The expansion of broadband in the United States is at a critical inflection point.

Massive uncertainty about the federal government's investment in rural connectivity is grabbing headlines, as the new Administration openly ponders changes to the Broadband Equity, Access, and Deployment (BEAD) Program that could favor satellite technology at the expense of robust terrestrial technology such as fiber. And in areas that are not eligible for federal broadband investment, many urban and suburban localities are raising concerns about whether the aging legacy networks in their communities are capable of delivering best-in-class service—or competitive pricing—to local households and businesses.

At the same time, many localities are still struggling to determine how best to use their American Rescue Plan Act (ARPA) funds for broadband projects, even as the clock is set to run out on their ability to spend those funds.

Given these uncertainties, local governments should be thinking about how to understand and navigate the coming federal policy changes—and private market forces—and developing strategies to attract broadband investment in their communities.

This brief discussion provides insights and guidance for localities on why and how to initiate a competitive partner selection process to advance their broadband policy goals, to leverage both public and private investment.

Potential Changes to BEAD Rules

The BEAD Program is a once-in-a-lifetime infrastructure investment with the ambitious goal of connecting all Americans that currently lack high-speed internet access.

Under the existing BEAD rules, fiber is prioritized given its virtually unlimited scalability and long asset life. However, Congress and the National Telecommunications and Information Administration (NTIA) may seek to eliminate BEAD’s fiber preference, potentially by lowering the extremely high cost per location threshold (EHCPLT) to prioritize satellite and fixed-wireless solutions.

While the majority of states have already begun the process of collecting applications from potential BEAD subgrantees, many of these states may need to modify their subgrantee program rules if NTIA changes its guidance. For better or worse, programmatic changes at the state level would also give localities more time to reconsider their approaches.

Local Government Roles in the BEAD Program

To ensure the goal of ubiquitous and affordable broadband coverage is met, local communities will need to play a direct and proactive role in their states’ BEAD subgrantee programs.

Roles for public sector entities can range from financial (e.g., providing upfront local match funding or providing a financial backstop for an ISP) to operational (e.g., streamlining access to public easements, rights-of-way, or pole attachments) to serving as an anchor customer (i.e., purchasing connectivity for public safety, transportation, and government services) or simply providing letters of support to other applicants.

Public sector applicants can be municipalities, counties, tribes, economic development agencies, other political subdivisions, or newly created authorities that represent multiple public entities joined together.

Influencing Local BEAD Outcomes by Applying for Funding

As the grantees under the BEAD Program, states have been given the challenging task of developing funding allocation processes that can efficiently and fairly select specific projects and subgrantees for funding given their unique market, policy, and geographical constraints. These selection processes, which have now been established through each state’s Initial Proposal Volume II (IPv2), must balance statutory and NTIA requirements with state-specific goals and considerations.

Although states have devised thoughtful protocols to select the most qualified subgrantees and impactful projects, the state BEAD programs do not and cannot accommodate specific city or county government policy considerations. The only way for localities to incorporate their policy objectives into the BEAD process is to become subgrantees themselves, either on their own (a less likely scenario) or through a public-private partnership.

Fortunately, such partnerships are not only allowed but encouraged by many state subgrantee selection processes. Further, BEAD allows for new entrants, consortia, and other non-traditional players to compete for grants, and states have indicated a desire for innovative and cost-effective proposals through their IPv2 submissions to NTIA.

Public-Private Partnerships for Broadband

A strategy of implementing public-private partnerships with ISPs to stretch public funding further and achieve other critical policy objectives is not dependent on BEAD or any single funding program. Regardless of what may happen to the BEAD Program’s IPv2 guidance, policymakers in all communities should already be thinking ahead to what comes next, particularly since taxpayers in many BEAD-eligible areas may not be fully satisfied with the broadband grants made either under the existing BEAD rules or new rules that might emerge.

While the BEAD Program will invest a tremendous sum—over $40 billion—in federal funding to deliver broadband to unserved and underserved areas, this money will still be insufficient to build ubiquitous fiber-to-the-premises, particularly in the most rural areas. Under the existing rules, some BEAD funds will be spent on satellite services, which cannot meet these rural communities' long-term broadband capacity needs and will require ongoing financial support once the BEAD funds run out. Therefore, localities with BEAD-eligible locations (as well as communities that will not see BEAD-funded infrastructure) should take proactive steps now to think about other potential sources of funding, such as ARPA. These other sources of funding could serve as a local match for a selected partner—and, along with other forms of public support, could encourage fiber investment and better achieve affordability, coverage, and competition in the local broadband market.

Funding Broadband Public-Private Partnerships

Separate from the BEAD process, thousands of local governments in the U.S. are actively searching for solutions that result in 21st century broadband connectivity to their residents, businesses, and public institutions. These governments can and should begin developing a contracting and procurement strategy to partner with one or more fiber ISPs that can meet their broadband objectives.

As discussed earlier, communities have a wide array of financial, operational, and other levers at their disposal to create partnerships that amplify available public resources and serve local policy objectives better than projects driven by the ISPs alone.

Notably, many local governments still have ARPA funding, which is set to expire at the end of 2026. ARPA funds could serve as a public contribution for a local fiber build, with every public dollar likely bringing multiple private sector dollars to the table. Even beyond direct funding contributions, public agencies can bring significant value to partnerships with ISPs by leveraging public connectivity purchasing power, providing operational support and access to rights-of-way, or being a vocal supporter of the partnership. Each of these public value contributions can materially improve the overall viability of a fiber-to-the-premises initiative.

In return, public agencies can secure benefits such as specific buildout commitments, low-income discount programs and pricing commitments, connectivity to key community anchor institutions, and compliance with additional requirements such as consumer privacy or net neutrality. Such public-private partnerships, and the risk-sharing they facilitate, have the potential to create win-win outcomes and tangible policy impacts.

Best Practices for Selecting a Partner

Localities can benefit from lessons learned and best practices from past experience when thinking about structuring and tailoring a project and partner selection process to their unique needs.

For example, consider these examples of local governments successfully securing partnerships to meet their broadband goals:

• Memphis, Tennessee, successfully leveraged the competitive process to procure connectivity for enterprise and smart city purposes, with incentives and priority provided for entities that commit to invest their own funds to build fiber to homes throughout the city, including in the lower-income areas of the city.
• Scott County, Kentucky, used a competitive solicitation process to select a partner to build fiber-to-the-premises in its unserved communities and to upgrade existing broadband internet to faster speeds in served areas. The county's award to its partner was contingent on the partner seeking a federal grant to reduce the county's financial outlay.
• Lancaster, Pennsylvania, dedicated some existing infrastructure and modest ARPA funds to incent a private entity to commit to building ubiquitous fiber-to-the-premises, with the City's contribution and risk both limited and contained.
• Boulder, Colorado, offered a competitive procurement for the lease of its 50-mile fiber backbone to provide fiber throughout the city. Through this process, the City not only secured buildout commitments but also shares in some of the project’s commercial success.

The Benton Institute for Broadband & Society has published extensively about the spectrum of public-private business models in past white papers, including The Era of the Broadband Public Private Partnership: New Trends and Opportunities in the Wake of COVID-19 and Public Infrastructure/Private Service: A Shared Risk Partnership Model for 21st Century Broadband Infrastructure.

While it is important to conduct proper planning before jumping into a partner selection process, it is equally important for many localities to avoid “analysis paralysis” given the urgency of broadband programs in the current moment. Now is a time when it’s important to get started quickly and then to run an efficient and competitive partner selection and negotiation process.

Partner selection strategy will depend greatly on the current competitive landscape for internet service in a given region. For example, in areas that have an electric utility or cooperative with substantial physical assets and human resources, there may be a potential for a municipality to play a greater operational role.

For areas with only one incumbent ISP and minimally demonstrated market interest in fiber construction, the options for a competitive partner selection process may be limited, which may also simplify the partnering decision. In such cases, localities still have strategies at their disposal to maintain leverage in exclusive negotiations with an ISP.

Key Next Steps in the Local Broadband Planning Process

Many communities have been thinking about broadband more intently since the COVID-19 pandemic, when the importance of digital connectivity came into stark focus. Such efforts may have included different forms of stakeholder engagement, development of new policies, or reviews of local infrastructure assets—all of which can provide key inputs into a local broadband planning effort.

To the extent that these activities have stalled and/or no local broadband champions have emerged, the BEAD grant process may represent the perfect time to re-engage, and to start thinking about a strategy for identifying and selecting potential private collaborators.

Localities can take the following practical next steps to get started on this endeavor.

• Assess existing infrastructure: Conduct a broadband gap analysis through stakeholder engagement and local asset reviews.
• Define broadband objectives: Identify key goals such as affordability, coverage, and digital equity.
• Determine the public sector role: Decide whether to contribute financially, operationally, or as an anchor customer.
• Evaluate potential partners: Analyze the competitive landscape and engage ISPs, cooperatives, or utilities.
• Evaluate potential partnership structures: Assess different models for collaboration, outlining roles, responsibilities, risk-sharing, and financial commitments.
• Act quickly: Consult state broadband offices and funding specialists to secure funding and structure agreements before relevant BEAD and ARPA deadlines.

Whether BEAD-eligible or not, we encourage localities to engage planning and funding specialists and start actively thinking about how to get off the sidelines and take control of their broadband future in the BEAD era and beyond.

Wim Verdouw is a principal at Rebel’s Washington (DC) office, with 20 years of experience in financial analysis, project development and project implementation in broadband, transportation, renewable energy, water, and social infrastructure sectors. With a combined background in economics and engineering, Wim leverages his experience from public and private sector infrastructure projects to advise clients on critical infrastructure financing aspects and project structuring, in particular for P3s. Wim is currently advising a state government agency on the contractual structuring and procurement of an 8,000+ mile middle-mile fiber network in the US. Wim has also advised on several last-mile fiber-to-the-premises broadband P3 projects, including in San Francisco, Cambridge (MA), rural New Hampshire, Boulder, and West Hollywood (CA). Wim received a Bachelor of Science in Economics from the London School of Economics and Political Science and a Master of Science in Civil Engineering from the Delft University of Technology.

Zachary Karson is a manager at Rebel with over 7 years of experience advising both public and private sector clients on infrastructure projects in various sectors, including broadband, mass transit and mobility, renewable energy, water, and wastewater. Zachary specializes in financial analysis, risk analysis, procurement support, and assisting clients with key commercial and financial decisions. Zachary works closely with Wim Verdouw as project manager on Rebel’s broadband financial and transaction advisory engagements. Zachary has a Bachelor of Arts from Kenyon College and a Masters in Business Administration and Masters in Public Administration from New York University.

Joanne Hovis is a broadband analyst and president of CTC Technology & Energy. For more than 25 years, she has advised state and local governments in development of collaborations with the private sector to address broadband and connectivity needs. In the past few years, she has led the CTC teams that advise more than a dozen states in BEAD, ARPA, middle mile, or other broadband planning.

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.

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