While States are scurrying to award BEAD infrastructure funds before September 4, the other portion of BEAD – non-deployment funds – is in limbo. One paragraph of NTIA’s BEAD Restructuring Policy Notice put non-deployment funding on hold:
Funding for allowable non-deployment purposes is under review and NTIA will issue updated guidance in the future. As of the date of this Policy Notice, NTIA rescinds approval of all non-deployment activities approved in Initial Proposals. NTIA will not reimburse Eligible Entities for any new costs associated with previously approved non-deployment activities incurred after the date of this Policy Notice. An Eligible Entity should consult with the NIST Grants Office and NTIA if the Eligible Entity believes that it is entitled to reimbursement for non-deployment activities or costs that were incurred prior to the publication of this Policy Notice. Final Proposals will only require detail on the use of BEAD funds for deployment projects.
For those who haven’t been following BEAD closely, non-deployment funds are any remaining money after a State has made awards to bring broadband to every BEAD unserved and underserved location. Because of the uneven nature of allocating BEAD funding to States, some States didn’t expect to have any non-deployment funding, while others expected significant non-deployment funds.
NTIA’s original guidance from several years ago suggested that non-deployment funds could be used for projects related to broadband adoption, providing broadband devices to the public, digital skills training, and other activities to complement BEAD’s universal connectivity goals. States had already published creative plans for using the non-deployment funds. For example, West Virginia planned to use $30 million to create a database of utility poles in the state, $4 million to update security on the State’s own network, $90 million to award grants for expanding rural cell towers, and $30 million for training programs for technical jobs in the telecom sector.
The new rules from NTIA in the Notice clearly expect States to reduce the money spent on broadband infrastructure since the new BEAD grant rules give top priority to ISPs that request the lowest amount of money to achieve the desired BEAD goal of 100/20 Mbps. We won’t really know what this means until the States announce the final BEAD grant winners – but the consensus is that it will mean significantly less BEAD funding for fiber and more for satellite and fixed wireless broadband.
If NTIA sticks to the rules determined by the BEAD legislation, then any reduction in spending on infrastructure would mean increased funding for non-deployment purposes. Congress intended that the full $42.5 billion of BEAD funding be spent on broadband infrastructure or related non-deployment activities. Governors and elected officials from red and blue states have been urging NTIA to use the funds as intended by Congress.
I conducted an informal poll on the question to policy folks around the industry. Some expect that NTIA will kill all non-deployment funds as a way to take credit for ‘returning’ money to Treasury. Others are hopeful that NTIA will allow at least some non-deployment activities. Optimistic folks point to the fact that NTIA left the door open and didn’t kill the funding when they issued the Notice of the new rules. That same notice officially killed funding for digital equity grants, and it would have been an easy way to end non-deployment funds.
As mentioned in the quotation above from the Notice, the September 4 filing from each state for BEAD grants no longer requires a revised request for non-deployment funds. I expect that most States will still include their wish-list for the use of non-deployment funds. It seems like that will put NTIA into the position of accepting or rejecting specific non-deployment projects. That could mean a lot of bad press, state by state if NTIA rejects ideas like the West Virginia plan to spend $90 million on new rural cell towers – a long-term infrastructure project that would benefit a lot of people in the state for decades.
An even bigger question is how an agency like NTIA could decide to not spend non-deployment funds that were specifically directed by Congress. It’s one thing for the White House to issue executive orders that countermand Congressional spending, and courts will be busy for a long time figuring out the extent that is allowable. It’s a whole lot fuzzier if an agency like NTIA can directly ignore Congress. For all of us who thought we knew how the federal government works, this is uncharted territory.