The Broadband Equity, Access and Deployment Notice of Funding Opportunity – Financial Issues

The National Telecommunications and Information Administration (NTIA) has established basic rules for the $42.5 billion Broadband Equity, Access and Deployment (BEAD) grants in the recent Notice of Funding Opportunity (NOFO). One of the most important aspects of the rules that potential applicants need to understand relates to funding and financing. Note that the NOFO instructs the States what it expects to be included in each state’s broadband grant program for the BEAD funding. The first set of rules concerns the amount of grant funding. Since the Infrastructure Investment and Jobs Act passed Congress, the industry has been talking about BEAD grants offering 75 percent grant funding. It’s not that simple. The NOFO says that states are required to incentivize matches of greater than 25 percent from subgrantees. That means states must make every effort to award less than a 75 percent grant. In fact, if two entities request building fiber to the same geographic area, the one asking for the smaller amount of money will automatically win, assuming they meet the basic grant requirement. This makes sense and will stretch the grant money further, but internet service providers should be prepared for a sliding scale where the less the borrowing the greater the grant points.

[Doug Dawson is president of CCG Consulting.]