Bandwidth Hawk

BEAD delays are inevitable and, as Steven Ross reports, the death of BEAD is now also possible – and maybe even likely.

By: Steven S. Ross, Broadband Communities

Here’s the bad news.

Broadband deployment to the unserved is now a major political issue. The main reason seems to be the large pot of money up for grabs—not wokeness or a preference for fiber.

With varying degrees of formality, many prospective broadband deployers have been alerted by state BEAD offices. But the public, equipment vendors and dealers, and outside-plant construction firms generally have not.

As of April 18, the “most optimistic date” for completion of National Telecommunications and Information Administration (NTIA) review of new rules – as relayed by many state offices but not necessarily released to the general public – would be mid-May.

A formal request on April 16 for more information on the Commerce Department’s public relations portal, lodged by myself, was unanswered as of April 18.

In other words …

As the administration, nonprofit shills for big business, and many in Congress complain about supposed delays in the cumbersome Broadband Equity, Access, and Deployment (BEAD) grant process, the $42.5 billion effort is now, despite the supposed mid-May date, about to be delayed another year. I note that contrary the administration’s statements, and Congressional statements, BEAD has met every statutory deadline in the 2021 law.

Secretary of Commerce Howard Lutnick’s stated reason for delay, according to a March 5 press release posted on the Department of Commerce’s website, is “because of the prior administration’s woke mandates, favoritism towards certain technologies, and burdensome regulations, the program has not connected a single person to the internet and is in dire need of a readjustment.”

With that, Lutnick announced the beginning of a “rigorous review” of the BEAD Program.

He also said his review intends to result in “ripping out the Biden Administration’s pointless requirements.”

“It is revamping the BEAD program to take a tech-neutral approach that is rigorously driven by outcomes, so states can provide internet access for the lowest cost,” Lutnick’s comments stated. “Additionally, the department is exploring ways to cut government red tape that slows down infrastructure construction.”

Deafening silence

At the time, Lutnick stated that he planned to “work with states and territories to quickly get rid of the delays and the waste.”

“Thereafter we will move quickly to implementation in order to get households connected,” the comments stated.

That was six weeks ago. Only silence since.

It is unclear if existing awards have been put on hold. Three states (Delaware, Louisiana, Nevada) have reached the point where all the deployers have been selected. Additionally, their projects have been released for public comment.

A delay seems likely, but again, the Department of Commerce’s press office has not responded.

State offices that are well-along in their final selection process, but not completed, like Maine and West Virginia, have been told to stop all activity until the word on new rules comes down from NTIA.

Current costs are in line

Despite Lutnick’s statement, BEAD grant costs handed out so far, or ones about ready to be handed out (Maine and West Virginia) soon, seem not far off of the numbers associated with subsidies from U.S. Department of Agriculture (USDA) Reconnect program. This is despite the fact that BEAD premises should be harder to service, due to their remoteness.

For the first three rounds of Reconnect, the average subsidy for passing each home, farm, other business, or school was just over $4,500 in the third round (construction started mainly in 2023). That’s compared to $4,100 in 2019, and almost $6,000 in 2020.

All awardees in the third round, and almost all in previous rounds, told USDA they were deploying FTTP, or fiber-to-the-premises.

BEAD subsidies seem to be mostly in the $5,000 to $6,000 range, judging from what state BEAD offices say and what deployers using my financial models are telling me.

USDA awards typically cover as much as 80 percent of the total deployment cost and can include loans. BEAD varies from state to state, but 60 percent seems more the norm.

Thus, the idea that BEAD has leaned more into fiber and needs the mid-course correction due to its cost seems a bit far-fetched.

Some fine-tuning certainly could be done. But major overhaul at this late date for minor changes seems silly.

Also, wireless providers will eventually need available fiber to multiply the number of their wireless access points, allowing them to maximize use of spectrum. The Federal Communications Commission (FCC) expects to get authorization to auction off the last available spectrum later this year.

How we got here

The risk to BEAD was needlessly increased by sleepwalking the nomination of Arielle Roth to head NTIA.

Her appointment was announced February 3. Her confirmation hearing held March 27, and final comments and complaints were due the following week. But Congress recessed a few weeks later without acting.

Arielle Roth (pictured above) could be confirmed as head of the NTIA in April. Screenshot

As it is, much of the revision is and will be well underway by the time she takes office at the end of April (at the earliest). The NTIA has a caretaker in charge now, and the head of the NTIA’s BEAD office quit a month ago.

Federal register issue?

Even the optimistic mid-May release of rules that the NTIA has in mind would not likely start the clock running.

Proposed rule changes, especially of this magnitude, are supposed to be released for comment in draft form for 30 days in the Federal Register, under the Administrative Procedures Act. Folks at NTIA would then have up to 30 days to resolve issues raised in comments and then finalize the new rules.

That pushes potential deployers back to July (at the earliest).

By the time funding is finalized, construction contracts firmed up, labor found, and tariff issues settled, the optimal construction season will be gone in much of the country. The result? Another year’s delay, caused by the folks complaining about the delay!

There will be inevitable lawsuits due to any new rules anyway. That’s a given, considering the amount of money on the table. But I note that only one deployer right now – Starlink – has a particularly short route to providing service. They can drop off a home satellite system, point it at the sky, and plug it in.

The hardware cost is about $600, and the satellites are already orbiting. Not all the spectrum is in place, but a new spectrum sale – the last one physically possible – is in the works.

‘This whole delay is a sham’

The price for Starlink service to consumers would be high without subsidy. Starlink wants more than $100 a month. Folks who have analyzed FCC maps think low-Earth orbit (LEO) satellite would work as a solution for as many as 20 percent of BEAD-eligible premises. That’s far more than the 2 to 4 percent many (including me) thought likely.

Many of those remote locations are farms. Notably, farm systems such as automated tractors and water dispersal. They also depend on extremely solid reliability, with fairly low data transmission needs. I think Starlink can often pass muster, but I may be in the minority on that.

My conclusion? This whole delay is a sham to get a cheap shot at “wokeness” and to include more LEO satellite. Starlink is a great product. It has been competing for and winning some BEAD subsidies. So has Blue Origin’s Kuiper satellite system.

Maybe they do deserve more. But what does “wokeness” have to do with it?

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