Monitoring New York’s Municipal Infrastructure Program: Evaluating Round 1 Awards
In January 2024, New York State received $228M in Capital Projects Funding (CPF) from the U.S. Department of Treasury to launch a Municipal Infrastructure Program (MIP). Governor Kathy Hochul hailed the MIP as a “transformative federal investment [that] will help us keep even more New Yorkers connected” to broadband.
Overseen by the state’s ConnectALL Office (CAO), the MIP “support[s] the development of open-access and publicly owned and/or controlled last mile fiber broadband infrastructure to deliver reliable high-speed internet service to homes, businesses, and community anchor institutions across the state” by providing “[g]rants…to municipalities, non-profits, and other entities to construct open and accessible public broadband infrastructure.”
Combined with a $664M funding allocation from the federal BEAD program and some additional state dollars, CAO has more than $1 billion on hand to finally close New York’s digital divide. Even so, CAO has stated that its BEAD allocation “may be insufficient to fund fiber to every single unserved and underserved location, particularly considering the unpredictability of fiber construction costs during the BEAD timeline and considering the challenges of reaching many extremely remote locations in some parts of New York.”
For these reasons, the ACLP and others urged the New York State legislature to ensure that all available funds, including MIP funding, focused first and foremost on bringing broadband to the state’s remaining unserved and underserved locations, of which about 95,000 remain. Otherwise, the potential exists for MIP funding to be used to build duplicative infrastructure in areas where broadband is already available. This dynamic is called “overbuilding.” Overbuilding is inefficient and wasteful, especially when the resources being used to construct duplicate internet infrastructure in one town could be used to bring service to areas without any broadband.
Assuring Accountability
MIP Round 1 awards were announced in July 2024. Grants totaling over $70M were awarded to six projects.
Information for each funded project was confined to a single page and included only a high-level map depicting where the MIP-funded network would be built, information about how many locations the network would pass, and the cost of services to be provided. Omitted from the project “Fact Sheets” was data sufficient to determine whether overbuilding might occur.
In response, the ACLP submitted a public records request to Empire State Development (ESD), CAO’s parent agency, in August 2024 seeking “all records related to awards made by Empire State Development’s ConnectALL Office (CAO) in Round 1 of its Municipal Infrastructure Program (MIP),” including data necessary to determine the extent to which locations to be served by MIP-funded programs are “served,” “underserved,” and “unserved.”
After a lengthy review and appeals process, the state provided the ACLP with all the information and data that it requested. These materials are available on BBE’s Accountability page.
Analyzing MIP’s Round 1
After reviewing these documents, the ACLP identified the following takeaways regarding Round 1 of the MIP:
- New York Appears to be Using the MIP to Stoke Demand for Municipal Broadband
- To Further its Policy Goals, the State Created Favorable Scoring Criteria for Municipal Broadband Applicants
- Round 1 of the MIP Resulted in Significant Broadband Overbuilding
- New York Will Likely Need Every Cent of Available Funding to Bring Broadband to Remaining Unserved and Underserved Locations
- Syracuse’s Award is an Outlier and Merits Further Scrutiny
Takeaway #1: New York Appears to be Using the MIP to Stoke Demand for Municipal Broadband
Throughout the materials describing the MIP, the CAO noted that it will “prioritize projects that address unserved and underserved locations.” To achieve this goal, the program will invest available funds in municipal broadband projects across the state. This was an intentional policy choice made by CAO, a choice that it said was informed by a “substantial number of Public Entities that indicated interest in or previous studies that determined the need for publicly controlled fiber networks to address challenges of network availability, performance, affordability, and consumer choice, among other local priorities, and to address digital equity locally.”
Prior to the launch of the MIP, only a small number of municipalities across the state had launched a municipal broadband project or indicated interest in one; none had completed their planned networks. As the ACLP has documented in previous analyses, tepid demand for municipal broadband in New York is not surprising because private ISPs, oftentimes with the support of public grant dollars, have succeeded in pushing broadband to nearly every corner of the state. Even so, Governor Hochul signed legislation 2022 that served as the foundation for the MIP and related municipal broadband efforts.
Since then, the state has focused significant resources on trying to build interest in municipal broadband among localities. Among these efforts was appointing as head of the CAO the architect of a $2 billion municipal broadband proposal in New York City. That “master plan,” which called for massive broadband overbuilding in NYC, was eventually shelved by Mayor Adams. CAO has also hired the same consulting firm that assisted in the development of the NYC “master plan,” signing the firm to a two-year contract worth $14 million. In addition to its work on the now-defunct NYC “master plan,” the consulting firm has been involved in numerous other municipal broadband initiatives in New York, California, and elsewhere across the country.
Since the launch of the MIP, the data indicates that a great deal of skepticism remains among municipalities regarding the viability of and need for municipal broadband. Indeed, despite predicting that there would be significant interest in the MIP from the 3,000+ local governments and 62 counties across New York, only 8 public entities submitted applications for grant funding in Round 1. Of these, 6 eventually received funding; 2 did not. Six additional localities received funding in Round 2, one of which appears to be a modified version of a proposal rejected by CAO in Round 1 (information and analysis regarding Round 2 projects is forthcoming as the ACLP awaits additional public records).
It is unclear why municipal broadband is a priority in New York at a time when 95,000 locations across the state remain without sufficient broadband access. As the ACLP has noted elsewhere, municipal broadband almost always entails significant overbuilding. Choosing to build duplicative broadband infrastructure in served markets is risky and wastes scarce public resources. Uncertainty about whether available BEAD funding will be sufficient to close New York’s remaining digital divides – and whether BEAD funding might be rescinded, reduced, or delayed by the incoming Trump administration or the next Congress – only amplifies the risks and wasteful nature of municipal broadband in the state.
Takeaway #2: To Further its Policy Goals, the State Created Favorable Scoring Criteria for Municipal Broadband Applicants
The scoring rubric developed by CAO for the MIP is very favorable to applicants and appears to prioritize speed to deployment over operational sustainability. Indeed, the state’s scoring rubric does not appear to evaluate the long-term financial or operational viability of the proposed projects.
The ACLP received a more granular version of the MIP scoring rubric than the one made publicly available by the CAO. This rubric offers a unique look at how CAO prioritized certain application elements over others in Round 1. For example, the state placed significant weight on the extent to which projects are open access (“Network infrastructure sharing model”), project size, and the status of locations to be passed by the MIP-funded network. In theory, proposals seeking to bring open access fiber networks to large swaths of unserved and underserved locations would likely be well positioned to win a grant.
Absent from these criteria is any attempt by the CAO to evaluate the long-term sustainability of MIP-funded networks. For example, the rubric lacks any reference to financial projections or other materials that would provide the state with a sense of how the network might perform over the long term. Instead, based on a review of the documents received by the ACLP, CAO’s review of MIP applications on financial questions seems to have revolved around two questions: (1) “Do we trust [applicants] with the money?” and (2) “Are [the applicants] capable of financing the scope of the project (i.e. can they bond, borrow, or have reserves to sustain ESD’s reimbursement payment model and complete the project?).” Post-deployment financial performance does not appear to be a consideration for CAO.
Ultimately, the CAO scoring rubric appears to prize speed to deployment. The deadline by which CPF-funded networks must be “substantially complete” is December 31, 2026. The operational aspects of MIP-funded networks – i.e., whether these networks will be able to reliably and sustainably deliver promised services over the long-term – do not appear to be a priority for the state.
Also left unaddressed by the state is what happens when an MIP-funded network struggles to sustain itself financially. Will the state bail these networks out? If so, from where will those funds come?
Takeaway #3: Round 1 of the MIP Resulted in Significant Broadband Overbuilding
The ACLP has raised concerns about the potential of MIP funding being used to support inefficient and wasteful overbuilding. This is especially worrying at a time when the resources being used to construct duplicate internet infrastructure in one town could be used to bring service to areas without any broadband. Discussions about potential reductions in BEAD funding or changes to the BEAD program by the next presidential administration and Congress only heightens these concerns.
State officials have brushed aside these concerns and reiterated on several occasions that the MIP would “prioritize projects that address unserved and underserved locations.”
Unfortunately for New Yorkers without access to robust broadband connections, this does not appear to be the case, at least regarding the results of Round 1 of the MIP. Based on data received by the ACLP via its public records request, the data points to the contrary.
As shown in the table below, served locations made up the majority of passings in all but one MIP-funded project. At the extreme end of the overbuilding spectrum is the project in Syracuse, where 100% of all locations to be passed are already deemed served by 100/20 Mbps service (this is contrary to its initial assertion that 85% of locations were underserved; see below for further analysis). On the other end of the spectrum is Sherburne, where only 15% of locations to be passed by the MIP-funded project already have 100/20 Mbps service (this is the only project in Round 1 where unserved locations constitute the majority of passings).
Overall, 86% of the locations to be passed by the six projects awarded funding by CAO in Round 1 of the MIP are already served with 100/20 Mbps broadband.
| MIP Project | Served | Underserved | Unserved |
|---|---|---|---|
| Dryden | 2,129 (80%) | 74 (3%) | 470 (18%) |
| Franklin | 1,481 (91%) | 0 (0%) | 141 (9%) |
| Livingston | 2,673 (65%) | 246 (6%) | 1,212 (29%) |
| STN | 3,073 (73%) | 52 (1%) | 1,079 (26%) |
| Sherburne | 86 (15%) | 61 (11%) | 427 (74%) |
| Syracuse | 13,531 (100%) | 0 (0%) | 0 (0%) |
| Overall | 22,973 (86%) | 433 (2%) | 3,329 (12%) |
While MIP Round 1 projects appear to be bringing service to 3,762 unserved and underserved households, they will do so while funding duplicate connections to 22,973 other locations that currently have broadband access at or above 100/20 Mbps. If the goal of the MIP is to bring service to the unserved and underserved, it will do so incredibly inefficiently, with only 14% of all locations reached by the program in Round 1 falling into that category.
More broadly, about 90,000 locations across the state will remain without adequate broadband after accounting for the MIP Round 1 commitments. At the same time, nearly 23,000 locations across multiple cities and counties will see an additional broadband option deployed thanks to the MIP. This illustrates the inefficient and inequitable nature of using scarce public funding to facilitate wasteful overbuilding.
Takeaway #4: New York Will Likely Need Every Cent of Available Funding to Bring Broadband to Remaining Unserved and Underserved Locations
The following table summarizes each of the 8 applications submitted in Round 1 of the MIP and the results of CAO’s scoring of each application.
| Applicant | Amount Requested | Matching Funds | Served Locations | Underserved Locations | Unserved Locations | Cost/ Mile |
|---|---|---|---|---|---|---|
| CNYRPDB* | $28,846,550 | $0 | 396,255 | 1,627 | 12,341 | $67K |
| Dryden | $6,253,011 | $906,321 | 1394 | 50 | 292 | $90K |
| ErieNet* | $21,534,407 | $850,000 | 165,627 | 0 | 52 | $132K |
| Franklin County | $2,140,544 | $0 | 1461 | 0 | 145 | $59K |
| Livingston | $23,879,730 | $112,000 | 2,573 | 242 | 1,246 | $80K |
| Sherburne/ Columbus | $7,068,948 | $0 | 21 | 58 | 547 | $108K |
| Southern Tier | $19,435,000 | $0 | 2,620 | 406 | 1,650 | $81K |
| Syracuse | $9,225,657 | $1,400,000 | 2,149 | 12,176 | 0 | $531K |
The data confirms how expensive it is to bring broadband to unserved and undeserved locations. The “Cost Per Mile” to build these networks is substantial, even in densely populated areas like Syracuse. Looking ahead to BEAD, if its funding allocation remains unchanged, the state will likely need every available dollar to bring service to all remaining unserved and underserved households because the deployment costs in those areas will be substantially higher. If locations remain unserved post-BEAD, or if the state is forced to fund less reliable broadband infrastructure to close remaining coverage gaps, or if the state loses its BEAD allocation for whatever reason, then hard questions must be asked of the CAO regarding its decision to use the MIP to turbocharge municipal broadband overbuilding.
Takeaway #5: Syracuse’s Award is an Outlier and Merits Further Scrutiny
Syracuse, which received a sizeable award in Round 1, appears to have misstated the need for its proposed network. Specifically, in its application the city misclassified 85% of the locations its network will pass as “underserved” when in fact 100% of the project’s locations are served. Even so, it does not appear that the CAO sought to correct this mistake until after it awarded Syracuse MIP funding.
Moreover, that Syracuse received any MIP funding is curious given the project’s reliance on fixed wireless (FWA) to connect all locations. Syracuse was the only applicant in Round 1 to position FWA as its primary internet on-ramp for its MIP-funded network. Franklin was the only other applicant that indicated it will leverage FWA, but only to bring service to very-high-cost locations.
There are several different kinds of FWA, the robustness of which hinges on the spectrum being used to deliver last-mile internet access service. So-called “licensed FWA” uses licensed portions of the wireless spectrum to provide service. These offerings tend to be more reliable because the spectrum being used is occupied only by the licensee. “Unlicensed FWA,” on the other hand, relies on spectrum bands that are used by multiple entities, which reduces bandwidth and reliability. For these reasons, broadband service provided via “unlicensed FWA” tends to be considered inferior and not adequately comparable to those delivered over wireline and licensed FWA networks.
Syracuse’s MIP-funded network will use unlicensed FWA to deliver internet access services to 14,000+ residents. These kinds of connections are typically used only as a last resort in areas where it is cost-prohibitive to deploy more reliable broadband platforms like fiber or licensed FWA. The locations to be covered by Syracuse’s MIP-funded network, however, do not fit the high-cost profile of locations where unlicensed FWA is typically deployed. Residents in areas covered by the Syracuse MIP network will thus be offered inferior state-subsidized broadband products. Because these locations are already served, they will have other, faster options available to them at similar prices. As such, take-rates for Syracuse’s MIP-funded offering may be much lower than expected given because of the inferiority of the technology being used and the availability of better offerings from established providers.
For these reasons, the Syracuse project might warrant further scrutiny by federal and state officials. In addition, it might be worthwhile for officials to explore whether Syracuse’s score on its application should have been changed, or if the award should have been rescinded, once CAO officials learned that the city had grossly overstated the number of underserved locations to be covered by the proposed project.