Rural Development Rural Utilities Service Telecommunications Program Christopher L. Collins – General Field Representative Telecommunications Program Rural Utilities Service (573)

RUS Telecommunications Program History 2 In the 1930’s, the Rural Electrification Administration (REA) made financing available for electric cooperatives and other entities to bring electricity to rural communities that might otherwise not receive it. In 1949, the REA received authority to finance telephone service in recognition of its importance to rural communities. Funding was provided for basic telephone service to ensure that rural residents and businesses received the same type of services as urban areas. Starting in 1995, all telecommunications networks financed were required to be broadband-capable. Rural Utilities Service (RUS) is the successor agency to REA.

RUS Telecommunications Program Organization Telecommunications Program Staff: –National Office staff: Leadership Loan and business specialists Electronics engineers –Field staff - General Field Representatives (GFRs) Rural Development State Office Staff: –Broadband Coordinators in RD state offices 3

RUS Telecommunications Program Loan and Grant Programs Telecommunications Infrastructure Loan Program: Loans to improve and build telecommunications service in rural communities (<5,000 population)  Newly expanded funding for E911 Service Rural Broadband Loan Program (Farm Bill): Loans to build and upgrade broadband services in rural high cost areas (<20,000 population) Community Connect Grant Program: Grants for broadband service providers and others who offer broadband services in rural and remote areas (<20,000 population) Distance Learning/Telemedicine Loan and Grant Program: Loans and grants for providing Distance Learning and Telemedicine services to rural residents and anchor institutions Public TV Grants: grants for rural public TV stations for the digital TV transition Weather Radio Grants: grants for weather radio systems in rural communities More than $22 billion invested in rural America since

FY 2012 Available Funding RUS Telecommunications Program Program 2012 Available Funding Telecom Infrastructure Loans$690 million Broadband Loans$736 million Distance Learning and Telemedicine Grants$16.1 million Community Connect Grants$14.2 million 5

Telecom Infrastructure Loan Program Since 1949, the Telecommunications Infrastructure Loan Program has provided financing for new and improved telecommunications infrastructure in rural communities of 5,000 or less. Loan funds may be used to finance telecommunications services in rural areas for: new construction; improvements; expansions; acquisitions (with restrictions); and refinancing (with restrictions). Interest rates are set at current U.S. Treasury rates, depending on loan maturity at the time of each advance. RUS accepts applications for the Telecom Infrastructure Loan Program on a continual basis. All infrastructure financed must be broadband capable. New financial pro-forma required due to FCC changes in USF. 6

Telecom Infrastructure Loan Program Applicants must submit full 5-year pro-forma financial statements Income Statements Balance Sheets Statements of Cash Flow Applicants must also submit: Supporting Schedules covering network access revenue Supporting Schedules covering debt Supporting Schedules covering plant deployment and depreciation Supporting Schedules for non-operating and non-regulated revenue and expenses Pro-Forma Statements should be in the same format as in RUS Operating Report. New RUS borrowers will have initial access to the RUS system to help provide data along with required spreadsheets and schedules. Pro-Forma Statements and Supplemental Schedules are available at: Applicants should work closely with local GFR. 7 Financial Information Requirements

Telecom Infrastructure Loan Program Eligible Applicants: Entity eligible to borrower from the RUS State or Local Governments Indian Tribes Emergency Communications Equipment Provider Application Guide to be available soon. Applicants should contact GFR Funding Purposes: Furnish and Improve telephone service in rural areas Finance facilities and equipment which expands, improves, or provides: 911 access Integrated interoperable emergency communications, including multiuse networks that provide commercial or transportation information services in addition to emergency communications services Homeland security communications Transportation safety communications Location technologies used outside an urbanized area Access Loan Program

Telecom Infrastructure Loan Program Eligible Area: City, Town, or Incorporated Area with population less than 20,000 Not an Urbanized Area contiguous and adjacent to a city or town with population greater than 50,000 Applications will be accepted year round Access Loan Program

The Broadband Loan Program Designed to provide loans for funding, on a technology neutral basis, for the costs of construction, improvement and acquisition of facilities and equipment to provide broadband service to eligible rural communities. The program’s goal is to ensure that rural consumers benefit from the same quality and range of telecommunications services that are available in urban and suburban communities. Created under the 2002 Farm Bill and reauthorized under the 2008 Farm Bill. Applications are accepted year-round. 10% matching equity support required. 10

The Community Connect Grant Program The Program provides rural communities: Broadband to residential and business customers Free broadband to Critical Community Facilities in the community for at least 2 years A Community Center that provides free broadband Internet access for at least 2 years. Eligible community: A community recognized in the 2010 U.S. Census or in the most recent edition of Rand McNally’s “Commercial Atlas & Marketing Guide” A community in which broadband service is not currently available A community with population not exceeding 20,000 Scoring is based on population density, economic need of the community as determined by median household income, and benefits of the project. 15% matching requirement 11

The Community Connect Grant Program Grant funds may be used to finance: The construction, acquisition, or leasing of facilities, including spectrum, to deploy Broadband Transmission Service to all participating Critical Community Facilities and to offer such services to residential and business customers in the community. The improvement, expansion, construction, or acquisition of a Community Center that furnishes free access to broadband Internet service. These costs cannot exceed the greater of 5% of the grant amount or $100,000. End-User Equipment needed to carry out the Project. Operating expenses incurred in providing Broadband Services to Critical Community Facilities for 2 years of operation and in providing training and instruction. These costs cannot exceed $250,000. The purchase of land, buildings, or building construction needed to carry out the Project. 12

The Distance Learning and Telemedicine (DLT) Grant Program 13 DLT Grants are not just a way to obtain educational technology or medical equipment. The focus is on using the unique capabilities of telecommunications to connect rural areas to each other and to the world, thus overcoming the effects of remoteness and low population density. 1. Distance learning means a curriculum with measurable results delivered via telecommunications and stresses the connection of students and teachers at remote sites. 2. Telemedicine means the delivery of medicine from medical professionals at one site to patients at other sites via telecommunications. Telemedicine shows benefit to rural residents either in reduced travel or access to services.

The DLT Grant Program $465 million in DLT grants and loans have been awarded total. Serving rural communities of 20,000 or less. Minimum grant $50,000; maximum grant $500, % required matching contribution. Scoring is based on the population at end-user sites (those receiving the DLT services), income (as measured by participation in the National School Lunch Program), leveraging (providing more than a 15% match) and benefits of the project. 14

The DLT Grant Program FY 2012 Awards: 2012 DLT grant awards were announced by Secretary Vilsack on June 6, A total of 52 awards were made, for $14.1 million. Almost 40% of the awards are serving counties where the minority population is >= 30% More than 15% of the awards are serving counties where the tribal population is >= 30% Almost 40% of the awards are serving persistent poverty counties Almost 100% of the telemedicine awards are serving Medically Underserved Areas (as defined by HHS) 17% of the awards are serving counties where the unemployment rate is >=15% 15

Broadband Initiatives Program RUS received funding under the American Recovery and Reinvestment Act of 2009 (ARRA) for broadband infrastructure in rural communities (this was a one-time program). This program is the Broadband Initiatives Program (BIP). RUS provided loans and grants for broadband infrastructure projects as well as Technical Assistance grants. RUS is managing the rollout of 259 active infrastructure projects, $3.2 billion in loan/grant funds. The majority of BIP projects are on track with comprehensive financial and operational oversight from RUS. $2 billion of projects is under contract. Reimbursements are lagging behind but at $1.1 billion to date. Twenty-seven projects are fully complete and 39 are substantially complete. Field staff are monitoring progress and compliance. These projects are creating economic activity, broadband access and new high wage jobs in rural communities. 16

RUS Telecommunications Program QUESTIONS For copies of this presentation, please provide contact on index card or leave business card.