Will BEAD Networks Offer Affordable Service?
Monday, October 30, 2023
Will BEAD Networks Deliver Affordable Service?
"Access to affordable, reliable, high-speed broadband is essential to full participation in modern life in the United States."
—Infrastructure Investment and Jobs Act
The Broadband Equity, Access, and Deployment (BEAD) Program—established by Congress in the Infrastructure Investment and Jobs Act—gives priority to projects that will result in broadband internet access service being offered in areas where service wasn't available before. Given that federal funds will provide 75 percent of the costs to deploy these networks, the chances that competing networks will be built at any time in the foreseeable future are very slim. Absent any market forces to check price increases, what guarantee do taxpayers have that the networks they are funding will offer services they can afford?
States, territories, and the District of Columbia (known as "Eligible Entities") are now working on Initial Proposals, a prerequisite for receiving the BEAD funding. Initial Proposals describe the competitive processes the Eligible Entities propose to use to select subgrantees to construct broadband projects. Initial Proposals must describe how Eligible Entities will ensure that every resident has access to a reliable, affordable, high-speed broadband connection.
The National Telecommunications and Information Administration (NTIA) oversees the BEAD Program and has asked Eligible Entities to address service affordability for both low-income and middle-class households. In determining whether to approve an Eligible Entity’s proposed definition of “low-cost broadband service option,” NTIA will consider, among other factors, (1) whether prospective subgrantees will be required to participate in the Affordable Connectivity Program, any successor program, and/or any other household broadband subsidy programs; (2) the expected cost (both monthly and non-recurring charges) to a low-income subscriber for a typical broadband internet access service plan after the application of any subsidies; and (3) the performance characteristics of the proposed options, including download and upload speeds, latency, data caps, and reliability commitments.
NTIA has also asked Eligible Entities to submit a plan to ensure that high-quality broadband services are available at reasonable prices to all middle-class families in the BEAD-funded network’s service area. The Eligible Entity’s middle-class affordability plan may include the following:
- Requiring providers receiving BEAD funds to offer low-cost, high-speed plans to all middle-class households using the BEAD-funded network;
- Providing consumer subsidies using BEAD funding, if the Eligible Entity has surplus funds after meeting its obligation to connect all unserved and underserved areas;
- Using regulatory authority to promote structural competition such as eliminating barriers to entry, opening access to multi-dwelling units, or promoting alternative technologies;
- Promoting consumer pricing benchmarks that provide consumers objective criteria to use in determining whether the rate offerings of broadband service providers are reasonable and to encourage providers to adopt affordable pricing; and
- Establishing a regime of continued monitoring and public reporting to ensure that high-speed internet connections are affordable for middle-class households in their state or territory.
Two states are awaiting approval for their affordability plans: Louisiana and Virginia.
Affordability a Priority for Louisiana
The Louisiana Office of Broadband Development and Connectivity (also known as ConnectLA) sets an affordability goal for its BEAD-supported projects: decrease by 15 percent the number of households that cannot afford broadband service and devices. ConnectLA has three objectives:
- Continue to publicize and market the Federal Communications Commission's Affordable Connectivity Program to improve outreach and education for financial assistance.
- Promote the availability and use of financial incentives for low-income households.
- Research innovative state-level program offerings to target the most vulnerable of populations.
ConnectLA is aiming for all broadband service providers and all eligible households in Louisiana to participate in the ACP. This would help connect more 900,000 households.
ConnectLA's proposal addresses two types of affordability: a Low-Cost Broadband Service Option and a Middle-Class Affordability Plan.
Low-Cost Broadband Service Option
In Louisiana, all applicants for BEAD funding will be required to offer a low-cost broadband service option that meets the following criteria:
- A service offering is set at a price that is affordable to the eligible population, defined as those eligible for the Federal Communications Commission's Affordable Connectivity Program or its successor.
- The applicant must submit to ConnectLA evidence demonstrating that the service option is affordable to the eligible population, including market analysis that demonstrates clearly that the service option is reasonably affordable to the average ACP-eligible household. Failure to demonstrate that the low-cost service option is affordable may result in ConnectLA requiring additional information be submitted.
- The price specified for this service option will be a contractual requirement of awardees for the useful life of the network assets, which is defined as 8 years for the purpose of this section.
- Allows the end user to apply the ACP benefit to the service price and encourages customers to participate in the ACP or successor program(s).
- The specified price may be adjusted once per year based on the Consumer Price Index, as defined by the U.S. Bureau of Labor Statistics.
- Providers will be held to performance requirements as established by the BEAD program, with download speeds of at least 100 Mbps and upload speeds of at least 20 Mbps.
- Provides typical latency measurements of no more than 100 milliseconds.
- Is not subject to data caps, surcharges, or usage-based performance reductions, and is subject only to the same acceptable use policies to which subscribers to all other broadband internet access service plans offered to home subscribers by the participating subgrantee must adhere.
- In the event the provider later offers a low-cost plan with higher downstream and/or upstream speeds, permits Eligible Subscribers who are subscribed to a low-cost broadband service option to upgrade to the new low-cost offering at no cost.
ConnectLA strongly encourages that a low-cost broadband service option be made available to all eligible prospective customers across the subgrantee’s service territory; however, this service option must at least be available to locations within the awarded project areas under the BEAD program.
Middle-Class Affordability Plans
The affordability of broadband services offered over BEAD-funded networks for middle-class households is also a priority for ConnectLA. The state’s primary strategy for advancing middle-class affordability is to implement a highly competitive subgrant program that will afford a wide range of providers the opportunity to access Louisiana’s substantial BEAD funding allocation in order to deploy new high-quality networks that sustainably support reasonable pricing while also improving the competitive structure of the broadband market in the state. As a policy determination, the state finds that affordability is best advanced via the promotion of a competitive provider market made up of financially strong operators of high-qualify broadband infrastructure.
ConnectLA's Granting Unserved Municipalities Broadband Opportunities (GUMBO) 2.0 program contains many elements intended to advance this overall goal. As part of the GUMBO 2.0 design, affordability plays a central role in the scoring criteria ConnectLA will use to evaluate proposals to serve a location under the BEAD program. Scoring criteria will ensure that lower price commitments receive higher point totals, while leaving necessary flexibility for the business case decisions of prospective subgrantees to balance tradeoffs between BEAD funds requested, pricing commitments, and the quality of deployed networks.
Using the FCC's Urban Rate Survey as a reference price, ConnectLA will score applications based on their pricing of five performance tiers:
- 100 Mbps/20 Mbps minimum downstream/upstream speeds
GUMBO 2.0 does not require subgrantees to offer any particular rate for any particular tier of service (although existing Louisiana law does impose certain requirements on existing in-state providers). Instead, this BEAD-mandatory affordability scoring category offers applicants the opportunity to obtain additional points via voluntary commitments at rates of their choosing, with scoring based on the reference tiers above. Applications that decline to provide a reference tier/price commitment will receive 0 points in the affordability category but retain full ability to score points in other categories and will not be otherwise penalized in the GUMBO 2.0 process.
Any fiber-to-the-home (FTTH) application that includes a voluntary five-year commitment to offer symmetrical 1 Gbps service to new subscribers at the monthly reference price for that speed tier, with no installation, equipment rental fees, or other charges to the end user, shall receive a baseline score of 100. Any FTTH application that includes a five-year commitment to symmetrical 1 Gbps service at a price lower than the reference price will receive an additional score added to the baseline score of 100.
ConnectLA strongly encourages subgrantees to make an affordable broadband service option available to all eligible prospective customers across the subgrantee’s service territory. However, this service option must at least be available to locations within the awarded project areas under the BEAD program.
Virginia's Focus on Affordability and Full Broadband Adoption
Virginia wants to be one of the first large states in the country to achieve universal broadband. To achieve this goal, the Commonwealth’s broadband infrastructure must extend to all Virginians to whom it can practically be extended. Additionally, it will require policy structures and models of service delivery to support affordable access to the internet for those who cannot afford it via that infrastructure.
To the extent funding is available, Virginia will promote federal resources for broadband affordability by increasing ACP utilization by more than 5 percent through existing and future efforts. Virginia wants to fully utilize the Affordable Connectivity Program to lower the cost of broadband services for those who need it most.
Low-Cost Broadband Service Option
The Commonwealth of Virginia strongly encourages BEAD applicants to ensure that the services provided through BEAD-funded networks are affordable to Virginia residents of all socioeconomic statuses.
Subgrantees receiving BEAD funds to deploy broadband infrastructure will be required to offer a “low-cost broadband service option” that is available to customers for the useful life of the network assets. The Virginia Office of Broadband defines a low-cost service option as the following:
1. The applicant offers a service option that meets, at a minimum, the following criteria:
- Set at a price that is affordable to the ACP-eligible population.
- The applicant must submit to the Office of Broadband justification on why the service option is affordable to the eligible population, including market analysis that demonstrates clearly that the service option is reasonably affordable to the average ACP-eligible household. Failure to demonstrate that the low-cost service option is affordable may result in the Office of Broadband requiring additional information be submitted to justify that the service option meets the requirement.
- The price identified will be a contractual requirement of awardees for the useful life of the network assets (which is defined as 8 years). This price may be indexed to the Consumer Price Index, as outlined by the U.S. Bureau of Labor Statistics, but shall not exceed an increase of four percent annually.
- Allows the end user to apply the Affordable Connectivity Program benefit subsidy to the service price and makes a demonstrable effort to inform prospective customers of these programs and the steps necessary to enroll and apply the benefit to the service plan.
- Consistently and reliably provides download speeds of at least 100 Mbps and typical upload speeds of at least 20 Mbps. And provides typical latency measurements of no more than 100 milliseconds.
- Is not subject to data caps, surcharges, or usage-based throttling, and is subject only to the same acceptable use policies to which subscribers to all other broadband internet access service plans offered to home subscribers by the participating subgrantee must adhere.
- In the event the applicant later offers a low-cost plan with higher downstream and/or upstream speeds, permits eligible subscribers that are subscribed to a low-cost broadband service option to upgrade to the new low-cost offering at little to no cost.
2. The applicant is required to participate in the Affordable Connectivity Program,
- The Virginia Office of Broadband will encourage BEAD applicants to 1) ensure that prospective customers are aware of their participation in the ACP and 2) participate in any successor broadband subsidy programs should funding for the Affordable Connectivity Program be depleted and not renewed.
3. The low-cost broadband service option must be made available to those who qualify for the FCC’s Affordable Connectivity Program.
- Subgrantees may not impose additional eligibility restrictions beyond those applicable to the Affordable Connectivity Program.
- In the event that funding for the Affordable Connectivity Program is not replenished and the National Verifier is no longer available, the Office of Broadband will defer to NTIA clarification on how low-cost service option eligibility verification should occur.
4. The low-cost broadband service option must be made available to all eligible prospective customers across the subgrantee’s service territory, including locations within the awarded project areas under the BEAD program.
Middle-Class Affordability Plans
The affordability of broadband services from BEAD-funded networks for middle-class households is a priority for the Virginia Office of Broadband.
The affordability of internet service plans for middle-class households is addressed by the following program elements:
1. BEAD Proposal Scoring Criteria
- Affordability will comprise 20 percent of the scoring criteria the Office of Broadband will use to evaluate proposals to serve a location under the BEAD program.
2. Low-Cost Service Option
- Providers participating in the BEAD program are required to offer to eligible customers the Low-Cost Service Option defined above.
- The Office of Broadband encourages broadband service providers to ensure that broadband services offered to prospective customers in the BEAD-awarded area are affordable and reasonably accessible to middle-class households.
3. Consideration of Special Construction Costs
For a subset of Virginians, broadband connections are not attainable because their home exceeds an internet service provider’s standard connection drop length from a roadway or easement containing telecommunications infrastructure. The cost incurred by homeowners to extend broadband infrastructure to these locations—referred to as special construction costs—range from a few hundred to a few thousand dollars, depending on the distance and cost to connect the location.
- To account for this affordability barrier to connect to broadband networks, awardees will be prohibited from charging special construction charges for a minimum of twelve months after broadband service is made available to a BEAD-funded location.
- Awardees will not be permitted to charge any fees to subscribers for these line extensions, except for the regular connection fees associated with any connection made on the network.
More State Plans Being Released
NTIA's BEAD Initial Proposal Progress Dashboard is tracking Eligible Entities' development (and NTIA's approval) of BEAD plans. From the dashboard, we see that additional states have released their Initial Proposals for public comment. We'll be looking at how these plans address affordability in future articles.
- Louisiana law requires that “[a] grant recipient that has offered broadband service to at least one thousand consumers for a period of at least five consecutive years shall offer broadband service at prices consistent with offers to consumers in other areas of the state.” (Louisiana Revised Statutes 51 §2370.29) This independent Louisiana requirement shall be implemented as a subgrant condition for any BEAD subgrant recipient meeting that definition, with “prices consistent with offers to consumers in other areas of the state.”
The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.
© Benton Institute for Broadband & Society 2023. Redistribution of this email publication - both internally and externally - is encouraged if it includes this copyright statement.
For subscribe/unsubscribe info, please email headlinesATbentonDOTorg