All but one of the awardees are Colorado-based internet service providers and municipal network operators. The other, Visionary Communications, offers service across two additional states, Montana and Wyoming. 

Administered through the Advance Colorado Broadband Grant Program, the awards were funded by the Treasury Department’s Capital Projects Fund. The program saw fierce competition, receiving 112 applications seeking a combined total of over $642 million across 47 counties.

Clearnetworx emerged as a major victor, securing $25.3 million for five projects. Based in Montrose, Colorado, the locally owned and operated fiber and wireless service provider arose in 2012 to address the region’s broadband scarcity.

Clearnetworx has been granted awards to install fiber along Highway 160 and Highway 184 in Montezuma County. This development coincides with the Colorado Transportation Commission’s recent approval of a fee schedule that allows broadband service providers to install fiber along the state’s roadways at reduced rates. Under the revised fiber access fee structure, broadband providers in rural counties such as Montezuma will gain access to some of the most competitive rates in the region, priced at $0.03 per foot.

Close on its heels, Maverix Broadband, is in line to win $25.1 million, aiming to deploy fiber-to-the-home services across Gilpin, Boulder, Chaffee, and Saguache counties, and Kiowa city, extending coverage to 731 locations in a city of 725 residents.

Fort Collins Connexion, a municipal broadband utility, secured $10.8 million for four projects serving 1,409 locations in Larimer County. Meanwhile, another municipal network operator, Loveland Pulse, is slated to receive $3.2 million to extend fiber connectivity to three service areas.

The Southern Ute Indian Tribe secured $8.5 million to serve 557 locations within the Southern Ute Reservation, marking a significant step in enhancing connectivity.

The recipients are committing over $42 million in additional funds towards the project’s costs – a total $155.5 million investment. 

Additionally, more funding from the Capital Projects Fund is designated for the Ridge View campus in rural Colorado. This initiative aims to establish a supportive residential community to aid in overcoming homelessness, ensuring long-term housing stability, and fostering successful reintegration into preferred communities.

The awards are set for finalization following an ongoing challenge process.

The state is committed to connecting 99 percent of Colorado’s households to “adequate” broadband by 2027. Today, over 90 percent of Colorado’s households and businesses have access to internet with 100 * 20 Megabits per second service, according to state data.

Counties, municipalities, non-profits, and organizations serving high-poverty areas can apply for grants until March 4. The funds can be used to make devices like laptops and routers available for loan at local community centers, or to equip those community centers with connectivity equipment and devices.

The money comes from the Treasury Department’s Capital Projects Fund, a $10 billion pandemic response that provides states money for expanding broadband infrastructure and other connectivity projects. About $9 billion of that has been awarded so far.

Florida received an additional $247 million in CPF funds for its Broadband Infrastructure Program, which the state awarded in July. Those projects are expected to get broadband 59,000 homes, businesses, farms, and community centers. 

CPF rules require new infrastructure funded by the program to deliver speeds of at least 100 * 100 Megabits per second (Mbps), but most projects funded by the state are expected to provide up to 1 * 1 Gigabit per second (Gbps).

The state will hold a webinar on the Digital Connectivity Technology Program’s application process on January 10.

In a year in review note published Friday, Rosenworcel touted the FCC’s efforts to promote the ACP, which provides a $30 monthly internet discount to low-income households. She noted the more than $77 million in ACP outreach grants – money for organizations to advertise the program and get eligible households enrolled –  the Commission awarded in 2023 and the 7 million new households that signed up for the program, bringing the total to more than 22 million.

“But our progress here cannot slow down – we need help from Congress to keep this groundbreaking program going,” she wrote.

The ACP was set up with a $14.6 billion allocation from the Infrastructure, Investment and Jobs Act. About $3.6 billion of that remains, according to a monitoring tool developed by the advocacy group Institute for Local Self-Reliance. Rosenworcel testified to the Senate in September that the Commission expects that money to dry up as early as April 2024.

Republican leaders on the House and Senate commerce committees expressed some skepticism about the program in a December 18 letter to Rosenworcel, calling the ACP “wasteful” because many enrolled low-income households were able to subscribe to broadband before receiving the subsidy. The FCC’s estimates put the number at 78 to 80,  Rosenworcel testified at a November House oversight hearing, but she noted the figures are not exact, as providers are not required to collect that information when someone enrolls.

President Joe Biden asked Congress in October for $6 billion to keep the fund afloat through 2024. Bipartisan groups of lawmakers and broadband industry groups have also pushed for Congress to refund the program, saying it will be an important tool for closing the digital divide and ensuring low-income subscribers stay online.

Providers who build new infrastructure with money from the Infrastructure Act’s $42.5 billion Broadband Equity, Access and Deployment program will be required to participate in the ACP, which experts have said would help stabilize revenue for ISPs who build in the hard-to-serve areas targeted by BEAD.

Rep. Yvette Clarke, D-New York, hinted at introducing a bill before the new year to address the impending ACP shortfall during the FCC oversight hearing, but the legislation has not yet materialized.

The NTIA sought comment on how to modify the framework, known as the Uniform Guidance, this summer after hearing from stakeholders that some provisions might harm participants in the Broadband Equity, Access and Deployment program, agency Deputy Chief Counsel Sean Conway said in a statement.

The agency said state broadband offices and internet providers repeatedly asked in those comments for Uniform Guidance adjustments that would bring BEAD in line with other federal broadband funding efforts managed by the Treasury Department. The Capital Projects Fund and Coronavirus State and Local Fiscal Recovery Fund are already being used in part to deploy broadband infrastructure, and aligning the program would make it easier for states to administer BEAD.

The policy notice makes four updates to BEAD guidance to do so. The changes apply to awards for infrastructure projects, defined as those in which more than 50 percent of the total project cost are necessitated by infrastructure deployment.

Program income

Broadband providers will be able to use income from BEAD-funded infrastructure “without restriction,” meaning they can keep subscriber revenue as profit. That, the policy notice says, is designed to “address a core problem for which the BEAD Program was created to solve, namely, the lack of a sustainable business case to expand and improve broadband services to unserved and underserved areas.”

Fixed amount awards

States and territories will be able to fund new infrastructure projects with fixed amount awards. That is generally not allowed in programs that require cost sharing or matching funds, which BEAD does, or for awards exceeding $250,000.

But the Uniform Guidance allows for fixed amount awards if projects have “measurable goals and objectives” and adequate data is available for a “reasonable estimate of actual cost,” the policy notice says. The NTIA reasons BEAD rules will result in grant applications meeting both of these requirements and is allowing fixed amount awards for the program regardless of the value of the award and without further approval from the agency.

The waiver is contingent on states and territories making an effort to monitor the reasonableness of project costs, the policy notice notes.

Permissionless upgrades

Broadband providers will be able to upgrade equipment in BEAD-funded networks without getting approval from the NTIA.

Ten-year Federal Interest period

BEAD-funded infrastructure will be subject to a ten-year Federal Interest period starting when a given project is completed, meaning equipment “acquired or improved” with BEAD funds will for that time be “held in trust for the beneficiaries of the BEAD Program,” according to the policy notice.

One key difference

The NTIA highlighted in its statement a notable difference between its Uniform Guidance policy and the Treasury Department’s: states and territories will still be required to structure their agreements with broadband providers as “subgrants” under BEAD.

If the agreements were structured as contracts, for example, a smaller set of Uniform Guidance provisions would apply, the agency said.

“Ultimately, this approach will further the goal of ensuring everyone in America has access to affordable, reliable, high-speed Internet service,” the NTIA said in its statement.

The Broadband Equity, Access and Deployment program got closer to breaking ground as maps were finalized, allocations were made, and states got to work drafting and refining their proposals for implementing the program.

• On the Fifth Day of Broadband, my true love sent to me:
  56 States and Territorial Broadband Offices Implementing BEAD
  4.8 Million Challenges to Broadband Coverage Data
  $3.6 Billion Funds Remaining in the Affordable Connectivity Program
  24 Reverse-Preemption Pole Attachment States (2023 edition)
  And One Artificial General Intelligence

Mapping was a central concern early in the year, as states pushed the Federal Communications Commission for more time to contest its coverage data. The commission had released the initial version of its broadband map in November 2022, and the updated version would be used by the National Telecommunications and Information Administration to determine relative need among states and territories and make final BEAD allocations.

The commission ultimately held to its January 13 deadline and unveiled the second version of its map in May.

Based on the data in that map, the NTIA made its BEAD allocations the next month. Texas saw the largest, at over $3.3 billion, with California taking home $1.8 billion. Missouri, Michigan, and North Carolina each received more than $1.5 billion and 14 other states were slated to get more than $1 billion to fund new broadband infrastructure.

All plans are due by December 27

That kicked off the planning phase. States have to get their proposals for administering BEAD funds approved by the NTIA. Those plans are due December 27, but some states have got theirs in early, with Louisiana and Virginia leading the pack.

As states worked to get their proposals together, the NTIA issued two important waivers for the BEAD program: one for the Infrastructure Act’s Buy America requirements and one for the original BEAD financing requirements.

The Build America, Buy America, or BABA, provision of the Infrastructure Act requires federally funded projects to spend 55 percent of their component costs with American suppliers and to manufacture materials in the United States.

That raised flags among the broadband industry, as deploying the fiber-optic cable favored by BEAD involves equipment full of semiconductors only manufactured at scale in Southeast Asia.

The NTIA released in August a proposed waiver for BEAD participants, releasing them from BABA requirements for all electronics and from the 55 percent component cost requirement for certain pieces of fiber equipment.

The waiver gives potential BEAD participants more breathing room and makes meeting BABA requirements feasible, Nokia’s Vice President of Broadband Policy Lori Adams said at a Broadband Breakfast event. The company announced a major manufacturing plant in Wisconsin for the fiber equipment that still needs to be American-made under the waiver, which it plans to get operational in 2024.

Alan Davidson, the agency’s administrator, testified at a December House oversight hearing that the finalized waiver will be coming in “weeks, not months.” 

Changes to the Letter of Credit requirements

The NTIA also issued in November a waiver to its letter of credit requirements. The agency’s original rules had mandated that BEAD grant recipients get a letter of credit from an accredited bank for 25 percent of total project costs. That involves putting up an equal amount of cash as collateral, which advocates and broadband providers warned was too restrictive and would prevent small companies from participating.

After months of pressure, the NTIA listened. Its November waiver opens the door for states to use a variety of other means to ensure the financial viability of projects, including performance bonds, which providers only pay out if the project fails, and completion milestones to lower the LOC as infrastructure is deployed and free up more money.

The first – and so far the only – state to have its full BEAD proposal approved by the agency was Louisiana. The NTIA greenlighted the first volume of the proposal, which outlines plans to accept and process challenges to government broadband coverage data, in September and approved the second volume, which details the state’s plan to award grants under the program, on December 15. 

That gives the state one year to accept grant applications and make their selections before submitting a final proposal to the agency.

Two others, Virginia and Kansas, have received approval on their volume ones, allowing them to follow Louisiana’s lead and start accepting broadband data challenges.

Several others have submitted their plans and are awaiting approval. Just as with the proposal process, they will likely be looking to Louisiana for lessons on implementing the BEAD program.

See “The Twelve Days of Broadband” on Broadband Breakfast

• On the First Day of Broadband, my true love sent to me:
  One Artificial General Intelligence
• On the Second Day of Broadband, my true love sent to me:
  24 Reverse-Preemption Pole Attachment States (2023 edition)
  And One Artificial General Intelligence
• On the Third Day of Broadband, my true love sent to me:
  $3.6 Billion Funds Remaining in the Affordable Connectivity Program
  24 Reverse-Preemption Pole Attachment States (2023 edition)
  And One Artificial General Intelligence
• On the Fourth Day of Broadband, my true love sent to me:
  4.8 Million Challenges to Broadband Coverage Data
  $3.6 Billion Funds Remaining in the Affordable Connectivity Program
  24 Reverse-Preemption Pole Attachment States (2023 edition)
  And One Artificial General Intelligence
• On the Fifth Day of Broadband, my true love sent to me:
  56 States and Territorial Broadband Offices Implementing BEAD
  4.8 Million Challenges to Broadband Coverage Data
  $3.6 Billion Funds Remaining in the Affordable Connectivity Program
  24 Reverse-Preemption Pole Attachment States (2023 edition)
  And One Artificial General Intelligence

The awards will fund 17 projects slated to get broadband to more than 16,000 homes and businesses by the end of 2025. 

The money comes from the Treasury Department’s $10 billion Capital Projects Fund, a pandemic response that provides states money for expanding broadband infrastructure and other projects. About $9 billion of that has been awarded to states so far.

CPF rules require new infrastructure funded by the program to deliver speeds of at least 100 * 100 Megabits per second (Mbps).

“We are incredibly excited about this first phase of CPF investments in South Carolina,” Jim Stritzinger, director of the state’s broadband office, said in a statement. “With these investments, ISPs are now penetrating hard-to-reach areas from the Lowcountry to the Upstate, and lives are changing by the day.”

He said South Carolina is planning to award the rest of its $185 million CPF allotment sometime in early 2024. 

This round of funding went to eight local service providers, which are set to put $50 million of their own capital toward the projects.

In addition to funding infrastructure, states can also use CPF funds for improving community centers and other projects that improve access to online work, education, and healthcare.

The ACP, set up with a $14 billion allocation from the Infrastructure, Investment and Jobs Act, provides a $30 monthly internet subsidy to more than 22 million low-income households. That money is set to dry up as early as April 2024.

The impending shortfall has led to calls from advocacy groups, lawmakers, and broadband providers for Congress to renew the program. They say the fund is an important tool in closing the digital divide – the gap in economic opportunity between areas with and without high-speed internet access – and for ensuring people can access new infrastructure set to be funded by the federal government’s $42.5 billion broadband expansion effort.  

President Joe Biden asked Congress in October for $6 billion to keep the fund afloat through 2024. But Republican leaders in the House and Senate commerce committees criticized the administration’s public spending and were doubtful about the ACP’s effectiveness in their letter to FCC Chairwoman Jessica Rosenworcel.

Their concerns centered around the number of ACP recipients who had no broadband access prior to enrolling. Rosenworcel testified at a House oversight hearing in November that FCC surveys put the number at 20 to 22 percent of the program’s participating households, but she noted that the agency has had difficulty pinning down the exact figure because providers are not required to collect that information when someone enrolls.

Sens. John Thune, R-South Dakota, and Ted Cruz, R-Texas, and Reps. Cathy McMorris Rodgers, R-Washington, and Bob Latta, R-Ohio, pointed to that number as evidence the program is “wasteful” by subsidizing broadband for low-income households that were able to get online previously. 

The lawmakers also pushed back on Rosenworcel’s testimony at the same hearing that the program’s participants would be forced offline if it were not to be refunded and asked the agency to provide ACP enrollment data it had committed to make public.

“Unfortunately, your testimony pushes ‘facts’ about the ACP that are deeply misleading and have the potential to exacerbate the fiscal crisis without producing meaningful benefits to the American consumer,” they wrote.

The Infrastructure Act’s Broadband Equity, Access and Deployment program allocated $42.5 billion among all 56 states and territories to get high-speed internet to areas without adequate infrastructure. States are in the process of refining and submitting their initial proposals for administering the program, which are due December 27.

A provision of the program requires that providers set up an affordable plan for low-income households on BEAD-funded infrastructure. States are directed by the NTIA to either explicitly set out in their proposals what that low-cost price point will be, or to share with the agency a formula that will be used to determine that price.

The draft volume two of Virginia’s initial proposal, which outlines the state’s plans for choosing grant winners under the program, does neither. The state is proposing to require that grant applicants outline and justify their own low-cost options as part of the application process. 

After the state submitted its volume two to the NTIA, the agency wrote in a letter to the state that it “must be able to determine the impact to a customer at the Initial Proposal stage – it isn’t enough to know as of the Final Proposal. Thus the low-cost option must be established in the Initial Proposal as an exact price or formula.”

Virginia is concerned that would amount to “rate regulation,” which the Infrastructure Act bars the NTIA from doing as part of BEAD, and is asking the agency to accept its proposal without changes to the low-cost provision.

“We respectfully request that NTIA accept Virginia’s proposed definition of its low-cost option as submitted,” the state’s newly submitted proposal reads.

The issue came up during NTIA Administrator Alan Davidson’s testimony at a House oversight hearing on December 5.

Republicans on the House Energy and Commerce Committee repeatedly brought up the low-cost requirements as potentially violating the Infrastructure Act, which Davidson pushed back on.

“We are not setting a price at the NTIA. We are not setting a national price for broadband. We are not setting rates,” he said. “It seems quite reasonable to say that in return for receiving these federal funds… providers need to have a low-cost option.”

The money comes from the $10 billion Capital Projects Fund, a pandemic response measure that provides states money for broadband infrastructure and other efforts that bridge the gap between connected and unconnected communities. About $9 billion has been awarded so far.

Wisconsin’s latest award will go to two separate measures: deploying computers and Wi-Fi equipment in apartment buildings and improvements to libraries and other community centers.

The community center improvement effort will get the lion’s share of the funding, $107 million. That money will spin up a new grant program called the Flexible Facilities Program. Local and Tribal governments can apply for funding to construct new facilities or purchase upgraded broadband equipment for an existing one.

Applications for that program will be available in January 2024.

The remaining $33 million will go to the Digital Connectivity and Navigators Program. In addition to new devices, the program will also fund trainings to help residents use them for work, education, and health care. 

Wisconsin was awarded $42 million in CPF funds to expand broadband infrastructure in 2022.

The company was the second biggest winner in the 2020 Rural Digital Opportunity Fund (RDOF) auction, in which broadband providers competed with plans to serve rural areas with the least government support. More than 600,000 homes and businesses were slated to get internet from Starlink’s low-earth orbit satellite technology.

But the commission concluded in 2022 the nascent technology was not capable of providing the speeds the company claimed. Speed tests showed its current networks operating well below what Starlink’s bids committed to, and the FCC was not convinced the company could improve its technology in time to meet RDOF deadlines. It was pricey too, requiring customers to purchase a $600 dish.

Commissioners reiterated its position by denying the company’s appeal on Tuesday. The agency “has a responsibility to be a good steward of limited public funds meant to expand access to rural broadband, not fund applicants that fail to meet basic program requirements,” FCC Chairwoman Jessica Rosenwrocel said in a statement.

Elon Musk’s Starlink was not the only major company to inflate its capabilities in RDOF bids. Nearly 100 bidders have defaulted since the auction, leaving in limbo an estimated $2.8 billion of the $9.2 billion originally awarded. 

The FCC upheld another denial on Monday in the case of LTD Broadband, which appealed the commission’s finding that it could not reasonably serve the more than 500,000 locations to which it had committed. The commission also hit LTD with a $21.7 million fine for its default.

The commission’s two Republicans dissented to Starlink’s denial, claiming they saw a path for the company to improve its speeds before the first deployment deadline in 2025.

Brendan Carr claimed the denial was politically motivated, a case of the Biden administration going after Musk for embracing increasingly right-wing views after purchasing Twitter (now called X) – but that purchase went through in October 2022, after the FCC issued its denial.

LTD was the biggest winner in the 2020 Rural Digital Opportunity Fund auction, coming away with more than $1.3 billion in planned support over 10 years. Broadband providers competed with bids to serve unconnected areas using the least government money.

In August 2022 the FCC nixed LTD’s award, declaring it to be in default. LTD, now called GigFire, had failed to meet eligibility requirements in several states it was supposed to serve and, the commission decided, was ultimately unlikely to be capable of getting high-speed internet to the 528,088 homes and businesses to which it had committed.

LTD was not alone. It’s estimated that over $2.8 billion of the $9.2 billion awarded has since gone into default. The commission was criticized at the time for choosing bids from companies that exaggerated their capability and only vetting applicants more closely after the auction.

That’s what happened in the case of LTD – the commission found it to be in default after reviewing a longer application from the company. On the same day the proposed fine was adopted, the FCC denied LTD’s appeal of the default decision, reaffirming its position that the company could not meet its obligations under the program.

By defaulting on its bid, the commission said in a statement announcing the fine, LTD “hindered the disbursement of funds that could have otherwise been expended for the advancement of broadband access across primarily rural areas in the United States.”

The Minneapolis Star Tribune reported that the company’s CEO Corey Hauer is considering further options, including “taking the FCC to court.” Hauer did not respond to a request for comment.

Other major defaults include SpaceX and Starry, who lost out on $886 million and $269 million respectively. The two companies were slated to serve more than 700,000 rural homes and businesses.

LTD’s penalty is the largest to date – the commission has proposed another $13 million in total fines against 95 other defaulting RDOF bidders. That includes a $732,000 fine against Etheric Communications announced alongside LTD.

RDOF was originally budgeted for $20.4 billion, but it’s not clear when or if the remaining money will be awarded.

The funding is designated for the expansion of Whitman-Walker’s Max Robinson Center, a multi-purpose community facility known for providing essential healthcare services to underserved communities, particularly the LGBTQ community. 

The expanded center will also offer public access to computer terminals and high-speed wireless broadband across the premises, according to a press release. It is also expected to enhance healthcare accessibility for residents, offering both telehealth and in-person visits. In particular, it will establish 63 examination, therapy, and consultation rooms, facilitating the expansion of telemedicine services. 

“Connecting workers and families to training, education, and health care services is central to expanding economic opportunity and prosperity in communities across the country,” Deputy Secretary of the Treasury Wally Adeyemo said in a press release. “The expansion of Whitman-Walker’s Max Robinson Center, financed in part by the American Rescue Plan’s Capital Projects Fund, shows how the Biden-Harris Administration’s historic investments are building projects needed to expand access to critical health and educational services.” 

Additionally, a portion of this investment will facilitate the construction of two versatile community spaces that will support community health and wellness initiatives. The aim is to accommodate an estimated 10,000 new patients by 2025, supplementing the current service of 5,000 patients.

Within the community space, there are plans to host resume building and interview skills workshops, along with educational and training programs tailored for local residents.

The CPF allocates $10 billion to states, territories, freely associated states, and tribal governments, aiming to support essential capital projects. These initiatives aim to expand economic prospects and bridge the gap in internet access within underserved communities. 

The Technology in the Parks Act would expand the Federal Communications Commission’s E-Rate program to include local parks. That program currently provides approximately $4 billion in yearly broadband subsidies for schools and libraries through the FCC’s Universal Service Fund. Adding public parks would allow them to request government money toward the cost of internet each month.

The move is “crucial to bringing broadband access to these community spaces,” said the bill’s sponsor, Rep. Danny Davis, D-Illinois, in a statement.

In an effort to provide devices on the subsidized connection, the bill would also put parks in the U.S. General Services Administration’s Computers for Learning program. That would give parks access to computer equipment no longer being used by federal agencies. 

The bill would also tap the Department of Labor to implement a grant program for “technology training programs” in local parks.

Similar programs aimed at helping people navigate and participate in online spaces are drawing funds from other federal agencies. The Commerce Department’s $42.5 billion broadband expansion program makes room for states to fund digital literacy trainings, and its $2.75 billion Digital Equity Act programs are targeted at such efforts.

Reps. Raúl Grijalva, D-Arizona, and Bruce Westerman, R-Arkansas, introduced a similar bill on November 29 that would expand broadband in national parks managed by the federal government.

The program, funded by the American Rescue Plan Act, will reimburse broadband providers for utility pole replacement costs. Expanding networks can involve attaching equipment to those utility poles. When a pole needs to be replaced to accommodate more equipment, pole owners typically pass the cost on to attachers.

Telecommunications companies have cited this extra cost as a barrier to quick broadband deployments, something utility companies dispute. The two industries have been in conflict on the issue for years, with both continuing to push the FCC to weigh in on a cost sharing regime.

North Carolina’s plan is an effort to smooth over the issue for future broadband expansion efforts, Nate Denny, the state department of information technology’s deputy secretary for broadband and digital equity, said in a statement. 

“It addresses a significant barrier to closing the digital divide in remote parts of our state,” he said.

Under the program, broadband providers can apply for 50 percent of the replacement cost for each pole replaced, up to $10,000 per pole. Pole replacement costs in unserved areas after June 1, 2021 are eligible for reimbursement. 

The program will kick off in February 2024 and accept applications from qualified providers.

The FCC has authority in 26 states over the terms of agreements between investor-owned utilities and telecom companies, which does not include publicly owned utilities or broadband providers that solely provide internet. The agency is set to vote on updated pole attachment rules at its December meeting.

Two popular programs are central to this goal: the Affordable Connectivity Program and the Rip-and-Replace program. Both of these programs have tremendous bipartisan, bicameral support; but both have been underfunded and now risk dying on the vine. Congress has the opportunity to fully fund these programs if it has the will to do so.

Let’s break it down.

The Affordable Connectivity Program provides low-income American families and veterans with discounts on Internet service and connectivity equipment, including higher discounts for those living on Tribal lands. With affordable broadband, more Americans can get online and be a part of the digital economy.

The ACP has been wildly successful, connecting over 21 million households to essential broadband they could otherwise not afford. And it continues to garner widespread support, with the vast majority of voters (78%) calling for its extension, including 64% of Republicans, 70% of Independents, and 95% of Democrats.

Congress provided the ACP with $14.2 billion in 2021—but funding is now running low and is projected to be fully exhausted by spring 2024. Governors, lawmakers on both sides of the aisle, public interest groups, and Internet service providers are all raising the alarm about its imminent depletion. That’s why the Biden Administration in October called on Congress to replenish the program’s coffers with an additional $6 billion.

A good start, but not the whole story. Our foreign adversaries are well known for their espionage, and while a spy balloon might get the attention, a far more insidious problem lurks in our communications networks: equipment designed and produced by Chinese suppliers Huawei and ZTE. A bipartisan Congress passed the Secure and Trusted Networks Act to eradicate national security threats such as these, but sufficient funding for the Rip and Replace program has never materialized.

Again, the Biden Administration has stepped up and identified a need for $3.1 billion to fully fund the program as a “key national security priority” in its emergency supplemental funding request. It’s a narrative we can all get on-board with: that broadband falls under the umbrella of national security as a whole. American consumers and institutions both benefit from American-built networks and increased protection at home. But communications providers can’t live up to these needs on their own.

As it stands, the responsibility to get affordable, secure connectivity programs across the finish line rests with Congress. Even with a consensus of support for these two programs, the devil is in the details of how to make the price tags palatable to enough policymakers on Capitol Hill. The key is ensuring that any changes preserve the widespread efficacy of the program that has made it popular so far.

For example, Congress could cut the cost of the ACP by limiting the additional Tribal funding to rural Tribal lands. Any such change should be grounded in an evaluation of existing need in urban areas, but could be an opportunity to ensure funds are being directed to areas of greatest need. And Congress should consider indexing the ACP to inflation. The high inflation of recent years has wreaked havoc on the budgets of consumers—and inflation-proofing the program would ensure that broadband remains affordable for all Americans even should inflation come back.

As for Rip-and-Replace, those of us urging for more funds could concede putting safeguards in place to ensure the money is being used for its intended purpose – the kind of compromise needed to get such policies across the finish line

These are just some ideas as we head into the final funding fight. Not everyone is going to be on the same page on what is and isn’t working best, but shared success starts by recognizing that we all have the same endgame. Congress must ensure that adequate funding for the ACP and Rip and Replace program are included in any year-end spending package. We have an all-too-rare opportunity to win the race for high-tech dominance—we just need to provide the resources.

Kate Forscey is a contributing fellow for the Digital Progress Institute and principal and founder of KRF Strategies LLC. She has served as senior technology policy advisor for Congresswoman Anna G. Eshoo and policy counsel at Public Knowledge. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

The agency clarified it will define fixed wireless broadband provided through “licensed-by-rule” spectrum as reliable. That makes providers using that spectrum eligible for funding if fiber is too expensive, and protects them from overbuilding by other projects under the program.

The move is a win for wireless providers, who have been pushing the NTIA to move on the issue since it released the notice of funding opportunity for the Broadband Equity, Access and Deployment program in 2022.

When the BEAD guidelines were first published, they only marked broadband provided via licensed spectrum – frequency bands designated by the Federal Communications Commission for use by a single provider – as reliable broadband. 

That meant areas receiving broadband through only unlicensed spectrum – bands set aside for shared use – would be open for BEAD-funded projects from other providers. This is still the case under the clarified rules.

The original guidelines would also put systems like the Citizens Broadband Radio Service in a gray zone. The CBRS uses a tiered license system, with government users, priority license holders, and general users sharing 150 megahertz of spectrum. Each tier gets preference over the one below it, meaning a general access user cannot, for example, interfere with a government system.

Some broadband providers use that spectrum on a general access basis to provide internet service. They were initially marked in the FCC’s broadband data with the same code as fully licensed spectrum, 71. But when the FCC added in January a new technology code specific to licensed-by-rule spectrum, 72, it became unclear how the technology would be treated by the BEAD program.

The NTIA cleared up any confusion on November 9, issuing an updated version of its FAQs specifying the new technology code would be treated as reliable broadband, and thus both eligible for BEAD dollars and protected from overbuilding. 

The agencies did not go so far as to comment on the merits of the technology, though, saying in its new FAQ section that it would treat licensed-by-rule as reliable because it was originally classified under 71, with fully licensed spectrum.

Hawaii released both volumes of its Broadband Equity, Access and Deployment initial proposal on Tuesday, followed by Oregon’s volume two on Thursday. The public comment period for Oregon’s plan is open until December 9, with the Hawaii window closing December 10. 

States must submit both volumes to the National Telecommunication and Information Administration by December 27, but the agency is approving proposals submitted earlier. Virginia and Louisiana have received approval for their volume ones and are getting their challenge processes underway. 

Volume one details how states will accept challenges to broadband mapping data, while volume two outlines the states process for administering grants under the $42.5 billion program.

Hawaii volume one

The University of Hawaii, rather than a state office, is overseeing the BEAD grant process in the state. 

Like most of those states, the UH broadband office is adopting the NTIA’s model challenge process, a template the agency set up as guidance. Hawaii is planning to use one of the modifications laid out by the NTIA and designate homes and businesses with DSL internet as “underserved,” and thus eligible for BEAD funds, regardless of what speed they are subscribed to.

That modification is an effort to phase out old copper telephone wires in favor of the fiber-optic cable prioritized by BEAD rules. The state will also accept speed tests as evidence that a provider’s service is lower than advertised, as well as the optional area and MDU, or multiple dwelling unit, challenges laid out by the NTIA. 

Under those rules, if six locations in a census block group or 10 percent of the units in an apartment building challenge the same provider’s technology or coverage, the provider must provide evidence that they serve the entire block group or building as reported in government data.

Hawaii is also intending to make some additions to the NTIA’s default list of community anchor institutions, organizations that are slated to get gigabit symmetrical speeds under the program. The UH broadband office is adding correctional facilities, job training centers, and homeless support centers to the list in an effort to get broadband to the state’s most vulnerable residents.

Hawaii volume two

In volume two of its initial proposal, the University of Hawaii declined to set outright a high cost threshold, the price at which the university will start to consider funding non-fiber technologies. In what is becoming another common approach, the university said it will use the grant applications it receives to determine which locations, if any, might need non-fiber technology to get served by the program.

The university said it plans to lay out minimum financing requirements when it requests grant proposals for the program. The NTIA changed its rules on those requirements on November 1, after pressure from advocates, broadband offices, and providers to loosen the 25 percent letter of credit rule. The agency now allows performance bonds and milestone-based reimbursement, which advocates say will let more small providers compete for BEAD funds.

Hawaii will also have to take environmental hazards into account when funding new infrastructure, the draft volume two said. It cited climate change fueled sea level rises, hurricanes, tsunamis, and volcanic activity as high risks for broadband deployments.

The university plans to administer the state’s $149 million BEAD allocation in a single funding round, but said it may conduct multiple rounds or negotiate directly with providers if necessary to serve all locations in the state.

Oregon volume two

Oregon’s broadband office is also planning to set a high-cost threshold after receiving all grant applications, and may decline to set one at all, it said in the state’s volume two.

The state will also negotiate with providers if not all unserved and underserved locations receive a grant application. It may also conduct multiple funding rounds in that case, something state offices have flagged as being a heavy lift given the NTIA’s one year timeframe.

The letter of credit language in Oregon’s volume two was written before the NTIA changed its guidance on the issue, the state’s broadband office wrote. It is seeking comment on how to address the updated guidance.

Democratic lawmakers sought $100 billion, while their Republican counterparts countered with $65 billion, saying the former’s proposal was wasteful and excessive. The final score was $65 billion, with $42.5 billion of that earmarked for infrastructure in the Broadband Equity, Access and Deployment program, or BEAD.

Crucially, the BEAD program adopted a new definition of what adequate broadband would look like: 100 Megabits per second download and 20 Megabits per second upload.

It turns out, that speed threshold is serving as a key reason why money from BEAD and other programs will be used to cover already-subsidized projects under an older Federal Communications Commission program that has only recently completed some broadband builds using older technology.

Broadband Breakfast has analyzed the data and spoke with experts and former FCC officials about the pitfalls and problems with the Connect America Fund Phase II, or CAF II, a $10 billion funding program that started in 2014.

FCC officials working on the program said they knew the 10 Mbps download and 1 Mbps requirement was low and would lead to further subsidization down the road.

But they went ahead with it because they needed a political win after the low adoption of the program’s predecessor: Connect America Fund I.

Right after the program started, the FCC changed broadband speed requirements

The problems started just six weeks after the CAF II program was finalized, when the FCC in 2015 approved a new definition of adequate broadband: an internet connection of at least 25 Mbps download and 3 Mbps download.

Critically, it didn’t migrate the CAF II threshold over to the new definition out of fear it would disincentivize interest in the program.

“In retrospect I can say it was a mistake having 10 * 1 Mbps be the standard for CAF Phase II,” said Carol Mattey, a former FCC bureau chief who worked on the plan.

The program offered large telecommunications companies, called price cap carriers, annual funding in exchange for providing that 10 * 1 Mbps service to rural areas across the U.S. without access to faster connections.

The FCC was desperate for providers to get on the program. It realized that it had many more years to formulate a reverse auction process, which would be used under the program’s successor, the Rural Digital Opportunity Fund, and so it was trying to entice providers to accept money by keeping the speed threshold low.

‘It was scandalous… it was graft’

Instead of waiting to formulate the reverse auction, which involves the providers bidding for the lowest amount of public dollars, they wanted to show that they were committed to connectivity – even when they knew that the speeds were low.

“It was scandalous, what the commission did,” said Jonathan Chambers, the FCC’s policy head during CAF II’s implementation. “It was graft.”

Chambers said he and the economists in his office were opposed to subsidizing price cap carriers at 10 * 1 Mbps from the beginning. He saw it as a giveaway to a powerful industry with too few strings attached.

In 2012 and 2013, the FCC offered price gap carriers a baseline of $750 per location to expand internet at the then-minimum broadband speed of 4 * 1 Mbps under CAF I. Five companies, including AT&T, Lumen, and Frontier, accepted a total of $225 million.

That didn’t feel like much to agency staffers who spent years updating the High-Cost Fund, which had provided companies subsidies with much fewer obligations than CAF I.

“Basically nobody took it,” Mattey said. “At the time, it felt like a failure. We’d gone through all this trouble to reform universal service and nobody wanted the money.”

All that amounted to a situation in which FCC staff felt they needed a success after the lackluster CAF I, according to Mattey. With a competitive bidding procedure known as a “reverse auction” still years away, that meant getting big telecom companies to work with the agency on another round of funding.

Those companies had already pushed back on raising the minimum speed from 4 * 1 Mbps to 10 * 1 Mbps, and setting an even higher benchmark would have risked another round of refused money.

“There was a desire to make this a success,” she said. “Better to take an incremental success than to be bold and have an absolute failure.”

CAF II and CAF I were always intended to be a stepping stone, she said. It would serve as a stopgap measure to get people connected while the agency worked out the process for an auction, in which companies would compete for subsidies with plans for building and maintaining new infrastructure.

But the FCC had never administered a reverse auction for broadband subsidies before, and creating one took time. The CAF II auction, in which areas the price cap carriers turned down were put up for auction, took a total of seven years to put together and was not ready until 2018.

Carol Mattey

Even FCC Chairman Tom Wheeler felt the pressure

Tom Wheeler, the FCC chairman at the time, declined to talk about the negotiations among commissioners and telecom companies. But he told Broadband Breakfast he felt the pressure Mattey described.

He confirmed that the 10 * 1 Mbps benchmark was set as low as it was out of fear the price cap carriers would refuse the money if it meant a more substantial upgrade.

The low benchmark worked. Ten companies accepted a total of more than $1.5 billion each year for the next six years in exchange for getting 10 * 1 Mbps service to more than 3.6 million homes and businesses. They would ultimately build to slightly more locations and get a seventh year of funding at the same amount, for a total of more than $10 billion.

But the tradeoff was ultimately not worth it for Mattey. Upping the standard to 25 * 3 Mbps and letting areas turned down by price cap carriers go to auction would have served them better than funding such low speeds, she said.

Michael O’Rielly, a commissioner at the time, concurred with CAF II’s adoption. He said in public statements at the time that he had reservations about the program’s speed benchmark. But he told Broadband Breakfast that in hindsight he feels the low speeds were better than nothing for unserved areas.

“I’ve seen those that have nothing and can’t get connected,” he said. “If you can give them 10 * 1 they can actually do something with it, even if it’s not everything you can do with 100 * 20.”

Michael O’Rielly

93 percent of locations received service of only 10 Mbps * 1 Mbps

The three biggest winners at the time were Lumen, AT&T, and Frontier Communications. Lumen led the pack with a $514 million annual award, while AT&T and Frontier were given $428 million and $283 million, respectively. Windstream received almost $200 million.

The price cap carriers were supposed to get money each year until 2020, when they were required to have finished deploying upgraded infrastructure in their respective areas. Citing pandemic supply chain issues, they took another year. That meant builds finished as late as 2021 were providing 10 * 1 Mbps service – a technological standard deemed by BEAD to be obsolete.

Companies followed the minimum standard set out in the program. FCC data, reported to the agency by those companies, show more than 93 percent of all locations served with CAF II infrastructure received only 10 * 1 Mbps service.

And that took place after the commission had declared 10 * 1 Mbps as substandard. That 93 percent of locations represents about 3.7 million homes and businesses across the country that are now limited to no more than 10 * 1 Mbps internet service.

Most of those, more than 2.9 million, did not receive service on their internet connections until 2019 or later.

That 10 * 1 Mbps threshold was too low for the program to meaningfully connect people, said former FCC Commissioner Jonathan Adelstein. He left the commission in 2009 to head the Department of Agriculture’s Rural Utility Service, an infrastructure funding agency that supports broadband deployment.

“Well, 10 * 1 was our standard in 2010,” he said. “For people to be building that in 2020 is really inadequate.”

New money being spent to cover the failings of old money

Some of those have already been targeted with more federal money. In 2020, the FCC put areas with internet below 25 * 3 Mbps, including those served by CAF II recipients, up for a reverse auction process, the Rural Digital Opportunity Fund. Under RDOF, companies competed for subsidies with plans to cost-effectively build and maintain new infrastructure.

Winners have been allocated more than $6 billion to build and operate networks over the next 10 years under the RDOF program, according to the FCC, with another $14 billion still earmarked for the program. The minimum speed threshold for the auction was 25 * 3 Mbps, but the fiber being deployed by winners almost always provides speeds far in excess of that.

As part of RDOF, the price cap carriers lost 1.2 million homes and businesses to outside bidders, about a third of their previously subsidized locations. Competitors demonstrated to the FCC they would be able to get better internet for less money to the same areas price caps had been receiving money to serve.

Almost every single winning bidder committed to deploy fiber-optic cable: The fastest, most future-proof technology available.

Lumen, the biggest CAF II recipient, lost more than 250,000 locations through the RDOF process. It beat out competitors for just 19,000 locations.

Frontier lost another 285,000 homes and businesses, beating competitors in more than 10,000.

AT&T lost more than half a million locations in the RDOF auction, winning zero locations.

Those losses came largely at the hands of smaller companies and local cooperatives. Charter, the major cable company, also scooped up locations across the county.

Jonathan Chambers

Is there a silver lining?

CAF II did make some positive changes to broadband subsidies generally, Mattey said. There were no requirements at all for funding recipients before the program, which instituted speed minimums and reporting requirements.

Mattey and others also drew up a process for determining exactly where subsidized companies were operating, which again did not exist before. And then there was the smaller CAF II Auction, which happened in the areas where price cap carriers turned down CAF II funding.

The auction happened in 2018 and got faster service for less money. A total of 100 bidders won $1.49 billion over 10 years to serve more than 700,000 locations. The minimum required speed was still 10 * 1 Mbps, but more than half the winning bidders committed to serve customers with 100 Mbps download, and more than 99 percent committed to 25 * 3 Mbps.

BEAD, the latest round of broadband subsidy, requires minimum speeds of 100 * 20 Mbps and prioritizes fiber. Areas receiving less than 25 * 3 Mbps are designated “unserved” and given special priority for funding. States are not allowed to allocate BEAD money elsewhere until all unserved areas are set to be provided with high-capacity broadband.

FCC data still shows more than 800,000 CAF II-funded locations still have no reliable, fast internet infrastructure nearby, and are not among the 1.2 million with RDOF commitments. That puts them at the front of the line for BEAD funds. It’s not clear whether the remaining 1.6 million homes and business in the proximity of faster technology are themselves being served with that speed, meaning they may well also be slated for more federal funds.

“RDOF and BEAD are wholly replacing these networks,” Chambers said. “The FCC spent more than $10 billion, and what did we get for it? Nothing.”

South Carolina released both volumes one and two on October 30, followed closely by Georgia, which released its volume two on November 1. Volume one details how states will accept challenges to broadband mapping data, while volume two outlines the states process for administering grants under the $42.5 billion program.

The public comment period for draft versions lasts 30 days, with South Carolina accepting comments until November 30, and Georgia’s window closing December 1. A total of 32 states have now released volume two of their proposals for public comment.

States must submit both volumes to the National Telecommunication and Information Administration by December 27, but the agency is approving proposals submitted earlier. Virginia and Louisiana have received approval for their volume ones and are getting their challenge processes underway. 

South Carolina

In volume one of its proposal, South Carolina said it plans to adopt the model challenge process set up by the NTIA. That’s the process for ground-truthing broadband data to determine which homes and businesses need coverage.

The state is making optional modifications outlined in the model process. It will designate any area served only by DSL – digital subscriber line – technology as “underserved,” and thus eligible for BEAD funded projects, regardless of what speed the provider advertises. The option was included in the model to phase out copper telephone wires in favor of more future-proof broadband technologies like fiber-optic cable.

It will do the same with fixed wireless broadband, citing bad experiences using fixed wireless service for online learning efforts in 2020.

Eligible entities like nonprofits, local governments, and broadband providers, will be able submit challenges to state broadband data over a 30 day period. The process is ultimately slated to last 90 days, with 30 days each reserved for challenge rebuttals and adjudication.

In its volume two, South Carolina declined to set an extremely high cost threshold, the price at which the state will start to consider non-fiber technologies. Instead, the state’s broadband office is planning to compile a list of locations that are left off its round of grant applications and negotiate directly with providers on getting them service.

The state is also asking the NTIA for a waiver of its letter of credit rules in certain circumstances, such as small projects and companies the state has previously found to be trustworthy. The agency typically requires a 25 percent letter of credit from an accredited bank, which advocates and broadband companies have said could edge out smaller providers.

NTIA released a slate of acceptable alternatives to its letter of credit rule on November 1.

Georgia

Georgia released for public comment volume two of its BEAD initial proposal, a 242-page document detailing its plans for administering grants under the program.

The state will be following the NTIA’s updated letter of credit guidance, letting grant applicants choose performance bonds instead. Those are only paid out if the project fails outright, tying up less grant money than letters of credit.

Like South Carolina, Georgia did not set a high-cost threshold outright, opting to accept a round of grant applications first.

But unlike many other states, Georgia is planning to oversee multiple rounds of funding. BEAD rules give states one year to disburse their entire allocation, which some state broadband offices have flagged as too little time.

The state said in its draft volume two that it plans to use all of its $1.3 billion in getting service to areas its challenge process reveals to be unserved – having less than 25 * 3 Mbps broadband – and underserved – less than 100 * 20 Mbps, with no money left over for non-deployment efforts.

As such, the state is seeking comment on potentially changing its grant application scoring criteria to favor unserved locations, as underserved will generally be less expensive to build to.

The $42.5 billion Broadband Equity, Access and Deployment program rules require grant recipients to produce a letter of credit from a bank for 25 percent of the amount they are awarded. That involves putting the cash up as collateral, which critics have said could prevent small broadband providers from participating.

With the NTIA’s new ‘conditional programmatic waiver,’ states and territories will have other options to ensure the financial reliability of BEAD grants. Those include requiring a performance bond for the full award, which the awardee only pays out if they fail to meet their build out requirements. 

The waiver allows states and territories to use completion milestones to lower LOC amounts over time, meaning the LOC could decrease from 25 percent of the grant as infrastructure is deployed, freeing up money for grant recipients to use in their BEAD projects. That option can also apply to performance bonds.

The agency is also doing away with the 25 percent starting point, allowing the LOC to be as low as 10 percent under certain circumstances, as well as accepting letters of credit from credit unions.

In a blog post announcing the waiver, the NTIA said it may provide additional guidance on the matter in the future and emphasized that broadband offices can work with the agency to deviate from the standard rules.

“States and territories are also free to request waivers for additional circumstances not covered by this programmatic waiver,” it said. 

States will outline the letter of credit rules for their BEAD grant processes in volume two of their initial proposals, due to the NTIA by December 27.

The move comes after months of pressure from the broadband industry and lawmakers to change the BEAD letter of credit requirements. Small providers argued they would be edged out of the program because they have less cash on hand, hindering efforts to close the digital divide in remote and hard-to-serve areas.

BEAD director Evan Feinman first hinted the agency was working on an update to the requirement at the BEAD Implementation Summit on September 22.

The ask came Wednesday as part of a $55.9 billion request for domestic aid, including disaster relief and child care subsidies. Also in the White House’s request was $6 billion to continue the Affordable Connectivity Program, the monthly internet subsidy that’s set to dry up in April 2024 without additional funding.

In 2020, Congress required broadband providers to replace equipment from some Chinese companies, including Huawei and ZTE, citing concerns that it could be used for espionage. The effort was funded with $1.9 billion to reimburse companies for the cost of switching out gear.

But in July 2022 the FCC, which oversees the program, said broadband providers would need $4.98 billion to get the work done. There have since been repeated calls from lawmakers and industry to shore up the fund. Bills have been introduced in both the House and Senate to fill the $3 billion gap, but they have yet to be passed.

The deadline for approved companies to request reimbursement for rip and replace work passed on July 15. By default, companies have one year from the approval of that request to remove the Chinese equipment, but the commission has been granting deadline extensions as providers complain of funding troubles.

House Republicans managed to elect a speaker on the same day as the funding request, ending weeks of deadlock.

The program was set up with a $14 billion allotment from the 2021 Infrastructure, Investment and Jobs Act. It provides a monthly internet discount of $30 for low-income households and $75 for residents of Tribal lands, more than 20 million households in total. Participants can also get a one-time $100 device subsidy.

“Without this funding, tens of millions of people would lose this benefit and would no longer be able to afford high-speed internet service without sacrificing other necessities,” the White House said in a statement.

About $5 billion remains in the program, according to a monitoring tool developed by the advocacy group Institute for Local Self-Reliance. That money is expected to dry up as early as April 2024.

The request from Biden joins repeated calls for Congress to renew the program. Lawmakers have underscored the importance of the program for closing the digital divide – allowing low-income Americans to access the high-speed broadband funded by the $42.5 billion Broadband Equity, Access and Deployment program.

Broadband providers also want to see the program continued, asking Congress in September to use money from another yearly broadband subsidy to keep the ACP afloat. They argued the Universal Service Fund, itself the subject of calls for reform, would provide a more sustainable funding model than repeated allocations from Congress.

The funding request also comes on the same day as House Republicans elected a Speaker, ending weeks of deadlock and opening the door for potential legislation.

Cable companies provide broadband with copper coaxial cable, but fiber-optic cable and fixed wireless technology have been growing in popularity.

Jay Lee, chief technology officer at cable provider ATX, pointed to research from Dell’Oro Group which projects cable will lose 5 percent of its broadband market share by 2025, largely to fiber and fixed wireless.

“The competition is real, from both fiber and fixed wireless,” Ed Shrum, vice president of engineering at major cable company Cox said at the Cable-Tec Expo.

But cable companies are looking to stay competitive as the Joe Biden administration rolls out its $42.5 billion Broadband Equity, Access and Deployment program, which heavily prioritizes fiber.

“With respect to RDOF and BEAD,” Lee said, referencing another major broadband grant program, cable companies “can very easily edge out” competing bids from providers using other technology.

Cable companies are touting future deployments of new chip technology like DOCSIS 4.0, which enables faster speeds, but the real edge in grant applications will come from low costs to upgrade to fiber, Lee said. 

He pointed to the HFC – hybrid fiber-coaxial – networks many cable companies already operate. In these networks, fiber handles data transfer between access points and servers while individual homes are connected to the network via coaxial cable.

Upgrading those coaxial segments to fiber costs far less than laying a new fiber network from scratch, as many competitors will be looking to do, Lee said.

Shane Portfolio, senior vice president of engineering at Charter, said cable companies should emphasize their incumbent status to stay competitive, both in grants and with customers.

“Being an operator is a very hard thing to do,” he said. “And to do it well is even harder.”

For Shrum, the strategy is more than a mitigation effort. He said Cox plans to expand its coverage through federal subsidy programs in the coming years.

“RDOF and BEAD, we’re aggressively pursuing those avenues for growing subscribers and increasing our base,” he said.

The Biden administration’s $42.5 billion Broadband Equity, Access and Deployment program is still in its early stages. States have until December 27 to submit initial proposals for implementing the program to the National Telecommunications and Information Administration. Only Louisiana has started accepting challenges to broadband map data, the next step in the process.

Even so, providers considering applying for funds should familiarize themselves with BEAD requirements and their state’s proposals, said Lori Adams, Nokia’s vice president of broadband policy and funding strategy.

“Start that process now. Don’t wait until next year, because then it will be too late,” she said here at WISPAPALOOZA, the annual conference of small and fixed wireless broadband providers.

Adams and other panelists highlighted key requirements from the National Telecommunications and Information Administration that potential applicants should familiarize themselves with.

Letter of credit

The NTIA requires that providers awarded BEAD grants obtain a letter of credit from an eligible bank for at least 25 percent of their project costs. 

Banks with a Weiss credit rating of B- or higher are considered eligible. There are some large banks that do not meet this requirement, noted Steve Coran, WISPA’s counsel and an attorney at Lerman Senter.

“The supply of banks is probably lower” than applicants realize, he said.

Letters of credit often require cash collateral, meaning BEAD subgrantees will have to set aside 25% of their project costs. The collateral must be held for the duration of the project, meaning that money can’t be accessed until builds are complete.

The broadband industry has expressed concern about the requirement. The NTIA said on September 22 it is working on updates to the letter of credit rules.

Build America, Buy America

The Build America, Buy America provision of the 2021 Infrastructure Act requires that all federally funded projects allocate 55 percent of their component cost to American suppliers and use equipment manufactured in America.

“That’s a very difficult proposition for some items because we have global supply chains,” Adams said.

The NTIA released in August a draft waiver that would, if adopted, exempt most broadband electronics from the American supplier requirement – including all technology necessary for fixed wireless providers. The four categories not covered by the waiver are used for fiber-optic deployments.

Adams noted applicants planning to deploy fiber cannot circumvent the BABA requirements by absorbing the cost of components themselves and not including them in grant applications.

“If you’re deploying it in the field as part of the program, it has to be BABA compliant,” she said.

Subgrantees will not have to replace existing equipment that would not have complied with the rule.

Matching funds

The NTIA also requires subgrantees to produce matching funds totalling at least 25 percent of BEAD project costs. That can come in the form of cash or in-kind donations, like easements and rights of way from municipalities or donated equipment and labor.<

States are also looking into using unallocated funds from other federal sources like the Capital Projects Fund and the American Rescue Plan Act as sources of matching funds, said Gregory Guice, chief policy officer at lobbying firm Vernonburg Group.

Some of those funds will have different requirements for projects. The CPF has a higher minimum speed requirement than the BEAD program, for example.

Applicants might need to exceed the 25 percent minimum if they are bidding against many other providers, Adams noted.

“You might need as much as 40% to be competitive,” she said.

High cost per location threshold

BEAD rules require states to prioritize fiber infrastructure. But when fiber becomes too expensive, states can consider other technologies like fixed wireless to serve hard-to-reach areas for less money.

States can choose at what price per location they will start looking at non-fiber grant applications. Knowing that threshold for states providers are looking to apply in will be ket for WISPs, the panel said.

The NTIA’s rules currently leave unlicensed fixed wireless out of the definition of adequate broadband. Coran said it’s possible states could ask for waivers. In volume two of Louisiana’s initial proposal, the state said it will seek NTIA approval on allowing funds for fixed wireless service using unlicensed spectrum in some cases.

The launch of the broadband challenge process by ConnectLA marks the first time that a state broadband agency, under BEAD rules, kicks off an evidence-based procedure reviewing ground-truth local data against internet service provider claims of service.

“We have always worked with a sense of urgency to eliminate the digital divide,” said Veneeth Iyengar, director of ConnectLA. “Today’s start of the challenge process represents a significant step to draw down on funds from BEAD and to ensure once and for all that Louisianans in rural and urban areas have what they have also needed and deserved which is high-speed affordable and reliable internet.”

The state has frequently been the first in the nation on BEAD implementation landmarks, and the launch of ConnectLA’s challenge process makes the culmination of nearly two years of preparation by 56 state, district and territorial broadband offices.

The bipartisan infrastructure law passed in November 2021 and is a signature accomplishment of President Joe Biden. The law, and the rules implemented by the Commerce Department’s National Telecommunications and Information Administration, establish a framework for ensuring that Americans lacking access to broadband will be able to receive service through BEAD and other funds.

That law, the Infrastructure Investment and Jobs Act, invested $65 billion in broadband. Now ConnectLA’s move marks a step forward in the $42.5 billion federal effort through BEAD to expand broadband access. Other states are still submitting initial proposals for administering their allocations under the program, due December 27.

BEAD rules require states to accept and process challenges to broadband availability data before awarding grants under the program.

Going fast with a lean team

In spite of having only a three-person full-time staff, Louisiana was also the first state to have volume one of that proposal, which outlined the challenge process starting Friday, approved by NTIA on September 19, 2023.

Facilitating Louisiana’s program is the Ready Challenge Process Coordinator, part of a software platform purpose-built to assist leading state broadband offices in being data-driven, scalable and compliant throughout their broadband programs.

Louisiana using the Challenge Process Coordinator

Providers in Louisiana will have from November 8 to December 8, 2023, to rebut challenges, requiring evidence, such as information from network diagrams and management systems. The state will then weigh evidence and make determinations on its final broadband map by January 4.

Louisiana submitted the second volume of its initial proposal, detailing how it plans to award BEAD grants based on that map, to the NTIA on Monday. The state will have one year from the approval of that proposal to spend all $1.35 billion of its allocation.

Prioritizing the ‘unserved’ areas over other others

The BEAD program prioritizes areas marked as “unserved” – those with access to speeds of 25 Megabits per second (Mbps) download and 3 Mbps upload – for subsidized infrastructure projects, followed by ‘underserved’ areas – those with less than 100 * 20 Mbps.

Louisiana adopted the NTIA’s model challenge process, a template the agency put together for states to expedite the proposal approval process. That process is slated to last 90 days, ending in Louisiana on January 4, 2024. The state will be accepting challenges for the first 30 days, until November 5, 2023, followed by rebuttal and adjudication phases of the same length.

Challenges in the state can allege that data on things like internet speed, technology type, latency, and data caps available at a location is inaccurate.

Making use of area challenges and MDU challenges

Louisiana is making use of two optional modifications the NTIA laid out: Area challenges and multiple dwelling unit, or MDU challenges. Under these rules, if six locations in a census block group or 10 percent of the units in an apartment building challenge the same provider’s technology or coverage, the provider must provide evidence that they serve the entire block group or building as reported in government data. 

In the second volume of its initial proposal, Louisiana declined to set an extremely high cost per location threshold — the point at which it would consider fiber-optic infrastructure too expensive and consider other, less future-proof technologies.

Louisiana said in its proposal it plans to first review the grant proposals it receives, and if a non-fiber proposal would serve significantly more locations than a fiber proposal in the same area, it may elect to choose the cheaper proposal to get broadband to more residents. The proposal also noted Louisiana plans to fund fiber to every un- and underserved location in the state, and thus might not need a high-cost threshold at all.

The fund, established with the American Rescue Plan Act as a response to the Coronavirus pandemic, is aimed at closing the ‘homework gap’ – the inability of students without broadband internet to do homework assignments. It can subsidize devices or broadband service for students to use outside of school.

Wednesday’s round of funding will go to 220 schools, 2 libraries, and 4 consortia of school districts and library systems across eight states. The commission is nearly done allocating funds under the program, with $7.03 billion of the total $7.17 billion now awarded.

In May, the FCC extended the deadline for some program recipients to spend ECF funds after school and library associations complained of having too little time to spend their awards. The commission declined to change the deadline for awards under the most recent application window, like the ones made Wednesday. Those awardees will still have until June 30, 2024 to spend their ECF money.

The fund is part of a broader effort by the FCC to address the homework gap. The commission will vote at its October 19 meeting on a proposal to expand the E-Rate program, an ongoing subsidy for broadband service and devices in schools.

That proposal has drawn support and pushback along party lines, with Democratic lawmakers backing the plan and Republicans opposing it. The September 25 confirmation of commissioner Anna Gomez gives Democrats a 3-2 majority at the FCC.

The last application window for the ECF closed on May 13, 2022.

The $42.5 billion Broadband Equity, Access and Deployment program is providing an unprecedented amount in federal funds for expanding broadband infrastructure, but some states have estimated their allocations will fall short of the amount needed to get high-speed internet to all of their residents. 

For Steve Coran, an attorney at Lerman Senter and counsel for WISPA, the trade group for fixed wireless internet providers, previous funding programs – the Rural Digital Opportunity Fund, known as RDOF, and the Connect America Fund, or CAF – are a source of hope. The certainty of federal funds, he said, has helped many of his clients secure private investments to serve rural areas.

Using that certainty “to generate additional capital investment is, I think, an underappreciated aspect of the RDOF and CAF programs,” he said.

Willie Heflin, managing director of investment firm Kinetic Ventures, said his experience investing in smaller internet service providers confirmed this. He pointed to a provider who received $187 million over 10 years from RDOF and was able to raise an additional $240 million from equity investors, including Kinetic Ventures.

“They were able to really build a company and provide services for people who weren’t getting it before,” he said.

Federally subsidized projects can also spur network expansion by making it cheaper and easier for communities to connect to nearby infrastructure, filling some of the holes left by funding programs, said Brian Vo, chief investment officer at Connect Humanity.

The extent to which BEAD projects will be able to stimulate private investment will hinge on the availability of affordability funds like the Affordable Connectivity Program, according to Blair Levin, an analyst at New Street Research and former executive director of the Federal Communications Commission’s National Broadband Plan.

“The single biggest delta for the economic models that will drive deployment in rural areas is whether the ACP is funded,” he said. “If it is, that makes the economics a lot easier. And if it’s not, it makes them a lot harder.”

The $14 billion program, established with the 2021 Infrastructure, Investment and Jobs Act, provides monthly internet subsidies of $30 for low-income households and $75 for residents of Tribal lands. It is set to dry up as early as April 2024, with no clear path to refunding.

If you missed the BEAD Implementation Summit, sign up for Broadband Breakfast’s BEAD Starter Pack for $35/month (cancel anytime). You’ll get access to all the videos and each of the three Breakfast Club reports prepared for the BEAD Implementation Summit:

• July 2023 – A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment Program
• August 2023 – Precursors to BEAD Implementation: A Deep Dive Into Prior Broadband Programs
• September 2023 – A Deep Dive into the BEAD Program’s Matching Funds

Already a Broadband Breakfast Club member? Watch the videos!

The conversation took place at the Broadband Breakfast BEAD Implementation Summit, along with panels of other federal grant program officials, service providers, and investors. The $42.5 billion program is getting under way, with states releasing their initial proposals for implementing it and hearing public comments. Those proposals are due to the National Telecommunications and Information Administration by December 27.

Community outreach

Broadband heads cited engaging with communities – especially around challenges to broadband map data and fostering internet adoption – as being essential to the success of the program.

In New Jersey, broadband office leader Valarry Bullard and her team organized a listening tour. They go to churches and community centers to explain how high-capacity internet can play a role in people’s lives and local programs, without, she emphasized, jargon or acronyms.

“You kind of meet people where they’re at, you know?” she said.

Arkansas broadband director Glen Howie said his team went to all 75 counties in the state to explain how mapping challenges will work and work with counties to set up local broadband committees.

“You go into a county and you tell folks they have an opportunity to challenge their internet availability, they get fired up,” he said.

Mapping and data

As part of their proposals to the NTIA, states are required to outline a process for accepting challenges to the Federal Communications Commission’s map of broadband coverage. That map, now on its third iteration, is based on coverage reported by internet service providers, which is widely considered to be overstated.

Those map challenges will be crucial, both for BEAD and other federal broadband programs, the panel said. 

“It’s the foundation of all of our programs. We spend a huge amount of time on mapping,” said Angie Bailey, North Carolina’s head broadband officer. “We can’t do this work without strong, location-level mapping.”

In Maine, Andrew Butcher and the Maine Connectivity Authority have been investing in broadband mapping efforts for years, he said. A parallel mapping process to the FCC’s has helped them allocate previous broadband funds and confirm coverage reported by providers.

“It has allowed us to have a data-driven conversation, as opposed to a policy of dibs,” he said. “We want to understand where there’s service and where there’s not.”

Timelines

Deadlines, both for submitting initial proposals and awarding subgrants, are on broadband leaders’ minds. Those initial proposals are being submitted in two parts, and states have one year from the approval of part II to award their entire BEAD allocations.

That has Howie’s office in Arkansas worried about completing the challenge process, grant awards, and state rulemaking before the deadline

“The one year, arbitrary timeline that we’re all under at the moment is a huge concern for us,” he said.

Taking time on the initial proposal deadlines is helping states with smaller and newer broadband offices, like Bullard’s office in New Jersey, she said, learn from other states and prepare for the task ahead of them.

“Our plan will be submitted December 27, probably at 11:59,” she said. “It’s giving us some more time for that investment. We’re learning more about our counties… we’re connecting with our community anchor institutions.” 

If you missed the BEAD Implementation Summit, sign up for Broadband Breakfast’s BEAD Starter Pack for $35/month (cancel anytime). You’ll get access to all the videos and each of the three Breakfast Club reports prepared for the BEAD Implementation Summit:

• July 2023 – A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment Program
• August 2023 – Precursors to BEAD Implementation: A Deep Dive Into Prior Broadband Programs
• September 2023 – A Deep Dive into the BEAD Program’s Matching Funds

Already a Broadband Breakfast Club member? Watch the videos!

The 55-square mile island is the largest in Lake Michigan and had a population of 616, according to the 2021 American Community Survey from the U.S. Census Bureau.

Beaver Island’s Joint Telecommunications Advisory Committee made the request in a September 18 filing to the FCC asking that the commission reconsider its adoption of the Enhanced Alternative Connect America Cost Model, or Enhanced ACAM. That model updates the previous allocation of federal money from the Universal Service Fund to internet providers in rural areas.

The model makes $13.5 billion available through 2028. It allows carriers to continue receiving funding if they upgrade or continue to provide service at 100 Megabit per second (Mbps) upload by 20 Mbps download – regardless of the technology they use to do so.

This, the island’s committee says, will prevent the island from being reached with fiber-optic cable, the highest capacity, most future-proof broadband technology. The Broadband Equity, Access and Deployment program, established in 2021, allocates $42.5 billion for states to expand broadband infrastructure, but disqualifies areas already served by federal funding.

Michigan’s broadband office estimated its portion BEAD funding could provide fiber-based internet to every location in the state currently receiving less than 100 * 20 Mbps service. That covers all of Beaver Island. But the island expects its providers will take the Enhanced ACAM  money and update their older, copper-based equipment to meet speed requirements rather than compete at auction for BEAD grants to build fiber.

“Rather than assuring [sic] those areas affected by the Order will receive adequate service,” the filing reads, referring to the commission’s official adoption of the new model on September 1, “the Order instead all but guarantees they will receive a service that will quickly become outdated.”

The committee  said in its filing that in order for an Enhanced ACAM recipient to prevent an area from being eligible for BEAD funding, it should be required by the FCC to use fiber.

Providers have until September 29 to accept or deny Enhanced ACAM funding.

The letter of credit requirement in the $42.5 billion Broadband Equity, Access and Deployment program requires providers receiving grants to expand infrastructure to obtain a letter of credit from a bank for 25 percent of the project cost.

That means awardees will have to back the letters with cash, which many in the broadband industry have said will push small and community providers out of BEAD projects.

Feinman said the letter of credit requirement accomplishes two goals for the NTIA: it promises some recovery if a project fails, and offers a chance for third-party financial analysis of projects.

“What we did not do was offer a menu of options to do that. We are hard at work on that now,” he said. “You’re going to hear more from us about the letter of credit requirement in the relatively near future.”

The discussion was part of a question and answer session with the broadband community at the Broadband Breakfast BEAD Implementation Summit on Thursday.

The summit also featured state broadband leaders, other federal grant program officials, investors, and service providers in conversations about key focuses as states work to allocate and deploy BEAD funds.

When asked about a provision in the program allowing for internet service providers accepting grant money to conduct self-audits, Feinman said the NTIA, the agency responsible for administering the program, will be issuing more guidance to states on how to monitor BEAD projects.

That guidance will not be created in the next three months, though. 

“We have deep financial resources in the bank, but our human capital is not as thick as you might like,” he said. “We got to do initial proposals,” he added, referencing grant procedures which states will be submitting to the agency until December 27.

A new model for broadband expansion

Feinman repeatedly drew comparisons to the effort to bring electricity to rural America in the 1930s, but said that BEAD is different from other federal grant programs.

“This is not a normal grants program. This is in fact, not a grants program at all,” he said. “This is a universal coverage broadband infrastructure program. The tools that are being used to get there are grants.”

He said the program is a departure from previous broadband funding efforts because so much of its goal – universal broadband coverage in the U.S. – hinges on working partnerships, both between federal and state officials and between local governments, providers, co-operatives, and communities. That’s because of the complexity of the task and the sheer number of people who need to understand that task to accomplish it.

“This room, we have our hands on the pen. We are writing the next chapter of the great American infrastructure story,” he said at the event. “But this is going to require a true whole-of-society effort.”

If you missed the BEAD Implementation Summit, sign up for Broadband Breakfast’s BEAD Starter Pack for $35/month (cancel anytime). You’ll get access to all the videos and each of the three Breakfast Club reports prepared for the BEAD Implementation Summit:

• July 2023 – A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment Program
• August 2023 – Precursors to BEAD Implementation: A Deep Dive Into Prior Broadband Programs
• September 2023 – A Deep Dive into the BEAD Program’s Matching Funds

Already a Broadband Breakfast Club member? Watch the videos!

States are required to submit in two volumes initial proposals for administering their portion of the $42.5 billion allocated under the NTIA’s Broadband Equity, Access and Deployment program. The two volumes are due December 27.

The first volume is aimed at preparing for the eventual disbursement of funds. It details existing broadband funding programs operating in the state, the types of community anchor institutions within the state, and, crucially, areas in need of internet coverage as shown by the Federal Communications Commission’s broadband map and how the state plans to accept and process challenges to the data in that map. 

The FCC is on the third version of the map, updated through its own challenge process. The second version, which updated the provider-reported coverage data after accepting challenges alleging slower on-the-ground internet speeds and other inaccuracies, was used to determine relative need among the states and allocate BEAD funds.

Louisiana will be adopting the model challenge process created by the NTIA. States are not required to use the model process, but the agency encourages them to do so to streamline the drafting and approval processes.

The state is making optional modifications outlined in the model process. It will designate any area served only by DSL – digital subscriber line – technology as “underserved,” and thus eligible for BEAD funded projects, regardless of what speed the provider advertises. The option was included in the model to phase out copper telephone wires in favor of more future-proof broadband technologies like fiber-optic cable.

Louisiana will not accept challenges on the basis of speed, the amount of data a user can download or upload at a time, but will allow subscribers to challenge coverage with speed tests that show excessive latency, or delays in those uploads or downloads. Challenges must be collected and submitted by eligible entities like nonprofits and local governments.

It will also require providers to prove their reported coverage is accurate for an entire building or census block group, rather than on a per-location basis, if enough subscribers there challenge its service.

With volume one of its proposal approved Louisiana can begin administering its challenge process, which it plans to finish in 90 days.

Part of the Infrastructure, Investment and Jobs Act, the program allocated over $42 billion for expanding broadband infrastructure in areas with poor internet access. That funding was awarded to states in June based on the number of those areas listed in the Federal Communication Commission’s National Broadband Map.

The 20-page report from Cruz’s office highlights how it believes the map is inaccurate, and claims that it disproportionately benefited states with fewer unserved areas – those with no meaningful internet access – than the map shows. It points to Washington, D.C., where the FCC’s map shows a third of the district’s unserved areas within the National Zoo, and notes the high allocation per unserved map location.

D.C. received fewer BEAD funds than any state – just over the minimum benchmark of $100 million set out in the program – but its small size and dense population gave it over $540,000 per location, opposed to the national median of $5,600.

The broadband map is also considered by some state broadband offices to be inaccurate. The commission has released an updated version since the allocation of BEAD funds based on challenges to its coverage data and is requiring states to accept local challenges before awarding any grants with BEAD funds.

Cruz also noted in the report that some areas slated to be served by other federal funding programs are marked as unserved in the FCC map. Funds under the Rural Digital Opportunity Fund, Capital Projects Fund, and ReConnect Program have been awarded for providers to build infrastructure in areas that are still currently unserved, meaning BEAD funds were allocated based in part on areas that will receive broadband anyway.

The report calculated 85,000 of the 3 million unserved areas slated to be served by BEAD will already have been given service by another federal program.

The report also criticized BEAD’s preference for fiber infrastructure, saying alternative means of providing internet like satellite and fixed wireless could serve hard-to-reach areas for less money.

Participation in the webcast, via a live Zoom webcast, is available for $35. Breakfast and lunch are not included in the live webcast.

However, both in person and live online registrants for the BEAD Implementation Summit will obtain access to the complete videos of the BEAD Implementation Summit, a pathbreaking event tapping into the energy surrounding the $42.5 billion Broadband Equity, Access and Deployment program.

As state broadband offices work to prepare their five-year plans for the BEAD program, this timely event will discuss the challenges, controversies and solutions surrounding this historic push for universal high-speed connectivity.

Evan Feinman, deputy associate administrator for the Broadband Equity, Access and Deployment program, will be the keynote speaker at Summit.

The event, hosted by the Broadband Breakfast community and featuring an in-person and online streaming component, will feature four panels on the most relevant and topical issues regarding BEAD Implementation. Among the panelists who have confirmed include state broadband leaders like North Carolina’s Angie Bailey, New Jersey’s Valarry Bullard, Arkansas’ Glenn Howie, Virginia’s Dr. Tamarah Holmes, Maine’s Andrew Butcher and Illinois’ Matt Schmit.

New panelists and keynote speakers are being added frequently to the program.

The complete program – including both in-person and online registration options – is available at the BEAD Implementation Summit. In-person event registration is available for $245.

“The BEAD Implementation Summit will drill into the particulars of BEAD implementation as states are looking at the largest-to-date federal investment in high-speed internet infrastructure, said Drew Clark, editor and publisher of Broadband Breakfast. 

The event will take place at Clyde’s of Gallery Place at 707 7th Street NW, Washington. 

Register now to hear what federal and state government officials, plus industry and non-profit groups, have to say about the next steps in this historic broadband funding. In addition to discounts on events and access to premium videos, Broadband Breakfast Club members have access to comprehensive monthly exclusive reports that delve into key topics pertaining to Better Broadband, Better Lives.  

The money will fund the Oklahoma Broadband Infrastructure Grants Program, a state effort to subsidize broadband projects in areas that are expensive to serve because of low population density or geographic obstacles.

The state estimates that 20,000 locations will be served with OBIG-funded projects, about 13 percent of the areas lacking broadband in the state. 

Projects supported by the fund will be required to deliver speeds of 100 Mbps upload and download. That’s faster than the FCC’s broadband benchmark of 25/3 Mbps.

The money comes from the $10 billion Capital Projects Fund, established with the American Rescue Plan Act in response to the Coronavirus pandemic. The fund provides money for projects that enable work, education, and health monitoring.

More than $8 billion in CPF funds have now been awarded. Many states, territories, and tribal governments are using the money to finance broadband development projects.

Some state officials say the CPF is better suited to reach high cost areas because of its “sliding scale” model. States can provide matching funds for up to 95% of project costs with CPF money, compared to 7% under the Broadband Equity, Access and Deployment program.

Providers that build CPF-funded projects are required to participate in the Federal Communications Commission’s Affordable Connectivity Program, a monthly internet subsidy for low-income households. It provides $30 a month to most recipients and $75 per month to residents of Tribal lands.

The $14 billion ACP is set to dry up in 2024. It is unclear whether Congress will renew it.

The funding will provide $85.7 million to expand broadband infrastructure. It will go toward the construction of a submarine fiber-optic cable to the island, according to the Treasury.

Over $64 million will go to building and renovating 8-10 regional centers equipped with computers and high-speed internet, with the remaining $8 million covering administrative costs.

The money comes from the $10 billion Capital Projects Fund, established in response to the pandemic with the American Rescue Plan Act. The fund provides money to states, territories, and tribes for projects that enable work, education, and health monitoring.

Nearly $8 in CPF funds have now been awarded, with many states electing to use the money to finance broadband development.

“These funds will make a huge difference,” said Puerto Rico Governor Pedro Pierluisi in a statement. “They  will help us ensure that our island has the necessary broadband infrastructure, and that all our citizens have the internet access, tech assistance, and training they need and deserve.”

Providers who use CPF-funded infrastructure are required to participate in the Federal Communications Commission’s Affordable Connectivity Program. The ACP provides monthly internet subsidies for low-income Americans. The $14 billion program is expected to dry up in 2024, with no clear path to renewal.

Following announcements from large fiber equipment providers that they are building fiber equipment manufacturing plants in the United States, the telecommunications industry is turning its focus from domestic manufacturing requirements to other regulatory burdens that have the potential to bar Broadband Equity Access and Deployment projects.

Of those regulations, matching and letter of credit requirements could be the major hurdles. Rules for the $42.5 billion BEAD program require that grantees produce a match of at least 25 percent of total program awards on top of a letter of credit. A letter of credit certifies that a bank will reimburse the federal government with 25 percent of program awards in the event of a default.

“Nobody wants to see BEAD funding go to waste. But requiring applicants to provide a 25 percent match and a 25 percent letter of credit risks shutting out those best-placed to bridge the digital divide and does little to protect U.S. taxpayers,” Connect Humanity CEO Jochai Ben-Avie told Broadband Breakfast. Connect Humanity is a digital equity advocacy group that invests in community connectivity providers.

Matching requirement

Many small, rural, minority and women-owned internet service providers and municipalities are ready and willing to build affordable, high-speed broadband in America’s least served and most marginalized communities, said Ben-Avie. “But, unlike the large incumbents, they don’t have millions of dollars spare to scale the BEAD capital hurdle,” he said. He called the letter of credit requirement a test of a provider’s ability to lock up working capital rather than the provider’s ability to deliver high-speed broadband.

read more….

Read the three reports on BEAD in advance of the BEAD Implementation Summit on September 21, 2023. Register now and receive a copy of each of the three reports!

• July 2023 – A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment Program
• August 2023 – Precursors to BEAD Implementation: A Deep Dive Into Prior Broadband Programs
• September 2023 – A Deep Dive into the BEAD Program’s Matching Funds

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“It’s much easier to meet the manufacturing requirements as they are defined in the waiver,” said Lori Adams, vice president of broadband policy and funding strategy at Nokia, speaking at a Broadband Breakfast Live Online event.

On August 3, Nokia announced the Kenosha, Wisconsin-based manufacturing of key electronic components for fiber-optic broadband networks that are still required under the Buy America program.

“I don’t think we’re done,” said Will Arbuckle, a policy advisor at the NTIA, speaking about U.S.-based manufacturing announcements at another event on the subject on Wednesday. “I’m confident there are going to be more companies announcing domestic investment and job creation in the U.S. for the BEAD program.”

The White House’s Build America, Buy America provision – codified in the Infrastructure, Investment and Jobs Act – places two requirements on federally funded projects: 55% of the component cost must be spent with American suppliers, and materials must be manufactured in the United States.

This raised questions among the industry about the feasibility of expanding broadband internet infrastructure with BEAD funding. Fiber-optic connections, the fastest, highest capacity broadband technology that is expected to make up the majority of BEAD projects, will require equipment using semiconductors that are not manufactured in the U.S. at scale, say industry officials.

The proposed waiver would allow BEAD recipients meet the comply with the rules without having to worry about the semiconductor content of its equipment. Further, the waiver does away with the 55 percent component cost rule for pieces of the fiber-optic electrical equipment defined in the proposed waiver.

This will make it more practical for BEAD projects to comply with BABA requirements, these experts said.

“Now, if you told us ‘Hey, everything’s got to be ready to go by the end of this year,’ that wouldn’t be a problem,” said Robert Conger, general manager of software platforms and strategy at Adtran, an Alabama-based fiber equipment company. In addition to appearing on the Broadband Breakfast Live Online panel, Conger also spoke on another panel on the implications of the proposed BABA waiver hosted by FTI Consulting.

One component of fiber connection is not covered by the waiver: Fiber optic cables. Sourcing and manufacturing fiber in the U.S. is doable. Still, that will raise the costs of BEAD projects said Scott Wallsten, president of the Technology Policy Institute, speaking at the Broadband Breakfast event.

“If it didn’t increase costs, you wouldn’t need it as a condition,” he said. “We’ve got something that really helps fiber manufacturers, but not as much the customers.”

Other panelists argued efficiency and job creation are worth the higher costs, citing increased investments in American fiber manufacturing to meet the upcoming demand. The major cable manufacturer Corning announced a new North Carolina plant in June and Prysmian plans to convert a dated copper manufacturing facility to produce fiber optic cable.

The comment period for the proposed waiver is open until September 21.

Our Broadband Breakfast Live Online events take place on Wednesday at 12 Noon ET. Watch the event on Broadband Breakfast, or REGISTER HERE to join the conversation.

Wednesday, August 30, 2023 – Build America, Buy America

A new wave of activity in the domestic manufacturing market for fiber and electronic materials is happening. Companies including Nokia, CommScope, Corning and others have detailed investments to bring electronics and fiber manufacturing back to the U.S.A. A draft limited Buy America waiver was issued for BEAD projects on August 22. What are initial reactions to the draft waiver? Is there enough time to allay worries that the Buy America Act can delay deployment timelines and increase project costs?

Panelists

• Robert Conger, General Manager of Software Platforms and Strategy, Adtran
• Lori Adams, Vice President of Broadband Policy & Funding Strategy, Nokia
• Bill Sproull, Broadband Stimulus Consultant, DZS
• Scott Wallsten, President, Technology Policy Institute
• Drew Clark (moderator), Editor and Publisher, Broadband Breakfast

As General Manager of Software Platforms and Strategy, Robert Conger is responsible for developing the strategy, portfolio, and direction for the company’s global business while also leading the development of Adtran’s software platforms. Robert joined Adtran in 2000 and has served in a wide range of roles, including his most recent role as Senior Vice President of Technology and Strategy. Robert holds a Masters in Business Administration from Vanderbilt University and a Bachelor of Science in Electrical Engineering from the University of Tennessee.

As Vice President of Broadband Policy and Funding Strategy, Lori Adams is a key member of the Nokia Government Affairs Americas Team. She is responsible for developing strategies and tools to enable increased company participation in state, federal, and international programs supporting infrastructure deployment by several of Nokia’s business organizations. Additionally, she focuses on external government relations and communications with stakeholders at all levels of government through direct engagement, filings, and participation in public forums.

Bill Sproull is a broadband stimulus expert who leads DZS’s outreach efforts to federal and state broadband funding programs and our customers who want to apply for these funds.  Bill has worked with the telecom industry for over two decades in an executive economic development and trade association capacity.  Texas Governor Greg Abbott asked him to be the first Chair of his Governor’s Broadband Development Council, during which time he and his colleagues developed the Texas strategy for broadband deployment, creation of the state’s first broadband office and fund, all of which was adopted unanimously by the Texas legislature.

Scott Wallsten is President and Senior Fellow at the Technology Policy Institute and also a senior fellow at the Georgetown Center for Business and Public Policy. He is an economist with expertise in industrial organization and public policy, and his research focuses on competition, regulation, telecommunications, the economics of digitization, and technology policy. He holds a Ph.D. in economics from Stanford University.

Breakfast Media LLC CEO Drew Clark has led the Broadband Breakfast community since 2008. An early proponent of better broadband, better lives, he initially founded the Broadband Census crowdsourcing campaign for broadband data. As Editor and Publisher, Clark presides over the leading media company advocating for higher-capacity internet everywhere through topical, timely and intelligent coverage. Clark also served as head of the Partnership for a Connected Illinois, a state broadband initiative.

As with all Broadband Breakfast Live Online events, the FREE webcasts will take place at 12 Noon ET on Wednesday.

SUBSCRIBE to the Broadband Breakfast YouTube channel. That way, you will be notified when events go live. Watch on YouTube, Twitter and Facebook.

See a complete list of upcoming and past Broadband Breakfast Live Online events.

Other federal funding programs can help fill in funding gaps that exist through the $42.5 billion BEAD program, they agreed. These programs are currently funding and will fund many programs across the United States that will meet the same goal as BEAD: connect every unserved and underserved address to high-speed internet.  

Savid Johnson of the U.S. Department of Housing and Urban Development added that some funding programs, such as the Community Development Block Grant program, allows entities to use the money to meet the minimum match requirement through BEAD. Many experts have expressed concerns that the high match requirement will prohibit some providers from participating in the program. 

There is an “enormous amount of funding” in other programs, said Lakeisha Moise of the U.S. Department of Agriculture Rural Development. She added that the USDA has specific niche working with telecom companies and can help address unique challenges in the industry. 

Alternative broadband infrastructure programs include the U.S. Department of Treasury’s Capital Projects Fund which provides $10 billion to a COVID-19 pandemic relief fund that includes broadband infrastructure, the USDA’s ReConnect program that funds grants and loans for rural broadband projects, the White House’s Tribal Connectivity Program for tribal connection, and HUD’s CDBG program. 

They cautioned providers to be aware of different requirements across different programs. Nicolette Gerald of the Treasury warned that the Capital Projects Fund requires that providers supply 100 Mbps download and upload speeds, rather than the 100/20 Mbps that BEAD requires. 

The two states seem to be in a contest for “first in the nation” status in implementation of the signature program $42.5 billion program for broadband infrastructure under the Infrastructure Investment and Jobs Act of 2021. Louisiana was the first state to publicly release its five-year and digital equity plans in May and which released it initial proposal volume two on Friday. Many states are looking to Virginia and Louisiana to pave the way forward in designing BEAD program subgrants and answer questions on how to allocate broadband serviceable locations and how to score applications. 

Dr. Tamarah Holmes, Virginia’s state broadband officer, has said that the state is on an accelerated timeline for deployment of EBAD funds. It was the first to release the first volume of its initial proposal, due within 180 days of receiving allocation announcements in late June.  

Initial proposal volume one outlines how the state will run their state challenge process, which builds on the Federal Communications Commission’s national broadband map. Volume two details the state’s subgrant program. Once approved, states will have access to at least 20 percent of allocated funds. 

Virginia’s initial proposal, volume two, outlined the state’s vision for closing the digital divide, addressing adoption issues and enhancing economic growth and job creation. It hopes to complete construction of BEAD funded projects by 2027 and 2028 and increase adoption of the federal broadband subsidy program American Connectivity Program and invest all BEAD money by the end of 2024. 

The state’s selection process for BEAD will begin accepting pre-applications form applicants over a 60-day period. Pre-applications must include high level information about the applicant and a statement of qualification for building broadband to unserved and underserved areas of the state.  

After the pre application submission deadline, Virginia will publish defined application areas to conflict project areas so that no two applicants are proposing to serve the same locations. Applicants will be required to propose to serve all locations in an application area when submitting applications, “the Office of Broadband will not entertain proposals which do not seek to provide broadband access to all locations within a defined application area.” 

Full applications are due 90 days prior the publishing of application areas, which the state office will review and announce. It will also publish a timeline of the process on the office website.  

Scoring for BEAD applications will be 45 percent the most cost-efficient proposal, evaluated by the total funding requested to provide broadband access to a defined application area. 20 percent of the score will be based on affordability, referring the applicant’s commitment to provide the most affordable total price to customer for 1 Gigabit symmetrical speed. If the service package is at or below $100 per month, the applicant will receive full credit for this section. 

Fair labor practices will take up 10 percent of project scoring. Applicants must demonstrate plans to comply with federal labor and employment laws or produce a record of compliance to these laws. Speed to deployment consists of 5 percent of the score in which providers are scored based on the timeline they produce. The remaining 20 percent is given to local and tribal coordination efforts. 

“It is firmly expected that funding available under the BEAD program will address all unserved, underserved and community anchor institutions that lack broadband access,” read Virginia’s plan. 

Louisiana emphasizes a ‘sense of urgency’

Louisiana’s initial proposal volume two draft outlined that its goal is to provide reliable internet to all residents with a “sense of urgency.” Accordingly, the state will be looking for funded projects to be constructed and executed in the next five years. 

The state differs from Virginia in the way it plans to execute its subgrant process and score project applications. Although it will organize the eligible locations in the state into a set of predefined areas, prospective subgrantees will have “wide flexibility” to define their proposed project areas, Louisiana proposes. Proposals can be submitted in the form of groups of project areas as defined by the state. 

Higher cost locations will be paired with more desirable eligible locations within each designated area to ensure that providers are equally as competitive for these hard-to-reach areas. 

ConnectLA will release pre-qualification requirements to interested prospective subgrantees as well as a list of proposed predefined areas, after which subgrantees can provide required financial, operational, managerial and technical qualifications. Prospective subgrantees will be notified after this window whether they have been deemed qualified to participate in the program. They will then submit round one applications.  

Applications will be analyzed to identify any overlap between applications. Any project that brings fiber to the home that does not overlap with any other application will be awarded at the funding level requested, read the proposal. Round two applications will then commence.  

Louisiana proposes to rate applications on a point system. Out of a score of 200 possible points, projects will be awarded based on the percentage of maximum available funds requested for a total project area and the percentage of improvement over reference service pricing. It will rank out of 100 possible points a holistic score on fair labor practices based on compliance record. 

Additionally, it plans to allocate points to an applicant for enforceable deployment plans faster than 48 months, including economically challenged areas, committing to designated areas that lack resiliency infrastructure, affirmative support from tribal and local stakeholders. It will provide 50 points for fiber to the home projects.  

Scoring varies significantly from Virginia’s plan. But both prioritize meeting unserved needs, fair labor practices and affordability. Initial proposals are open for a 30-day comment period. 

The program provides annual grants to states and local governments to be used for economic and community development, primarily for low and moderate-income individuals. The Section 108 program, called the loan guarantee program provides CDBG recipients with the ability to leverage their annual grant allocation to access low-cost, flexible financing for economic development and infrastructure projects. 

According to Erik Pechuekonis, community planning and development specialist at HUD, the program provides loan guarantees of an amount five times the amount in annual grants from CDBG. States, Cities and counties are eligible for the program as well as subrecipients like nonprofits and economic development corporations.  

Loans are non-competitive and are provided at low rates for up to 20 years, said Pechuekonis. Additionally, the department provides one-on-one technical assistance. Loans may be used for acquisition construction, rehabilitation of public facilities and public improvements, which includes broadband builds, he said. 

Each project under the loan program must benefit low and moderate-income persons, improve housing or address urgent needs for community health and safety. Pechuekonis said that broadband projects qualify as reaching these minimum requirements. He specified that funds are available for broadband deployment and not as a subsidy for service. Additionally, grantees will be required to produce a source of collateral. 

The program “can also function as a gap filler so if you don’t get quite enough funding, we can step in and fill that role as well,” added Pechuekonis, referring to the $42.5 billion Broadband Equity Access and Deployment Program. “We generally work well with other federal state programs.” 

“This is something new in terms of applying these funds to broadband,” added Amy Maclean, editorial director at CableFax magazine.  

Pechuekonis said that HUD is trying to mesh out the priorities between grantee’s competing interests with housing, infrastructure and economic development. We are seeing a lot of interest in this program, he said.   

This comes months after the National Telecommunications and Information Administration released allocation amounts for states through the BEAD program. Many communities are turning to alternative sources of funding, fearing that they will not receive BEAD funds.