The NTIA should be getting close to approving all of the state BEAD initial grant proposals. Once that has been done, one of the last big steps will be for NTIA to announce how States can receive and use the BEAD non-deployment funds. When NTIA initiated the Benefit of the Bargain rules, the amounts of BEAD allocated to infrastructure plummeted, and the non-deployment funds mushroomed to over $20 billion, almost half of the original $42.45 billion BEAD funding.
NTIA will hold a listening session soon to hear ideas from State Broadband Office on how they would like to use the funding. Most States had specific proposals for using the funds, but States may not have specific plans for the increased amounts of non-deployment created by the Benefit of the Bargain changes.
The nondeployment process got complicated when the White House issued an executive order that said that NTIA “must provide that States with onerous AI laws … are ineligible for non-deployment funds, to the maximum extent allowed by Federal law.”
A number of State Attorneys General have expressed a willingness to sue NTIA should they be denied non-deployment in general, but also specifically if they are denied because they have state AI regulations. There is a great article, written by Lawfare, on the legal issues involved if this issue is taken to court. The article concludes that States have a great argument to question if NTIA or an executive order can overcome the intent of Congress when it passed the original BEAD rules.
One interesting observation in that article is that the White House is relying on a claim that State AI regulations may harm the development and deployment of AI. The argument is that AI applications drive demand for the Internet, so any State regulations that threaten the use of AI also threaten the value of BEAD-funded infrastructure. If that line of reasoning is deemed to be valid, it would imply that NTIA could withhold funding related to any other web applications that uses a lot of broadband.
The AI issue got more interesting when 22 states and the District of Columbia filed comments with the FCC in December that ask that the agency to not preempt any State AI regulations. While many of the States in the filing are blue, the filing included Arizona, Tennessee, and Utah.
The final interesting aspect of the issue is legislation introduced by two republican Senators, Roger Wicker (R-MS) and Shelley Moore Capito (R-WV), titled the SUCCESS for BEAD Act. The legislation is viewed as a way to negate the Executive Order and would require States to receive full funding and to distribute non-deployment funds through a competitive subgrant process. This would require grantees to provide a 25% match. The non-deployment funds could be used for six purposes: infrastructure improvement in rural areas, the enhancement of public safety and/or national security, network resiliency and cybersecurity protections, federal or military facilities, improving network latency, and the advancement of AI and related technologies.
Meanwhile, NTIA is still referring to non-deployment funds as savings, although there has been an acknowledgement that some of the funds should be distributed to States. I suspect that if NTIA does anything less than full distribution of all of the funds, we’ll see some combination of legislation and lawsuits to gain access to the funds.