In my opinion, the BEAD grant program has been a rolling disaster since it was introduced. We saw how a good grant program works when the Capital Project Fund program operated by Treasury quickly dispersed infrastructure money and put it to use. Both programs were authorized around the same time, yet most of the projects funded by CPF are completed, or will be soon since a few projects got an extension until next June.
By contrast, BEAD construction has barely started. There are numerous reasons for BEAD delays, with the most recent delay when NTIA lost a year when it switched to the Benefit of the Bargain rules that drastically halved the funding awarded for infrastructure.
One of the original elements of the BEAD legislation was that money that wasn’t spent on infrastructure would be rolled into what the legislation termed non-deployment funds, which were intended to support broadband functions that supplemented and aided broadband. Many states expected to spend most or all of their BEAD funding on infrastructure, but after the Benefit of the Bargain, there is now over $21 billion of non-deployment. NTIA has been promising for the last year that it would issue guidance to states on when and how that funding can be used. NTIA held listening sessions earlier this year and asked for public input about how to best use the non-deployment funds.
To the surprise of nobody who has been following the BEAD trainwreck, NTIA pulled a fast one with the non-deployment funds. Rather than giving guidance on the $21 billion of non-deployment funds, NTIA has instead determined that some tiny portion of the non-deployment funds can now be used to build more infrastructure. That sounds really good on paper, because who’s not in favor of building more infrastructure?
As you might expect, because this is BEAD, the new grant process is complicated. First, NTIA is developing a list of eligible locations for the new funding. Some of these will come from ISPs that have already refused to accept the first round of BEAD. But it’s hard to think NTIA will find many other meaningful unserved locations. The agency has already claimed victory several times over the last year, saying that BEAD has basically solved the rural broadband gap – so NTIA doesn’t believe there are any pockets of locations that were missed by the original BEAD.
Once the list of locations is published, there is a tight time frame for states to deal with the new BEAD round. States will have 30 days to validate the locations. Next, each state would have to hold another quick map challenge process. As a reminder, the map change process was probably the most dysfunctional part of the original BEAD process – anybody who took part in the map challenges knows it was a disaster, end to end. After the map challenge, states have to submit their final locations to NTIA for approval, after which the states can hold a 90-day supplemental bidding round. I’m sure that NTIA will want to review tentative awards before they are made. States will then have to contract with grant recipients for the new awards. That likely means modifying existing BEAD lines of credit, and who knows what else. It’s hard to see this entire process playing out in less than a year, particularly since there are several steps that include an NTIA review and approval. It’s hard to see any of this new BEAD money being freed to ISPs until sometime into 2028.
All of this is a very convenient delaying tactic for NTIA, since it takes NTIA off the hook for providing guidance for the bulk of the non-deployment funds until the new infrastructure spending has been completely resolved through signing contracts with grant winners.
There is another little twist to consider in that infrastructure awards will be made at the average cost per location from the first round of BEAD. By definition, since all states have made awards for satellite broadband, the new BEAD average award will be lower than what was originally awarded for fiber. Add to this the fact that inflation has made it more expensive to deploy any terrestrial broadband technology, and I doubt that many fiber ISPs will be willing to take new awards a year from now at lower levels than the Benefit of the Bargain grants.
I titled this blog Much Ado About Nothing, because that’s what I expect out of it. I have a hard time seeing any meaningful numbers of locations getting infrastructure in the process, meaning only a small fraction of the non-deployment funds will be used in this process.
I’m hoping this will be my last blog on BEAD, because the process has grown too obtuse to keep writing about. This seems like a scheme for NTIA to delay any discussion about using the $21 billion of non-deployment savings for several more years. I expect most ISPs to ignore this new process, but states are going to be obligated to try to make the awards to somebody. Wouldn’t it be ironic if this ends up making new grants to the satellite providers at a much higher amount per location than what they accepted with the original BEAD? My inner conspiracy voice wonders if that’s the real intention of the new rules.
We have a very, very small BEAD award with just 17 locations and about a mile of mainline fiber all together. The amount of hoops to jump through on the environmental and historical/tribal review is off the charts. Yesterday, we heard from the contractor doing the State’s review asking details about bore pits (where they would be placed and the specs on them like depth, etc) and they also asked about where the equipment and materials would be staged. It’s nuts. We haven’t passed ER. . . we have only done preliminary design. I’m not passing any info along to a contractor until we get through this part. They’re totally putting the cart before the horse. I can’t imagine how a company with a giant award would be able to get all of that detail so soon in the process.
it’s a huge blunder. one absolutely critical thing that the post touches on is that when you do any sort of funding you have to get that money out FAST else inflation kills projects. What is going to happen to the 1000 location projects that can now only fund 700 of the passings? Do they do 700 and then get a pass for failing to complete? Do the taxpayers that don’t get service have any recourse?
absolute train wreck.
How about the government just stops meddling in this industry entirely? The focus is always on the poor people living in out-of-the-way places who can’t have the same online experience that people in the cities do, and so their lives suck. /s
Well, a couple of newsflashes:
A: Many of those people choose to live out there, knowing full well that connectivity is thin, and they are perfectly happy with it.
B: Did anybody ever stop and consider how many lives, businesses, and families have been destroyed by this?
People pour their entire lives into building smaller, local ISP businesses. They’re loved by the locals, and this country pretends to think that’s a cool idea, but they’re getting wiped out by the big ISPs with government money offering services at below cost. At some point that will dry up and the prices will go back up.
In turn, that’s destroying the very equipment industry these smaller ISPs purchase their supplies from.
And in the end, as you fear, there still won’t be ubiquitous fiber broadband to every home anyway, as if that’s some requirement for life.
100% agreement on A
200% agreement on B
I keep going back to what government is capable of to make an area economically viable, and that’s highways. It’s NOT driveways. If the government came in and said that the only way we’re going to solve inequity is to fund new paved driveways for everyone in America, the economic boon would be absolutely minimal. You’d have to find it in the details, like ‘tire sales are down 0.5% due to less wear pulling in and out of driveway’. However every community needs a paved and maintained highway to thrive.
That’s where we’re at on this entire internet thing. Government money should be building highways ie long haul fiber to communities, actually to every intersection in every highway starting at the busiest highways and progressively down to smaller ones so that NEW communities can form and create new economies. That enables any and every person or company to start an ISP, compete for the customers, and generate economy. This is economics 101, we’re not even talking advanced stuff. We’ve lost the script so hard we can’t get the basics.
BEAD is anti-economy. It’s that government funding for drivaways paying to pave a mountain road to a resort cabin. It’s the death of startup ISPs, the death of a good many established ISPs that get bulldozed by government fund chasers. It creates monopoly markets.