Another Significant Supreme Court Ruling

The Supreme Court came down with another decision last week that is going to further hobble administrative agencies like the FCC. The case is McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., No. 23-1226.

This case started in 2013 as a class action lawsuit filed in federal court in the Northern District of California. The dispute between the parties began when McKesson Corporation sent unsolicited advertisements by fax to class members of the suit, including McLaughlin Chiropractic. The advertisements were sent to traditional fax machines as well as to online fax services.

The plaintiffs claimed that the unsolicited faxes were in violation of the Telephone Consumer Protection Act (TCPA) which forbids unsolicited communications with consumers without giving them a chance to opt out of the communications. The alleged damages come from recipients spending money on paper and toner to print the unsolicited faxes, which the TCPA refers to as advertiser cost-shifting.

While the case was pending in California courts for six years, the FCC issued an order that excluded online fax services from the TCPA since online faxes receive electronic files and don’t print hard copies of a received fax.

The McLaughlin case made it to the Supreme Court because the District Court found that it was required to follow the new FCC order, even though it disagreed with the FCC’s interpretation of the TCPA. The District Court also felt constrained by 1950 legislation referred to as the Hobbs Act, which has been interpreted as barring district courts from disagreeing with a federal agency’s interpretation of a statute.

The recent Supreme Court ruling sided with the District Court by a 6-3 vote. The Supreme Court ruled that “The Hobbs Act does not preclude district courts from independently assessing whether an agency’s interpretation of the relevant statute is correct.”

This is a significant ruling because it gives more explicit power to District Courts to disagree with an administrative ruling of a federal agency. It’s likely that there is a District Court somewhere in the country that will disagree with almost any federal agency ruling, meaning that it will be that much easier to tie up every decision made by the FCC or other federal agency in court.

When you tack this ruling onto the Supreme Court’s ruling last year in Loper Bright Enterprises v. Raimondo, it’s going to be increasingly difficult for federal agencies to issue decision that will stick. The Loper Bright ruling overturned a long-standing deferential approach to agencies’ interpretations of statutes, making it easier to sue them.

This new ruling also has practical implications since it explicitly weakens FCC enforcement of the TCPA. Among other things, the TCPA rules are the FCC’s primary tool for its effort to restrain the use of autodialers and artificial voices used in spam messages to consumers.

BEAD and the Economy

I’ve written about how the new BEAD rules impact County governments, broadband offices, and the general public. What’s not being talked about enough is the impact of building infrastructure on the overall economy. BEAD was part of the Infrastructure Investment and Jobs Act, which, while called an infrastructure bill, was foremost a jobs bill. Early on, NTIA envisioned that $42.5 billion was enough money to fund a lot of fiber construction and the jobs and economic benefits that go along with that construction.

I’m not sure if most people understand how labor-intensive it is to build rural fiber. Consider a BEAD project to build 1,000 miles of rural fiber to serve 5,000 homes and businesses. Such a project would involve the following labor:

  • The actual construction will require 50–60 man-years of technicians and supervisors to build the fiber network.
  • The project will require 10-12 man-years to construct fiber drops and install customers in homes and businesses.
  • There are probably 2 man-years of effort by the engineers, consultants, and others who design the network, order materials, obtain the grant, obtain permits and rights-of-ways, track construction, create maps and records, and report to the grant agency.

Direct labor is only the beginning. The benefits from constructing this project will spread through the local and national economy:

  • There is labor from employees of the vendors who manufacture fiber and electronics. With Build America rules, this labor is mostly in the U.S.
  • There is labor at the supply houses that warehouse, sell, and ship the materials.
  • There is work for truckers who deliver the materials from factory to supply house to construction site.
  • There will be half a dozen vehicles purchased or used to support the project. There are also computers, smartphones, test equipment, and related electronics.
  • There is work required by local people who locate buried facilities. There is work required at the electric utilities or other pole owners to coordinate adding facilities to their poles.
  • There is a huge boom for the local hotels, restaurants, gas stations, and other local merchants due to having contractors working in the local economy for an extended time.
  • There’s work for local electrical contractors to bring power to new electronics locations. Local contractors may be used to build or place huts and cabinets.
  • There is work at the banks and other firms that fund and insure the project.
  • There is work by the firms who will market and sell the new broadband to the people in the grant area.
  • This list could go on and on since the project will drive the ISP to spend money on software, office supplies, auditors, and a long list of other related expenses, all of which benefit somebody in the economy.

Finally, there are the permanent jobs created by the ISP that will operate the network. Depending on the size of the ISP who will operate the network, adding this network and customers will add 2-4 permanent technicians and customer service representatives along with the vehicles, office space, management, and benefits to support them.

That’s a huge amount of jobs and economic benefits from a single 1,000-mile fiber project, and the $42.5 might have funded the equivalent of 1,500 such fiber projects.

It’s clear that the new NTIA rules are going to greatly curtail the amount of fiber built with BEAD in favor of fixed wireless and satellite ISPs. The alternate technologies also benefit the economy, but at much lower levels. The major jobs benefit comes from building the physical infrastructure. Perhaps somebody has done the math, but I’m guessing that building a fixed wireless network probably brings only a tiny fraction of this benefit to the local economy. Giving  BEAD funding to satellite ISPs brings almost no benefit to the local economy.

I’ve seen economist estimates made over the years on how an infrastructure project like building fiber or a bridge brings 3-4 times the benefit to the economy than the local infrastructure spending. The changes the NTIA is will likely cut BEAD spending in half. It’s poor fiscal policy to focus on saving $20 billion in grant awards that might have brought $100-150 billion of benefit to the overall economy – and most of that benefit would have come to rural counties that most need it.

A Lesson Not Learned

Decades ago, I was lucky to have interviewed a number of rural people who told me what it was like when they finally got electricity. Almost every person I talked to mentioned how life-changing it was to brightly illuminate their homes with electric lightbulbs.

Other than that, everybody’s electricity story varied according to their economic circumstances and priorities. Wiring a home with electricity was a big expense for a lot of folks, and many got loans from their electric coop to help pay for wiring and appliances. Others introduced wiring gradually as their budget would allow. Farmers often lit their barns before their homes. The most valued and first appliances bought by many homes were washing machines and refrigerators.

People also told me about the frustration of waiting for decades to get electricity that was available in the county seat or other nearby towns. They said that most adult children left the farm, attracted by the lure and conveniences of electricity. They described how access to electricity clearly defined a world of haves and have-nots.

Rural electricity was largely funded by low-income loans to newly formed electric cooperatives. Electricity to the farm enabled the agricultural revolution that made the U.S. the breadbasket of the world. Rural electricity immediately raised the standard of living for rural residents and gave them the same opportunities as everybody else. I’m not sure how to do the math, but electrifying rural America was probably the best infrastructure investment that the U.S. Government ever made – rivaled perhaps only by the interstate highway system.

We took a different approach to stringing telephone copper in rural areas, with a mix of private and public investment. In 1900 there were over 3,000 telephone companies in the country – many of them in small towns and rural areas. Many of the rural networks were built and financed by farmers, but a huge amount of rural copper was also funded by government loans given to small telephone companies and newly formed rural telephone cooperatives.

Since it’s now clear that broadband is the newest utility that homes need to participate in today’s economy, the federal government naturally got involved in funding rural fiber networks. Some of this was funded with subsidized loans, but a lot more has been accomplished through federal grant programs like RDOF, ReConnect, and the Capital Projects Fund. The BEAD program was supposed to be the big grant program that filled in the final gaps in rural fiber – and many State Broadband Offices were well on the way to fulfilling that goal.

I’ve never understood why and how we lost the lessons we learned in the past. I am certain that a lot of rural America would already have fiber today if the federal government had offered 40- or 50-year loans at 1%. Electric and telephone cooperatives would have gladly taken that money to expand fiber networks across regions. Some of the big telcos would have taken the money. I am certain that new cooperatives would have been formed in areas where there were no logical recipients of the loans. Just like with electrification, the vast majority of these loans would be repaid, meaning there would be very little net cost to the government to fund rural fiber through loans.

Instead, the FCC chopped the rural landscape into Swiss cheese areas with the RDOF program, and other grant programs have tried to fit fiber projects around the messy jigsaw puzzle that was left over. I’m not sure that we could have designed a worse way to mess up the rural broadband landscape.

We’ve now suddenly decided that it’s too expensive to build rural fiber – even though we were near the finish line with BEAD. And to be fair to the critics of BEAD, it is expensive to give away billions in grants. But once we started down the grant pathway instead of the loan pathway, BEAD was the logical conclusion to the effort.

It’s sad we didn’t remember the lesson we learned from electrification. The best solution for stringing a wired network in rural areas is to loan the money to local companies who have a vested interest in making it work for the long haul.

Regulate Streaming Video?

Just prior to resigning from the FCC, Commissioner Nathan Simington wrote an article for the Daily Caller that suggests that the FCC should consider regulating streaming video in the same manner as traditional video offered by cable companies.

Commissioner Simington recognized this is an unusual position to take for an Administration and FCC that is trying to eliminate regulations. For example, he authored an earlier article that suggested that the FCC DOGE itself, and get rid of a lot of unneeded regulations and functions.

Commissioner Simington’s article makes some good points. He says that online content “allows a handful of powerful players to grow larger and more monopolistic, often while avoiding even the most basic public interest obligations. . . The result is a system that favors consolidation.”

Cable companies are saddled with a lot of outdated rules that are a disadvantage in the market. Cable companies are forced to pay ever-increasing rates for the right to carry local network affiliates. Programmers of all kinds hold cable companies hostage and force them to accept and pay for a lot of programming they don’t want in order to get the programming they must have.

Commissioner Simington proposed two solutions to make the market fairer. First, he thinks that the rules against TV station consolidation should be eliminated. He says that allowing station owners to get larger will allow them to be more efficient and give them more market power. This has been a talking point for Republicans for many years.

His second suggestion is surprising. He suggested reclassifying online platforms as MVPDs (multichannel video programming distributors) which would put platforms like YouTube, Hulu, and FuboTV under the same regulatory rules as cable companies. This would impose the same outdated rules on these platforms that plagues cable companies and satellite TV. I find this extraordinary because it would expand the FCC’s regulatory authority at a time when it seems that federal regulation across the board is going in the other direction.

The problem with both of his ideas is they wouldn’t really fix the industry. Consider the slow death of linear programming. No amount of station consolidation will fix the fact that one of the primary reasons why people have abandoned traditional linear cable programming is that they love the idea of watching what they want when they want. There are still millions of homes dropping traditional programming every quarter. It was just announced this week that streaming subscriptions now outnumber traditional cable subscribers.

I have to wonder what regulating the industry would do to the large number of companies like Tubi TV, Pluto TV, Plex, and Crackle that offer free programming and make their money from advertising. Bringing these companies under the MVPD rules would add costs and almost certainly break the free model.

The real underlying problem for both cable companies and streaming companies is the cost of programming. For the last fifteen years, programmers have regularly increased the cost of programming at a much faster pace than inflation. Programmers also flex their muscles to force cable companies and streaming companies to carry and pay for programming they don’t want to carry. The culprit in the industry is the companies that create programming, and there has been no discussion of regulating them – if that is even possible.

This article brought something to mind I remember from an economics class on regulation. The professor regularly told us, “Regulators gonna regulate”, meaning that regulators will find new things to regulate if not kept in check by legislators. As the FCC eliminates large numbers of regulations, perhaps it needs to find new things to regulate to justify its existence.

Nuances of the NTIA BEAD Notice

NTIA’s recent BEAD Notice changed the BEAD grant process to focus almost entirely on awarding the grant funds to the ISP that asks for the least amount of funding for a given location. But there are some other interesting changes in the Notice for ISPs to consider.

Grant Areas. Eligible Entities must also allow applicants to propose to exclude select broadband serviceable locations (BSLs) that the applicant determines are excessively high-cost locations from the project area (or would otherwise make the project economically unviable for the technology being used).

This means ISPs don’t have to stick to the grant serving areas that many States tried to dictate. A few States want grant applicants to apply for entire counties. Others forced ISPs to file for areas that combined highly rural areas with more dense areas. This is an opening for fiber ISPs to pursue smaller areas that make financial sense.

Prevailing Wages. States must still ensure that subgrantees have a demonstrated record of, and plans to continue compliance with, Federal labor and employment laws. A subgrantee will satisfy this requirement through self-certification of compliance with Federal labor and employment laws.

Some States were demanding prevailing wages. This new rule says that States should make sure that a grant applicant is complying with federal labor and employment laws but can’t layer on extra requirements after that.

Data Caps. NTIA eliminates the “Consumer Protections” section of the NOFO16 that required Eligible Entities to “ensure that each prospective subgrantee does not impose data usage caps.

With this restriction lifted, we’re bound to see grant winners implementing data caps.

Wholesale Access. NTIA further eliminates the “Interconnection Requirements and Wholesale Access” section of the NOFO.

This is an interesting change because every federal grant program I can think of requires grant winners to sell wholesale access to the network to other carriers. The primary intention of the wholesale access requirement was to allow rural networks to gain middle-mile transport through grant funded networks – something that is vital in rural America. I have a hard time imagining who lobbied for this.

Low-Cost Option. NTIA will only approve Final Proposals that include LCSOs (Low-cost Service Option) proposed by the subgrantees themselves.

ISPs still have to have one low-cost broadband option – but the States can’t dictate the rate. This is a big deal for ISPs because some States were requiring extremely low broadband rates for low-income households. States can no longer dictate any broadband rates.

Environmental Reviews. To support NTIA’s goal of issuing National Environmental Policy Act (NEPA) approvals within two weeks for an estimated 90 percent of BEAD projects . . . Eligible Entities are hereby required to use the Environmental Screening and Permitting Tracking Tool (ESAPTT) within the NTIA Grants Portal.

This is a big deal in that traditional environmental reviews are expensive, and there was likely going to be a big backlog and delays in getting the studies done. This forces a new role on State Broadband Offices.

A Troublesome Right-of-Way Dispute

The Virginia Supreme Court issued a ruling against Cox Communications that should trouble anybody building a fiber network that must cross railroad tracks. The case involves a dispute brought by the Norfolk Southern Railroad that challenged a new right-of-way law related to railroads.

The disputed law was unanimously passed in the General Assembly in 2023. The law requires that railroads respond and approve requests for fiber crossings across railroad tracks within 35 days or else file a dispute with the State Corporation Commission. The law sets the maximum fee for a right-of-way at $2,000 plus up to $5,000 to compensate a railroad for implementation costs.

Cox Communications invoked the new law in the spring of 2024 by requesting three underground railroad crossings in New Kent County. Norfolk Southern asked for a fee that exceeds the State’s cap and Cox refused to pay more than the amount established by law. Norfolk Southern appealed at the SCC, which declined to hear the case.

Norfolk Southern appealed to the Virginia Supreme Court. They claimed that the low rates established by the State equate to a taking of property for the benefit of Cox Communications, a for-profit corporation.

The Supreme Court agreed with Norfolk Southern. The Court said that the law violated the application of Code § 56-16.3 and violated Article I, Section 11 of the Constitution of Virginia. This part of the Constitution provides that property can only be taken for ‘public use’ and the party asking to take the property must prove the public use. The Court said that economic development and Cox’s private benefit do not justify a taking.

An article in the Cardinal News quotes Senator Bill Stanley, the lead proponent of the bill in the Senate, who called the decision wrong and disappointing. He says the State gave the land to railroads for the public benefit, but that railroads now seek to protect it as their own property against public benefit.

For those not familiar with legal language, the real dispute is about the fee. The railroad was ready to grant Cox a right-of-way for a fee higher than $7,000, and the railroad says it is a ‘taking’ for it to be required to the lower fee determined by the legislature.

This is an issue that plays out daily across the country where railroads charge high fees to allow fiber or other utilities to cross a railroad right-of-way. The Virginia law was trying to put a dollar limit on the cost of such rights-of-way and also trying to speed up the process. The Virginia court ruling made it clear that the legislature doesn’t have the right to put a cap on railroad fees.

Hopefully, this doesn’t make the entire law invalid and the 35-day response time will stay in place. If not, the legislature ought to act to close that gap.

The other issue that is not mentioned in the dispute is that Cox wants to place a buried conduit under the railroad tracks. From a practical perspective it’s impossible to believe that a conduit can in any way diminish the railroad’s property or operations. I can better understand why a fiber owner needs an easement to bury conduit on private land because the landowner might someday want to build something on that location. But railroad rights-of-ways are almost entirely for the purpose of laying track, and a buried conduit doesn’t stop that purpose. I know every lawyer reading this will give me several reasons why property laws are structured this way, but I also know that every fiber network owner is as perplexed by this as I am.

Broadband Usage 1Q 2025

OpenVault recently published its Broadband Insights Report for the end of the first quarter of 2025. OpenVault is documenting the continued growth in broadband usage by U.S. households.

One of the most useful statistics from OpenVault is the average monthly broadband usage per customers in gigabytes. Below is the trend in average monthly U.S. download and upload volumes since the first quarter of 2021. These averages include broadband used by residential and small business customers.The average U.S. broadband customer used 50 more downloaded gigabytes and 7 more uploaded gigabits per month than a year earlier. The interesting trend to note is that average download usage has grown roughly 50 gigabits each year since 2021.

This growth means continued pressure on broadband networks because if we assume roughly 120 million broadband subscribers nationwide, this growth means over 6.9 billion more gigabytes of data used each month than a year earlier.

The report this quarter concentrated on the growth of upload usage. As can be seen in the table above, the rate of growth of average upload usage grew at 8% in 2022, with the rate of growth increasing each year. OpenVault credits the 18% growth of upload usage between 2024 and 2025 to the increasing usage of video calls, cloud backup, IoT uplinks, and similar uses.

This growth in upload usage highlights the increasing value in having adequate upload speeds for both residences and businesses. To put the 7-gigabyte increase in average upload into context, it’s the equivalent of every household uploading 5 standard definition movie files or 2 high definition movie files every month. I think the average household would be surprised about how much data they are uploading.

Another interesting statistic from OpenVault is the change over time in broadband subscriptions. For years, the trend has been growth in the percentage of broadband customers subscribing to faster speeds. The following table documents a big increase in the percentage of people from 2024 and 2025 subscribing to speeds faster than 500 Mbps. The big shift in the last year is customers upgrading to speeds of at least 500 Mbps. OpenVault always includes other interesting statistics in its quarterly reports:

  • 9% of broadband subscribers now use more than 2 terabytes of data per month. 0.16% of homes now use more than 5 terabytes per month.
  • Business peak usage has been growing at a faster rate than residential usage. The peak usage measures the busiest hour of the day. Business peak upload usage grew 103%, and peak download by 105% since 2021. During that same time, residential peak upload grew 76%, and peak download by 59%.

FCC Lack of Quorum

When FCC Commissioner Nathan Simington recently announced his resignation and quickly departed, the FCC was left in an unprecedented situation where there are only two remaining Commissioners – Chairman Brendan Carr and Commissioner Anna Gomez. The consequence of the sudden vacancy is that the FCC no longer has a quorum.

Commissioner Simington’s departure was a surprise because even a week before the announcement, he was suggesting new areas of regulation the FCC might want to tackle. For example, he suggested that streaming TV services ought to be regulated the same as traditional cable companies. He had also just hired a new Chief of Staff. Commissioner Simington ended up leaving on the same day as Commissioner Geoffrey Starks, a departure that’s been known for months.

The sudden lack of quorum creates some interesting problems for the agency. The legislation that created the FCC clearly states that three Commissioners must be present to have a quorum. And a quorum is needed to vote on anything important like a rulemaking, petitions, applications, or major initiatives from the various FCC Bureaus.

The solution might be on the way since Olivia Trusty is in the midst of the Senate confirmation process to become the next FCC Commissioner. However, the Senate has a lot bigger issues on its plate right now, and there is no guarantee they will vote on that nomination soon. The Senate has also been sitting for months on the nomination of Arielle Roth as the new head of the NTIA – along with many other open positions around the government.

There is no easy answer of what happens if the Senate takes a while to fill a third Commissioner slot. A lot of the FCC’s work is done by the various Bureaus. These are the folks who approve that new wireless devices meet standards. These folks issue routine licenses for microwave links. The Bureaus issue renewals of the various licenses required by companies operating in the industry. The agencies gather data like the FCC maps.

Harold Feld wrote a detailed article about the legal specifics of what happens next. He expects that Commissioner Carr will direct the Bureaus to conduct business as usual, although there is a possibility that anybody harmed by an action of the Bureaus while there is no FCC quorum might be able to successfully claim that Bureaus have no authority when the FCC itself has no authority.

According to statute, the remaining two FCC Commissioners are largely powerless to do anything other than administrative functions. There are a lot of issues on the plate at the FCC right now. The Supreme Court could decide at any time that the Universal Service Fund is unconstitutional, and without a Quorum, the FCC couldn’t take a stab at fixing whatever faults the Court might find with the USF. That means the many things the USF does would come to an immediate halt.

The FCC is in the middle of its streamlining effort it has labeled Delete, Delete, Delete. The FCC is expecting to get authority from Congress soon to begin the process of auctioning spectrum. The FCC is considering a big merger between Paramount and Skydance. The FCC recently got an emergency petition from Echostar to try to stop the cancellation of its spectrum. Until a quorum is reestablished, the agency can’t take action on these, and many other actions.

It’s hard to believe that with a normal complement of five Commissioners we’d end up without a quorum – but here we are, in uncharted legal waters.

BEAD and the Rural Public

The last two days I wrote about the impact of the changes to the BEAD program on County Governments and on State Broadband Offices. As important as those impacts are, the real impact from changing BEAD is on the public living in the rural areas that are covered by BEAD.

Let me start with BEAD eligibility. The new rules include a provision that wireless ISPs (WISPS) that claim speeds to the FCC of 100/20 Mbps using unlicensed spectrum can certify their capability to State Broadband Offices and have those areas removed from BEAD eligibility. That means people living in the removed areas will not be seeing a new broadband alternative. It doesn’t matter if the WISP actually has speed far slower than 100/20 Mbps. It doesn’t matter homes have a line-of-sight issue and can’t be served by the WISP. It doesn’t matter if the WISP wants to charge $100 a month for 25 Mbps service. NTIA will have declared that these areas are served and deserve no federal funding for broadband upgrades. My guess is that millions of homes will be removed from the BEAD map and will be declared as already being served – which will be a huge surprise to the people living in these areas.

The biggest change in the new BEAD rules is that there will be a lot less fiber built with BEAD funds. Various States have been expecting anywhere from 60% to 95% of BEAD funding to go to build fiber. The revised rules will eliminate most of that fiber. BEAD grants will now be awarded to the ISP that asks for the lowest amount of funding for each location. Satellite and fixed wireless providers can easily underbid fiber ISPs if they want to serve a given market. This is going to save the federal government a lot of money, and a large portion of the $42.5 billion allocated to BEAD will not be spent.

Households in BEAD areas are likely to see BEAD money going to a WISP or Starlink – and on paper, that will be their fast ISP option. To be fair, WISPs who install the latest radios might deliver speeds up to 500 Mbps to many customers. But because of the line-of-sight issues with fixed wireless, some homes won’t be able to get service at all. But BEAD winners will not have to spend the extra money for the newest radios – technology capable of 100/20 Mbps is considered to be okay.

Unless they change their pricing philosophy, some WISPs have very high prices. Where fiber providers who won BEAD were likely going to charge $70 per month, some of the WISPs are already charging more than $100 for slower speeds. Starlink is already expensive – the company now has an $80 product in some markets, but its normal price is $120 per month.

Rural residents already feel like they’ve been jerked around for years. The FCC held a reverse auction for RDOF in 2010, and many of the networks promised by that funding are still not built – and might not be for 3 more years. Somebody promised a new solution from a BEAD grant might not see a solution until 2029. Many rural residents who have been told they have faster broadband coming are so cynical that they’ve stopped believing anything they hear about broadband. Certainly, many who have been told for the last few years that BEAD was going to bring them fiber are now going to be disappointed again.

I could write a dozen blogs about what good broadband meets for rural households – and I’ve written about this often over the years. Good broadband means kids can do homework and not have to sit in the parking lot of a library in the evening to do school work. Good broadband means rural residents can find online work that pays better than jobs available in their rural county. Good rural broadband means farmers can participate in the latest technology. Good broadband means houses for sale that somebody is willing to buy.

I’m picturing a resident who is told later this year that the federal government and their State Broadband Office is making a grant to Starlink to bring them faster broadband. They’ve already been able to buy Starlink for several years. They might already have rejected it for being too expensive. They might have already tried it and rejected it because of interference with trees or hills. If they’ve already heard through local politicians that better broadband is coming, can they conclude anything other than the government at all levels has screwed them on broadband while handing money to a company that doesn’t need it?

The consensus has been that BEAD was going to bring fiber to thousands of counties. Unless public pressure reverses some or all of the NTIA Notice, there will be many millions of rural homes after BEAD that still won’t have adequate broadband. I guess this means that States and local governments will have to regroup and get back to tackling the rural broadband gap  a little bit at a time.

Related Blogs

Updating My BEAD Bingo Card

County Governments and BEAD

BEAD and State Broadband Offices

BEAD and State Broadband Offices

I’ve been saying for the last few years that the hardest job in the industry has been the folks who head State Broadband Offices. These folks took these positions because they knew they could do a lot of public good by tackling the rural broadband gap and the overall digital divide. A lot of the hard work these folks did over the last three years was erased when NTIA first eliminated the Digital Equity grants and then recently eviscerated the BEAD grants.

SBOs were handed a giant mess with the BEAD grants. I’ve always said the biggest problem with BEAD was the Congressional staffers or ISP lobbyists who wrote the BEAD legislation. They made the process cumbersome and ridiculously complicated. In my opinion, NTIA made it even worse by being overly cautious from day one. It was clear that the agency did not want to be blamed for repeating the FCC’s disasters in the RDOF and CAF II subsidy programs.

SBOs knew the BEAD grant process didn’t have to be so complicated because they have processed and awarded almost $10 billion dollars of broadband grants from the Capital Projects Fund. Those grants came with some common sense rules, but they mostly trusted the States to be good shepherds of the funding. States did an overall great job. It’s not talked about enough, but this is easily the most successful broadband grant program we’ve ever had.

But SBOs accepted the BEAD complications and slogged through the many required steps of the BEAD process. While doing this, SBOs were widely blamed for being slow and not deploying needed broadband – and most of the delays were not their fault.

Some of the steps were so ridiculous that it would be comical if so much money wasn’t riding on the grant process. For example, the NTIA guidelines for the map challenge were overly complicated and largely impossible to comply with.

This last month has been massively disappointing for SBOs. The industry has talked about solving the digital divide for at least twenty years, and SBOs finally had a chance to do something about it. The Digital Equity grants would not solely solve the digital divide, but SBOs were working to create sustainable programs that would outlive the influx of initial funding. This all went for naught when the grant program was completely killed. There are a few states where the legislature contributed some funding for digital equity, but for the most part, this effort is dead.

Now, SBOs have seen all their hard work on BEAD upended completely. States were given a fair amount of latitude to design state-specific rules for awarding BEAD grants, and it’s fair to say that every state came up with its own solution. SBOs listened to state politicians, ISPs, and the public and did their best to create a grant program that fit the specific circumstances in their state

What is probably the most disturbing about the sudden change in the rules is that BEAD was finally working. A large majority of states have started the broadband award process and have been reviewing grant applications. States like Louisiana and Nevada made it through the award process and were ready to award a lot of money to build a lot of fiber while staying within the budget that BEAD gave them. Many states that are partway through the process report that they are getting grant requests to build fiber coming in lower than their expectations.

The revised BEAD grants are nothing more than a one-round RDOF auction by State, where the ISP that asks for the least amount of funding wins. There is a slight amount of wiggle in that a grant request that is less than 15% greater than the lowest bid can be considered. But BEAD is largely now low bid takes all. The one improvement over RDOF is that ISPs must meet financial, technical, and managerial criteria before participating. But even RDOF had an important fiber preference.

I’ve read a few opinions from folks who still think that a lot of the BEAD money can now go to fiber, and I hope they are right. But I remember the shenanigans played during the RDOF auction when ISPs were vying for $9 billion in funding. What are we going to see with a much larger pile of money at stake? What’s to stop a satellite company or large WISP from bidding $2,000 or less per passing to win a whole state?

One thing is for sure. It’s a lot less enjoyable to be a State Broadband Director now, because the NTIA took away one big set of funding and took all the decision making out of the BEAD grant funding. All of the work to create unique State solutions went completely out the door.

Related Blogs:

Updating my BEAD Bingo Card

County Governments and BEAD