Two U.S. agencies tasked with distributing about US$7.2 billion in broadband deployment grants and loans over the next 15 months have released an official list of funding rules, imposing net-neutrality clauses on grant applicants.

The 121-page notice of funds availability (NOFA) sets out general rules of how to apply for the funding, but largely ducks larger questions such as how the U.S. Rural Utilities Service (RUS) and the National Telecommunications and Information Administration (NTIA) will determine how much money will go to areas "unserved" or "underserved" by broadband.

In conjunction with the notice, U.S. Vice President Joe Biden announced the availability of $4 billion in loans and grants, the first wave of funds available under a huge economic stimulus package passed earlier this year. The notice gives applicants from July 14 to Aug. 14 to apply.

The notice requires that grant applicants "not favor any lawful Internet applications or content over others," often referred to as net neutrality. "Without a non-discrimination condition, network operators could give preferential treatment to affiliated services, or charge some application and content providers for 'fast lanes' that would put others at a competitive disadvantage," the notice said.

Applicants can deploy nondiscriminatory network management methods, and they can offer managed services that use private connections, such as telemedicine, public safety communications and distance learning, the notice said.

The notice also defines "unserved" and "underserved." In the economic stimulus package, the U.S. Congress required the funds go to unserved and underserved areas.

The agencies define an unserved area as one where at least 90 percent of households lack access to "facilities-based, terrestrial broadband service, either fixed or mobile," with a minimum broadband speed of 768K bps (bits per second) downstream. The NTIA and RUS did not want to define unserved as an area that has no broadband service, they said in the notice.

"An area should not be considered served merely because one or two households in that area have access to broadband service," the notice said.

The two agencies also discounted satellite broadband service, although some satellite services might be fast enough, the notice said. "Because the general reach of satellite service can extend to the entire country, it is excluded as a factor in the unserved definition to avoid a finding that no area in the United States would be considered unserved," the notice said. "Such a finding would render the term meaningless."

The definition of "underserved" is more complicated and depends on whether applications are made for so-called last-mile network funding or for middle-mile funding. For last-mile project to get funded, an area must have one of these scenarios: no terrestrial broadband service with 768K bps downstream speeds, no fixed or mobile broadband provider with advertised transmission speeds of 3M bps or more, or broadband subscriber rates of 40 percent or less.