Tag Archives: BEAD Grants

BEAD Rule Changes for Permitting

NTIA issued new General Terms and Conditions dated November 2025 that include dozens of changes to the BEAD rules for recipients, but also changes that impact state Broadband Offices that have wider implications on States. I’m not listing all of the changes here, but there is a great summary of the changes done by the Benton Institute on January 14. This blog will look at the issues related to permitting that have repercussions far outside of the BEAD grant recipients.

In Section 13.D of the revised NTIA Terms and Conditions, State Broadband Offices (SBOs – which are described as Grantees by the NTIA) have a lot of major new obligations related to permitting.

SBOs must “establish procedures to ensure that broadband-related permit applications are promptly accepted, and requests are approved or denied within 90 days”.

In general, SBOs don’t hold a position of authority in State governments to impose rules on anybody other than recipients of grants. Permits for BEAD will mostly mean getting permits to build along existing roads. SBOs are going to have to agree to this requirement, but it’s hard to imagine how an SBO can impose rules for State roads, County roads, Township roads, Municipal roads, roads through Tribal lands, and the biggest challenge – roads passing through federal lands. The goal of getting permits completed within 90 days is great, but it’s hard to think that the small number of people working in SBOs even know the identity of the many permitting authorities in a state, let alone can have any influence, other than perhaps begging, to get BEAD permitting authorities to meet the 90-day deadline. An even bigger challenge is permitting on private land, since a lot of rural roads are privately owned. What can an SBO possibly do to influence private permits?

SBOs must assist “state and local authorities in establishing a single, dedicated point of contact, which has knowledge of the application and review processes, for broadband-related permits.

The key word in this requirement is ‘assist”. Assuming that States even want to go through this process, they vary widely in how this would be achieved. There are States where a Governor might be able to do this. There are States where a State Regulatory Commission might have the authority to tackle this. But in many States, this might require action for a Legislature. What happens in States that don’t undertake the formation of a single, dedicated point of contact?

SBOs must provide technical assistance to permitting agencies to ensure sufficient capacity (e.g., Master Agreement and Consultant Reimbursement Agreement templates, surge support for permit processing, etc.)

This recognizes that local governments often will not have enough staff to quickly process all of the permits required by a BEAD project. SBOs must develop template contracts that can assist a locality if it wants to get help to speed up permitting. But this doesn’t address the issue and time required by local governments when hiring outside vendors. It doesn’t address if a local government has a budget for additional help. Interestingly, this extra funding could come in some states from BED nondeployment funds, assuming there is enough such funding for the purpose.

SBOs must provide “deference to the construction techniques chosen by BEAD Subgrantees (without seeking to influence those decisions), absent any identified safety concerns.

I don’t know if anybody, except perhaps for big ISPs that might have suggested this language to NTIA, really knows what this means, other than allowing construction practices that would otherwise not be allowed by pole owners or by the governments who control the rights-of-way for buried construction. SBOs are being directed to turn their heads to what would normally be non-compliant construction techniques. I’m not sure how pole owners and rights-of-way owners will be expected to comply with this.

SBOs must maximize “streamlined processing through permitting by rule; batch processing of substantially similar permit requests; and waiving or expediting duplicative or burdensome broadband permitting requirements where possible.”

SBOs can certainly promote language that allows batch processing. But, related to the staffing issue addressed earlier, how might a County with little or no staffing be expected to comply with big batches of permits? Even more confounding, are SBOs expected to look at local rules for permitting across the state to identify the ones that are duplicative or burdensome – and what do they do when they identify such rules?

SBOs must follow “FCC rules regarding timelines, rates, terms, and conditions for access to municipally owned poles and conduit for broadband projects – including provisions in the FCC’s rules providing for “one-touch make-ready” and “self-help” – and requiring BEAD Subgrantees that own poles (including cooperatives) to comply with FCC rules across their footprint.”

Around 23 states and D.C. have decided to have their own pole attachment rules, something that has been allowed by federal legislation. While most of these rules are largely the same as the FCC rules, many differ in substantive ways. How can an SBO in a state with its own pole regulation somehow force the State to suddenly follow the FCC rules. The specific requirement cites self-help and one-touch make ready, which are some of rules where States have taken a decidedly different stance than the FCC.

Overall impression of these requirements. SBOs will clearly try to follow these requirements since they must agree to them before they get BEAD funding. But these rules create huge problems for SBOs that don’t have the authority and muscle to impose these rules on the rest of the State and on the many entities that are involved in permitting. To some degree, the severity of these rules, when judged against the practical chance of an SBO accomplishing them, seems like a tool for NTIA to be able to say that any selected State has failed its obligations. I assume that if NTIA tries to withhold funding to a State based on these rules that it will be sued, but that means BEAD goes on hold in that State, to the detriment of the many rural residents relying on better broadband. Interestingly, none of these rules hinders satellite BEAD winners.

BEAD on Hold?

It appears that NTIA missed an important step when it generated the new BEAD rules in June in the BEAD Restructuring Policy Notice. That is the document that changed the scoring of BEAD grants from using a dozen different scoring criteria to choose grant winners to a new method that focused on the character of the proposed technology (priority or not) and the cost per passing.

On December 14, NTIA got a ruling from the GAO that the changes made by NTIA in the Policy Notice are outside of the scope of NTIA’s authority. According to the decision from the GAO, a major change like the one implemented by NTIA requires approval by both Congress and the Comptroller General.

Agencies like NTIA are subject to the Congressional Records Act (CRA), which defines the administrative process that government agencies must follow to change rules. The GAO says that NTIAs Policy Notice implements, interprets, and prescribes law or policy, which triggers provisions of the CRA. The Policy Notice not only affected changes within NTIA of how it administers the BEAD program, but it changed the process of how Eligible Entities (State Broadband Offices) go about seeking funding under the program.

The GAO letter lists the possible ways that NTIA could be exempt from seeking Congressional approval and concluded that none of the exemptions apply to NTIA’s Policy Notice changes. The key trigger for the GAO ruling was that the rule changes created a substantial effect on non-agency parties, meaning States and ISPs.

The conclusion of the GAO is as follows: “The Policy Notice is a rule for purposes of CRA because it meets the definition of a rule under APA and no CRA exception applies. Therefore, the Policy Notice is subject to CRA’s requirement that it be submitted to Congress and the Comptroller General before it can take effect.”

The bottom line of this ruling is that NTIA had no authority to unilaterally change the BEAD rules in such a drastic fashion. The BEAD rules in the IIJA legislation were specific, and the changes NTIA ordered with the Policy Notice were significant enough to require NTIA to seek Congressional approval before making the changes.

This is an interesting twist. In normal times, this would mean that NTIA would have to put BEAD on hold until this is resolved. NTIA would not be able to enforce the changes in the Policy Notice, and if Congress didn’t approve the NTIA changes, the BEAD program would probably reset to the status in June before the Policy Notice. It would mean that all of the changes to grant scoring and the requirements for States to determine priority technologies would be invalid. It would means all tentative grant awards made under the revised rules are invalid. States would probably have to re-score grant applications under the original BEAD rules for selecting winners.

But we don’t live in normal times, and this Administration is currently ignoring the rules of the Congressional Records Act in many other venues and programs. So what does this mean? It may mean nothing, and NTIA might just ignore this GAO decision. This might trigger action from Congress. There has been a lot of unhappiness that the amount of grant awards was trimmed so drastically. This decision certainly gives an actionable reason for anybody who wants to take NTIA to court to halt the BEAD process during litigation. Like everything associated with BEAD, awards made under the new rules are going to be under a cloud, and that makes everybody uncomfortable.

Predictions for 2026

The following are my predictions for 2026. I noticed that after I wrote this, the overall tenor of the list is negative. I’m generally pretty upbeat, but I can’t find fault with any of the predictions.

Federal Regulators Will Continue to Ignore Congress. Federal broadband regulators will continue to ignore Congressional legislation. This past year, the FCC ignored a Congressional edict to lower inmate calling rates. NTIA is ignoring Congress by withholding grant funding for the Digital Equity Act, and is likely to provide little or no funding for BEAD non-deployment funds. Expect similar actions in 2026.

Further Erosion of BEAD. NTIA is not done trying to whittle down the size of BEAD grant funding. The agency already whacked funding with the Benefit of the Bargain rule changes, along with numerous other actions. I expect NTIA to pull more rabbits out of the hat and find more excuses to deny funding to some states for issues like net neutrality, state permitting rules, or state regulation of AI.

Major Spectrum Battles. Congress instructed the FCC to find 800 megahertz of mid-range spectrum for auction. That means potentially reclaiming CBRS spectrum used for rural broadband and 6 GHz spectrum that is just starting to be implemented for WiFi 7. Cellular lobbyists preempted the normal deliberations on spectrum management and got the biggest item on their wish list included in the Big Beautiful Bill. I don’t expect opponents of the spectrum grab to go down without a big fight.

FWA Will Have Another Strong Year. AT&T, T-Mobile, and Verizon just had the biggest quarterly gain of new customers yet, adding over 1 million net new FWA customers in the third quarter of 2025. I predict the three companies will continue to add over 900,000 customers per quarter in 2026, and even more if we see a softening of the economy.

Universal Service Fund Reform Will Stall. Congress is considering badly needed changes to the Universal Service Fund. In the current political chaos in Congress, I predict that a USF bill will never make it through the legislative process.   

Big ISPs Will Have Record Cash Windfalls. There hasn’t been a lot of industry press about the bonus depreciation change included in the Big Beautiful Bill. This allows ISPs to quickly write off current fiber construction, which will cut tax liabilities and generate big cash bonuses for the biggest ISPs in 2026. I predict much of the windfall will be used to buy back stock rather than invest in new networks.

Big ISPs Will All Raise Rates. You might think that in a weakened economy, where the cost of living is the number one issue with the public, ISPs might hold off on rate increases. But the recent $5 across-the-board rate increase by AT&T for fiber will be the first of many significant rate increases during the coming year.

A Federal Regulator Will Declare that the Rural Broadband Gap has Been Solved. I don’t know if it will be the FCC or NTIA, but I expect one of the federal broadband regulators to declare that the rural broadband gap has been solved because of the many grant programs and because everybody can now buy satellite broadband. Arielle Roth already hinted at this when she said in a speech that the mission of BEAD “is nothing less than to close the digital divide once and for all”.

Grants Should Look Forward

State Broadband Offices had to go through a process this year of deciding if various technologies qualify for grant purposes as priority projects. A priority technology must meet the following requirement: Provide broadband service that meets speed, latency, reliability, consistency in quality of service, and related criteria as the Assistant Secretary shall determine; and ensure that the network built by the project can easily scale speeds over time to meet the evolving connectivity needs of households and businesses and support the deployment of 5G, successor wireless technologies, and other advanced services.

NTIA chose a speed of 100/20 Mbps as the metric for meeting the current test of a priority technology. This is convenient, since this was the declared speed that the legislation said a BEAD-funded technology must be able to deliver. Today’s blog asks if that definition is adequate.

One way to consider what the current speed of broadband should be is to look at historical trends. For many years, Cisco issued reports that regularly reported that the demand for speed was growing at roughly 21% per year for residential broadband, and a little faster for business broadband. Cisco and others noted that the demand for broadband speeds was on a relatively straight line back to the early 1980s.

It’s not hard to test the Cisco long-term growth rate. The following table applies a 21% growth rate to the 25/3 Mbps definition of broadband established by the FCC in 2015.This table is somewhat arbitrary since it assumes that broadband demand in 2015 was exactly 25 Mbps – but there was widespread praise of the new definition at that time, other than from ISPs who wanted to stick with the 4/1 Mbps definition. This simple table accurately predicted that we would be talking about the need to increase the definition of broadband to 100 Mbps download around 2022, which is exactly what happened. The FCC did not have a fifth Commissioner at the time and wasn’t able to make the change until March 2024 – but in 2022, the FCC wanted to change the definition of broadband to 100 Mbps download, which was at a 21% compounded annual growth rate from the definition of broadband the FCC had established in 2015.

I can’t think of any fundamental industry changes that would change the historical growth rate in the near future. We’ve certainly seen a big demand to buy faster broadband products. Consider the following chart that starts with the assumption that 100 Mbps was the right definition of broadband in 2022. Growing that number over time by the same 21% results in the following table. What does this table suggest for BEAD and other grant?. Consider the evaluation of Starlink, which is the technology that is closest to meeting or not meeting the needed speed. Ookla released a report in the first quarter of 2025 showing that the median speed on Starlink was 104.71 Mbps download and 14.84 Mbps upload, and that only 17% of Starlink customers in the first quarter fully met the 100/20 Mbps speed threshold.

The table above suggests that the current definition of broadband in 2025 should be something like 177/35 Mbps. It’s debatable if Starlink meets the 100/20 Mbps test today, but it clearly doesn’t meet a test based on the speed demand in 2025.

The BEAD future-looking test is challenging because nobody defined what future-looking means. I can think of two definitions of forward-looking that might make sense. One is to judge what speeds should be delivered when the grant project has been constructed, which for most BEAD projects will be at the end of 2029. The growth chart suggests that the speed for defining broadband in 2029 will be around 380/76 Mbps.

I think a better forward-looking test for a government-sponsored grant should be that a grant-funded network should still be relevant a decade after a grant is awarded. The chart suggests the desired speed should be 1191/238 Mbps in 2035.

Naysayers will argue that the 21% growth in speed demand can’t be sustained. Consider taking a more conservative approach that cuts the historical growth rate in half. That conservative approach would say that a target speed for a grant-funded project would be 195/30 Mbps in 2029 and 345/69 Mbps in 2035. I have nothing to go on except my gut, which tells me that 345/69 Mbps will feel inadequate in 2035.

Why BEAD to Kuiper?

There is no question that this has turned into one of the oddest years for broadband during my career. We’ve seen Digital Equity grants killed. We’re seeing the spending for BEAD being cut in half. And maybe oddest of all, we’re seeing States make sizeable BEAD grant awards to Kuiper, although the company isn’t close to having its first broadband customer.

You might think we should have learned a lesson from when Starlink was a big winner in the RDOF reverse auction. The FCC eventually killed those awards after it determined that Starlink was not ready to fulfill a major commitment to serve large numbers of locations in specific geographies.

As of the date of this blog, Kuiper has 153 working satellites in orbit. It has scheduled launches of an additional 72 satellites before the end of the year. It’s worth noting that previous planned launches have all been seriously delayed.

Kuiper was granted permission in July 2020 to deploy a constellation of 3,236 satellites. The satellites will be deployed at three altitudes of 370 miles, 380 miles, and 390 miles. The company says it will begin beta testing when it reaches 578 satellites deployed at 390 miles. To put this into perspective, Starlink launched commercial service when it reached 1,260 satellites. Even with that number, early Starlink customers complained about short service lapses between satellites. Kuiper is under pressure from the FCC to have 1,618 satellites in orbit by mid-2026 to maintain its spectrum licenses.

For the last month, I’ve been perplexed by the magnitude of the BEAD awards being made to Kuiper. As of the date of this blog, Kuiper has tentative BEAD awards for 324,000 locations, second only to Starlink at 427,000. The next biggest award winner is Comcast with 233,000 locations. These are tentative awards, and NTIA is still reviewing and may reject some of the tentative awards to fiber, which would likely increase the awards to satellite.

Kuiper is not nearly as ready as Starlink was with RDOF. The RDOF reverse auction closed at the end of 2020, and Starlink invited selected customers from its waiting list to try the service in January 2021. Starlink started taking pre-orders nationwide in April 2021. Starlink could finally reach every part of the lower 48 states in March 2022.

One of the oddest things about Kuiper is that nobody knows how fast the service will be until it is deployed. Early Starlink customers received speeds that were faster than advertised, but speeds went downhill quickly as customer additions outpaced satellite deployments.

Starlink is only now on the cusp of delivering consistent 100/20 Mbps broadband. According to a report from Ookla, Starlink speed tests in the second quarter of 2022 showed a median download speed of 53.95 Mbps, meaning half of customers had speeds faster than that speed, and half were slower. Median upload speeds in that quarter were 7.5 Mbps. In the first quarter of 2025, Ookla reported that Starlink had climbed to a median broadband speed of 104.71 Mbps download and 14.84 Mbps upload, nearly double the speeds in 2022. The Ookla report said that only 17.4 % of Starlink customers fully met the FCC definition of broadband of 100/20 Mbps per second, with the limiting factor for many customers being slow upload speeds.

I saw a recent quote from a State broadband manager, when asked why he made an award to Kuiper, said it was because they bid the lowest cost per passing. That seems like a cynical response, and it makes me wonder if State Broadband Managers have thrown up their hands and are just following NTIA’s rules without questions.

The chances are good that Kuiper will complete the constellation and will eventually deliver satellite broadband. But history has also shown that new technology companies are often late in meeting commitments and sometimes fail altogether. The BEAD grant process is taking a big chance that Kuiper will meet its obligations and that speeds will be reasonably fast – something that nobody can know until it happens.

Where Were the ISPs?

I’ve been doing a lot of thinking about how the BEAD grant program got off track. Even before the current giant swing in rules by NTIA, the program had a lot of problems. One of my observations about the BEAD grant program is that ISPs were not an integral part of developing the grant rules. ISPs were largely ignored from the start and were only brought into the BEAD process after the rules were largely set in concrete.

This is actually not that unusual in the world of grants, but BEAD was supposed to be different. The BEAD legislation required State Broadband Offices to reach out to stakeholders in “every corner of a state” to solicit feedback on what should be accomplished with the BEAD program.

The BEAD process wasn’t just about infrastructure and also included funding that might be used for distributing computers and devices and training people how to use them. It made sense for Broadband Offices to reach out to listen, particularly since many States had newly created Broadband Offices that had recently been created to handle the grants funded by the Capital Project Funds.

I sat through the outreach process in a number of States, and was disappointed when, in many States, there was no listening involved, just Broadband Offices talking about the BEAD timeline. But the real flaw of the outreach program to me was that ISPs were not considered as major stakeholders in this process. For the infrastructure portion of BEAD, ISPs are the only stakeholders that really matter, because they are the ones who will raise the needed matching funds, build, and operate the grant-funded networks.

A lot of the problems encountered in the BEAD process could have been avoided if NTIA and States had asked ISPs upfront what it would take for BEAD to be attractive to them. The first time I read through the legislation, I identified a number of requirements that ISPs were going to hate. In practice, many of the BEAD processes turned out to be even worse than I had feared. For example, the map challenge process, as devised by NTIA, was a total nightmare that had no chance of functioning as intended. States could have done a much better job, and many States already had created their own broadband maps of the areas that needed better broadband. Those efforts were ignored.

I had naively hoped that since BEAD was the first grant program to require public feedback, States would end up loosening the worst of the rules to make the program work. To me, the ideal grant program allows a Broadband Office to waive requirements that are a problem for specific ISPs. The State broadband grants in many states were flexible to make them work.

Unfortunately, any hope that BEAD could work well died when it became clear that States were not going to be given much latitude. From the outset, it quickly became clear that NTIA was not going to be an advisor to State broadband programs. Instead, NTIA dictated practically every aspect of the BEAD rules and process. NTIA left very little to State discretion.

When it’s over, I think the NTIA decision to take full charge of BEAD will ultimately prove to be the fatal flaw of the program. It didn’t have to happen this way. It was clear in the legislation that Congress intended States to develop unique plans for BEAD that worked for each of them. We know what a grant program looks like the federal governments hands over the reins to States. The Capital Projects Fund gave over $9 billion to States to award broadband infrastructure grants. Treasury created some basic rules but largely let States decide how to implement and operate the grant programs. States took a wide variety of approaches to choosing ISPs for the funding. In the end, CPF was a State-directed grant program with only light oversight provided by the federal government. If NTIA had adopted the same philosophy with BEAD, construction would have started for grant-funded projects a few years ago.

Any infrastructure grant program can only be successful if ISPs are willing to participate. State Broadband Offices understand this and were adept at making State grant programs work.

BEAD became so out of kilter that many States ended up with a large number of locations where no ISPs other than Satellite providers made bids. If States had run these programs from the start, they would have found a way to bring local ISPs into the mix. They would have been able to fund a lot of fiber, but would not have hesitated to fund other technologies when that made sense. And they would have accomplished all of the steps required by the legislation in a lot less than four years.

Going, Going, Gone?

We now know the next BEAD fight, and it might be the biggest fight yet. On September 5, NTIA issued a press release talking about the progress of the Benefit of the Bargain round for States to award BEAD funding. The press release announced that 36 of 56 States and Territories have made tentative BEAD awards and have submitted their final proposals to NTIA.

The header of the Press Release is that “Plans include broad range of technologies and save American taxpayers at least $13 billion”. The Press Release went on to say, “In the plans submitted today, states are already projecting savings of at least $13 billion for American taxpayers”.

The $13 million referenced by NTIA is the difference between the funding allocated to each state for BEAD and the amount being awarded to BEAD grants. According to the IIJA legislation that created BEAD, any funds not spent on infrastructure were to remain with the States to pursue other activities related to improving broadband. The legislation included some specific examples related to activities that promote the adoption and meaningful use of high-speed internet, including workforce development, digital literacy training, subsidies for internet-capable devices, telehealth initiatives, and the installation of Wi-Fi in multi-unit residential buildings. States were free to propose other ideas, and many have.

When NTIA issued the new rules for making BEAD grants in June, the agency said that funding for non-deployment funds was under review. It’s now pretty clear that NTIA plans not to expend the non-deployment funds and take credit for saving the expenditure for the U.S. Treasury.

The $13 billion number will grow. That amount comes from the States that have already submitted final plans. If the same ratio of non-deployment funds holds for the remaining states, then the amount of non-deployment will be around $25 billion. There are ten States where the non-deployment funds are more than $500 million, led by North Carolina at $1.1 billion and Georgia at $1 billion. The others include Arkansas, Kentucky, Louisiana, Mississippi, Ohio, Tennessee, Virginia, and West Virginia. Interestingly, the amount of non-deployment funding grew significntly when NTIS stressed making BEAD awards to satellite technology.

I describe this as a fight because States aren’t going to easily let this funding go. First, States have worked hard to reach consensus for specific plans for using the non-deployment funds. As an example, West Virginia plans to use non-deployment funds to create a database of utility poles in the state, to update security on the State’s own network, to award grants for expanding rural cell towers, and for training programs for technical jobs in the telecom sector. These are typical of the plans in other States and all work to further broadband deployment.

States are also unhappy about the NTIA statement because the funds were directed by Congress, and States believe they are entitled to the non-deployment funds. Louisiana Gov. Jeff Landry sent a letter to Commerce Secretary Howard Lutnick this week that emphasized that the non-deployment funds belong to the State. In Louisiana, the non-deployment funds are in the range of $850 million.

It’s not hard to imagine a coalition of State Attorneys General from red and blue states together suing NTIA to get the non-deployment funds. There are similar lawsuits underway for withheld funding for healthcare and education.

The bottom line is that a lawsuit might be inevitable. NTIA statements make it clear that it wants to claim the savings by keeping the non-deployment funds, and there are States that are likely not going to let the funds go without a fight. But maybe there is a compromise somewhere in the middle.

Big ISPs and BEAD

I remember that within a month after BEAD was announced, there were a lot of predictions that the program was going to be a huge giveaway to the largest telcos and cable companies. There was some reason for that outlook since there had been huge giveaways to large telcos in the past, such as the $10 billion CAF II fiasco.

I felt optimistic from the beginning that BEAD would not all go to big companies due to the fact that BEAD was being driven by States, and not by federal grant programs. I expected that States would have widely varying ideas on how to award the grants. States lost a lot of the flexibility in choosing different types of winners after the NTIA revised the BEAD grants to basically be a one-round reverse auction.

We’re now starting to see some of the preliminary BEAD results, and it’s a mixed bag – with some states favoring large companies and others not. I call the awards preliminary because every grant award made by the States still has to be approved by NTIA, and nobody knows what they are going to do with the proposed grants. NTIA could go along with State recommendations or could force States to award more money to ISPs with the lowest bids for funding, like the satellite companies. That’s something that we may not know for months.

The following is an analysis of the 29 states that announced BEAD awards by August 29. My analysis only looks at the 23 states that have made BEAD awards of over $100 million. In the following analysis, I consider the following as large companies: AT&T, Brightspeed, Charter, Comcast, Consolidated Communications, Frontier, Mediacom, and Windstream.

There are seven states so far that have awarded 5% or less of the funding to large ISPs, led by Kansas, with no BEAD awards to large companies.There are five states that have awarded 50% or more of awards to large companies, led by North Carolina at 85.9%.Following are the amounts of awards to large companies in the 23 states that are awarding more than $100 million.The biggest surprise in that list is AT&T. Just a year ago, the company said it was still thinking about participating in BEAD. A little surprising is the relatively small size of BEAD awards to Charter, which had been so aggressive in winning RDOF. Note, however, that this list is far from final since some large states like Texas, California, Illinois, Missouri, and Florida have yet to announce BEAD grants.

The Spectrum Policy Mess

There was a recent article in LightReading that asked a great question – BEAD bet big on CBRS and 6 GHz bands, so why is Congress gutting them? Answering that question needs some context.

NTIA leaned into supporting fixed wireless throughout the BEAD process. During the original BEAD map challenge process, NTIA made it clear that locations covered by WISPs using licensed spectrum (CBRS) were to be considered as served as long as the WISP claimed the ability to deliver 100/20 Mbps broadband. There were vigorous challenges by governments and ISPs during that map challenge, so some areas served by licensed spectrum were kept as BEAD-eligible if speeds were below that threshold.

More recently, NTIA came out with a surprise decision that State Broadband Offices (SBOs) had to remove BEAD locations served by WISPs using only unlicensed spectrum. We’ll have to wait for the final count, but folks are speculating that this removed about 15% of the remaining BEAD-eligible locations nationwide.

It’s likely that the majority of rural WISPs will be incorporating 6 GHz spectrum into rural fixed wireless networks. If they haven’t done so yet, it will be a big component of future electronics upgrades. 6 GHz spectrum has wide channels that allow WISPs to deliver much faster speeds to customers within a reasonable distance from a tower.

When NTIA made the announcement that locations served by unlicensed WISPs are considered to be served, NTIA also changed the BEAD grant rules drastically and is allowing fixed wireless, cellular FWA, and satellite on the same playing field as fiber when choosing grant winners. NTIA is allowing SBOs to give some priority to fiber, but since NTIA also reserves the right to review every grant award, I think the priority for fiber is somewhat of a smokescreen. It seems clear that wireless carriers and satellite carriers are going to win a lot more BEAD locations than anybody ever anticipated. WISPs that win BEAD are going to be heavily reliant on CBRS and 6 GHz spectrum.

At the same time that BEAD was changing, Congress took a different path that poses a big threat to the availability of CBRS and 6 GHz spectrum. Congress has accepted the hype from cellular carriers that they will be running out of spectrum in a few years. The carriers even rolled out the old saw that the U.S. is losing the 5G race to China. My cynical take is that the carriers want more spectrum to expand FWA home wireless.

In the One Big Beautiful Bill, Congress renewed the FCC’s ability to hold spectrum auctions and instructed the FCC and NTIA to identify at least 800 megahertz of spectrum between 1.3 GHz and 10.5 GHz to be auctioned. The FCC must auction at least 300 megahertz of spectrum within two years, which must include at least 100 megahertz of the C-Band spectrum between 3.98-4.2 GHz. The bill carves out two bands of spectrum that cannot be considered for auction or relocation. The 3.1-3.25 GHz spectrum has been used by the military for many years. Also excluded is spectrum between 7.4-8.4 GHz, which is part of the X-Band spectrum that is used for military satellites.

The FCC and NTIA must identify 500 megahertz of other spectrum that will support full-power commercial licensed use cases. The new law does not protect CBRS spectrum, which sits at 3-55 – 3.7 GHz. This spectrum is used today by over 1,000 entities today such as WISPs, private networks, ports, schools, sports venues, hospitals, airports, and the DOD. The OBBB also doesn’t protect 6 GHz spectrum that is fully used today for WiFi. The FCC approved 6 GHz spectrum for WiFi in April 2020, and the spectrum is key to the ongoing deployment of WiFi 6 and WiFi 7, along with rural broadband.

There is no guarantee that the FCC will touch these two blocks of spectrum, but it’s going to be exceedingly hard to find 800 MHz of spectrum to auction without grabbing some or all of these two spectrum bands. There will obviously be a big battle from WISPs and the WiFi industry to protect CBRS and 6 GHz, but the FCC has the cover from Congress to allow them to raid the two spectrum bands.

As the LightReading article points out, NTIA and Congress are working at odds with each other. It’s not hard to envision BEAD grants going to WISPs and then watching WISPs lose the spectrum they need.

This whole mess comes from Congress meddling in spectrum policy – something they haven’t done before. The historical process was for the FCC to weigh the pros and cons of available spectrum and to pick the most beneficial use for each spectrum band. But Congress wanted to claim $85 billion in potential revenue from spectrum auctions to offset tax cuts.

I’ve talked to WISPs who say that losing CBRS and 6 GHz spectrum puts them out of business. That would leave them with the historic WiFi spectrum that has too few and overused channels.

The economy will suffer greatly in the long run if the cellular carriers are able to pull off this unprecedented raid on spectrum. Rural broadband will suffer a big hit. But the biggest hit to the economy would come from loss of WiFi spectrum, which fuels trillions of dollars of value across the economy.

Final BEAD Rules Released

The guessing game is over since NTIA has released the final rules about how the new BEAD grant process will work. Unfortunately, it’s still impossible to make any guesses about the percentage of BEAD that will be awarded to fiber or other technologies. There have been both optimistic and pessimistic predictions of awards for fiber written in the last few weeks, and as you’ll see below, there is still no way to guess who is right.

There are a few things we know. It’s clear that a lot of State Broadband Offices (SBOs) still want to maximize the amount of awards made to fiber. We also know that overall eligible BEAD locations are being reduced by allowing a map challenge from WISPs that use unlicensed spectrum. Preliminary estimates are that as many as 15% of BEAD passings might be removed from the grant process, but we’ll have to wait and see if WISPs use this challenge.

NTIA has specified the process for SBOs to make proposed grant awards. The highlight of that process is as follows:

  • SBOs must start over, and all ISPs will be invited to bid in a single Benefit of the Bargain grant round (this is probably the dumbest new industry term I can recall).
  • SBOS can designate a project as a Priority Broadband Projects, meaning projects that get the first crack at funding (see more below). In areas where more than one priority project is eligible for funding, the ISP asking for the lowest amount of grant funding per passing wins, with the caveat that an SBO can award the grant to a project that is no more than 15% higher than the lowest bidder.
  • Areas with no priority projects are directly awarded to the ISP asking for the lowest amount of funding.
  • SBOs are given a number of options to find ISPs willing to serve locations that nobody has requested to serve.

Priority Broadband Projects. An SBO gets to decide if a given grant application is going to be designated as a Priority Broadband Project. To meet this requirement, a proposed project has to 1) be able to deliver 100/20 Mbps service today with a latency under 100 milliseconds, 2) be able to scale over time to meet evolving connectivity needs of households and businesses, and 3) support the deployment of 5G and successor wireless technologies and other advanced services.

The second requirement implies that an SBO can determine some future goal faster than 100/20 Mbps that applicants must agree to eventually meet. The new rules don’t specify how to do this. I’ve already seen a few SBOs suggesting ultimate speeds between 200 and 300 Mbps download. Faster future speed requirements might be a reason for not giving satellite a priority designation, but WISPs would likely qualify.

The last test for supporting 5G is a harder hurdle to satisfy. It’s clear that building last-mile fiber supports 5G and future wireless technologies, because new 5G towers or repeaters can be placed anywhere in a last-mile fiber network. This will be harder for a WISP to guarantee. A WISP might be able to meet this requirement if they are building a BEAD network that includes fiber backhaul to towers instead of using wireless backhaul. A WISP that isn’t proposing to build some fiber is going to have a challenge to meet this requirement.

The bottom line is that it should be easy to designate last-mile fiber projects as priority. WISPs have more of a challenge in being designated as a priority project, and I expect some WISPs will achieve this designation and others won’t, depending on the proposed network and specific technology. It seems to be easy to exclude satellite service from the priority designation.

NTIA Taking an Active Role in BEAD Awards. There is a new surprise rule that means that tentative grants awarded using the above rules might still not be final. NTIA has made it clear to SBOs that it must be kept in the loop during the entire grant process. The ultimate touchpoint is that NTIA wants to see and approve every proposed grant award.

There is no end to the ways that NTIA could exercise this power. The folks making optimistic predictions for fiber awards could be right and NTIA could elect to let SBOs call the shots and could rubber-stamp most proposed grants.

However, there has been a lot of speculation that Commerce wants to significantly reduce the size of the $42.5 billion program, and having the final approval might be the mechanism for lowering grant outlays. NTIA might set an arbitrary cap on the amount if BEAD per passing for fiber awards. NTIA might veto grants made for fiber if a WISP or satellite provider offers a lower price for the same area, which would largely undo the priority areas designation. NTIA might override proposed grant awards in blue states but not red states, in large states but not small ones, or for small ISPs but not big ones. NTIA could decide that Starlink gets no grants, if we are to believe the current spat between Elon Musk and the administration.

Unless somebody has inside knowledge of NTIA’s intentions for awarding grants, it’s impossible to guess what NTIA might do with its power to approve grant awards. I’m done guessing the amount of fiber that will be built by BEAD. At this point, I think we’ll have to wait until September to see what pops out of the BEAD award process.