$94B Federal Bill Aims to Modernize Digital Infrastructure, Boost Rural Access

With a focus on expanding economic opportunity in rural areas, the federal government is pouring billions into fiber expansion, satellite networks and other digital infrastructure aimed at boosting connectivity in hard-to-reach areas.

The funds could boost experimentation in areas like modular data centers and add new incentives for service providers in rural pockets of the country.

On the heels of the $1.9 trillion American Rescue Plan, which included reimbursements for schools and libraries offering internet access during the coronavirus pandemic, House Democrats introduced another $94B package, called the Accessible, Affordable Internet for All Act, which seeks to build high-speed fiber connections in communities where they are currently lacking.

“It’s a great thing that will probably be expanded,” said Rick White, a former congressman from Washington and CEO of TechNet. “My guess is that the bill won’t wind up as big as it is ... but they will get close to [$94B].”

White now advises Alliantgroup, a consulting firm focused on government-sponsored tax credits and incentives. 

As it stands, among the bill’s key provisions are $80B to deploy high-speed broadband to underserved areas, while also increasing minimum standards for speed to 25/25 — 25 megabits per second upload and 25 megabits per second download. The current standard of 25/3 was established in 2015, which proponents of the bill say is out of date given the increasing reliance on high-speed internet for work, school, entertainment and other basic services.

That change “will make funding available to many more communities in both rural and urban areas,” Katie Jordan, director of public policy and technology at the Internet Society, wrote in an email. The bill also directs the Federal Communications Commission to publicize data on pricing, as well as introducing subsidies and grants to encourage adoption in rural, low-income and tribal communities.

“Government policies dealing with rural broadband may need to have a more explicit focus on actually adopting (and effectively using) the technology. The traditional focus of these programs on simply providing infrastructure may not be enough to encourage true economic growth,” added Joe Connelly, data center lead at Turner & Townsend, in an email. “Inasmuch as adopting (and using) broadband must be a focus of 'digital divide' policy, future options must consider the means to encourage people to subscribe to broadband services once they are present.”

Should the bill pass in something close to its current form, it will trigger a closely watched bidding process around how the billions in federal funding will be allocated — and speculation about where opportunities lie for service providers.

The Rural Digital Opportunity fund, an FCC broadband program announced last year, plans to allocate a total of $20B over the next several years to boost rural broadband. In its first phase, which will disburse $9.2B over the next 10 years, the FCC announced 180 winning bidders. Some of the largest awards went to Charter Communications, which received about $1.2B, and Elon Musk’s SpaceX, which received about $890M to help fund satellite-based internet to rural areas through Starlink, its satellite division.

“That’s the kind of thing that people are going to have to try,” to boost connectivity in hard-to-reach areas, White added.

Improved broadband access in more parts of the country could lay the groundwork for development of data centers and other digital infrastructure assets. SpaceX, for example, announced late last year a partnership with Microsoft that will connect its Azure cloud computing network to Starlink by way of small, modular data centers.

Microsoft’s modular data centers are roughly the size of a shipping container and designed to deliver cloud computing to remote areas, even in “high intensity” use cases such as military missions, humanitarian crises and mining, according to the company. Microsoft’s modular units are already in use by defense customers and private sector companies.

Meanwhile, rising internet traffic and data consumption by consumers is expected to drive an ongoing boom in smaller, “edge” data centers closer to end users outside of major markets. According to PricewaterhouseCoopers, the market for edge data centers is expected to triple between 2017 and 2024 to $13.5B.

Major investors are increasingly taking a holistic view of digital infrastructure opportunities, with some funds, like Digital Colony and Digital 9 Infrastructure, aggressively expanding their portfolios to include assets such as cell towers and fiber networks in addition to data centers.