Tuesday, November 26, 2024
Through the Infrastructure Investment and Jobs Act, Congress and the Biden Administration created the “Internet for All” Initiative, a $65 billion investment to ensure all Americans can access affordable, reliable, and high-speed internet. But with new leadership coming to the White House and the U.S. Senate in January, the promise of the Infrastructure Investment and Jobs Act may not be realized.
On November 21, 2024, incoming Senate Commerce Committee Chairman Ted Cruz (R-TX) sent a pair of letters to the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA), the Executive Branch agency charged with implementing the broadband provisions of the Infrastructure Investment and Jobs Act. The letters—one about the Broadband Equity, Access, and Deployment (BEAD) Program, and the other about the Digital Equity Act—effectively instruct NTIA to ignore the law and halt progress towards universal connectivity in the U.S. Here we take a look at Sen. Cruz's letters and their potential impact.
Congress appropriated $42.45 billion for the Broadband Equity, Access, and Deployment (BEAD) Program, funds to be used by states, territories, the District of Columbia, and Puerto Rico for broadband deployment, mapping, and adoption projects. The first priority for BEAD funding is providing broadband to unserved areas (places lacking broadband with at least 25/3 Mbps service), followed by underserved areas (those with service below 100/20 Mbps), and then to community anchor institutions lacking at least 1/1 Gbps service.
NTIA administers the BEAD program and sets guidelines for how states should award grants to the entities that will build and operate the high-speed networks.
In a letter to Assistant Secretary of Commerce for Communications and Information Alan Davidson, the head of the NTIA, Sen. Cruz noted that President-elect Donald Trump has already signaled that substantial changes are on the horizon for this program saying:
We’re spending—just to show you—we’re spending a trillion dollars to get cables all over the country, up to upstate areas where you have two farms, and they are spending millions of dollars to have a cable. Elon can do it for nothing.
"Elon," of course, is Elon Musk, the owner of satellite internet company Starlink. Musk has much to gain if NTIA's "fiber-first" preference in the BEAD program is loosened to allow Starlink to win contracts to provide service to more unserved and underserved locations.
Cruz told Davidson that with new NTIA and Congressional leadership, "states will no longer be subject to the unlawful and onerous bureaucratic obstacles imposed by the Biden-Harris NTIA."
On Cruz's agenda for 2025 is reversing or eliminating NTIA guidelines he believes:
"[S]tates will be able to expand connectivity on terms that meet the real needs of their communities, without irrelevant requirements that tie up resources, create confusion, and slow deployment," Cruz said.
The senator also instructed Davidson to "bear these upcoming changes in mind" and "pause" NTIA's BEAD efforts during the current transition period.
Through a review of the law and with public consultation, NTIA decided that the unique characteristics of fiber meet the Infrastructure Investment and Jobs Act's requirement to “ensure that the network built by the project can 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."
But NTIA is also allowing room for additional strategies—like fixed-wireless access and service provided by low earth orbit (LEO) satellites like Musk's Starlink—in areas where fiber networks may be too expensive to deploy.
To be clear, NTIA has not proposed or mandated any kind of rate schedule for service provided over BEAD-supported networks. However, Congress did include a grant condition in the law that requires BEAD-supported providers to offer at least one low-cost option for eligible subscribers. Each state and territory—in consultation with NTIA and internet service providers—has determined what that low-cost option will be in their areas.
NTIA has approved proposals that identify a range of expected costs to low-income households while also permitting providers to request waivers to account for areas where the costs to deploy are higher. This waiver model recognizes the geographic and economic diversity of states and territories while ensuring affordable options are available. NTIA notes that the various approaches states and territories have proposed, and NTIA has approved, reflect states’ and territories’ balancing of a variety of interests, including affordability and robust provider participation.
Of course, BEAD is only supporting the deployment of broadband infrastructure to locations that do not currently have access to 100/20 Mbps service. BEAD, in essence, will use taxpayer money to create local monopolies for an essential service. Absent competition, there will be no market pressure to ensure that public funding is not used to create networks that charge unfair rates for services that are essential to full participation in modern life in the United States. The low-cost plans are the only guarantee of affordable rates.
NTIA sees workforce development as a key component of the BEAD Program’s success. NTIA urges states and territories to think through a number of workforce-related issues as they consider how their state’s or territory’s workforce will build out high-speed internet infrastructure.
States and territories must have programs that will promote equitable training, development, and deployment of a qualified workforce. States and territories must consider certain criteria when selecting subgrantees, including the use of fair labor practices, fair wage practices, project labor agreements, and proper classification of workers.
“Build America, Buy America” (BABA) requirements outlined in the Infrastructure Investment and Jobs Act also aim to create jobs across the country. BABA established a domestic content procurement preference for all Federal financial assistance obligated for infrastructure projects after May 14, 2022. The domestic content procurement preference requires that all iron, steel, manufactured products, and construction materials used in covered infrastructure projects are produced in the United States.
Again, NTIA has allowed some flexibility for states. On February 23, 2024, the Department of Commerce released a BABA waiver for the BEAD Program.1 This waiver takes into account comments received during the 30-day public comment period for the proposed draft waiver and provides specificity and certainty on how the Buy America preference applies to optical fiber, fiber optic cable, electronics, enclosures, and other products that will be used to build broadband networks. Over a dozen companies have announced new domestic investments in response to NTIA’s implementation of the BEAD Program, creating over 2,000 new jobs.
Communities that lack broadband are also often the most vulnerable to extreme weather and climate events. As the nation makes these historic investments to deploy new broadband infrastructure, NTIA believes it is critical for this infrastructure to be resilient.
To ensure taxpayers get long-lasting value for their investment and to help strengthen the longevity of BEAD-funded networks, NTIA requires that states and territories “demonstrate that they have sufficiently accounted for current and future weather and climate-related risks to new infrastructure projects.”
Essentially, states and territories must take into account the likelihood that this infrastructure, funded by the taxpayers, will be impacted by increased storm, fire, or other hazards.
Rather than using federal funds to build networks that cannot withstand foreseeable climate events, NTIA is striving and encouraging the states and territories to build networks that are secure and resilient to ensure taxpayer dollars are maximized for the long-term.
As Carol Mattey wrote in 2023, NTIA directed states and territories to select fiber over non-fiber technologies—except where it costs too much. The “Extremely High Cost Per Location Threshold” is a method for calculating where states can use a less expensive technology than fiber (e.g. fixed wireless). Setting the threshold lower reduces the opportunity for fiber applicants to automatically win over non-fiber applicants, which allows finite BEAD dollars to go further.
Establishing the Extremely High Cost Per Location Threshold requires a tradeoff between quality and coverage. More fiber means better connectivity but increases the risk that there won’t be enough money to bring internet to every location; less fiber means worse connectivity but an increased likelihood that everyone gets connected and, potentially, that some money is left over for community anchor institutions and non-deployment activities.
NTIA said states should set the Extremely High Cost Threshold as high as possible to help ensure that fiber projects are deployed wherever feasible, but it did not require state broadband offices to specify their specific threshold when they filed their Initial Proposals. By setting the Extremely High Cost Threshold after the initial solicitation, states give themselves the freedom to select applications proposing non-fiber technologies in the areas where fiber bids are highest to make the sum of the state’s projects fit their budget. State broadband offices don’t want to dissuade non-fiber applicants from applying, not knowing now whether there will be applicants proposing to deploy fiber for each and every location in the state and not knowing the specific BEAD outlay that fiber applicants will seek for each and every project. Declining to set the threshold in advance puts some pressure on fiber applicants to submit reasonable requests because they won’t know the precise tipping point where the state may select non-fiber applicants.
As part of the Infrastructure Investment and Jobs Act, the Digital Equity Act appropriated $2.75 billion to fund initiatives that equip people with the skills and technology they need to thrive in our increasingly digital world. The law created three separate but complementary programs:
"I urge you to withdraw the unlawful NOFO and halt issuing Program grants before you cause real harm."—Sen. Cruz
In a separate letter on Nov 21 to the NTIA, Sen. Cruz raised concerns about the third program—the $1.25 Competitive Grant Program. Specifically, he takes issue with the program’s prioritization of “covered populations”—and one covered population in particular: members of a racial or ethnic minority group. As defined by the Infrastructure Investment and Jobs Act, covered populations represent eight demographic groups that historically have had lower rates of broadband adoption, including: veterans, aging individuals, low-income individuals, rural residents, people with disabilities, incarcerated individuals, individuals with disabilities, individuals with language barriers, and the aforementioned racial and ethnic minorities.
In his letter, Sen. Cruz asks NTIA to pause implementation of the Competitive Grant program. He argues that, by relying on metrics related to “covered populations,” NTIA is using race-based criteria to make funding decisions. This, according to Sen. Cruz, is unconstitutional. Citing the Fifth Amendment and a 2023 Supreme Court decision on affirmative action, Cruz says that race-based criteria can only be used when remediating “specific, identified instances of past discrimination that violated the Constitution or a statute.” According to Cruz, the Competitive Grant program does not meet this standard.
Cruz is correct that covered populations are a priority in the program, but his assertion that NTIA itself established this priority is not. Rather, the law explicitly defines covered populations and specifies that NTIA should consider them when evaluating grant applications. Further, Congress articulates why the program is needed, writing that “The digital divide disproportionately affects communities of color, lower-income areas, and rural areas, and the benefits of broadband should be broadly enjoyed by all.”
Given the lack of any existing constitutional challenge to the Digital Equity Act, NTIA has no grounds to disregard the explicit text of the law—as a federal agency, it is, in fact, obligated to follow federal law.
The Competitive Grant Program recently gathered its first round of applications. NTIA received over 700 applications for a combined total of $6.5 billion in requested funding (much more than the nearly $1 billion available this round). NTIA is currently evaluating applicants and, once winners are selected, NTIA and the winning applicants will begin the application “curing” process, i.e. revising plans and adjusting budgets to ensure compliance with program expectations. This will take time, and winners will not be guaranteed funding until the process is complete and contracts are signed.
Can NTIA finalize awards before January 20? NTIA has indicated that it will try. However, the amount of work needed—by both NTIA and the awardees—to finalize awards is substantial. What is clear is that the next Administration will oversee grantees, issue reimbursements, and manage any additional grant rounds (i.e. the $250 million remaining for FY 2026).
NTIA is currently led by Assistant Secretary of Commerce for Communications and Information Alan Davison under U.S. Secretary of Commerce Gina Raimondo. Until January 20, 2025, both serve under President Joe Biden and are likely to continue implementing the Infrastructure Investment and Jobs Act and other laws as they have been doing for the past three years. At the Benton Institute for Broadband & Society, we will continue to keep an eye on NTIA’s approval of states’ spending plans on both broadband deployment and adoption.
On January 3rd, 2025, the 119th Congress will convene and Sen. Cruz will presumably chair the Senate Commerce Committee. On January 20th, President-elect Donald Trump will be inaugurated and take over the executive branch, including NTIA. He has vowed to eliminate all programs that promote diversity, equity, and inclusion on day one of his second term. Trump has also indicated his intention to nominate Cantor Fitzgerald CEO Howard Lutnick for Secretary of Commerce. Despite Commerce’s large broadband portfolio, Lutnick’s views on connectivity are unknown. He is, however, close to Starlink owner Elon Musk who could profit from changes in BEAD rules.
Although the Federal Communications Commission has limited involvement with BEAD, Trump’s pick for FCC chair, Brandan Carr, took to X on November 23 to again complain about BEAD saying the federal government is “throwing even more money at the problem, instead of fixing it.”
On November 19, the New Mexico Office of Broadband Access and Expansion asked the state's Legislative Finance Committee for $70 million to help cover the cost of connecting some locations to satellite high-speed internet. Over a five-year period while high-speed internet lines are built, the money would pay for a $600 satellite receiver to get connected, along with $30 toward the $120 total monthly bill. The program is called Accelerate Connect New Mexico. Drew Lovelace, the broadband office’s acting director, thinks Starlink is the only possible provider of the service.
Without noting the connection between Starlink and Trump’s Department of Government Efficiency (DOGE) which will be headed by Elon Musk, Carr responded to the news saying,
The federal government continues to claim that Starlink is not a Reliable Broadband Service and thus is ineligible for full participation in the $42B program. So the federal government is going to spend more of your money than necessary and take longer than needed to connect households using non-satellite technologies.
But, because the $42B is a complete mess and leaving Americans stuck on the wrong side of the digital divide, New Mexico is turning to Starlink as the high-speed Internet service that can get the job done today.
In other words, New Mexico shows that, contrary to the federal government’s claim, Starlink is a reliable broadband service and the Biden Admin’s contrary claim is not grounded in the facts or sound policy.
It is @DOGE time.
Notes
Kevin Taglang is Executive Editor at the Benton Institute for Broadband & Society. Drew Garner is Benton's Director of Policy Engagement.
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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Broadband Delivers Opportunities and Strengthens Communities
The Department of Commerce’s National Telecommunications and Information Administration (NTIA) has approved and recommended an application from Illinois, allowing the state to request access to more than $23 million to implement its Digital Equity Plan. This funding comes from the $1.44 billion State Digital Equity Capacity Grant Program, one of three Digital Equity Act grant programs created by the Infrastructure Investment and Jobs Act. Illinois will use the $23,732,912 in funding to implement key digital equity initiatives, including creating a dashboard to measure progress toward digital equity and launching university partnerships and recruiting nonprofits and community-based organizations to serve as regional digital equity champions/conveners.
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2. Gigapower’s workforce model is fraught with exploitative, low-road employment practices.
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