How American Rescue Plan Broadband Funds Stack Up in the States

With American Rescue Plan funds flowing into state government coffers, about a third of the nation’s 50 states have announced what portion of their Rescue Plan dollars are being devoted to expanding access to high-speed Internet connectivity.

The federal legislation included $350 billion for states to spend on water, sewer, and broadband infrastructure, though everything we have seen suggests that the vast majority of that will not go to broadband. There is also another $10 billion pot of rescue plan funds, called the Capital Projects Fund, that mostly must be used to expand access to broadband.

Laboratories of Broadband-ification 

As expected, each state is taking their own approach. California is making a gigantic investment in middle-mile infrastructure and support for local Internet solutions while Maryland is making one of the biggest investments in municipal broadband of any other state in the nation. And although Colorado does not prioritize community-driven initiatives, state lawmakers there have earmarked $20 million for Colorado’s two federally-recognized Indian tribes to deploy broadband infrastructure with another $15 million devoted to boosting telehealth services in the state.     

Undoubtedly, individual states’ funding priorities vary. Some states may be relying on previously allocated federal investments to boost broadband initiatives and/or have been persuaded the private sector alone will suffice in solving its connectivity challenges. And in some states, such as Illinois, Minnesota, and Maine, lawmakers have prioritized using state funds to support broadband expansion efforts while other states may be waiting on the infrastructure bill now making its way through Congress before making major broadband funding decisions.

As of this writing, 17 states have earmarked a portion of their Rescue Plan money (totaling about $7.6 billion) to address the digital divide within their borders. Those states are Arizona, Arkansas, California, Colorado, Delaware, Hawaii, Indiana, Kentucky, Maine, Maryland, Montana, Missouri, Virginia, Tennessee, Vermont, Washington, and Wisconsin.

A handful of those states are making major investments to boost broadband with an emphasis on community-driven solutions where local governments, public entities, and non-profit organizations can use the funds to bring high-speed Internet service to the unserved and underserved. Some states are priming the pump to simply throw money at the big monopoly ISPs, even as a growing number of local communities across the nation are considering building community-owned broadband networks, fed up with a lack of competition in a market dominated by monopoly interests. Others fall somewhere in between.

The states with plans that favor publicly-owned local Internet choice include: Arkansas, California, Maine, Maryland, Vermont, and Washington. (In addition to tracking how states are allocating Rescue Plan funds, we are also maintaining an ongoing list of local community-led broadband projects that are using American Rescue Plan funds. That list can be found here).

Leading The Way

Arkansas

In Arkansas Gov. Asa Hutchinson has proposed adding $250 million of its Rescue Plan Funds to the Arkansas Rural Connect grant program, which is roughly how much the program has disbursed since its founding in 2019. The plan will need approval from the state's Rescue Plan steering committee as well as the Legislative Council.

So far, the Arkansas Legislative Council has approved $120 million in state Rescue Plan dollars to go to 34 “shovel-ready” broadband projects across the state, with an additional $27 million provisionally approved for 12 additional projects that are eligible if they pass a technical review. While a significant portion of the funds look to be going to Windstream, a big monopoly Internet Service Provider, also funded are as many as seven projects by electric cooperatives totaling $18 million. See the full list here.

Although Arkansas is one the least-connected states in the nation, the digital landscape in the Razorback State is changing for the better. Until this year, Arkansas had been on the list of states with preemptive laws that make it more difficult or, in some instances, impossible for local communities to build their own Internet networks. In February, state lawmakers passed Senate Bill 74, which now allows government entities “to acquire, construct, furnish, or equip facilities for the provision of voice services, data services, broadband services, video services, or wireless telecommunications services” so long as they “partner, contract, or otherwise affiliate with an entity that is experienced in the operation of the facilities.”

Now that the legal barriers to community broadband networks in Arkansas have been largely removed, we are likely to see many more local communities in the state follow in the footsteps of cities such as Clarksville and Conway in delivering affordable, reliable, high-speed Internet access where incumbent providers have failed to do so.

California

In the home of Silicon Valley, state lawmakers have settled on a plan that invests a considerable proportion of its Rescue Plan Funds to expand Californians access to high-speed Internet service. In fact, California’s investment makes up about half of the $7.6 billion in Rescue Plan funds all states combined have allocated for broadband expansion.

The biggest chunk of the state’s Rescue Plan dollars will be spent building middle-mile infrastructure across the Golden State. Gov. Gavin Newsom and state lawmakers have agreed to invest $3.25 billion of its Rescue Plan funds to construct a statewide open-access middle-mile network – what Ernesto Falcon of the Electronic Frontier Foundation described as “one of the largest state investments in public fiber in the history of the United States.”

It’s a major victory for community broadband advocates in California, especially considering the opposition from AT&T and the cable industry to the plan. However, the rules are still being created in the California Public Utilities Commission (CPUC) and AT&T may find help from monopoly allies in still restricting the middle mile in ways to lock out competition and needed investment. 

Another $522 million in Rescue Plan Funds will be used to support the construction of last-mile projects allocated by the state’s Public Utilities Commission. 

While much still needs to be done for the state to expand broadband access, California lawmakers have coalesced around a strategy that includes state-funded technical assistance teams to provide guidance to communities building municipal networks. Moreover, the state has established a $750 million financing program so that municipalities, cooperatives, and nonprofits can access long-term, low-interest financing to build out fiber-to-the-home (FTTH) networks. Beyond that, as EFF reports, “an additional $2 billion is (also) available in grants for unserved pockets of the state for private and public applicants.”

Maine

In Maine – one of the most rural states in the country – Gov. Janet Mills announced the state would be allocating $128 million of its American Rescue Plan funds to expand access to broadband. The funds will be disbursed by the newly created ConnectMaine Authority, the lead agency tasked with reaching the state’s goal of connecting “95 percent of potential subscriber locations by 2025.”

Unlike in states across the country that limit or outright ban local communities from building their own networks, Maine’s Broadband Action Plan puts “Community-Driven Broadband Projects” at the forefront. We have covered a number of those projects here.

Not only is the state supportive of local Internet choice, state officials can also be credited with raising the bar on the very definition of broadband, having moved to define broadband as service that offers “at least 100/100 (Megabits per second) Mbps" connectivity, while redefining “underserved” areas as those lacking access to speeds of 50/10 Mbps, both of which are far better than the current FCC definition of broadband as 25/3 Mbps.

Another important feature of the ConnectMaine Authority is that the enabling legislation requires the agency to “collaborate with organizations representing marginalized and historically disadvantaged groups when making determinations regarding the distribution of these funds.”

While Maine has much work to be done to reach its goal of near universal connectivity, from a policy perspective it is a state with among the most favorable conditions for building and operating community-owned networks.

Maryland

With $3.9 billion in American Rescue Plan funds on its way to Maryland, Gov. Larry Hogan and state legislative leaders seized the moment in May, allocating $300 million of its Rescue Plan funds to expand broadband infrastructure and digital inclusion initiatives across the state.

The biggest bulk of the funds – $97 million – will go toward funding the building of physical infrastructure, with $45 million earmarked specifically for municipal broadband grants. It’s one of the biggest allotments of funds specifically targeted at municipal networks of any state in the nation.

The bipartisan budget agreement was hailed by Republican Gov. Hogan, as an example for the nation demonstrating how “people from different parties can still come together, that we can put the people’s priorities first, and that we can deliver real, bipartisan, common sense solutions to the serious problems that face us.”

One “serious problem” in Maryland, according to a recent Abell Foundation report, is that 23 percent of Maryland households (520,000) do not have a wireline home Internet connection, 40 percent (or 206,000) of which are Black households.

Much of that comes from a lack of affordability and other barriers to adoption. To deal with those challenges, the budget agreement also includes $45 million to subsidize monthly Internet service costs for qualifying families and $30 million to pay for Internet-connected devices for financially eligible households. It also includes an additional $4 million for a new University System of Maryland program to support training and developing curriculum to bridge the digital divide as well as $2 million for digital navigator programs.

This all comes as the state lawmakers recently passed two companion broadband bills (SB 66 and HB 97), known as the Digital Connectivity Act, which expanded the state’s Office of Rural Broadband and transformed it into the Office of Statewide Broadband to oversee infrastructure expansion and better coordinate the affordability and adoption challenges associated with addressing the digital divide – a reflection of the fact that broadband access is not only an issue in rural areas but urban centers as well.

Vermont

In May, state lawmakers reached a deal to spend $150 million of the state’s Rescue Plan funds on broadband expansion. As the VTDigger reported when the deal was struck, the legislation makes “communication union districts a centerpiece of the state’s efforts to extend fiber networks to rural areas that lack adequate Internet service,” though the bill does allow for small Internet Service Providers (providers who operate in no more than five state counties) to receive funding if they commit to building out service to all addresses where they propose to serve.

While Communication Union Districts (CUDs) will likely get the bulk of the funding, as part of the legislative deal, state Senators insisted on allowing small providers to access the funds because some communities in the state have yet to form a CUD.

In 2015, Vermont lawmakers passed legislation that allowed the formation of Communication Union Districts, or CUDs as they are more commonly called. It allows two or more towns to join together to establish a CUD as a governmental body specifically designed to build telecommunication infrastructure. They were formed to serve as the primary vehicle by which Vermont would reach its goal of having universal access to broadband by 2024.

Presently, there are nine CUDs whose service areas cover most of the state, minus a handful of scattered towns who have yet to vote to join an existing CUD or form one of their own.

As for the existing districts, CUD leaders last year said if they were going to succeed, they would need an infusion of federal funds. Now, with American Rescue Plan funds on the way, the CUDs wish is close at hand.

As many other states are in the process of figuring out how, or if, to spend its Rescue Plan funds to expand broadband access, Vermont, with its CUDs already established, is well-poised to move forward. And, unlike at the federal level where there is a deeply partisan debate over whether funds should be funneled to the big incumbent monopoly providers or be directed to local publicly-owned entities, top Republican and Democratic state leaders in Vermont have come together around a framework that supports local community-driven efforts. 

This summer, Vermont Gov. Phil Scott appointed his election opponent, Christine Hallquist, to serve as Executive Director of the newly created Vermont Community Broadband Board. As a former utility executive who has been a champion of CUDs, in announcing the appointment, Gov. Scott said: “I cannot think of a better person to lead this important effort than Christine. Her experience as a cooperative executive and most recent experience with two CUDs as well as her long-standing commitment to expanding broadband in Vermont will be valuable to this work.”

You can read our ongoing coverage of CUD projects here.

Washington

Washington is a public power state with 28 community-owned Public Utility Districts (PUD), 19 municipal utilities, and 16 cooperatives combining to serve over half the state’s population with electricity and other utility services. In 2000, PUDs were authorized to offer wholesale telecommunications services and today more than half of them do, having collectively deployed more than 7,900 miles of fiber and investing upwards of $500 million in broadband infrastructure.

It wasn’t until this year that state lawmakers removed the barriers that prevented PUDs and other public entities from offering retail broadband services. Gov. Jay Inslee and the state legislature followed that up with a bill that allocates $260 million of Washington’s Rescue Plan funds to provide grants for broadband infrastructure projects.

While the bulk of that money is aimed at expanding broadband deployment, $5 million is set aside for “broadband equity and affordability grants,” according to the legislative language.

Eligible applicants for the large pot of money include: local governments; ports; public utility districts; federally-recognized tribes; nonprofit organizations; nonprofit cooperative organizations; and “multiparty entities comprised of a combination of public entity members or private entity members.”

Whereas in some other states American Rescue Plan funds are directed to privately-held providers exclusively, in Washington lawmakers went in the other direction, as the bill allocating the Rescue Plan funds explicitly states that multiparty applicants for the grant funds “cannot be solely comprised of private entities.” In other words, the only way for private providers to access the grant money is by partnering with a public entity.

With the state’s broadband officer serving as the fiscal agent for awarding grants, funding priority will be given to last-mile projects that target “unserved” areas, which the legislation defines as areas where households and businesses lack access to broadband service of speeds less than 100/20 Mbps, which is considerably higher than the federal floor of 25/3 Mbps. 

The bill does, however, prohibit grant awards for projects where a broadband provider currently offers service of greater than 100/20 Mbps or has begun construction to provide service to end users in a proposed project area.

With the state’s well-established history of publicly-owned utilities, combined with the infusion of federal funds, now that all legal restrictions have been removed for public entities to offer retail broadband service, Washington has created one of the friendliest and supportive environments for local Internet choice in the nation.   

Honorable Mention

Colorado

Colorado is known for its stunning landscapes. The state’s digital landscape, however, isn’t so pretty. BroadbandNow ranks Colorado 25th on its list of most connected states and notes that “when it comes to broadband affordability, Colorado is struggling to keep up with the rest of the U.S.”

Colorado is also a state with a law (SB 152) that seeks to discourage municipalities from building and operating broadband networks. 

Of the $3.8 billion in American Rescue Plan funds awarded to the state, $75 million of that has been earmarked to address Colorado’s connectivity challenges. And while the state’s Broadband Stimulus Account will be allocated $35 million for a new grant program “for proposed projects that seek to achieve regional broadband deployment and provide interconnection between communities,” according to a summary of the enacting legislation, the bill specifies that “projects awarded money under this grant program, except for projects awarded to Indian tribes or nations, cannot use the money awarded for last-mile broadband deployment.”

We give the state an honorable mention though because the state does allocate another $35 million pot of Rescue Plan money for a Digital Inclusion Grant Program in which $20 million is earmarked for tribes “for the purpose of deploying additional infrastructure on tribal lands and providing devices to Indian tribes or nations.” The other $15 million in the Digital Inclusion Grant Program is for “providers of telehealth services.”

While the state is making a vital investment in tribal broadband and telehealth services, for community broadband advocates outside of Indian Country and the healthcare sector, it’s disappointing the state isn’t putting more resources into municipal efforts, particularly as communities such the city of Golden are exploring the possibility of building a citywide municipal broadband network.

None of this should be surprising considering that 15 years ago state lawmakers passed legislation known as SB 152 that banned local municipalities from building and operating broadband networks – a law designed to protect incumbent providers from competition. Thankfully, the law does allow for communities to vote to opt-out. And since the law was passed nearly two decades ago, more than 150 Colorado communities have done just that, including the cities of Fort Collins, Loveland, and Estes Park; each of whom are building out fiber-to-the-home networks in the Front Range region.

Dishonorable Mention

Hawaii

There’s not much to say about Hawaii because the Aloha State has decided to spend only $5 million of its Rescue Plan funds on broadband expansion. State lawmakers have established a new Hawaii Broadband and Digital Equity Office, which will administer a grant program that aims to develop broadband access in “unserved and underserved areas of the state.”

The legislation establishing the new grant program requires that eligible applications “commit to paying a minimum of sixty per cent of the total project costs out of the applicant’s own funds.” But, here’s why we single out Hawaii for dishonorable mention: the paltry allocation of Rescue Plan funds for broadband expansion in the state can only be awarded to “a non-governmental entity.”

According to Broadband Hui, a coalition of public officials and private interests, 55,000 households in Hawaii (11.8 percent of Hawaiian households) do not have an Internet subscription while 7 percent of households have no computer.

Some half (51.8 percent) of Hawaiians supposedly have access to fiber, which is more than double the national average, according to BroadbandNow, with “the best coverage … found on the island of (Oahu) in Honolulu.”

There are 43 Internet Service Providers operating in Hawaii with the two major national providers being Spectrum and Windstream. Still, BroadbandNow estimates “there remain 22,000 residents who do not have any wired Internet providers offering service at their address and another 91,000 have only one wired provider available at their residence.”

Leaving it to private providers to bring affordable, reliable high-speed Internet service to the unserved and underserved without putting funds into community-owned networks or well-funded public-private partnerships is a recipe for leaving the unconnected in the lurch. And as it stands now, it appears the chances of seeing municipal broadband in Hawaii is about as likely as a proposal to count how many grains of sand are on the state’s beaches.

As the rest of the year winds down, we will continue to track which additional states set aside Rescue Plan funds for broadband expansion and whether those funds will be put to community-driven solutions or simply subsidize private incumbents.

Header image: CC0 1.0 Universal (CC0 1.0) Public Domain Dedication

Inline image of Clarksville billboard courtesy of Clarksville Connected Utilities

Inline image of California state seal courtesy of Wikimedia Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0) 

Inline image of OTO Fiber installation in Maine courtest of OTO Fiber

Inline image of Vermont CUD map courtesy of Vermont Department of Public Service

Inline image of Pulse Fiber installation in Colorado courtesty of Pulse Fiber