Last week, we received a phone call that the House of Representatives Committee on Energy and Commerce Subcommittee on Communications and Technology was looking to host a congressional hearing on the status of the Broadband Equity, Access, and Deployment (BEAD) Program.
While I always welcome the opportunity to share thoughts with Congress, this particular hearing was one that would require threading a needle. On one hand, NTCA continues to hold out that we will have some members across the country looking to participate in this historic broadband grant program and fill in the gaps in rural communities where other providers have chosen not to deploy. On the other hand, we also continue to have concerns on how the program is shaping up in a number of states.
At the end of the day, all of us at NTCA were confident that we could find a way to thread that particular needle, as it was a very timely opportunity to share with key members of Congress how the recent Fifth Circuit ruling on the constitutionality of the Universal Service Fund (USF) will chill any and all investments in broadband networks, dramatically increase rural consumer rates and put existing loans at risk. So, I changed some personal plans (spending a few days working from the beach with family) and spent the drive back from Delaware asking myself the questions that I hoped would be asked of me so I could share the topics most top of mind for NTCA members—and then maybe played Linkin Park and the Killers at top volume as well!
My message was that while new grant programs are exciting, it wasn’t grants that made this happen. It was a mix of commitment, loans, private capital and support for the federal USF. However, there is more to do. We need to finish connecting Americans, especially those in rural areas not served by NTCA members, and support the ongoing mission of universal service, which begins only once the network is built.
So, with that in mind, here is what I shared with Congress.
The things we think have worked well with BEAD to date:
First, the Infrastructure Investment and Jobs Act (IIJA) set forth two critical priorities: connecting those most in need of broadband first and building networks meant to last wherever possible before resorting to “good enough for now” options. These provisions should help to target funds properly and avoid the failures of past broadband programs.
On this last point, an analogy may be helpful. We often hear how important it is to “win the race to 5G.” No one talks about “winning the race to make sure everyone at least has LTE wireless.” Why would we settle here? Why would we not want to “win the race to future-proof our networks” rather than spending over $42 billion for “good enough for now” broadband?
A second promising aspect of BEAD is the upfront vetting of funding recipients. While it takes time to get this right, as the FCC’s Rural Digital Opportunity Fund proceeding showed, failing to vet upfront leads to confusion, waste, wasted time and Americans still unserved.
Third, in the face of concerns about overstated coverage and locations that don’t exist on the commission’s broadband map, we’re pleased that National Telecommunications and Information Administration (NTIA) and the states have tried to refine data to get a more accurate picture. It’s not clear yet if this effort has worked, but it gives us a better chance to get things right.
Fourth, I commended NTIA’s willingness to take feedback and revisit certain program rules. From letters of credit to Build America/Buy America to Part 200 rules, NTIA has tried to reduce some program burdens.
Fifth, NTCA was delighted to see Congress expressly state that the IIJA should not be read to “reduce the congressional mandate to achieve the universal service goals for broadband.” USF is complementary to grant programs like BEAD, and this congressional reaffirmation was critical.
But indeed, NTCA members have a number of concerns:
First, while I mentioned our appreciation for efforts by NTIA and the states to improve the broadband map, many flaws remain. These flaws may keep providers from reaching areas in need, and the lack of confidence in the challenge processes is a deterrent.
Second, how states define the geographic areas for BEAD will affect who participates and the kinds of networks built. For smaller providers, being required to serve every unserved location in massive rural county will be daunting. Also, if a project area is too big, it undermines bids for priority broadband projects. Rather than getting fiber to most locations and alternative technology to the remainder, we’ll end up with “the lowest common denominator” for all locations. This is a bad result both for consumers and for the government paying billions of dollars to help serve them.
Third, the weighting of matching funds in BEAD could affect participation by smaller providers. When matching funds largely determine which applicant wins, the biggest provider with the most financial resources will always win. This is not a recipe for widespread participation and success.
Fourth, other strings and concerns could deter smaller provider participation. For example, concerns about affordability measures in some states remain, as they could undermine project sustainability. Concerns about increased costs for labor or supplies are another issue worth watching and may require additional relief.
Permitting is an issue that the subcommittee has taken the lead in addressing. However, we continue to hear about lengthy delays when it comes to obtaining federal permits or state and historical preservation approvals. Additional action is important, but so too is execution – agencies must adhere to streamlining measures and need staff to handle applications.
A final substantial barrier is uncertainty surrounding the FCC’s USF programs. USF support has been critical to the remarkable progress that smaller operators have made in providing and sustaining affordable rural broadband, but a federal court recently declared the USF contribution mechanism unconstitutional. This decision may have a chilling effect on BEAD participation. In a recent survey, more than 200 NTCA members indicated that the loss of USF could lead to skyrocketing rural broadband rates, plummeting broadband investment and put loans for prior deployment at risk. If this happens, taking on more investment through BEAD may be the last thing on the minds of hundreds of broadband providers, who are frankly the best positioned and knowledgeable on serving these rural markets.
BEAD offers great promise, but significant challenges remain. That is why we look forward to working with Congress, NTIA, states and other stakeholders to develop policies that will deliver the goals of universal connectivity. Reminding policymakers about the impact of recent court decisions on USF made the journey worth the effort.
Bloomfield’s full testimony can be viewed on the committee’s website.