of a Rural Fiber Fund that can be including as a part of the upcoming economic stimulus package.

This is the first fruit to be borne of our labors. We'll be working on crafting an in-depth policy paper over the holidays that will be released on January 5th.

But until then everyone should feel encouraged to comment on, add to, and punch holes in this proposal so that we can make the argument so strong so as to seem inevitable.

Without further adieu:

Proposed Addition of the Rural Fiber Fund to the Economic Stimulus Package

ᅠGoal: Wire all of rural America with full fiber networks.

Why Fiber?
Because "broadband" in the 21st century means fiber. Only fiber has the capacity to support the next generations of big bandwidth applications.

ᅠBecause "broadband infrastructure" equals fiber. It requires the most jobs to deploy, delivers the biggest economic boost, and provides world-class, future-proof connectivity.

ᅠBecause rural communities can't compete in the 21st century with 20th century broadband.

How Will This Stimulate the Economy?
Deploying fiber creates high quality jobs in its construction and operation.
$1 billion spent deploying broadband infrastructure creates 19,500 jobs - Ken Peres, CWA

Having fiber promotes economic growth.
$1 billion of new broadband infrastructure adds $10 billion to the GDP - Michael Curri, SNG

ᅠUsing fiber aids rural communities in attracting, growing, and retaining local businesses; becoming energy efficient; improving healthcare and education systems; and more.

How Does The Rural Fiber Fund Work?
Partial loan guarantees to spur deployment and matching grants to aid in planning.

Partial Loan Guarantees
A number of shovel-ready projects can start deploying if the government steps in to share the risk with private capital serving as a credit enhancer that improves the quality of loans.

These guarantees will be based on population density. The lower the density the higher the guarantee so deployers will be incentivized to extend their networks into less populous areas.

All ownership models are eligible, private and public, in order to foster the most innovation.

Getting a guarantee requires an applicant to have:
* A management team with experience in deploying/operating fiber networks
* Tangible support from local partnerships committed to the project
* Verified capital sources adequate to construct and operate the network

Networks built with government-guaranteed loans must:
* Have universal buildout
* Provide unfettered Internet access
* Have plans to provide 100Mbps scalable to 1Gbps of capacity

Matching Grants
Many communities already want fiber but need help financing the planning, surveys, and feasibility studies to move forward. All eligible communities will have access to the matching grants. Particular emphasis will be on projects that take advantage of loan guarantees.

ᅠWhy Partial Loan Guarantees?
They maximize budgetary bang for the buck. Only a portion of each loan is guaranteed and only some of those loans will default and require the actual outlay of federal funds.

ᅠThey effectively leverage and unfreeze private capital markets through the carefully calibrated application of federal guarantees, which have worked successfully in other infrastructure improvement and economic development initiatives.

ᅠThey allow the imposition of important social goals on these networks while also requiring projects to make their business case to the financial markets thereby combining the strengths of government with those of the private sector in economically sustainable partnerships.

ᅠHow Fast Will It Work?
At least $1 billion worth of shovel-ready projects will start hiring in Q1 '09. The remaining billions from the first phase will be allocated as their availability becomes known and network developers adjust their models to take advantage of the Fund's guarantees.

Pent-up demand for fiber combined with the planning grants program will set in motion a second wave of projects that can come online within in the second half of '09.

ᅠHow Big Should It Be?
The first installment of $10 billion will spur the deployment of all shovel-ready projects, help interested communities begin planning, inspire existing fiber networks to expand, and spark the evolution of rural fiber deployment to no longer rely on government loans and grants.

ᅠThe second installment of $10 billion will be set aside until the first $10 billion is allocated. At that point the program's progress will be assessed as to if further funds are needed and whether or not loan guarantees continue to be the most appropriate, effective mechanism.

How Do We Make This A Reality?
A Rural Fiber Fund Working Group has been collaborating on the development of this initiative. Our group consists of deployers, consultants, public advocates, and policy experts.

A Rural Fiber Fund policy paper is being prepared for a Jan. 5th release that will flesh out the details of this proposal and include a list of shovel-ready projects from across the country.ᅠ

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