Every once in a while there is legislation proposal that strikes me as a common sense idea. One recent such piece of legislation is the Broadband Fairness Act proposed by Senator Josh Hawley (R-MO).

The Act is simple and would return any defaulted grant funds administered by a federal agency back to the State where the award was originally intended. For example, there were numerous defaults for RDOF as Starry and many other ISPs withdrew from the fund and the awards to LCD Broadband and Starlink were cancelled by the FCC.

Under this proposed law, those defaulted funds would have gone directly to the States where the grant or subsidy was originally supposed to go. The Act encourages the States to use the money directly for the areas that were affected by the default.

The mechanics of making this work could get complicated. Consider RDOF that is paid out over ten years. I suppose this law would mean the State would get the funding over the remaining pay-out schedule. That should be enough funding for a State to justify creating an immediate grant since it knows it will eventually be reimbursed (just like is done by an ISP).

This would also apply to the many other grant and subsidy programs like ReConnect, CPF, SLFRF, EA-CAM, NTIA grants, and CAF-II.

This law would also apply to BEAD. There is no doubt in my mind that there will be BEAD defaults. There will be ISPs that agree to take grants in areas that turn out to be a lot more expensive to build than they expected. With a grant program of this size, there likely will also be ISPs that get into financial straits in the next few years and find themselves unable to complete the grant construction.

The beauty of this idea is that the money would go back to states fairly quickly to be used for the original purpose. This idea is almost what I would call a reverse claw-back. States would claw back federal funds to use for broadband if the first federal grant award fails for any reason.

Without something like this mechanism, areas with defaults simply get no broadband. That’s a scary thought because after BEAD runs its course, there might not be any more federal broadband grants for a while. Areas where grants default will be left behind with no broadband solution. If there is a big RDOF default next year, the FCC is not going to act to fill the created broadband gap.

In some ways, this feels like a little bit of a dig against the federal agencies that award grants. The FCC certainly made a mess of RDOF when only $6 billion out of $9 won in the auction is still active, and there are rumors of more coming defaults. But sometimes defaults just happen. Nobody expected Charter to walk away from a few RDOF areas recently – but they made a business decision that they could not afford to fulfill those obligations. This Act is a way to get defaulted money back into action much faster than waiting for federal agencies to launch a replacement grant program. It’s hard to not like the simplicity of the idea.

Because of the way that Congress functions today, this likely would need bipartisan co-sponsors to get any traction. It’s an idea that politicians in states that are going to see a lot of federal grant funding might want to consider.