A BEAD Program Progress Report

On September 10, 2024, the House Commerce Committee's Communications and Technology Subcommittee held an oversight hearing focused on the Broadband Equity, Access, and Deployment (BEAD) Program. BEAD was established with $42.5 billion by Congress in the Infrastructure Investment and Jobs Act. Congress charged the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA) with implementing BEAD which provides grants to states to deploy broadband in unserved and underserved areas. The goal of BEAD is the deployment of broadband infrastructure passing every serviceable location in the U.S. and providing service of at least 100 megabits per second (Mbps) download and 20 Mbps upload. Commerce Committee Chair Cathy McMorris Rodgers (R-WA) and Communications and Technology Subcommittee Chair Bob Latta (R-OH) said, "This hearing will serve as an opportunity to hear about how the implementation of the program is going, better understand the impact of NTIA’s rules, and what to expect going forward as states begin to award funds. It’s essential that each state be given the ability to develop broadband plans that meet its specific needs, encourages participation by providers, and connects all Americans with reliable broadband services as Congress intended."

Opening Remarks

Chairman Latta opened the hearing by noting that investment in broadband infrastructure to rural communities is a worthy cause. He immediately raised concerns about BEAD implementation:

• First, this program was created outside of regular order, and therefore lacks appropriate provisions to safeguard these taxpayer dollars.  
• There was no discussion of whether $42 billion is the right amount to connect every American or debate on how this program should be administered.  
• The infrastructure bill was also a missed opportunity to enact meaningful permitting reform that would have broken down barriers to deployment and stretched this federal funding further.  

Chairman Latta said that NTIA is adding requirements in the BEAD Program that are contrary to Congressional intent and could make the program less attractive and more expensive to the broadband providers needed to deploy to unserved and underserved communities. He pointed to "price controls for certain broadband plans, preferring certain technologies over others, and adding burdensome and unnecessary workforce and climate requirements." He also raised concerns about workforce and supply chain shortages.  

In her opening statement, Subcommittee Ranking Member Doris Matsui (D-CA) defended NTIA's work with states on low-cost service options on BEAD networks. She has asked NTIA to prioritize affordability in its administration of the program. 

Commerce Committee Chair Cathy McMorris Rodgers (R-WA) said she and her Republican colleagues have been vocal about NTIA's "self-imposed guidelines" that could undermine the program. 

Rep. Frank Pallone, Jr. (D-NJ), the Ranking Member of the full committee, noted the strong support for BEAD Program among Republican governors. 

Rep. Pallone emphasized that the Infrastructure Investment and Jobs Act "directs NTIA to execute a deliberate process with the states and gives NTIA explicit authority to approve or disapprove what each state proposes for its low cost option. Committee Republicans should not forget that this requirement was enacted on a bipartisan basis and not just created out of thin air by NTIA. And Congress included this requirement because having access to internet service is only meaningful if people can actually afford it."

A Word About the Affordable Connectivity Program

On June 1, 2024, the FCC's Affordable Connectivity Program ended due to a lack of funding. BEAD-funded networks were to participate in the ACP, making broadband service provided over the networks more affordable for low-income households. By helping to expand the universe of potential customers, ACP was seen as a way to make BEAD networks more financially viable in the long term. 

Chairman Latta and Ranking Member Matsui are part of the bipartisan, bicameral Universal Service Fund (USF) Working Group which is seeking reforms to the FCC's USF programs. 

“I am committed to finding a long-term solution to address broadband affordability," said Chairman Latta. "However, ACP must be reformed to ensure that it is targeted towards those who truly need the subsidy to pay for broadband, and it must have a sustainable funding source. Relying solely on stopgap funding leads to uncertainty for those who rely on the program."

Testimony

The subcommittee invited four witnesses:

• Misty Ann Giles, Director and Chief Operating Officer, Montana Department of Administration
• Basil Alwan, Chief Executive Officer, Tarana Wireless
• Shirely Bloomfield, Chief Executive Officer, NTCA – The Rural Broadband Association
• Blair Levin, Policy Analyst, New Street Research; Non-Resident Fellow, Metropolitan Policy Project, Brookings Institution

Giles told the subcommittee that states face a common issue—navigating the complex BEAD process. NTIA's functional requests are akin to building a plane while flying it without having the necessary instructions to be successful. NTIA has provided either no guidance, guidance given too late, or guidance changing midstream, all with a lack of appreciation for state operations and costs and the needs of our telecommunication providers—this has created a chaotic implementation environment. She added that while prioritizing advancement in social policies is well intended, these policies create undue complications that states and providers have never faced in other broadband programs. Our telecommunication providers, many of whom are small businesses, are left to navigate these trials while being tasked with successfully deploying BEAD dollars. 

Tarana Wireless delivers internet access via fixed-wireless technology. Using both licensed and unlicensed spectrum, Tarana's next-generation fixed wireless access (ngFWA) platform overcomes previously challenges including slow speeds, interference, and not being directly visible to the tower. Alwan presented Tarana Wireless as a less expensive alternative to fiber broadband deployment. Tarana delivers high-speed, low-latency internet at one-tenth of the cost of fiber, while delivering fiber-class service with available plans up to 1Gigabit.

"To be clear," Alwan said, "we agree fiber is fantastic. In fact, we depend on fiber for our backhaul. Service providers should use fiber wherever it makes sense. Yet when it's too costly, and takes too long to instal...then the solution should be 'Fiber-And'—leveraging another reliable technology that meets and preferably exceeds the standards. If we rely solely on one technology, we will run out of money long before we run out of American families who are depending on us to deliver universal service."

NTCA CEO Shirley Bloomfield delivered extensive testimony on what is working in the BEAD Program as well as raising questions and concerns about BEAD implementation. On the plus side, Bloomfield noted:

• The Infrastructure Investment and Jobs Act articulated two sound priorities: 1) connecting those most in need of broadband access first; and 2) looking to build lasting networks to wherever possible before resorting to “good enough for now” connectivity options.
• State broadband offices and the NTIA are paying attention to vetting of would-be recipients of BEAD funding. "The greater focus in BEAD on upfront vetting of candidates is a welcome development," Bloomfield said.
• The FCC's efforts to improve data on broadband has resulted the best resource produced to date when it comes to identifying broadband availability. Bloomfield also noted that the National Broadband Map could be improved. 
• NTIA has taken feedback on some of its rules and adjusted them accordingly. 

In addition to better broadband maps, Bloomfield said improvements could be made if:

• States could define smaller and more flexible project service areas.
• NTIA and states deemphasized matching funds when selecting BEAD awardees.
• So many strings were not attached to the deployment of BEAD networks and ongoing provision of service to those locations

Bloomfield also emphasized the impact of a recent court ruling that found the contribution mechanism for USF unconstitutional. Rural Americans, she said, ultimately will pay the price through a mix of materially higher broadband rates and materially worse broadband access.

Blair Levin offers four main points in his testimony:

1. The principal causes of the time the BEAD program has taken to be able to fund deployments stem from Congress’ desire to avoid the problems of waste, fraud and abuse that plagued the FCC's Rural Digital Opportunity Fund (RDOF) program and other deployment programs. Half of the time taken to implement BEAD so far was spent on creating the National Broadband Map, as Congress required.
2. The criticism of BEAD implementation that characterizes the Congressional directive to assure that the broadband service is affordable as price regulation is wrong as a matter of law and history. As a matter of history, that is exactly what every FCC, under both Republican and Democratic leadership, has done when providing subsidies for high-cost area deployments. It is necessary to condition the government subsidy on an affordability requirement as the subsidy creates a monopoly.  Monopolies price in ways that would make the service unaffordable to many, which would be contrary to Congressional intent. 
3. The affordability issue would not be a problem if Congress had extended the Affordable Connectivity Program. 
4. There are other issues that will have a large impact on BEAD’s success that have been largely overlooked. 

• Workforce and supply chain issues.
• The biggest challenge for BEAD will ultimately be compliance with the grant terms, an issue that has afflicted all such programs.
• The biggest concern in terms of the long-term commitment to make broadband universally available and affordable, for which BEAD plays a critical role, is the legal and economic threat to the current Universal Service Fund framework. 

Issues of the Day

As Members of the Subcommittee questioned the witnesses, four issues garnered most of the attention: rate regulation, technological neutrality, permitting, and wages.

Rate Regulation 

In the Infrastructure Investment and Jobs Act, Congress mandated that BEAD-supported networks be required to offer at least one low-cost broadband service option for eligible subscribers. Each state (in consultation with NTIA and subgrantees) will define what ‘‘low-cost broadband service option’’ means for this purpose and the NTIA will determine who the eligible subscribers are and approve state definitions of low-cost broadband service options.

Some states have balked at NTIA's suggestion that low-cost broadband service options be priced at $30/month which, in combination with the ACP, would make broadband service affordable for any low-income household on a BEAD network. Republican Members of Congress consider this rate regulation. Democrats defended the move as a way to ensure that all households in BEAD areas can benefit from the investments in these networks.  

"The position of NTIA is ... that this is a voluntary program, so it's not rate setting. However, I would state that is a farce," said Giles.

But, as Blair Levin noted, it is "necessary to condition the government subsidy on an affordability requirement, as the subsidy creates a monopoly. Monopolies price in ways that would make the service unaffordable to many, which would be contrary to congressional intent." When BEAD was created, the AC was expected to be the solution to the program's affordability requirement—but Congress has since let the ACP's funding lapse.

Technological Neutrality

NTIA has adopted a "fiber-first" approach. Fiber-based broadband networks are viewed by many as the gold standard in infrastructure as it has the capacity to easily scale speeds over time to meet the evolving connectivity needs of households and businesses and support the deployment of 5G, successor wireless technologies, and other advanced services. However, in some states, building fiber networks to reach every location may prove to be too costly. Republican Members repeatedly said that NTIA should allow states flexibility to craft broadband plans that meet the needs of the state, using alternative technologies like fixed-wireless access and low-earth-orbit satellite broadband.

Permitting

NTIA requires all broadband buildouts by BEAD subgrantees to be completed not later than four years after receiving their grants. This timeline, while typical for broadband programs, may overwhelm the agencies responsible for conducting permitting reviews of potential projects. With 56 different states and territories all attempting to build roughly within the same four-year time period, speed in the permitting process will be a key to success. Many permitting requirements—such as the National Environmental Policy Act (NEPA) and National Historic Preservation Act of 1966 (NHPA)—Republicans say, create unnecessary barriers to infrastructure deployment by requiring environmental and historical review before deploying, even in previously disturbed areas. Additionally, state and local permitting authorities will be similarly inundated with requests from across their jurisdictions all arriving at the same time. Without permitting reform to reduce these burdens, these delays will lead to rising costs and wasted government funding. 

In 2023, the House Commerce Committee passed the American Broadband Deployment Act of 2023. The Republican-backed bill would:

• Streamline the process for requesting approvals to deploy new broadband infrastructure;
• Require that application fees to review permitting applications are based on actual and direct costs, and that providers have a clear timeline for a response;
• Simplify the process for requesting approval to upgrade existing infrastructure; and,
• Ensure that environmental and historic preservation reviews for broadband deployments are proportional to the level of deployment taking place.

Labor and Wages

Republican Members criticized BEAD's labor requirements, including a suggestion to pay “prevailing wages,” which they said could raise the costs of broadband infrastructure projects. They also criticized NTIA's preference for BEAD awardees to use unionized labor. NTCA's Bloomfield noted that many of her rural providers contract instead of hiring deployment crews.