Will Congress Change the BEAD Program?

The House Communications and Technology Subcommittee met on March 5 in a hearing titled "Fixing Biden’s Broadband Blunder." Republicans on the panel seem most focused on concerns raised by states and broadband providers about the National Telecommunications and Information Administration's (NTIA) Broadband Equity, Access, and Deployment (BEAD) Program. Established by Congress in the Infrastructure Investment and Jobs Act, the BEAD Program is distributing $42.45 billion to states to provide grants for last-mile deployment in unserved and underserved areas. Republicans complain that although the Infrastructure Law was passed in November 2021, "not one inch of fiber" has been deployed to connect any locations in the US. Republicans blame BEAD requirements around paying workers a fair wage, deploying climate-resilient networks, and requiring affordable rates as the main reasons for the slow rollout of BEAD dollars.

As he opened the meeting, Subcommittee Chairman Richard Hudson (R-NC) said, "Closing the digital divide is a top priority for this Committee." He outlined the problem as he sees it:

It has been over 3 years since the [Infrastructure Investment and Jobs Act] became law, and we are still waiting for the first home to be connected using these funds. I think we should understand how this happened. First, [Federal Communications Commission] maps that Biden-FCC Chairwoman Rosenworcel said would be ready in 'months' instead took much longer to develop. Then, the Biden-Harris Administration saddled the BEAD program with regulations unrelated to broadband to appease left-wing interest groups. These included technology preferences, burdensome labor rules, and climate change requirements, to name a few. Worse, the Biden Administration flagrantly ignored the law by forcing states to regulate broadband rates before NTIA would approve their proposals, even though the law explicitly prohibits rate regulation. These actions did nothing to deploy broadband but instead created confusion while making the program less attractive to providers and deployment more expensive. 

“Energy and Commerce Committee Republicans are committed to fixing these blunders so that every American has access to broadband as quickly as possible," said Chairman Hudson. 

House Commerce Committee Ranking Member Frank Pallone, Jr (D-NJ) said,

"Elon Musk is salivating over the prospect of steering BEAD dollars to his companies. Just yesterday the Wall Street Journal reported Musk’s SpaceX and Starlink could receive up to $20 billion worth of BEAD funding under new plans being developed inside the Commerce Department. Musk is a grifter, and Republicans are going to just stand by and watch. 

"To be clear, many of the changes our colleagues have suggested for BEAD can be done without delays or mandates. Loosening funding requirements they don’t like — while misguided — does not require states to go back to the drawing board. The pauses we see at the Department of Commerce, however, are like shackles on broadband providers in Louisiana, Nevada, and Delaware, who need only basic administrative approvals to begin their work in as little as six weeks. Instead, companies are sitting on tons of supply with a labor force questioning if there will be work next month.

"Make no mistake: the current threat to the BEAD program could be avoided if only Republicans and the Trump Administration would get out of their own way and let this program move forward as intended. This opportunity to connect every American to reliable, high-speed internet will not come around again.

The subcommittee heard from four witnesses:

• Grant Spellmeyer, President and CEO, ACA Connects
• Tim Donovan, President and CEO, Competitive Carriers Association
• Greg Hale, CEO, LTC Connect in Kentucky
• Sarah Morris, Former Acting Deputy Administrator, National Telecommunications and Information Administration

Spellmeyer, who represents small and medium-sized cable TV and broadband providers, urged Congress to adopt the following measures:

• Make targeted reforms to the BEAD program to promote wider participation and allow the funds to go further in connecting unserved Americans;
• Streamline access to permits and rights-of-way to help broadband projects get built on time and on schedule; and
• Adopt smart policy to promote broadband access for households who struggle to afford service.  

Spellmeyer also recommended that NTIA:

• Affirm that subgrantees can meet the “low cost service option” requirement by offering the lowest rate they offer at non-BEAD locations in the same state or, in the alternative, offering a rate that meets the Federal Communications Commission’s Urban Rate Benchmark.  
• Remove or at least reduce requirements that raise connectivity costs and are not required by statute.
• Further relax letter of credit requirements and create a flexible waiver process for Build America Buy America that serves the interests of providers and U.S.-based manufacturers.
• Streamline permitting to the greatest extent possible, including by establishing a “deemed granted” remedy for Federal permits and ensuring States can access resources to expedite State/local permitting.  

The Competitive Carriers Association (CCA) represents communications providers ranging from small, rural providers, serving fewer than 5,000 customers, to regional and nationwide providers serving millions, as well as vendors and suppliers throughout the communications ecosystem, connecting communities using all technologies available, including mobile, fixed wireless, wired, and satellite. Donovan said the industry needs decisive action from the government to survive and to expand services, including through:

• addressing an existential threat to the Universal Service Fund (USF) and updating aspects to continue this important program;  
• improving the 5G Fund and basing eligibility on reliable data;  
• supporting successful implementation of the BEAD Program with reasonable modifications;  
• supporting network security;  
• restoring spectrum auction authority and making additional full power spectrum available for wireless use; and
• reforming the siting and permitting process to provide operators with greater certainty and drive rural broadband deployment.  

Donovan said "BEAD must ensure that all technologies are available to deploy fixed connectivity, including fiber, fixed wireless access, and satellite." He also stressed that policymakers "should avoid conditions that make BEAD participation prohibitively challenging, including labor requirements that can be particularly challenging in rural markets; complexities regarding affordability plans, especially where ongoing support may not be available; uncertainty regarding other aspects that set artificial benchmarks that frustrate technological neutrality; and needlessly challenging permitting processes." He also asked Congress to amend tax laws to make certain that federal broadband deployment funding will not be considered taxable income. 

Hale's LTC Connect is a member of NTCA-The Rural Broadband Association, which represents about 850 rural, community-based broadband providers that are deploying networks and offering advanced communications services in deeply rural communities. The focus of his testimony was on the FCC's Universal Service Fund (USF), which is being challenged in Federal court. He stressed that if the USF were eliminated:

• Rural Americans’ broadband rates could skyrocket. 
• Broadband network investments could drop significantly in the coming years. 
• There is substantial potential for default on outstanding network construction loans, including many held by the federal government.  

"Congressional action may be necessary to prevent these negative impacts if the Supreme Court" eliminates or curtails the USF, Hale said. "We urge members of Congress to stand ready to support legislative efforts that could help to ensure the ongoing viability of USF initiatives and ultimately ensure that every American gets and stays connected. Prompt, thoughtful, and well-crafted action by Congress could help to dispel uncertainty that otherwise might hang over the USF to the detriment of millions of rural and low-income Americans and schools, libraries, and rural healthcare facilities across the nation."

Concerning the BEAD program, Hale suggested:

• NTIA consider publishing all waivers that have been granted to various states to date in connection with the BEAD program and consider whether these can be made available across the board to all states. 
• NTIA could articulate a more reasonable approach to the “low-cost option” that better reflects those challenging economics of operating in rural areas.
• Further changes with respect to relaxing the letter of credit requirements, workforce obligations, and other policies that do not relate directly to broadband deployment should likewise be considered for guidance from the agency. 

Sarah Morris, who is currently a managing director at Waxman Strategies, stressed that states are nearly at the BEAD finish line. "To stop their progress now—or worse, to make them go backwards—would be a stick in the spokes of the most promising broadband deployment plans we have ever seen. Nearly every state has identified the locations it will put out to bid, many are actively reviewing and accepting bids for work, and all states have spent the past three years honing the best approach for their sub-grant processes based on the law Congress wrote. Each approach is driven by the unique needs in the state—the geography, topography, number and type of service providers, and number of unserved and underserved locations. Congress should support the flexible approach and carefully considered decisions that have gone into each state’s process."