BEAD and Buy America

The NTIA recently issued a clarification of its intentions for the Buy America rules that are part of BEAD. In a blog released on August 22, the NTIA said that it still plans to take a strict approach to enforcing Buy America. In practical terms, that means that NTIA intends to only seek minor waivers from the Buy America rules.

NTIA first adopted a strict position on Buy America after the State of the Union address this year, when President Biden stressed that one of the key principles behind the Infrastructure Investment and Jobs Act, which funded the upcoming BEAD broadband grants, was to use American materials and labor.

As a reminder, the rules that determine if something is manufactured in America are included in Section 70912 of the Build America, Buy America Act. The Act requires that the iron, steel, manufactured products (including fiber-optic communications facilities), and construction materials used in a federally-funded project are produced in the United States unless a waiver is granted. That Act defines to be produced in the United States if the final product is manufactured in the United States and that at least 55 percent of the total cost of components are mined, produced, or manufactured in the United States.

The NTIA is proposing that 90% of the materials used to construct BEAD projects meet that definition. The NTIA made this recent announcement to provide incentives for fiber vendors to bring manufacturing to the U.S. for key broadband components. The NTIA says it will be leery of asking for waivers for materials that meet the following criteria:

  • Strategically important technologies that ensure the security, integrity, and reliability of network data should be produced in America.
  • If a product’s domestic manufacturing line can be scaled quickly, it should be produced in America.
  • A product, like fiber-optic cable that comprises a significant portion of the overall network cost should be produced in America.

The NTIA recognizes that some of the chips needed for broadband might not be manufactured here in time to support that BEAD grant implementation and may file a limited waiver for chips. However, there is a lot of progress being made to move chip manufacturing to the U.S. But chip factories tend to specialize in specific kinds of chips, and there may not be anybody making enough chips here for fiber electronics in time to meet the BEAD timelines.

The good news is that there is a lot of movement to build fiber electronics in the U.S. to meet the BEAD requirements. For example, both Nokia and Adtran have announced manufacturing plans in the U.S. Calix doesn’t have a U.S. solution yet but recently announced it should have one by the time that BEAD grants are awarded.

There are new fiber cable facilities being constructed by Corning, CommScope, Prysmian, and Superior Essex.

Overall, the Build America requirements don’t appear to be the big bottleneck that was feared a year or two ago. It will remain to be seen if the new U.S. manufacturing will be able to keep up with the demand from BEAD. It looks like most states are going to try to award as much money as possible in 2024, which means that construction for BEAD grants across the country will all start within a fairly narrow time window.

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