WASHINGTON, January 8, 2024 – Alabama and Florida have included provisions in their draft plans for the Broadband, Equity, Access, and Deployment program that, if approved, would allow areas earmarked for money from the Rural Digital Opportunity Fund to qualify for funding from BEAD, citing concerns over future changes in the number of locations RDOF will serve.

Alabama’s state broadband office seeks the exemption due to ambiguity surrounding a planned reassessment of eligible areas at the six-year mark of the Federal Communications Commission’s RDOF program, which will revise service area location totals, altering how many homes will be served under the program more than halfway through project deployments. 

If approved, this exemption would enable the designation of Alabama’s RDOF service areas as underserved, thereby qualifying them for BEAD funding in the state. This request was articulated in a waiver request signed by the Alabama Department of Economic and Community Affairs Director Kenneth Boswell addressed to the National Telecommunications and Information Administration, the government agency responsible for overseeing BEAD.

Similarly anticipating variations in RDOF service areas, Florida’s BEAD draft plans outline a motion that would set aside funds within BEAD for currently designated RDOF areas. If approved, Florida’s strategy would necessitate reserving funds to distribute late in the BEAD process if RDOF service locations change and the affected addresses are released from the program.

In December, it was announced that nearly one-third of the money awarded through Phase I of RDOF had been defaulted on at the conclusion of the long-form authorization process, which may have lent to the state’s concerns over these projects coming to full fruition.

The Alabama state office explicitly points out several concerns with RDOF in its waiver request, including its significantly longer timeline compared to BEAD deployment by two to four years. State officials say RDOF’s longer timeline might uncover instances where an RDOF grant recipient defaults or doesn’t completely meet its deployment requirements until long after the BEAD funding deadlines have passed.

The letter further cites concerns with difficulty in identifying and confirming locations tied to RDOF commitments, and the aforementioned potential fluctuations in the number of covered locations, which will not be completely finalized until the FCC’s final authorization process at RDOF’s six-year mark.

The letter expresses concern that the FCC lacks a process to reallocate or re-bid areas affected by default or revision, stating it could result in “fragmented and isolated pockets of unserved households and businesses that will not attract sufficient private investment for future broadband improvements.”

Both Alabama and Florida are requesting a partial waiver of a program rule that requires state broadband offices to exclude “any location that is already subject to an enforceable federal, state, or local commitment to deploy qualifying broadband” from BEAD-eligible funding.

The NTIA’s Notice of Funding Opportunity considers this and on page 37 states that the Assistant Secretary has the discretion to exempt locations with pre-existing commitments upon request, if the eligible entity successfully proves that it is essential to achieving the BEAD program’s objectives.

The RDOF initiative aims to serve 149,381 locations in Alabama with projects led by sixteen different internet service providers. In Florida, 103,036 locations are slated to benefit from $152 million in awards distributed among seven providers. Virtually all these providers aim to establish low latency networks equipped with Gigabit-speed technology.

The push for widespread connectivity has led to multiple federal and state initiatives, resulting in parallel efforts and investments in various regions.

WASHINGTON, December 19, 2023 – House Republicans are accusing the National Telecommunications and Information Administration of regulating broadband pricing as part of its $42.5 billion Broadband Equity, Access and Deployment program. 

Their concerns, outlined in a letter to NTIA head Alan Davidson Friday, center on rules requiring states — the entities ultimately awarding grants under the program — to ensure providers set up affordable plans for low-income households to get connected on BEAD-funded infrastructure. States are afforded flexibility in how they do this, but the NTIA has expressed a preference for setting a specific price point or a formula that will be used to calculate the low-cost plan.

Republican lawmakers said in the letter that approving state BEAD plans with required pricing amounts to rate regulation by the NTIA, something the agency is forbidden from doing by the Infrastructure, Investment and Jobs Act, which spawned the BEAD program.

“As we have said before, NTIA’s approval of state plans that include rate regulation is NTIA regulating rates in violation of the IIJA,” the letter reads.

All 16 Republican members of the House Communications and Technology Subcommittee signed the letter, including Communications Subcommittee Chair Bob Latta, R-Ohio, and Commerce Committee Chair Cathy McMorris Rodgers, R-Washington. The two signed another letter on Friday to FCC Chairwoman Jessica Rosenworcel saying her claims about the effectiveness of the Affordable Connectivity Program, a monthly broadband subsidy for low-income households, were overstated.

The issue of alleged rate regulation came up during Davidson’s testimony to the subcommittee at an oversight hearing on December 5. Asked repeatedly if the NTIA would regulate rates to ensure affordability requirements are met, Davidson emphasized the agency would not be handing down price requirements.

“We are not setting a price at the NTIA. We are not setting a national price for broadband,” he said at the hearing.

Davidson did not forestall the agency approving state plans to mandate rates or set price caps, which was not enough for House Republicans.

“If we’re going to spend billions of dollars of federal money, and people are going to take that money,” Davidson said, “it’s not unreasonable to ask them to be careful about affordability when they’re doing so.”

The NTIA has only officially approved one proposal for selecting BEAD grant recipients so far: Louisiana’s. That document sets the state’s low-cost option at $30 – set to match the subsidy provided by the ACP – but gives applicants room to raise that up to $65 if necessary for the financial sustainability of a project.

Virginia’s plan requiring providers to submit their own low-cost plans as part of the application process drew some pushback from the agency. The NTIA asked the state to set up more concrete requirements around the low-cost provision, citing a need to know how consumers would be affected before approving the plan.

The state, citing the same concerns as Republican lawmakers, is asking NTIA to approve its plan as is.

WASHINGTON, November 9, 2023 – There is still more work to do on BEAD program financing requirements, advocates and broadband providers said on Thursday.

“Now the work kind of begins again,” said Quinn Jordan, head of the Mississippi Broadband Association.

He and other stakeholders pushed the Commerce Department to change the letter of credit rules for its $42.5 billion Broadband Equity, Access and Deployment program.

Before November 1, BEAD rules required a 25 percent letter of credit, which advocates said would edge out smaller providers. The updated rules allow states to use other means of confirming the financial viability of projects, like performance bonds, which are only paid out if a project fails,  and reimbursements based on deployment milestones.

But going forward, work will center on making sure state contracts are compatible with the other frameworks allowed in the changed rules, those advocates said at a webinar in the broadband community.

“If there’s too much exposure, we could really run up the cost of these performance bonds,” Jordan said.

Phil Macres, a telecom lawyer who organized a coalition of broadband providers to push the letter of credit changes, said he has been meeting with surety companies – institutions that issue performance bonds – to work on how best to structure these contracts.

The second biggest focus will be ensuring state broadband offices know how to navigate the updated financing rules, said Calum Cameron, a communications manager at Connect Humanity. Cameron drafted a 300-signatory open letter advocating changes to the old letter of credit rules. 

“This group will continue to work on both of these fronts,” he said. 

Working for letter of credit changes

The rule change took months of advocacy work behind the scenes, said Gigi Sohn, the longtime broadband advocate and one-time FCC nominee who now heads the American Association for Public Broadband.

“If anybody tells you this is an issue that was just brought to the attention of the NTIA,” she said, “it’s been much longer than that.”

Panelists credited Sohn’s involvement with some of the effort’s success.

“As soon as Gigi Sohn got involved, that’s when the issue really started to take hold.” said John Windhausen, director of the School, Health, and Libraries Broadband Coalition.

That, Mindhausen said, made it easier to set up meetings in August with White House officials and express concerns that the original letter of credit requirements were too restrictive.

Charles Thomas, director of operations at two small ISPs, said he reached out to Macres and Elizabeth Bowles, another panelist who serves as CEO of the ISP Aristotle Unified Communications, after hearing them speak about the BEAD letter of credit at a webinar.

He eventually sat down with them and NTIA Director Alan Davidson to explain how the old rules would have left him and other small ISPs on the sidelines.

“You got to get involved,” he said.