Author Archives: Doug Dawson, CCG Consulting

FCC to Review State AI Regulation

FCC Chairman Brendan Carr announced that the FCC will pursue the directive from the White House to review and possibly block state regulations related to artificial intelligence (AI). At an industry summit, he was quoted as saying that the FCC has authority under Section 253 of the Communications Act related to the FCC having authority to step in if a state of local law is prohibiting the deployment of modern infrastructure.

It’s been a while since I read 47 U.S. Code § 253, and it turns out that the language in that section is short and succinct:

In general, no State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.

 Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with section 254 of this title, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications service, and safeguard the rights of consumers.

 If, after notice and an opportunity for public comment, the Commission determines that a State or local government has permitted or imposed any statute, regulation, or legal requirement that violates subsection (a) or (b), the Commission shall preempt the enforcement of such statute, regulation, or legal requirement to the extent necessary to correct such violation or inconsistency.

The FCC faces a regulatory conundrum if it tries to use Section 253 to regulate AI. It’s clear that Section  253 only applies to telecommunications services.

There are only two paths I can think of that would enable AI to be considered as a communications service. The obvious one is if Congress passes a law that says it is. However, I imagine the folks in the AI industry would fight hard not to be regulated like a telecommunications service.

The more roundabout way would be for the FCC to deem broadband to be a telecommunications service, and then somehow determine that AI comes along for the ride. That doesn’t seem likely since Chairman Carr had plans to immediately declare that broadband is not a telecommunications service when he became Chairman. He was saved from having to do that when, in early January, the U.S. Court of Appeals for the Sixth Circuit overturned the ruling from the previous FCC that put broadband under Title II regulation. That meant that the FCC reverted to the rules made by the Ajit Pai FCC that said that broadband is not a telecommunications service and can’t be regulated as such.

It’s hard to see a logical path to regulate AI as a telecommunications service if broadband is not telecommunications. I can’t think of a logical argument to enable that. It’s also not easy to claim that AI is communications. AI is mostly computer calculations done in a data center. AI prompts initiate from users and are carried to a data center via broadband, and the results are carried back to the customers via broadband. But there is no way in a fiber network that AI bits are different from any other kinds of bits.

I’ve never heard any argument that the other kinds of content that ride broadband networks can be considered to be a communications service. If AI is somehow considered to be communications, then so are responses from Google search, a movie from Netflix, and practically everything else that traverses the Internet. Every company that transmits content will vehemently oppose the idea that what they send over the Internet is a regulated communications service.

The FCC faces an additional challenge in trying to overturn State AI regulations. Several recent Court rulings have weakened the FCC’s authority. Loper Bright Enterprises v. Raimondo overturned the Chevron Doctrine, which brings into question the ability of the FCC to enact laws that were not specifically mandated by Congress. This year, McLaughlin Chiropractic v. McKesson Corp gave District Courts more leeway to disagree with rulings made by federal agencies like the FCC.

It’s clear that the FCC is going to tackle the issue, but it’s going to take some interesting regulatory and legal gymnastics to pull this off. Perhaps the FCC’s goal is to just tamp down State regulations before they are enacted, but a Google search tells me that every State either has passed or is considering regulations related to AI.

Limiting Large Network Outages

Ookla recently published an interesting article that emphasizes what I have been telling folks for a long time. Not that many years ago, telephone and broadband networks were structured in such a way that most outages were local events. A fiber cut might kill service to a neighborhood; an electronics failure might kill service to a larger area, but for the most part, outages were contained within a discrete and local area.

There were exceptions. Rural areas have been susceptible to fiber cuts in the fiber that provides Internet backbone. Years ago, I worked with Cook County, Minnesota, which would lose voice and broadband every time there was a cut in the single fiber between Minneapolis and northern Minnesota that supported the area. A public-private partnership was created to build the THOR network to solve backhaul failures in a large chunk of southeastern Colorado.

https://www.ookla.com/articles/building-digital-resilience-strategies-2025

As the article points out, this has all changed because network operators have consolidated and interconnected networks across large geographic areas. Ookla says that the new phenomenon of large scale outages is a direct result of digital transformation. As carriers, companies, and governments have grown increasingly reliant on cloud services, managed providers, and interconnected networks, they now have to live with outages where what used to be a local problem can cascade across a region, or even across the country.

The article looks at the recent power outage in Spain and Portugal that quickly grew from a local outage to a power outage across much of the Iberian Peninsula. Ookla points out that in today’s world, there is not that much difference between outages of a power grid, a cellular network, or a fiber network.

The article points out that outages can cascade much faster than anybody expects. The difference between a temporary disruption and a system-wide crisis depends on how quickly the network operators can recognize and analyze the causes of a problem. Ookla says there are five key steps needed to keep disruptions from escalating. Every major network outage is likely due to network operators failing at one of the early steps of this process.

  • Detection: Spot the first signs of trouble across multiple data sources, from outage reports to operator dashboards.
  • Attribution: Identify the root cause of the problem, whether it’s an internal software bug, a fiber cut, or a regional power failure.
  • Communication: Share timely, accurate information with stakeholders and the public to reduce confusion.
  • Remediation: Act quickly to contain damage, restore critical services, and prevent cascading failures.
  • Learning: Capture lessons from each event and feed them back into playbooks, exercises, and long-term resilience planning.

Ookla believes that the local reaction within the first hour can make a huge difference in the extent and length of an outage. There was one power company in Iberia that was able to isolate itself from the cascading shutdown because it was prepared to react quickly. I wonder how many local ISPs are ready to quickly react to problems caused outside their local network. The Ookla article suggests that local operators can do a lot more to protect themselves and their customers against major outages.

NTIA’s BEAD Role

At the SCTE Tech Expo in Washington, DC, Arielle Roth, the newly seated head of NTIA, was quoted by several sources as saying, “Our role is to be good stewards of the money . . . We wouldn’t be doing our due diligence if we didn’t look under the hood and make sure that Americans aren’t on the hook for costs that would be unreasonable.”

By the looks of what NTIA has been doing, they seem to have taken cost-cutting as the primary goal of the BEAD program. First, they forced States to shave millions of locations from the BEAD-eligible list, and I believe we’re going to find out later that many millions of those locations should have gotten grants for better broadband. NTIA is now in the process of setting a cost cap for each state based on the CostQuest cost models and forcing ISPs to accept 65% or less of the state-specific cost cap.

I would agree that NTIA has a responsibility to make sure that money isn’t wasted, but that is not supposed to be its primary concern. Let me take you back to the beginning of BEAD to talk about how this was supposed to work.

Congress clearly intended for the full $45.5 billion allocated to BEAD to be spent. States were instructed to bring good broadband to every BEAD-eligible location, and the legislation included an emphasis on building fiber. Whatever wasn’t spent on infrastructure was to be used for non-deployment projects that were broadband-related. This could have encompassed a wide variety of different uses to be determined by each state. The legislation suggested uses for non-deployment funds for things like wiring urban MDUs for broadband and getting computers and other devices into the hands of those who need them. States have suggested a wide range of uses for non-deployment funds. For example, West Virginia wanted to use the funds to do a statewide pole inventory to make it easier to build fiber. South Carolina envisioned creating a statewide middle-mile network that made sure that ISPs in every rural county could buy backbone Internet for the same price as in the populous counties.

Unfortunately, NTIA got off to a bad start early when it realized how bad the FCC maps were. The whole BEAD process was delayed waiting for better maps. When they got slightly better maps, NTIA pulled the trigger and used those maps to allocate BEAD funds to states. Almost immediately, some states yelled that they didn’t get enough money, while other states realized they got more than they needed. There were policy discussions about shifting money between states after awards were made, but that never happened.

The States then went through a map challenge process. Unfortunately, the rules required by NTIA made it far easier to remove BEAD-eligible locations from the map than to add locations that should have been eligible. I know multiple counties that worked hard to show that some of the ISPs in their County were not delivering 100/20 Mbps. However, the process for proving that was nearly impossible to follow – it required convincing multiple customers of a given ISP to take speed tests multiple times per day over multiple days, and in a specific manner. The end result of the disastrous map challenge process was that millions of locations were removed from BEAD, with relatively few added.

More recently, NTIA acted to remove even more locations from BEAD. They correctly removed locations where some other grant was supposed to build better broadband. But they also made it easier for WISPs, using both licensed and unlicensed spectrum, to ask to remove locations from the BEAD map.

States were originally given a lot of latitude in how to use the funding allocated to them. But States were to act under the overarching intentions of the legislation that said they should consider fiber first. States understood that by funding relatively expensive fiber builds, they were reducing the funds that would be left for non-deployment. States had serious policy discussions of how to balance between building fiber and other needs.

But this latitude is exactly what Congress intended. They wanted BEAD to avoid the problems of RDOF, where the FCC called the shots and ended up awarding money to ISPs that should not have been funded. That draws attention to a second quote from Roth. She said that BEAD funding should go to “serious providers who are going to deliver on their promises and that we’re not going to see defaults.” I hate to be the bearer of bad news to NTIA, but by pressuring ISPs to take less grant funding to stay in BEAD, NTIA is greatly increasing the chance of future defaults. This is going to be a repeat of RDOF. ISPs will start building networks and will suffer inflation and supply chain issues, and some of them will decide that it’s better to pull the plug than to finish building a project they can’t afford, and that can’t make money. That’s the reason for the RDOF defaults in recent years – RDOF winners looked at the low amounts of award they accepted in the reverse auction and threw in the towel.

One thing is now clear with BEAD – NTIA now fully owns the program. States lost all of their latitude with BEAD, and the NTIA changed the rules after the BEAD process made it to the five-yard line. Whatever happens from here will be laid 100% at the doorstep of NTIA, and my prediction is that BEAD is not going to be talked about fondly in many parts of the country.

Broadband in a Hurry

There is an interesting new twist on wireless backhaul. The Swedish company TERASi has developed a wireless backhaul technology that enables networks to be configured on the fly. The company has developed a small, lightweight, portable microwave radio that can quickly be mounted anywhere on a tripod, a pole, or any object with line-of-sight to a neighboring radio.

The radios use frequencies in the 70 GHz range. They can provide 2 Gbps in bandwidth for up to 5 miles or 10 Gbps for a few miles. Latency is a super-low 5 milliseconds.

The selling point for these portable radios is that they can be installed and configured in minutes. This is due to the small size of 3x3x1 inches. The company says a radio can be mounted on a photography tripod or even on a drone to create a quick wireless link. The small radios are being touted as a solution for quick links in the field for the military or for a quick link any time an ISP needs a quick connection.

The radios are now in beta testing mode, and the company would like to hear from ISPs or local governments that might have a unique use case for radios that can create a quick link.

It’s not hard to imagine numerous uses for a microwave network that can be installed quickly.

  • The company is marketing this to the military as an alternative to using Starlink on the battlefield. There have been several times in Ukraine where the Starlink network went down – at least once intentionally, and once recently when Starlink had a worldwide outage. Microwave radios are safe from interference since it’s nearly impossible to intercept the tiny beam between two devices. These radios also have the upside of delivering higher bandwidth than satellite.
  • The technology could be a boon for disaster recovery. ISPs and utilities could string together a backhaul network that would allow them to reestablish a quick bandwidth link to substations, cell towers, or powered electronics hubs. The devices could be in place quickly to establish connections for critical first responders. Local governments could use the radios to power public hotspots to give quick connectivity to the public.
  • These radios could be an instant patch for damaged networks, particularly in situations where repairs will be slow. These radios could be a quick fix for fiber cuts in places that are hard to fix, like bridges and railroad crossings. The radios could leapfrog landslides, fire, or flooded areas to keep a network functioning.
  • Temporary wireless networks make sense for places like construction sites that need bandwidth today, but not permanently.
  • Commercial firms might consider this as a quick fix between nearby buildings for emergency redundancy.

The downside is the expense of buying units that might never be used. But the huge upside is having the ability to create a quick broadband connection for emergencies and critical needs.

Easing Tower Placement

Communities need to be on the alert because the FCC has opened a new proceeding that will make it easier for carriers to deploy towers and other wireless infrastructure. On September 9, the FCC approved the Notice for Proposed Rulemaking in Docket WT 25-276 titled Build America: Eliminating Barriers t Wireless Deployments.

The NPRM builds on the FCC’s 2018 Small Cell Order that made it easier for carriers to deploy small cell sites. To cite the introduction to the NPRM, the FCC is looking to “ensure investment and network buildout is free from unlawful regulatory burdens imposed at the state and local level. . . we continue to see regulations that inhibit the deployment, densification, and upgrading of wireless networks, resulting in an effective prohibition of 5G wireless services.”

The current FCC seems to have a penchant for referring to any practice it doesn’t like as unlawful. This seems way over the top. If local communities were being unlawful, then carriers would be prevailing against them in lawsuits and with FCC complaints, which are not happening.

The main thrust of the NPRM is to seek comments on whether the FCC should take steps to ensure that state and local permitting doesn’t effectively prohibit the deployment of wireless infrastructure. The FCC is looking for comments about local regulations that:

  • Inhibit the deployment of macro cell towers and other wireless facilities
  • Impose unreasonable delays in permitting approvals
  • Assess disproportionate or otherwise unreasonable fees
  • Condition approval on aesthetic or similar criteria
  • Impose other regulatory impediments

To be fair to the FCC and carriers, there are communities that want better cell service while also fighting hard against the construction of new large cell towers. There is a definite NIMBY movement against placing cell towers near the residential communities they serve.

The NPRM also asks if the FCC should implement alternative dispute resolution procedures or an accelerated docket process that has been commonly referred to as a “rocket docket” to facilitate disputes on permitting or tower placement.

The docket also seeks comments to better clarify the meaning of “concealment elements.” which are used by tower builders to minimize the visual impact of towers and other wireless infrastructure. It’s an amusement for my family to point out cell towers poorly disguised as pine trees that stick up far higher than any other trees.

Finally, the NPRM asks if there are any other regulatory changes related to wireless infrastructure that should be considered.

Highlighting Cable One

Today’s blog looks at the market performance of Cable One. Cable One is a traditional cable company that markets under the name Sparklight. The company has over one million broadband customers. I’ve written about most other large cable companies, and I’m highlighting them in this blog since they seem to be suffering from the same problems facing other cable companies.

It’s not entirely fair to refer to Cable One as a cable company, because the company has deemphasized cable TV sales for a number of years. They were one of the first cable companies to publicly say that its future is broadband.

Cable One has seen an erosion of customers similar to other cable companies. The last quarter that the company added broadband customers was in the first quarter of 2024. At that time, the company had 1,066,400 broadband customers. There has been a loss of broadband customers in every quarter since, with the company having 1,031,300 customers at the end of the second quarter of 2025 – a loss of 2.6% of the customer base. That loss is similar to the biggest cable companies – Comcast lost 2.6% and Charter lost 2.2%. It’s far better than Altice (5.4%) and Breezeline (6.2%).

The loss of customers has resulted in an erosion of revenues. There has been a drop in revenues every quarter since the third quarter of 2022 ($1.71 B) to the second quarter of 2025 ($1.54 B). The drop in net income is far more dramatic, from $376 million in the second quarter of 2022 to $20.3 million in the first quarter of 2025. The company experienced a precipitous drop in net income in the second quarter of this year, with a loss of $496 million, mostly driven by a $456 million write-off due to asset impairment related to the company’s drop in stock prices.

Stock prices are the big story for the company. At the end of the second quarter of 2022, the company’s stock was $918.77 per share. It’s seen a steady drop since then, and when I wrote this blog, the stock was at $168.23.

The company’s worsening performance can be tied to a number of issues that affect every big cable company:

  • Intense Competition. The company is seeing significant competition from fiber overbuilders as well as FWA cellular broadband.
  • Stagnant Churn. An issue that is not discussed much is that broadband customers are not hopping between ISPs nearly as much as in the past. ISPs are often offering special pricing for a multi-year contracts to keep customers from churning, and it seems to be working.
  • Fixed Footprint. The smaller cable companies like Cable One are not expanding service areas. Comcast and Charter are expanding to some degree through greenfields and grant opportunities, but even they aren’t seeing a big overall growth in passings.
  • Price Pressure. Competition is forcing cable companies to offer special prices to keep customers, driving down ARPU (average revenue per user). This can be offset by rate increases, but that becomes a limited strategy in competitive markets.

It’s hard to know the future for companies like Cable One. It faces a giant challenge if it wants to grow revenues or even hold them steady. I have no knowledge of this, but it would seem that the company must be an acquisition target for a larger ISP. The only other cable company with more than a million customers that is not part of the giant ISP is Altice.

Urban WISPs

When Tarana released the new G2 generation of radios, one of the claims the company made was that the radios are powerful enough for ISPs to bring point-to-multipoint broadband to metropolitan areas.

The new specifications support the premise. The new G2 radio can support up to 512 customers in a sector (2,048 customers in total). Each sector can accept up to 6.4 Gbps of backhaul bandwidth. If all customers are provided with a gigabit product, the oversubscription ratio would be 20:1. That’s about double the ratio for current fiber technology, but many ISPs would find this to be acceptable. If a WISP were to install a Tarana radio on an existing tall urban tower, it should easily be able to see a lot more than 2,000 homes and businesses.

Selling fixed wireless in an urban area is an interesting marketing plan because there are a lot of locations that won’t be reachable from a single radio site. Rural areas have dead zones created for wireless technologies by hills and other impediments. In a city, the dead zones are more pronounced but localized. There is dead zone created behind every tall building. A home next to a taller neighbor might not be able to see a tower directly. This can be solved to some extent by using multiple towers, but tower real estate in many cities is hard to come by. Many towers are already loaded to capacity or are reserving any remaining capacity for the giant cell companies.

But a WISP could never serve everybody in an urban environment. There are nowhere near enough tall towers in a typical city or suburb to serve more than a relatively small percentage of households. A WISP marketing plan will shoot to fill all of the slots on a radio. However, there is a proceeding at the FCC that is considering overriding local restrictions on tower placement, which could be a huge boon to WISPs and cellular FWA providers.

This is an intriguing idea that would bring yet another competitive option to cities. There is already a price war of sorts for gigabit broadband in cities. For example, in highly competitive markets, customers can buy a gigabit from AT&T for $65 per month, with even lower introductory prices for new customers. Cable companies are falling all over themselves with low rates to keep customers from churning. It seems like a WISP that doesn’t have to support a wired network ought to be able to be price-competitive.

Wireless technology also brings a new option for redundancy for businesses. A growing percentage of businesses are willing to pay for two diversely routed ISPs to make sure they can stay connected to broadband. A wireless backup provides a lot more safety as a backup connection since local events like a downed pole might knock out both fiber and the cable company.

It’s an interesting option that brings a real wireless option for many urban homes. The FCC broadband map shows that I have eight choices of broadband at my house, but most of them are wireless carriers that can’t actually serve me with acceptable broadband. I’ve never understood why WISPs claim coverage across whole cities. When I look at detailed Ookla speed tests, most cities show barely any actual use from the WISPs. There are exceptions, but the current FCC maps are highly exaggerated for cities. But the FCC has no incentive to clean up the maps when every home in a city has one or two legitimate options for gigabit broadband.

The Tarana announcement has to worry the big cable companies that are already struggling to hang on to every customer. Losing even just a few thousand customers in every urban market to WISPs presents a new competitive worry.

BEAD Cost Caps

Most States have now sent final BEAD proposals to NTIA with a list of the proposed ISPs to win BEAD funding for every eligible location. The next step is for NTIA to review grant applications, which is now underway. The agency has already been contacting States and establishing a cost cap for each State based on the CostQuest cost models.

Several States have reported that NTIA is instructing the State to outright reject any proposed award that is more than 85% of the cost cap. States are to ask any ISP with a proposed BEAD cost between 65% and 85% of the cost cap to lower the BEAD award to 65% or else default the grant. Any proposed BEAD award below 65% of the cost cap is apparently safe for now. This may not be the last step, and NTIA has set a deadline for itself for December 4 to review all grant awards.

The current process is clearly aimed at lowering the amount of funding awarded by BEAD. The Benefit of the Bargain round of BEAD grants has already drastically lowered the amount of BEAD grants. For the States that have reported to NTIA when I wrote this blog, States have awarded $16.1 billion for grants, and those same States are not spending $17.9 billion of unassigned funding. We have no way of knowing NTIA’s motivation – is this purely to save federal grant monies or to give more money to satellite.

I understand the desire to save federal grant money. However, Congress created the $42.5 billion BEAD program with rules intended to spend all of the funding, either for infrastructure grants or for broadband-related uses. With the current awards, almost 53% of the funding will go unspent, and that percentage will climb as States implement the cost thresholds.

There are several reasons why using CostQuest cost studies to establish the cost caps doesn’t make much sense. By definition, a huge percentage of BEAD locations are more costly to reach with a wired technology than the average cost to reach everywhere in a State. I would hope NTIA took that into consideration when setting the cost caps.

Statewide averages costs don’t make sense for states that have a wide range of topology and household density. I look at my own state of North Carolina, which goes from the ocean coast, through urban centers, into the Piedmont hills, and finally into Appalachia. I remember when Minnesota used average costs from the CostQuest models as a way to validate the magnitude of grant requests. The State calculated a different average cost for each County, which makes a lot more sense than applying a single cost cap for a whole state.

There is another issue that might be the most important reason why it makes no sense to look at CostQuest model numbers. In most places in the country, the BEAD location map is comprised of a mixture of BEAD-eligible locations and locations that either have good broadband or are supposed to get it. There are myriad examples where a BEAD eligible-location sits next door to one that is not eligible. In many cases, this hodgepodge represents an error in broadband mapping more than any reality in the real world – but that is a topic for another blog.

Picture having to build into a small rural neighborhood where only half of the homes are BEAD eligible. This results in a cost per passing that is likely almost double what it would be if every location were BEAD-eligible. This situation is found all over the BEAD map, everywhere I’ve looked. The folks who designed BEAD understood this because it was widely publicized how RDOF awards had carved up the broadband landscape into Swiss cheese rather than into contiguous grant areas.

All of these reasons mean that applying a single statewide cost cap to judge BEAD locations  is nothing more than an exercise to lower grant spending. I’m just speculating, but this seems to be a tool to get the broadband office to cancel grants rather than NTIA having to be the heavy. What’s clear is that the bottom-line result of applying a cost caps will mean a lot more locations awarded to satellite or other low-cost technologies.

A New Major Telecom Vendor

Many folks in the industry will already recognize Amphenol, the company that is poised to become one of the major new vendors in the industry. The company has decided to grow quickly by acquisition. It recently purchased the Connectivity and Cable Solutions subsidiary from CommScope for $10.5 billion. Amphenol also bought Trexon, a cable assembly business, for $1 billion.

Amphenol is a worldwide business with manufacturing facilities in forty countries. The company is in a wide range of markets, including military-aerospace, industrial, automotive, information technology, mobile phones, wireless infrastructure, broadband, medical, and pro audio. The largest division of Amphenol is Amphenol Aerospace (formerly Bendix Corporation).

In the telecom world, Amphenol Fiber Systems International (AFSI) was started in 1993 to manufacture fiber optic connectivity products and systems in Allen, Texas. In July 2024, Amphenol purchased two subsidiaries from CommScope. The company paid $2.1 billion to buy the Outdoor Wireless Networks (OWN) and the Distributed Antenna Systems (DAS) business. Amphenol also resurrected the Andrew Corporation brand name, a company previously acquired by CommScope, that manufactures tower and rooftop systems and cable management accessories.

Amphenol’s acquisitions are not just focused on telecom, and recent acquisitions include Carlisle Interconnect Technologies (CIT) which makes antennas and sensors for harsh environments; Lutze, a railway technology company; LifeSync, a manufacturer of connectors, antennas, and sensors for the medical industry; Narda-MITEQ, a maker of RF and microwave equipment for the military; XMA, a manufacturer of passive microwave components; and Q Microwave, which specializes in RF filters and subsystems for the military and space sectors.

The many acquisitions have already boosted 2025 earnings for the first half of the year. The strategic acquisitions contributed 15% to the first half of 2025 revenues. On a reported basis, revenues jumped 52% and excluding acquisition-related contributions, organic growth was 37% to hit $10.46 billion. In second-quarter 2025, revenues jumped 57% year over year on a reported basis and 41% organically to $5.65 billion.

The acquisition of CommScope’s fiber business makes Amphenol a major player in the broadband business. This puts Amphenol in competition with companies like Corning, Belden, and Prysmian. The company is also hoping for a big boost from selling fiber to supply the current AI explosion.

The CommScope sale might surprise some, but the company was in trouble due to a massive debt load of over $7 billion, and slower-than-expected sales that led to inventory build-ups in its broadband and cable access segments.

BEAD Awards and Satellite

North Carolina, where I live, recently announced its preliminary awards for BEAD. The State has allocated $408.5 million for preliminary BEAD awards out of an allocation of BEAD money to the State of $1.5 billion. That leaves an astounding $1.1 billion on the table and likely unspent. There is some hope that the unspent money, referred to as non-deployment funds, will be at least partially available to the State for broadband-related activities. But that possibility seems to be dwindling every day.

The State had to cover 93,138 homes and 374 community anchor institutions with the BEAD funds. The State made awards to build fiber to 68% of the locations, to deploy cable or fixed wireless to 2% of locations, and to subsidize low-orbit satellite providers for the remaining 30% of locations.

Now that the awards have been announced, we can finally see the proposed BEAD areas by location and technology. I live in Western North Carolina, that was devastated a year ago by Hurricane Helene. There was a lot of hope in this part of the state that most of the awards would go to fiber. The State mostly did okay for Western North Carolina. Of the 29,400 BEAD-eligible locations in this part of the state, over 24,000 went to ISPs who promise to build fiber, leaving 5,300 locations that will get awards for low-orbit satellite. Most of the satellite funding in the State went to Kuiper, which got $15.9 million out of the $18.3 million awarded to satellite. People here are scratching their heads, wondering why a company with only a hundred satellites is being awarded grant funding.

But now that the funding for satellite has sunk in, I’m starting to see what this means for Western North Carolina. First, there are five counties where satellite was awarded to all of the eligible BEAD locations – Clay, Madison, Mitchell, Polk, and Yancey.

What do County officials in those counties tell people? NTIA is giving money mostly to Kuiper and some to Starlink to be able to offer them satellite broadband. All of the BEAD-eligible locations in these counties can already buy satellite broadband from Starlink. The only benefit of BEAD for these residents is that they will probably get a free receiver for enrolling as a BEAD customer. Any hope these counties had of filling in the map with fiber is now gone.

There may be future broadband grants. For example, USDA is planning a new round of ReConnect grants. But even if we assume that ReConnect can be used to cover areas served by satellite, ReConnect won’t make a big dent in areas given satellite from BEAD. So far, with 45 states reporting preliminary BEAD results, the two satellite companies have been awarded $707 million in BEAD. That’s a lot of locations nationwide, and the number is likely going to grow significantly before BEAD grants are final.

It was understood from the time that the BEAD rules were adopted by Congress that there would have to be some remote locations that can’t be reached with fiber. But nobody thought it would be nearly as many as we are seeing. The BEAD grants were originally going to award $45.5 billion in grants, but it now looks like the actual awards will be less than half of that amount.

In North Carolina, a lot of the 5,300 locations in Western North Carolina could have gotten fiber if the state had been able to use more of the $1.1 billion it will be returning to Treasury. I fully understand the desire to be cost-conscious with federal funding, but BEAD was intended by Congress to be a once-in-a-generation opportunity to build long-term broadband infrastructure for a lot of rural America. I always assumed that the BEAD emphasis on fiber first would have meant that States would be judged for the whole portfolio of grants being awarded, and wouldn’t shy from awarding BEAD for areas where construction costs are higher than average.

I have to mention that the proposed grant awards are far from final. I’ve heard from multiple States that NTIA is now asking them to either reduce the amount of funding for some grants or reassign the money to somebody else. That likely will mean even more locations will go to satellite by the time the dust settles and the BEAD grants are final.