Tag Archives: Louisiana

Showdown at the BEAD Corral

The telecommunications industry has not had many instances when a momentous decision could drastically change the industry. The only big one I remember was when Judge Harold Greene issued the landmark ruling in 1982 that resulted in the divestiture of AT&T into multiple local Baby Bells and the remaining AT&T long-distance company. While a small number of insiders knew what was coming, the announcement of the divestiture rocked the industry and drastically changed it going forward.

Rural broadband is facing a similar dramatic moment when the NTIA decides what its going to do with the BEAD proposals that States have presented to it. State Broadband Offices (SBOs) have been submitting final BEAD plans that are still mostly fiber. This seems to fly in the face of NTIA, which changed the rules to give a lot of funding to alternative technologies, meaning satellite and fixed wireless.

A little history is needed to explain why I categorize this as a showdown. In the original NOFO for BEAD, the NTIA clearly stated that its preference was for as much of the BEAD money as possible to go to build fiber. The fiber preference came from wanting to use this once-in-a-generation grant to create long-term broadband networks in rural areas. Over time, the NTIA eased its stance a little and came out with rules to describe how satellite broadband can be used to serve remote locations. But the preference was still to use BEAD for fiber.

The new administration upended the BEAD program. In June, it issued new BEAD guidelines that made it much harder to award money for fiber. The NTIA rules essentially turned the BEAD review process into a one-round reverse auction and said that BEAD funding should go to the ISP that asks for the least amount of grant per location. The only caveat was that the NTIA could consider a second applicant that was within 15% of the cost of the lowest bidder. When the new rules were published, the industry collectively saw it as a fiber killer.

But the new rules had a small loophole. SBOs could designate some BEAD applications as ‘priority broadband projects’, as long as they met three criteria. A proposed technology had to meet the speed, latency, reliability, and consistency criteria established by the BEAD legislation. A proposed technology had to be able to scale over time to meet foreseeable future broadband demand. Finally, a proposed technology had to support the deployment of 5G and other successor technologies.

SBOs have seemingly aggressively used this loophole to disqualify alternative technologies and still award BEAD to fiber projects. It’s not hard to understand how they could do this. For example, there are many articles about how satellite doesn’t always meet the 100/20 Mbps test today, and it’s not hard to set a future speed threshold that satellite can’t guarantee. The third requirement of supporting 5G and future technology deployments can be interpreted to mean deploying fiber backbone networks in rural areas that can support future cell towers. It’s clear that satellite doesn’t meet this requirement, and a fixed access network that only uses microwave backhaul also fails to meet it.

West Virginia issued a Final BEAD Plan for public comment that awards 99% of the state’s BEAD money to fiber to reach 94% of the eligible passings. Virginia proposes to bring fiber to 81% of its eligible passings. Part of the BEAD review process for BEAD is to elicit public comments on the proposed use of the funding. Starlink filed comments in Virginia and Louisiana, aimed at the NTIA, that the States are not adhering to the revised NTIA guidelines that say that funding should go to the lowest bidder.

Even with States still proposing fiber, the new NTIA guidelines have had an impact. Louisiana had completed its BEAD process before the new guidelines. The State originally proposed to bring fiber to 95% of the locations in the state. The NTIA rules required Louisiana to restart the grant process, and in the revised process, the State lowered the allocation to BEAD to 80% of the locations. During the process, fiber ISPs sharpened their pencils and lowered the requested amount of funding.

NTIA now faces a big choice. SBOs (and actually the Governors they work for) have clearly said that they want BEAD money to build fiber. All three of these early states have Republican governors, and as I have always said, broadband is not a partisan issue at the state and local levels.

This is definitely a showdown moment. NTIA can concede to the requests from these States. In doing so, it will have a hard time not doing the same thing for other states, red or blue. Or the NTIA can play the bad cop and tell States to kill most of the proposed grants for fiber.  But perhaps whatever the NTIA decides isn’t the final word since the process now hangs under the threat of lawsuits – perhaps from Starlink, or perhaps from States who lose grant awards aimed at fiber.

Is it Too Late to Change BEAD?

There has been a lot of speculation since the election that the BEAD grant program is going to get revamped. I’ve heard speculation that a lot more money might go to satellite broadband. There have been rumblings that some in Congress want to relax some of the harsher BEAD rules that make it harder and more expensive to build new broadband networks.

In the midst of this speculation, the State of Louisiana announced that it has tentatively chosen the winners of its $748 million BEAD program. The next step is for the State to submit a report to the NTIA asking for permission to make formal grant offers to the winning ISPs.

The BEAD process in Louisiana seems to have worked in the way that Congress intended when it formulated the rules. More than 95% of the 140,000 BEAD-eligible locations are slated to get fiber from the awards, with the rest going to satellite and fixed wireless. 70% of the BEAD dollars are being awarded to ISPs based in the State. Over half of the award went to a consortium of local ISPs.

While Louisiana was the fastest to the finish line, a lot more states plan to open BEAD grant portals before the end of this year and start to accept grant applications. While it look a long time to reach this point, a lot of states are now on a path to choose grant winners.

This raises the interesting question if it’s too late for a new administration to make major changes to the BEAD program. It seems highly likely that Louisiana, and probably a few more states will have approval from the NTIA to make grant awards before the January 20 inauguration. A whole lot more states will have a list of tentative grant winners by then for most of their available BEAD funds.

There is also the question of the process needed to change the BEAD rules. The BEAD rules were created by Congress, and it seems that Congress would have to act to change the rules. It seems plausible that Congress could act to relax some of the BEAD rules it doesn’t like. I know that ISPs would welcome changes that remove some of the burdensome administration and reporting rules that come with BEAD. Congress could change some of these rules next year and make the changes retroactive for any grants that have already been awarded. There would be relief around the industry to see rules like mandatory environmental studies and required low rates eliminated.

A new administration will almost certainly change the folks heading the NTIA, and in doing so would control the purse strings for the many states that haven’t finished the BEAD award process. My understanding of the process is that once NTIA blesses a State’s grant awards that the money is flowed to the States to begin awarding grants. I have to think that Louisiana and other states will fight hard against any federal attempt to claw back funds that have already been awarded to build fiber.

A new administration and a new NTIA could easily change the grant award rules for states that haven’t completed the grant process. But we can’t forget about Congress in this process. Rural broadband is a popular cause for politicians, and I wonder how many would vote for drastic changes that would impact their own states? Could Congress really get a majority vote to cut back or drastically modify a popular program? Would the administration really want to use political capital for this issue when there are many other prioities for the new administration?

There are several ways the administration could give more funding for satellite. For example, they could pause work at NTIA until they figure out the path to do that. But if Congress has to go along with any major changes, this is not necessarily an easy path. Putting BEAD on hold would mean the administration would be delaying broadband implementation – something that Republican Senators have been complaining about the NTIA for the last year.

The administration can obviously do anything it wants with BEAD starting with the inauguration, with the caveat that Congress is going to want a say in big changes. But I’m not sure that there is much that can done about grant awards that have already been funded before that date