[News] NTIA's chief of staff responds to BEAD criticisms

The following article was published on Light Reading:

The $42.45 billion Broadband Equity Access and Deployment Program (BEAD) program is moving ahead again following changes to a less fiber-focused and more cost-oriented approach that has opened the door to fixed wireless access (FWA) and satellite broadband options.

The updates to the program and the delays it has caused have, naturally, been a source of frustration for states that feel they need to rebid for projects, along with network builders, vendors and service providers.

Brooke Donilon, chief of staff at the NTIA, took on many of those criticisms Tuesday at the Mountain Connect event in Denver, holding that changes to the program, while frustrating for some in the short term, will provide long-term benefits.

Donilon, who joined NTIA in April, acknowledged that there was a "very natural frustration" about the changes, which caused some to go back to the drawing board.

"We totally understand that," she said, noting that's she's also been "incredibly impressed" by the responses by the states, which were given a 90-day period to resubmit, with final proposals due September 4.

BEAD changes a source of frustration

Some of that frustration was on display here at the event. When the restructuring notice was posted on June 6, Steve Carender, director of special funding at Surf Internet, recalled reading through it multiple times, resulting in the "gnashing of teeth."

"It was very hard to be quite honest," Carender said here on a BEAD-focused panel. But after that initial "period of anger and frustration, we got to work."

Josh Etheridge, owner of EPC, said his company was asked to generate a workforce for BEAD and spent "hundreds of thousands of dollars" to ramp that up.

"It was a humongous hit in the gut to have all of those people on staff and look at them and say, 'Hey, we were very heavily involved in this, and now it's paused,'" he said. "It was a hard hit."

On today's morning panel, Gigi Sohn, executive director, American Association for Public Broadband, said she recognizes that the BEAD changes are here and what's done is done. But she also wishes that the project moved with more urgency to cure its issues in early 2024 – many months before the election that led to today's BEAD alterations.

NTIA "should have moved heaven and Earth" to get money to the states by the end of 2024, she said. "And that didn't happen ... it's just a shame."

The new BEAD program, Donilon argued, removes "onerous" requirements related to areas such as climate change and rate regulation. States, she noted, could stand on their current bids if they want to. "But we also gave people the opportunity to refresh their bids, given that all of these burdens have been lifted."

She believes the program, in general, is now better, holding that the cost savings that result will make up for some of the current delays and related frustrations.

Leaning too much on LEO?

Donilon noted that "priority broadband project" designations are now at the "heart of the program," which include some baseline requirements in areas such as speed (100 Mbit/s down by 20 Mbit/s up) and latency (100 milliseconds or less), and to support the deployment of 5G and "successor wireless technologies."

That designation clearly has opened the door wide to satellite broadband providers such as SpaceX/Starlink and Amazon's Project Kuiper, which appears to be pursuing BEAD projects aggressively under the revised program.

As Light Reading reported this week, early signs indicate that BEAD dollars will reach fewer locations than expected and that low-Earth orbit (LEO) satellite providers are in position to greatly benefit from the changes to the program.

Speaking on today's opening panel, Evan Feinman, the former BEAD director at NTIA, agreed that there has been a "dramatic shift" to satellite broadband and away from "more robust" options like fixed wireless and fiber under the revised rules. He's likewise concerned this shift will cause families to spend more to get online for services that don't live up to the definition of broadband.

"There is going to be a ton more LEO than there needs to be," Feinman said. A service like Starlink is "remarkable technology" that's paying dividends in the US and beyond, but "it's not a replacement for terrestrial broadband," he argued.

Donilon said the new rules ensure there is not a "blanket determination" focused on fiber that was linked to the BEAD rules created under the Biden administration. She stressed that satellite broadband will be required to meet the priority project metrics, which will likely mean upgrades of some existing systems.

"Some results will be satellite. Some results will be fiber. We are opening this program to real competition," Donilon said. "At the end of the day, our goal is a mix of technologies to serve this very diverse country."

Low-cost concerns

BEAD's revised focus on lower-cost deployments also has its share of critics, with some believing it opens the potential for bidders to default, as many did after winning bids for the Rural Digital Opportunity Fund (RDOF).

Donilon noted that RDOF didn't define priority broadband projects and that its reverse auction approach created "a race to the bottom."

She argued that BEAD won't be burdened with that problem. "You don't get to a race to the bottom with BEAD because you have to be a priority broadband project to even get in the race," Donilon said.

Another change to the BEAD program is a lack of an affordable Internet tier that was covered in the version created under the Biden administration. Donilon said NTIA's change was to ensure the program simply follows the law. The former administration "got cute" by forcing rate regulating to the states. "We're not going to support backdoor rate regulation," she explained.

The low-cost topic was addressed rather directly and threateningly in a newly updated version of the NTIA's FAQ on BEAD released Tuesday that appears to challenge New York's affordable Internet rule for low-income households.

"Per the RPN [restricting policy notice], states may not apply state laws to reimpose LSCO (low-cost service option) requirements removed by the RPN." Such a violation "would result in rejection of the Final Proposal" for states to receive funds. Notably, the NTIA will only allow low-cost rate plans set by Internet service providers.

What's next?

So, when will money be distributed and shovels be hitting the dirt?

Donilon said there's still hope to get some money out the door by the end of the year. "We could see some really early successes early next year" with regard to projects truly getting underway, she noted.

Donilon also believes that the prioritization on cost will mean there will be some BEAD money left on the table. That's becoming yet another source of concern.

Sohn is fearful the states won't see those non-deployment funds, pointing to US Commerce Secretary Howard Lutnick as an architect of the federal government's Department of Government Efficiency (DOGE) program. She's also worried Congress will be asked again, down the road, for tens of billions of dollars to truly bridge the digital divide.

Kevin Gallagher, who previously served as a senior advisor to former US Secretary of Commerce Gina Raimondo, said it's a "good bet" that BEAD's non-deployment funds could go toward supporting AI and data centers in rural America.

Sohn argued that this would negatively impact the environment. "People who live near data centers hate them," she said.

Feinman was on the other side, holding that such funds could be used to bridge an "AI divide." Unless that's addressed, rural areas, he said, could be "left behind again" with AI as they were with broadband.