81 FR 37121 - Rural Broadband Access Loans and Loan Guarantees

DEPARTMENT OF AGRICULTURE
Rural Utilities Service

Federal Register Volume 81, Issue 111 (June 9, 2016)

The Rural Utilities Service (RUS), hereinafter referred to as the Agency, is confirming the interim final rule published in the Federal Register on July 30, 2015, which amends its regulation for the Rural Broadband Access Loan and Loan Guarantee Program (Broadband Loan Program).

[Federal Register Volume 81, Number 111 (Thursday, June 9, 2016)]
[Rules and Regulations]
[Pages 37121-37122]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-13302]



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Federal Register / Vol. 81, No. 111 / Thursday, June 9, 2016 / Rules 
and Regulations

[[Page 37121]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1738

RIN 0572-AC06


Rural Broadband Access Loans and Loan Guarantees

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule; confirmation.

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SUMMARY: The Rural Utilities Service (RUS), hereinafter referred to as 
the Agency, is confirming the interim final rule published in the 
Federal Register on July 30, 2015, which amends its regulation for the 
Rural Broadband Access Loan and Loan Guarantee Program (Broadband Loan 
Program).

DATES: Effective June 9, 2016.

FOR FURTHER INFORMATION CONTACT: Keith Adams, Assistant Administrator, 
Telecommunications Program, Rural Utilities Program, U.S. Department of 
Agriculture, 1400 Independence Avenue SW., STOP 1590, Room 5151-S, 
Washington, DC 20250-1590. Telephone number: (202) 720-9554, Facsimile: 
(202) 720-0810.

SUPPLEMENTARY INFORMATION: Since the inception of the Broadband Loan 
Program, the Agency has faced, and continues to face, significant 
challenges in delivering the program due to the following factors: (1) 
The significant number of applicants proposing to offer broadband 
service that are start-ups with limited resources; (2) the continual 
evolution of telecommunications technology; and (3) the associated 
higher costs of serving rural communities. With the enactment of the 
Agricultural Act of 2014 (the 2014 Farm Bill), the Broadband Loan 
Program has been significantly modified, and was suspended while the 
Agency revised this regulation. Given that the program was unable to 
operate during the revision, the Agency published an interim rule on 
July 30, 2015 in the Federal Register (80 FR 45397) so that the program 
could immediately reopen. The Agency invited comments to guide its 
efforts in drafting the new procedures implementing the 2014 Farm Bill 
and received comments from the National Cable & Telecommunications 
Association, WTA-Advocates for Rural Broadband and Mr. James Cook. 
These comments and the Agency's responses are summarized as follows:

Broadband Service and Broadband Lending Speed Definitions

    Comment: Respondents commented that the definitions for Broadband 
Service, which sets the eligibility standard for an area, and Broadband 
Lending Speed, which sets the construction standard, are too low and 
should be raised to higher standards to be more in line with the 
current Federal Communications Commission (FCC) definition for 
broadband of 25 megabits downstream and 3 megabits upstream.
    Response: As the respondents noted in their comments, the 
regulation establishes a process to change these definitions by 
publishing new requirements when a NOSA/NOFA is published opening up an 
application window. The Agency agrees that higher definitions would be 
beneficial to rural residents. However, when these definitions are set, 
it is not only the bandwidth requirement for rural areas that is 
considered but also the amount of funding that is available for any 
given application window. If a higher definition for bandwidth is used, 
more of the country then becomes eligible for funding. When limited 
funding is available, the Agency has to ensure that those funds are 
directed to the most unserved rural areas. The Agency will re-evaluate 
these requirements every time a NOSA/NOFA is published and set the 
standards accordingly.

Overbuilding

    Comment: Respondents commented that the RUS investment should go 
into unserved areas and that the Agency count all terrestrial providers 
in the proposed service territory when determining area eligibility.
    Response: RUS agrees that unserved areas should be the target of 
the program. To ensure that all terrestrial broadband providers are 
counted in an area where an application is being considered, RUS has 
developed a multi-layer approach to locate them. First, when an 
application is submitted, the proposed service territory maps will be 
posted online utilizing the RUS Mapping Tool and existing service 
providers may respond to the public notice. If three or more existing 
providers are identified in the area and they meet the minimum 
eligibility speeds, then that area is considered ineligible for 
funding. If no providers respond to the public notice, then the Agency 
will have its field staff visit the proposed service area and locate 
all broadband providers in the area. The field staff will contact these 
providers and request that they respond to the public notice.

Area Eligibility

    Comment: One respondent suggested that instead of three incumbents 
making a service area ineligible for funding, that the requirement be 
changed to two incumbents. The respondent also suggested that the 
definition of broadband service be raised to the current FCC definition 
for broadband of 25 megabits downstream and three megabits upstream.
    Response: Although there is merit in using a higher bandwidth 
definition to determine area eligibility, the requirement that three 
incumbents in an area make that area ineligible is a statutory 
requirement and cannot be changed. The regulation does allow for the 
eligibility definition to be changed and the Agency will consider 
higher speeds whenever a NOSA/NOFA is published. As stated previously, 
the Agency must also recognize the amount of funding that is available 
each time an application window is opened and will set the eligibility 
definition accordingly.

Affordable Rates

    Comment: One commenter reiterated that broadband service in rural 
areas needs to be affordable.
    Response: Applicants must complete a market survey and a 
competitive analysis of all providers in the proposed service area as 
part of the application. This ensures that price points are set at the 
proper level for the area in question and that the operation is 
sustainable. There is a balance between providing high quality 
broadband service and charging the appropriate rate. It must be 
recognized that in less dense population

[[Page 37122]]

areas, it may be necessary to charge a higher rate to ensure the 
viability of the operation.

Affiliated Companies

    Comment: One commenter proposed that affiliate or affiliated 
companies providing broadband service in the same proposed funded 
service area should be recognized as one incumbent service provider 
when considering if an area is eligible for funding.
    Response: Each company that is providing broadband service in an 
area and meets the definition of an incumbent service provider will be 
counted as an incumbent service provider in determining the eligibility 
of an area. RUS cannot treat legally established companies properly 
acting as independent companies as the same entity.

Broadband Usage Restrictions

    Comment: One commenter recommended that if a company has capped the 
amount of bandwidth that is allowed for a given period, that additional 
standards should be established in determining if this provider would 
be counted as an incumbent service provider when determining service 
eligibility.
    Response: The Agency appreciates this suggestion and will consider 
it during the next revision to the regulation. The main goal of the 
program is to provide funding to areas that do not have any broadband 
service. Most companies that cap bandwidth have options where a 
consumer can buy more bandwidth at an additional cost.

Wireless Broadband Service

    Comment: One commenter recommended that wireless solutions for 
broadband service should be validated during busy hour/busy time when 
determining if the wireless provider meets the definition for an 
incumbent service provide when determining area eligibility.
    Response: There are many levels of providing broadband service and 
a number of ways for determining this. The Agency has elected to use 
advertised broadband rates that are being sold and to validate that 
this level of service is being provided in an area. We will consider 
implementing additional tests the next time the regulation is revised. 
If tests of this nature are implemented for wireless service providers 
then corresponding tests will have to be implemented for wireline 
service providers.
    The Agency appreciates the interest of the commenters and thanks 
them for their comment submissions.
    The Rural Utilities Service did not receive any significant adverse 
comments during the public comment period on the interim rule, and 
therefore confirms the rule without change.

PART 1738--RURAL BROADBAND ACCESS LOANS AND LOAN GUARANTEES

    Accordingly, the interim rule amending 7 CFR part 1738 which was 
published at 80 FR 45397 on July 30, 2015, is adopted as a final rule 
without change.

    Dated: May 26, 2016.
Brandon McBride,
Administrator, Rural Utilities Service.
[FR Doc. 2016-13302 Filed 6-8-16; 8:45 am]
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