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Regional Matters

March 3, 2022

The End of the Digital Divide? The Future of Broadband Post-Infrastructure Investment and Jobs Act (IIJA)

In November 2021, President Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) into law. This bipartisan piece of legislation not only funds key components of the nation’s physical infrastructure such as roads, bridges, and rail, but also it directly addresses broadband as a key piece of the nation’s infrastructure. The IIJA seeks to address the nation’s “digital divide” that exists between broadband users and those who lack connections (whether due to unavailability or unaffordability) with $65 billion for broadband deployment, affordability, and digital literacy. The COVID-19 pandemic exposed the key resources that those without broadband subscriptions are often deprived of: education (e.g., reliable connection for remote learning, transition to college), health care (e.g., telehealth), and labor market opportunities (e.g., training, applications, job placement).

This article will explore the IIJA’s broadband provisions, the necessary steps that state governments must make to unlock the bill’s funds, and the potential impact on Fifth District residents. Closing the digital divide will require multiple actors (state and local governments, federal agencies, and broadband providers) to work together to fulfill the IIJA’s funding requirements while addressing local needs.

The Digital Divide

The digital divide refers to the gap in opportunities caused by unequal access to online resources among American households. As society has become increasingly digitally dependent over the past decade, the presence of this disparity has become a growing concern.

The digital divide is driven by two co-occurring gaps: access and adoption. The access gap largely reflects the disparity in broadband infrastructure availability between metro and rural areas. The adoption gap is driven by low-income residents’ inability to afford broadband subscriptions even where the infrastructure is available.

Broadband Funding in the IIJA

The IIJA addresses the access component of the digital divide by providing $42.5 billion in state grants for broadband deployment, the largest component of broadband funding in the bill. States will receive at least $100 million each, with remaining funding determined by a formula that accounts for the number of unserved and high-cost locations in each state. In order to set a minimum standard of service nationally, states are required to prioritize their deployment efforts in unserved areas that do not provide service speeds of at least 25 megabits per second (Mbps) download and 3 Mbps upload. Then, states may direct remaining funds toward underserved areas (service below 100/20 Mbps). An additional $2 billion will be set aside for U.S. Department of Agriculture grants and loans for rural regions to construct, improve, or acquire facilities and equipment needed for broadband deployment.

The law addresses the adoption component of the digital divide with $14.2 billion for the Affordable Connectivity Program, which provides discounted broadband subscriptions and devices to low-income households. Nearly all of the nation’s broadband providers will be able to participate in the program and receive subsidies for discounting service to qualifying households.

IIJA’s third major broadband component provides $2.75 billion to fund Digital Equity Act Programs. The goal of these programs is to “ensure that all individuals and communities have the skills, technology, and capacity needed to reap the full benefits of our digital economy.” This set of programs will target covered populations such as low-income households, individuals with disabilities, and rural inhabitants, among others. In addition to assisting the covered populations in adopting broadband, the Act facilitates grants to workforce development programs that aim to leverage their broadband access into job training and opportunities.

Challenges in Unlocking the Funds

Despite the substantial broadband funding in the IIJA, states face some challenges to unlock the funding.

Firstly, the Federal Communications Commission (FCC) will develop maps to determine the specific levels of grant funding beyond the $100 million minimum per state. Previous discrepancies in broadband coverage among maps developed by the FCC, the U.S. Census Bureau's American Community Survey, and other sources have led to conflicting depictions of the existing digital divide, with the FCC painting a rosier picture of existing broadband coverage than the other sources. In 2020, Congress allocated $65 million for the FCC to update their methodology so that their 2022 maps can more accurately measure broadband coverage and speeds. Any delay in the release of the new FCC maps or perceived inaccuracies that states contest could delay the deployment funding.

Secondly, states must develop enforceable prioritization plans to deploy the grants once final funding is allocated (i.e., deployment to unserved areas before underserved areas). States will work with the National Telecommunications and Information Administration to establish rules and procedures for funds to be awarded to broadband providers to achieve the criteria set out in the IIJA as well as a five-year plan for spending the funds.

Lastly, states must develop their own digital equity plans to receive any funding from the Digital Equity Plan Programs. Once the funding levels are announced, states will have 60 days to submit their plans, which will involve a separate set of rules and procedures to award digital equity funding to broadband providers.

Fundamentally, the challenge lies in the coordinated execution of plans among state government, federal agencies, and broadband providers, among other stakeholders. For example, stakeholders in rural areas must contend with “last mile” infrastructure, which connects regional networks to unserved individual businesses and households. Last mile infrastructure requires finding firms that are able to lay fiber-optic cable to far-flung premises often across challenging topography.

The Reach of the IIJA in the Fifth District

The Biden administration estimates (based on current FCC benchmarks) that 1.7 million currently unserved people in the Fifth District could gain access to broadband service while 8.3 million people will be offered access to affordable internet subsidies as a result of the IIJA. The estimates in the chart below indicate the estimated minimum reach of the IIJA deployment funding to Fifth District residents based on estimates from the Biden administration alongside the need for broadband based on data from BroadbandNow, a research organization that combines estimates from public (FCC, U.S. Census) and private sources (internet service providers). For example, the Biden administration expects that a minimum of 14.5 percent of West Virginia residents will gain broadband access; according to BroadbandNow, 30.8 percent currently lack access. The figures in the chart suggest that a minimum of one-third to one-half of unserved Fifth District residents will receive access to broadband services from the IIJA deployment funding.

The chart below provides estimates of the percentage of residents who will be eligible for the IIJA’s broadband affordability subsidies from the Biden administration. The affordability estimates include residents who currently live in served areas as well as residents who are currently unserved but will receive access from IIJA state deployment funds. Around 30 percent of West Virginia, North Carolina, and South Carolina residents will be eligible for the program, 23 percent of Virginia and District of Columbia residents, and 17 percent of Maryland residents.

Final Thoughts

The IIJA has allocated an unprecedented level of federal funds to close the digital divide. Closing that divide, however, will require state governments to navigate the updated FCC maps that will determine deployment grants, swiftly develop digital equity plans, and coordinate the delivery of broadband service to their constituents.

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