New BEAD Rules Enable Efficient Spending But Make it Pointless to Try

Commerce Secretary Howard Lutnick’s National Telecommunications and Information Agency is trying to make the $42 billion Broadband Equity, Access, and Deployment program more efficient. However, at least one new provision threatens to undercut these efficiency incentives. NTIA’s new rules improve the previous administration’s rules in many important ways. They eliminate requirements unrelated to broadband that resulted in making it more complicated and expensive for states to create and implement their plans. The revised rules are technology-neutral, focusing on meeting minimum quality measures rather than favoring one technology. Those changes make it possible for states to spend the money more efficiently. But NTIA's new rules also removed incentives for them to try. States now face the prospect of losing any money they don’t spend. For example, they can’t spend money they save on digital connectivity programs and, indeed, don’t know what will happen to the leftover funds. Given that, why should states try to spend the money efficiently? They should try to spend as much money as possible in ways that benefit the state, as long as they comply with NTIA’s rules.