As the House was expected to vote on a bill to raise the debt ceiling and cut government spending on Wednesday night, New Street Research Policy Advisor Blair Levin shared quick thoughts on the negotiated bill’s potential impact on telecom providers and the markets—if adopted as is.
If the deal passes, it will be a “huge relief” on markets, says Levin in a note to clients. NSR is “cautiously optimistic” that a bill avoiding a default will pass both the House and the Senate. NSR is hopeful that will happen “without causing a crash, or leading to a court battle that would leave markets unsettled during the pendency of the proceeding,” he writes.
The impact on telecommunications providers, as NSR anticipated, is “basically zero.” That means no impact on the Broadband Equity, Access and Deployment program or the Capital Projects Fund. “While most of the funds in the Commerce Department BEAD program and Treasury’s Capital Projects Fund have yet to be spent, they were not subject to any rescission,” Levin notes.
However, there could be a small impact on the Agriculture Department’s Rural Utilities Fund. The bill text reads that “The unobligated balances of amounts made available under the heading ‘‘Rural Development Programs—Rural Utilities Service—Distance Learning, Telemedicine, and Broadband Program’’… are hereby permanently rescinded.” This small program is targeted to rural areas with populations of 20,000 or fewer, with awards ranging from $50,000 to $1 million.
There could also be a small impact on the FCC. The legislation states that, “The unobligated balances of amounts made available under the heading ‘‘Federal Communications Commission—Salaries and Expenses’’… are hereby permanently rescinded.” Levin writes: “We think this is about a small amount related to FCC efforts to address COVID with improved telemedicine efforts, and do not believe the rescission will result in any material change for the regulated entities.”
NSR is uncertain about the potential impact on the Affordable Connectivity Program (ACP). “The biggest policy risk for ISPs, in our view,” is the end of the ACP when the current congressional appropriation runs out, which is likely to occur in 1H24. “As expected, the legislation does not address the program,” states Levin. “The big question is whether the political process leading up to the legislation and its aftermath improves or degrades the chances for additional funding through the budget process this fall. We think the already-uphill battle will be a bit more uphill now.”
By Leslie Stimson, Inside Towers Washington Bureau Chief
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