Joey Wender and the Treasury's Capital Project Funds - Episode 551 of the Community Broadband Bits Podcast

Joey Wender (00:07):
1.8 million households that will have high speed Internet because of our fund. And it's 1.8 million households closer to reaching the ultimate goal of serving every location in the United States.

Christopher Mitchell (00:20):
Welcome to another episode of the Community Broadband Bits podcast. Before we launch in today's show, I wanted to share a little bit about some interesting things that are coming up. One is a live stream on June 7th at three Eastern Time. Our next building for digital equity livestream. This will be the fourth one. We've had a lot of good feedback on our others. It's a interesting mix of presentations and trivia and, and q and a. And you can find more at building for digital equity.com, where you'll see information about that live stream on June 7th at three Eastern Time. Also, there you'll see information about the Building for Digital Equity Podcast, of which we have many episodes and more to come. These are shorter discussions about people doing that hard work. And then for those of you who haven't heard about the Connect This Show, we are gonna be continuing to do those about every two weeks, and you can find more@connectthisshow.com.

(01:27):
That is a hour long video show, usually a little bit longer than that, often featuring Travis Carter from u i Fiber in Minneapolis, Kim McKinley from Utopia Fiber, and Doug Dawson, the consultant extraordinaire. So if you haven't caught any of those they're best on video. You can watch 'em on YouTube. You can find that in additional shows from ilsr. The Institute for Local Self-Reliance, where I work at ilsr.org/podcasts. This is Christopher Mitchell with the Institute for a Local Self-Reliance. Almost said I was in St. Paul, but I'm not. Today I am in Houston, Texas at the Harrison Edwards Podcast Booth area where the media does interviews and press releases. And I'm here with Joey Weder, who is the director of the Capital Projects Fund CPF at the Department of Treasury. Welcome to the show, Joey. Thanks

Joey Wender (02:20):
For having me.

Christopher Mitchell (02:21):
I am excited to talk with you. I think this has been a terrific project. I'm happy to give us a chance to talk about some of the great successes. And I'll complain to you a little bit about where I wish some states had been a little bit more forward thinking about these really flexible funds. But for people who don't immediately know how to separate the capital projects fund from the other pots of broadband money, what is the Capital Projects Fund?

Joey Wender (02:48):
The Capital Projects Fund was funded by the American Rescue Plan. So this is a bill that predates the bipartisan infrastructure bill. And the American Rescue Plan was all about covid relief. And Congress in their wisdom said, you know what? The pandemic was truly a national teaching moment. We all realized it was put into horrible focus that if you did not have high-speed Internet, you were completely left behind by society. Now Chris, you and I knew that pre pandemic, as did everybody else at this time. They

Christopher Mitchell (03:22):
Said they did. It felt much more real after the pandemic. Oh,

Joey Wender (03:25):
As real as it got. Yep. And so Congress decided to put a 10 billion down payment on closing the digital divide and working towards the Biden administration's goal of providing affordable, reliable, high speed Internet to all Americans. And so my job is to administer that fund.

Christopher Mitchell (03:44):
And this fund has similar rules to what I like to call slur fir the state and local fiscal recovery. That's right. Which which I think there's two things that a lot of people that listen to my work would love. One is networks have to be built to 100 megabits. 100 megabits. So symmetrical high speed service. And another one was that there's a lot of flexibility in terms of how to use it. So BEAD is very prescriptive. Mm-Hmm. <affirmative>, this is much more of local governments and communities have a sense of where this money That's right. Needs to be directed. We're gonna trust them.

Joey Wender (04:21):
That's right. So I'll take 'em both. So, and I think there's a third component that I want to mention

Christopher Mitchell (04:25):
As well mm-hmm. <Affirmative>, and these are similarities from slur, firf, and cpf. Cuz they're very similar but not quite the same.

Joey Wender (04:30):
Right. And so for all of your listeners, these are both funds that are administered by the Department of Treasury. The capital projects fund exclusively for connectivity, 10 billion and is what you call slur, I call state and local fiscal relief fund. It's a 350 billion pot that has many eligible uses, one of them being broadband. And so I, I think the three features that you're, you're, well, two plus one that I'll add in are, one, we do have a hundred symmetrical build out standard. We want these investments to not just last for years, but for decades to come. We don't want communities to come back to us in few years and say, Hey, we need some more money. This turns out this was, this was a, this was an antiquated technology. Mm-Hmm. <affirmative>, we're trying to avoid that and really make the taxpayer dollars stretch as far as possible. Second, on your point about flexibility, you know, from our perspective we say that if a community or if a household is not served by a hundred by 20 connection, they do not have affordable, reliable high-speed Internets. And so all areas that do not have 120 are eligible for our funded.

Christopher Mitchell (05:38):
They don't have reliably 120.

Joey Wender (05:40):
That's right. Or a

Christopher Mitchell (05:41):
Hundred slash 20. That's right. And that's, that's the remarkable thing I thought was was opening that up. That's right. So it's not about what's advertised, it's about what is delivered on a regular

Joey Wender (05:51):
Basis. Correct. That's exactly right. And I think that's so important.

Christopher Mitchell (05:54):
So you had it on a slide, but have you committed to memory how many states have already received a portion of their money, how much you've spent, and how much everyone's benefiting? Because I wrote it down when you did your presentation <laugh>,

Joey Wender (06:03):
We have awarded 39 states to the tune of about 6 billion to dates. And those states estimate that we are gonna serve 1.8 million households, which is 1.8 million households that will have high speed Internet because of our fund. And it's 1.8 million households closer to reaching the ultimate goal of serving every location in the United States.

Christopher Mitchell (06:29):
Yes. And some states have received partial awards. So 39 states have received some awards. Some of them have gotten all of it, but some of them have more awards that will be announced in the future. Right.

Joey Wender (06:40):
That's exactly right. So we've been announcing them on a rolling basis. In fact, we started announcing state awards before our application deadline even arrived. Mm-Hmm. <affirmative>, because it's so imperative and time is of the essence to put these funds to good use. So we approved Louisiana, West Virginia, Virginia, and New Hampshire in June of 2022, which was four months before our application deadline. Mm-Hmm. <affirmative>. And we have, we continue to approve plans on a rolling basis. So you are right. We've approved plans in 39 states, but for some of those states, we have not approved all of their plans. We will get to those and we will approve all of them in the coming months.

Christopher Mitchell (07:21):
Now those four states are ones that are where I wish that, you know, I'm, I work for a place called the Institute for Local Self-Reliance mm-hmm. <Affirmative>. So it's weird for me to say, if I was the king and I was telling everyone what to do from high and above, and there was no local self-reliance, I would've demanded that they use those funds in areas where we're not likely to see additional support. And that's where I worry a little bit. So what I'm saying is those areas have committed to a hundred percent spending of those funds in areas that do not have 25 3, I think. Right. Which is fine. Well, within the rules, in my perfect world, they would've waited for BEAD. And I know that there's hard politics to say mm-hmm. <Affirmative>, we're gonna, there's real politics of a state house saying we're gonna let those rural areas wait even longer because bead will come out eventually and to spend it in more urban areas.

(08:08):
But this is, these rules are so great and flexible, thank you. And to address nimble, like, like areas, these small areas that are gonna be harder to address. So I'm so excited when I see, like Nevada, right. They are using this for apartment buildings. Yep. And partially so I'm, I'm curious you know, what are some of the, the areas where, obviously states that are spending it in rural areas, that's, you know, we all kinda have a sense of how that works. Are there any other examples or do you wanna talk about Nevada? Just where there's a real flexible, interesting approach that's a little bit outside the box.

Joey Wender (08:38):
Nevada's a terrific example. And New York is doing the same thing. You're talking about funding urban public housing units. Mm-Hmm. <affirmative> huge, you know, high density where they're, you know, we call multi-dwelling units because as you know, better than anybody, the digital divide is not just rural problem.

Christopher Mitchell (08:56):
Absolutely.

Joey Wender (08:56):
It is also an urban problem. And we have to be connecting people where they are. And you mentioned that you, you had a, you know, some, some criticism for some states. Look, this is the plus and minus of our program. Mm-Hmm. <affirmative>, we are providing a lot of flexibility to states to tailor their programs to address the critical needs that exist within their states. Now, the result, I think, is gonna be a huge net positive. Yes. Because if you had a one size fits all approach, it would not work for all 50 states. So what you're gonna have is 50 different flavors. Mm-Hmm. <affirmative>, you and I might, might have our own personal opinions about some states versus others, but in the end, you are gonna get vastly better results from each state choosing or eat locality choosing projects as opposed to me in DC directing specifically where the money is gonna go.

Christopher Mitchell (09:47):
Yes. Some of those are gonna be surprises too. There's gonna be states where I'm like, I don't think that's gonna work and it's gonna work and I'm gonna learn. And so That's right.

Joey Wender (09:54):
That's right.

Christopher Mitchell (09:55):
I, I a hundred percent agree, and this is what I have long argued for, is more state flexibility. I think even in states that might do things that I might say were incorrect or didn't work out as well in states, I think they're gonna learn because these states, I think there was some cynicism originally. I think we all think the states are doing better than we thought they would in terms of this monumental task. They didn't have staff doing this in many cases years ago.

Joey Wender (10:20):
You know, I just came off the stage here and someone said, well, you know, what was one of your biggest fears and biggest worries when I started the program? And it was precisely that, that there was a big knowledge gap out there. Mm-Hmm. <affirmative> when I started this, when I started this job 16 months ago. I mean, there were some states that, I mean, really hadn't hung a shingle in terms of having a broadband office. Right. So you said, oh my god. Yeah. Because some of these states are gonna really struggle.

Christopher Mitchell (10:44):
And not just that, but N T I A sucked out a lot of the talent. It was hard to find people. I'm not here to

Joey Wender (10:49):
Talk about Ntia <laugh>,

Christopher Mitchell (10:50):
But No, I'm saying nt I hired great people that were then not available to

Joey Wender (10:53):
No, of course. <Laugh>, you know, in the end, because of work that you and so many others have, so much, so many others have done that people have done the hard work at what I call climbing that knowledge gap. Mm-Hmm. <affirmative>. And so now that is not my worry. Right. Most states, if not all states have, have, have, have pretty sophisticated thought out plans about how they're gonna use these dollars mm-hmm. <Affirmative>, and as long as they're, you know, following our rules, you know, it's a hundred symmetrical. You know, we're obviously given a lot of flexibility, but also parti, you know, requiring that providers participate in the affordability program. You know, we're we're saying to states, go at it. Mm-Hmm.

Christopher Mitchell (11:33):
<Affirmative>, I'm curious now, you spent a decade working with Senator Markie. You were with him when he was Representative Markie. He's been a real leader in, in Internet access issues. And so I, there's several questions just I, I would possibly get into on this. But the one that comes to mind on that is, when you were up there talking, I was, if I told you eight years ago that Congress was gonna dump an unprecedented amount of money and it wasn't gonna be really filtered through the federal government apparatus that has built up knowledge about this, it was gonna go to the States. Would you have said, really,

Joey Wender (12:07):
I I, I

Christopher Mitchell (12:07):
Don't believe you, like eight years ago, you're working on the Hill. You hear that like, this money's all gonna be funneled through the states

Joey Wender (12:12):
Eight years ago? Well, I think eight years ago, all of it would've been almost inconceivable. Right. I mean, first of all, the scale at which we're operating mm-hmm. <Affirmative> would've been inconceivable. I just made the joke that there was a time when $10 billion seemed like a lot of money. Right. Well, and now 10 billion relative to 42 billion we're we're small, small people argued, which was hilarious. People

Christopher Mitchell (12:32):
Argued the 7 billion was too much in 2009.

Joey Wender (12:35):
That's what I'm saying. Which is hilarious relative to the, to the last economic downturn. And, you know, whether this was gonna be a state run focused state focused program. No, I think it would've been hard to imagine at that moment. However, however, Congress has learned a lot of lessons. Right. As we have made investments in broadband. And I think they were very correct in putting so much discretion in states for our program. Mm-Hmm. <affirmative>, I think the other thing that was wildly unexpected eight years ago, which you cannot overlook is Covid. Yes. Right. Covid shined a spotlight on the necessity of broadband. Remember our 10 billion follow was in a covid relief bill. Okay. And the bipartisan infrastructure bill, which had money for lots of different things, again, comes after, or during, I should say the pandemic. Mm-Hmm. <affirmative>, would there be that much money for broadband, but for the pandemic, I have my doubts. Right. Cuz I really believe that was the national teaching moment and the pandemic exposed what we all knew. So when you say could you have imagined it eight years ago, why certainly could not have imagined the Covid pandemic. Right, right. I don't think any of us could.

Christopher Mitchell (13:55):
And I think there's actually voices out there who are calling to try to even pull some of this money back. And so, like, I think it's worth people knowing, people who don't know how Congress works, money that has not been expended could be pulled back and not spent. So that is out there and a, and a concern. So I wanna ask you one other thing about the Hill for sure, which is acp. Yes. We have a lot of concerns because technically the fund will be at zero next year. However, the way Congress works, and in particular the way Congress is functioning right now, it doesn't mean that we can wait until the spring of next year to try to get more money into it. There. And Well, why don't you just, if you could gimme like a little civics 1 0 1, maybe 1 0 2, of like, how, how does, how do we actually, what is the mechanism by which money will actually be put into ACP in a realistic fashion, and what's the timeframe? Sure.

Joey Wender (14:49):
So let me just start with the statement that funding the ACP is essential. I said earlier that we require every provider that takes a dollar of our money, any amount of our money outta the Capital Projects Fund, participate in the affordability program in the acp mm-hmm. <Affirmative>, because that's how important we believe it is. Affordability is one of the greatest barriers of en to entry of signing up for the Internet. And that is one way to overcome that affordability gap. So I just want, I want to emphasize that point, how proud we are to be partnering with the FCC on it in terms of how do you fund the acp? I mean, again, this is drawing on my 13 years on the, from the Hill. Unless for my time at the Department of Treasury, you know, in the end there are a few, a couple must pass bills where lots of things that need to be funded, whether it be funding the federal government, whether it be tax credits that expire at the end of the year, whether it be the National Defense Authorization bill, which is funded every year.

(15:53):
These are, you know, the must pass bills. And these come in the fall and usually, you know, it's the last thing that is done before lawmakers go home for Christmas and for New Years. And so when people say, people say, well, the fund's gonna run out next year in 2024. I say, no, no, you're thinking about it all wrong. You should be thinking about how do we ensure that additional money for ACP is attached to one of these must pass bills in 2023 mm-hmm. <Affirmative>. Because if we get to January of 24 and we have not provided money for the acp, we are way behind and we are in an exceptionally challenging position in order to obtain additional resources.

Christopher Mitchell (16:40):
And beyond that, I think there's also just the fact that we are still trying to enroll new people into it. And it is hard for whether it's an organization or an Internet service provider to be putting resources into enrolling new people into something that could be gone in six months. Wow. Right.

Joey Wender (16:55):
And, and again, it's, it's, there's, it's really twofold. I said, this is a cascading effect. Mm-Hmm. <affirmative>, you know, on the one hand, the the most obvious impact is we're signing up low income people, low income families for to, to get Internet access. Right. So we're gonna rip it away from them next year. That's horrible. That's a moral, that's, that's awful. But there's also a second piece, Chris, that you're describing. It's not just the reliance by households and we're saying, yes, you should sign up for this. This is gonna be good for you mm-hmm. <Affirmative> and to not then take it away from them next year. It's also the providers. Right. What CPF is attempting to do when a beat is trying to do is address a market failure. Why is it that there are tens of millions of households in the United States without affordable, reliable, high-speed Internet?

(17:49):
It's because the market, or at least players in the market, have determined that it is not worth their capital and their resources to go to those places. Mm-Hmm. <affirmative>. So what has congress done? Congress has said, this is what we're gonna do. We're gonna create, we're gonna create programs that sweeten the pot, that helped pay for the capital expenses of providers to go to these places. That's what my program does. It's a CapEx program. That's what the BEAD program is. They're providing CapEx. Right. But there's an additional component here that people need to realize is that providers are also making assumptions about their rated return. And they're looking at the service area that they're going and saying, oh, look at all these people that are gonna sign up for the acp that's a revenue stream. Mm-Hmm. <affirmative> for providers that they're baking into their assumptions. You take away that revenue stream. Maybe these areas are no longer attractive for providers to go. So in so many ways, the ACP is the linchpin that holds all of this together. And if it, and that is why the coalition that supports the ACP ranges from the biggest telcos and the biggest cable companies to the most liberal, progressive interest groups. Mm-Hmm. <affirmative>, we all support the ACP because it all helps attain these ultimate goals. So I cannot stress how important it is to replenish the fund.

Christopher Mitchell (19:16):
And at the same time, I know that we have listeners who look at the ACP the same way I do skeptically with a concern that if that was the only thing we were doing, that would be a bad plan. But I would like to just end the interview by noting that before Congress acted, when the Biden Harris administration did move forward, they said that they wanted to restructure, they wanted structural solutions. And I think it's really important to understand that the CPF fund, the bead funds, this is about ideally, and Congress didn't fully buy into this vision, unfortunately, to Congress' discredit, I think. But the goal is, is that we are moving to a better marketplace mm-hmm. <Affirmative>, and we need a ccp, the a acp, why are we are heading in that direction. So the ACP does not stand alone, but we absolutely need it.

Joey Wender (20:05):
Absolutely need it. And look, and I know you're alluding to other things that we might need long term, and I don't want to, you know, talk about those issues, but in the end, right now, ACP is what we have. Right. It's what we have. And it's the only possibility that we can get through Congress in the next year and a half before the next election. So we have to fund it. There is no alternative, there is no other choice. And if we don't, it will truly have cascading effects on all the work we're doing throughout the broadband broadband world.

Christopher Mitchell (20:38):
Well, I am excited to have had a chance to talk with you about this. I think the Capital Projects Fund has been a really exciting to watch develop, and I am curious to see what happens with the Final 11 states and other states that haven't received their funding. So, we'll stay tuned. Stay tuned. Indeed.

Ry Marcattilio (20:53):
We have transcripts for this and other podcasts available at muni networks.org/broadbandbits. Email us@podcastmuninetworks.org with your ideas for the show. Follow Chris on Twitter, his handles at Community Nets, follow muni networks.org, stories on Twitter, the handles at muni networks. Subscribe to this another podcast from I L S R, including Building Local Power, local Energy Rules, and the Composting for Community Podcast. You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter@ilsr.org. While you're there, please take a moment to donate your support in any amount. Keeps us going. Thank you to Arne Husb for the song Warm Duck Shuffle License through Creative Commons. This was the Community Broadband Bits podcast. Thanks for listening.