NTIA Assistant Secretary Arielle Roth recently made a speech at the Hudson Institute that outlined her policy positions related to reshaping the BEAD program. The changes to BEAD were initiated by Commerce Secretary Lutnick and are now being finalized and implemented by Roth. The bottom-line impact of the changes will be to cut the amount of spending from the BEAD grant program roughly in half, with the savings returned to the Treasury.

Roth says that the changes are not just about saving money. Her position is that the cuts being made are to make sure that the government doesn’t distort or sabotage the pace of technological innovation.  To quote Roth, When the government overspends or over-subsidizes a single technology, it doesn’t just waste funds; it warps the progress of innovation. Excessive subsidies crowd out private investment, slow down research and development, and delay technological progress. That’s counterproductive to BEAD’s mission, which is to close broadband gaps, not freeze technology in place. In a field as dynamic as broadband, minimizing distortion is critical, because in every case, the most significant breakthroughs in connecting rural Americans have come not from subsidies, but from technological innovation itself.

That’s an amazing policy position to take related to rural broadband. I’d like to put her position into a bigger perspective. Her argument is a good one related to the whole broadband industry. I don’t know anybody who would argue that the federal government should help to pick technology winners for the entire industry. The market today is taking care of that pretty well. Over the past several years, over 14.5 million customers have chosen to buy broadband from the FWA cellular companies, much to the dismay of the cable companies. A recent article said that major fiber overbuilders in urban and suburban markets are seeing penetration rates between 35% and 45%. Starlink has grown to have four million U.S. broadband customers. It seems like the overall market is working pretty well, being fueled by private capital and head-to-head competition.

But even there, the federal government can’t help itself from fiddling at least a little bit with the market. Congress recently directed the FCC to rework mid-band spectrum allocations to bring 600 megahertz of spectrum to auction. That action will benefit FWA cellular competition even more than cellular service. That’s what incessant lobbying and contributions from the cellular industry buy. But mostly, the government hasn’t been intervening in the broader broadband market.

Roth’s policy position falls flat when applied to the tiny world of BEAD. The BEAD grant program aims to bring broadband to the last 6 to 7 million locations that got left behind by the market. For the most part, the BEAD locations are the most remote or least dense areas where nobody has been willing to make private investments. Congress recognized this when they developed BEAD, and it’s still the market reality. Without a one-time grant subsidy, these locations will likely never see better broadband.

How BEAD grants are awarded is extremely important to the households that will get the broadband, along with the construction companies and vendors that will supply the materials and labor to implement the grants. A lot of rural people put effort into the BEAD process in the hopes of getting a generational broadband upgrade.

But the technology chosen for BEAD has almost zero impact on the bigger U.S. broadband market. It really doesn’t matter to the larger market if the BEAD money all goes for fiber or all goes for satellite. It’s absolutely impossible to make an argument with a straight face that the technologies chosen for BEAD will somehow “warp the progress of innovation” if it’s not done just right.

I know Assistant Secretary Roth is looking for a good argument for awarding all of the locations in a rural county to satellite instead of fiber – but this argument is not it. The truth is that the NTIA changes to BEAD are only about saving money. NTIA could have completed the BEAD grant award on the same timeline by deciding to spend the full $42.5 billion, but they chose not to. They whacked the spending in half and are now searching for a clever way to justify their choices. I can’t think of a more ludicrous argument than one that says that spending more BEAD money on fiber would somehow sabotage the overall pace of broadband technology innovation for the country.