Tag Archives: Arielle Roth

Justifying Cuts to BEAD

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.

Starlink Disputes Virginia BEAD Awards

In an action that surprises nobody, Starlink has taken exception to the BEAD awards being proposed by the state Department of Housing and Community Development (DHCD) of Virginia, which is administering the BEAD grants in the State.

The Starlink comments were filed in response to the proposed final report from DHCD that informs NTIA of its proposed BEAD awards. Each state must solicit public comments on the proposed awards. These comments are forwarded to NTIA, and the agency has the final say on making the awards.

Starlink objected to the BEAD awards and said that it should have been awarded $60 million. To put Starlink’s complaint into perspective, Virginia is proposing to award BEAD funds to cover 133,500 locations. The proposed award to Starlink was $3.26 million to cover 5,579 locations for an average award of $584 per location. Project Kuiper was also awarded funding for satellite broadband, with a proposed award of $4.46 million to cover 6,967 locations for an average award of $641 per location. The two companies together have proposed awards to cover 9.4% of the BEAD locations in the State.

Virginia proposes to award 1,519 locations for fixed wireless technology, or 1.1% of BEAD locations. Most of the proposed funding went to fiber. It’s not easy to cite the exact percentage going to fiber since Comcast won awards for 24,343 locations, some to be served with fiber and some to be served by traditional cable TV technology. Over 89% of the awards went to either fiber or cable TV technology.

The Virginia public comment period on the proposed BEAD grants is for seven days, and other states will have similar comment periods. All of the states are hurrying to get a final report generated by the September 4 deadline set by NTIA, and most states are expected to meet the deadline. That means there will be a lot of opportunities over the next month for Starlink to make similar comments in other state’s proposed final reports.

To put Starlink’s request for $60 million into perspective, the company says that amount would cover almost all of the eligible locations in the State. We’ll have to wait to see how NTIA reacts to the Starlink comments. The agency has the flexibility to agree with or ignore Starlink. This final decision rests with Arielle Roth, the newly seated head of NTIA.

This issue has to be a hot potato in a purple state like Virginia. The state has a Republican Governor who recently praised the proposed BEAD awards. I’m sure that County and State elected officials have been publicly praising the proposed awards that will bring fiber to a lot or rural Virginia. Nobody knows what happens if NTIA agrees with Starlink. NTIA could decide which fiber grants to undo, but it would more likely pass the issue back to the State.

To complicate matters even further, Starlink’s filed comments in the BEAD process is not necessarily the end of the line, and Starlink or fiber providers who lose proposed grants in this process could file a lawsuit if they disagree with the final decision of NTIA or DHCD. BEAD could still get very messy before it’s done.