Economists’ Comments on State BEAD Proposals

We write to provide economic insight to help states maximize the benefits of its Broadband Equity Access and Deployment (BEAD) and other funds for its residents. Several economic concepts are critical to maximizing the benefit of the BEAD money for state residents.  

• BEAD money is limited. A dollar spent for one use cannot be used for another.  
• Prices set by competition usually result in more efficient outcomes than prices set by regulators.
• Consumers care whether they can get sufficient service when and where they want, not which technology underlies the service.
• Service today is worth more than tomorrow. The longer the delay in providing service, the more detrimental to people forced to wait.  
• Risks of non-performance should fall on the party best able to bear and control that risk. A party is less likely to perform if it faces few or no consequences for failing to fulfill its promises.  
• Every decision involves tradeoffs. For example, attempting to provide the highest quality of broadband everywhere makes it more difficult to provide affordable access to the greatest number of people.  

We recommend that the state adopt the following five rules to maximize the BEAD benefit:  

1. Set a specific and measurable (i.e., quantitative) scoring mechanism for selecting among subsidy applicants to maximize competition and keep BEAD buildout costs down.
2. Allow suppliers of all technologies to compete, without preference over technologies, to provide sufficient service for state residents.
3. Determine geographic service areas for bidding before the competition.
4. Ensure that applicants have the capability to perform on their promises of delivering service, and ensure subgrantees do perform.
5. Any price commitments as part of the selection process should be tied to prices for similar service in unsubsidized areas.
6. Determine and communicate in advance specifically how the projects will be evaluated.