1. 1 Rural Development 1400 Independence Ave. Washington, DC 20250 www.usda.gov/rus/telecom Presenter: Jacki Ponti-Lazaruk Assistant Administrator Jacki.ponti@usda.gov 202-720-9554 Rural Development Telecommunications Program Funding for Broadband W2i Digital Cities Convention December 12, 2007

2. 2 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

3. 3 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 Programs

4. 4 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.htmlhttp://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 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.htmhttp://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 mary.campanola@usda.gov Rural Development Utilities Programs Support for Telecommunications Loan and Grant Applicants

5. 5 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

6. 6 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.

7. 7 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

8. 8 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

9. 9 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

10. 10 Broadband Loans… Types of Organizations Funded 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

11. 11 Broadband Loans… Types of Technologies Funded As of 12/1/07

12. 12 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:

13. 13 Broadband Loans… Eligible Entities Corporations Limited Liability Companies Cooperative or Mutual Organizations Indian Tribes Public Body

14. 14 Broadband Loans… Ineligible Entities Individuals Partnerships (including LLPs) Any entity serving more than 2% of the telephone subscriber lines installed in the United States

15. 15 Broadband Loans… Direct Cost-of-Money Loans Bear interest at the cost of money to the Treasury for comparable maturities. The interest rate is set at the time of each advance of funds The current rates can be found at: http://www.federalreserve.gov/releases/h15/update

16. 16 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

17. 17 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.

18. 18 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

19. 19 Broadband Loans… Key Components of an Application Credit Support Business Plan Market Survey Financial Information System Design

20. 20 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

21. 21 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.

22. 22 Community Connect Grant Program Serves one Community Community without Broadband Provides a Community Center Free service to Critical Facilities

23. 23 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

24. 24 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.

25. 25 Jacki Ponti-Lazaruk, Assistant Administrator Thank You W2i Digital Cities Convention 12/12/07