Draft Bill Would Reclaim BEAD Program Nondeployment Funds

Senator Joni Ernst (R-IA) reportedly has drafted legislation that would direct the states to return funds from the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program not specifically used for broadband deployment – a savings estimated to be as high as $20 billion.

The "Recovering Excess Communications Appropriations while Protecting Telecommunications Upgrades, Reinvestment, and Expansion Act" (the RECAPTURE Act), which as of this writing has not yet been introduced, would amend the statute that created the BEAD Program – the Infrastructure Investment and Jobs Act (IIJA) – to clarify that each state shall "deposit in the general fund of the Treasury, for the sole purpose of deficit reduction," funds beyond those "designated for a specific purpose in the final proposal" approved by NTIA – that is to say, in the wake of the "Benefit of the Bargain" revisions, nondeployment funds.

In "How to 'Spend' Unused BEAD Funding," an October Perspectives from FSF Scholars, former FCC Commissioner and current Free State Foundation Adjunct Senior Fellow Michael O'Rielly – while acknowledging that some state use of BEAD Program funds for non-deployment purposes is "contemplated in the infrastructure law" – recommended two alternative approaches:

• One, given that the national debt is massive and growing rapidly, nondeployment funds should be returned to the U.S. Treasury: "[w]ith the nation facing such widely acknowledged financial difficulties, the thinking by many experts is that this money needs to be reclaimed."

• Two, in light of past grant-recipient performance, at least some of that money should be set aside "to account for the simple fact that not all broadband builds will happen as planned…. [E]xperience suggests that a reserve funding stream could be useful to handle this inevitability."

It is worth noting that others, including Senator Roger Wicker (R-MS), have argued that the IIJA allows states to retain any such remaining money. As Senator Wicker wrote in September:

[T]he Trump administration has changed the way these broadband funds will be spent. Because of this, many states' proposals will come in under budget. These states could actually end up with leftover funds from the 2021 broadband legislation. In that law, Congress was clear: States can use this remaining grant money. That policy rewards those who wisely stewarded their deployment funds.

Senator Ernst's draft legislation, should it ultimately become law, would provide a definitive response to this potentially open question.

Relatedly, Senator Ernst announced on November 7 that she is introducing the "Returning Unspent COVID Funds Act," a bill that would "claw back more than $65 billion in unspent COVID funds and return the money to taxpayers." That legislation would target subsidy programs created by the American Rescue Plan Act of 2021, among others.

NTIA's Roth Targets Net Neutrality, Duplicate Funding

In remarks delivered at the Hudson Institute on October 28, NTIA Administrator Arielle Roth announced implementation changes to the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program regarding two topics of substantial concern for Free State Foundation scholars: (1) the imposition of so-called "net neutrality" obligations, and (2) the possibility of overlapping federal subsidies.

With respect to the former, Roth clarified that state-level net neutrality statutes represent a form of rate regulation inconsistent with statutory language found in the Infrastructure Investment and Jobs Act – "[n]othing in this title may be construed to authorize the Assistant Secretary or the National Telecommunications and Information Administration to regulate the rates charged for broadband service" – and therefore may not be applied to BEAD Program subgrantees, not just in subsidized areas, but statewide:

State-level net neutrality rules—itself a form of rate regulation—create a patchwork of conflicting regulations that raise compliance costs and deter investment…. To protect the BEAD investment, we are clarifying that BEAD providers must be protected throughout their service area in a state, while the provider is still within its BEAD period of performance. Specifically, any state receiving BEAD funds must exempt BEAD providers throughout their state footprint, from broadband-specific economic regulations, such as price regulation and net neutrality.

Regarding the latter, Roth announced a straightforward solution to the duplicate-funding risk I have highlighted on many occasions, most recently in "The Failure's in the Footnote: Agencies Must Improve Broadband Expenditure Coordination Efforts," a January 2025 Perspectives from FSF Scholars:

NTIA will require states to have providers certify in writing that they will not require or take additional federal subsidies—including operational subsidies—to complete or operate their BEAD projects…. BEAD was designed to close broadband gaps once and for all, not create another cycle of dependency. Congress envisioned "future-proof" networks that would stand on their own, not require permanent federal subsidies or future bailouts.

These changes are of a piece with other action Roth has taken to realign the BEAD Program with congressional intent, as well as ongoing efforts to prevent waste, fraud, and abuse.

Video of Roth's remarks can be found here.

Ookla: "Broadband" Availability Expanding Rapidly

According to an Ookla report (registration required) released on October 27, the availability of high-speed Internet access that satisfies the FCC's definition of "broadband" grew dramatically during the first half of this year.

Ookla, which operates the Speedtest® website, reported that the number of states in which most of its users enjoy speeds that meet or exceed the minimum benchmarks established by the FCC – 100 Mbps downstream and 20 Mbps upstream – nearly doubled between January and June of 2025. It also found that parity between urban and rural areas increased substantially during that time.

Specifically, Ookla's testing data revealed that the number of states in which at least 60 percent of users have access to "broadband" jumped from 23 (including the District of Columbia) as of year-end 2024 to 39 by the end of June 2025. In five of those states – Connecticut, Delaware, New Jersey, North Dakota, and Rhode Island –over 70 percent of its users receive "broadband."

In only three largely rural states do less than half of Speedtest® users report "broadband" service: Wyoming (48.26 percent), Montana (41.09 percent), and Alaska (38.42 percent).

In addition, the gap between the speeds provided to urban and rural users narrowed in 33 states during the first six months of this year – nearly double the number of states (17) in which that disparity increased. 

USTelecom Report: Broadband Investment Continues to Rise Rapidly

USTelecom – The Broadband Association is out with its annual report on investment in communications infrastructure by U.S. broadband providers. For 2024, the report documents that America's broadband providers invested $89.6 billion in new infrastructure. This brings the total capital expenditure investment in broadband facilities since 1996 to more than $2.2 trillion.

That's a huge amount of capex for 2024 and since 1996. As far as I know, no one has seriously questioned the validity of USTelecom's annual investment reports.

It's not news that it is very expensive – very capital intensive – to meet America's expanding need for fast, reliable, and secure broadband networks. That's what the USTelecom reports have documented over the last three decades. Certainly, America's broadband networks will be essential to enabling and facilitating the burgeoning use of AI. America's economic security will depend on it.

Of course, there is an important policy context that undergirds any discussion of the role of broadband – and continued broadband investment – in America's economy. Given the competitive environment that exist today, there certainly is no need for adoption of any heavy-handed regulatory mandates such as the now eliminated "Net Neutrality" regulations. They stifle investment and innovation, rather than promoting it.

And there is a need to remove permitting and other impediments, especially at the state and local level, that unduly delay infrastructure projects and render their costs unreasonable.

Carr Updates Congress on Broadband Interagency Coordination

In a series of letters dated September 9, 2025, FCC Chairman Brendan Carr updated congressional leaders on steps taken by the Commission to improve data collection and interagency coordination efforts related to federal broadband infrastructure subsidies.

The Government Accountability Office (GAO) published "Broadband Programs: Agencies Need to Further Improve Their Data Quality and Coordination Efforts" on April 28, 2025. That report, which I described in detail in a May post to the FSF Blog, highlighted shortcomings in the processes by which the four agencies primarily responsible for distributing billions in federal dollars – the FCC, NTIA, and the Departments of Treasury and Agriculture – share data to prevent the awarding of duplicate grants and the overbuilding of privately funded infrastructure.

It also identified concerns relating to the accuracy of the FCC's maps – the National Broadband Map and the Broadband Funding Map – and the efficacy of federal and state agency coordination.

To address these issues, the GAO report made 14 recommendations, six specific to the FCC.

In his letters to committee leadership in both the Senate and the House, Chairman Carr wrote that the Commission "is pleased to inform you that the Commission is actively addressing and incorporating GAO's six recommendations into [its] processes and interagency coordination of federal broadband funding projects."

Regarding data collection, the FCC, consistent with its internal corrective action plan, has been documenting internal policies and procedures, reviewing how mapping data is validated, and aligning processes relating to verifications, audits, and enforcement.

To improve interagency coordination, the Commission has been working with other agencies to establish a common definition of "covered data" for the purpose of information sharing as well as timelines governing that sharing process.

In conclusion, the letters assert that, "[t]ogether, when fully implemented, the Commission, as well as our sister agencies, expect these process improvements will further minimize wasteful duplicative funding."

For more on the critical importance of effective interagency coordination regarding broadband subsidies, I direct your attention to "The Failure's in the Footnote: Agencies Must Improve Broadband Expenditure Coordination Efforts," my January 2025 Perspectives from FSF Scholars, as well as the numerous Free State Foundation publications referenced therein.

PRESS RELEASE: FSF Says the Proposed Charter - Cox Transaction Will Benefit Consumers

Today, Free State Foundation President Randolph May and Senior Fellow Andrew Long filed comments with the FCC in the agency’s proceeding to consider the proposed Charter - Cox transaction. Below are excerpts from the Introduction and Summary and the Conclusion that capture the essence of FSF’s comments: 

"We evaluate the likely relevant impact that the proposed transaction would have – that is, how it might affect the public interest, convenience, and necessity – given the specifics of the proposal and, critically, the broader competitive context that exists today. In short, we find there is ample evidence that the proposed Charter/Cox transaction, if approved, would benefit consumers by invigorating competition in the broadband, mobile, and video marketplaces. We also conclude that, given the de minimis extent to which the applicants' footprints overlap and the indisputable widespread existence of competitive pressures, there appear to be no substantial transaction-specific harms that might offset those benefits.”

 

*     *     *

"[T]he combination of Charter and Cox promises numerous consumer benefits. These include lower costs, greater choice, and additional innovation in traditional cable offerings (broadband and video) fostered by an enhanced ability to compete with often much larger rivals, including Big Tech platforms with global reach; (2) the expansion of Charter's hybrid MVNO offering into Cox's footprint combined with lower costs through greater scale; and (3) the "onshoring" of Cox customer-service jobs. And given the lack of any meaningful overlap in service territories, not to mention the high level of third-party competition in all three marketplace sectors, there appears to be little, if any, basis for concern that the transaction could result in significant harms."

Wireless Taxes Are Way Too High

The Wireless Foundation's valuable annual report regarding the taxes and fees imposed on wireless services has just been released. It short, it paints a dismal picture for consumers with respect to the taxes, fees, and government surcharges added to their bills.

 The top line: A typical American household with four phones on a “family share” plan, paying $100 per month for taxable wireless services, would pay over $330 per year in taxes, fees, and government surcharges.

 

Taxes, fees, and government surcharges now make up a record-high 27.60% of the average wireless services bill.

 

The federal Universal Service Fund (FUSF) charge has increased again, from 12.76% to 13.36% of the average wireless services bill, and state and local taxes on the average bill also increased, from 14.01% to 14.25%. Together, you get the 27.60% total.

 

Maryland, where the Free State Foundation is located, ranks in the top quartile of those states with the highest taxes, fees, and government surcharges imposed on wireless services. Over 30% of the average Marylander's wireless services bill is composed of those add-ons.

 

Some good news: The average charge from wireless providers has decreased by 29% since 2012, from $47.00 per line per month to $33.36 per line.

 

Now the bad news: During this same time, wireless taxes, fees, and government surcharges increased from 17.18% to 27.60% of the average bill. The result – the consumer benefits from lower wireless prices are almost totally offset by higher taxes and fees.

 

Of course, the Tax Foundation's report is not just a sterile exercise in collecting and organizing data. All this matters greatly to consumers, and especially to low-income families. According to the report, approximately 83 percent of low-income adults live in wireless-only households. Wireless taxes, fees, and surcharges are regressive and disproportionally adversely impact low-income families.

 

That should be reason enough for state and local taxing authorities, and the federal government with regard to the USF fee, not only to halt the upward trend but to act to substantially reduce the current tax burden on wireless consumers!

The South Carolina BEAD Way

South Carolina's broadband office has announced that of the $551 million originally available under BEAD grants for connecting the state's remaining unserved locations, it plans to spend just $41.3 million, or 7.49 percent of the $551 million originally allocated to the state. 

Only 20,480 eligible homes and businesses remain to be served. South Caolina attributed this to the investments already made using American Rescue Plan Act funds. These funds led to the relatively rapid reduction in unserved and underserved locations.

 

This very sizeable reduction in expenditures is a testament to the success of the revamping and reorienting of the BEAD program under the Trump administration. The Biden administration's rules, contrary to the congressional direction, disfavored the use of lower cost technological platforms other than fiber. And the Biden administration created additional costs by including it its rules mandates requiring use of union labor, favoring government-owned networks, and inducing rate regulation.

 

South Carolina should be commended. The state is committed to connecting all its unserved locations. And saving the federal government millions of dollars too.

Constitution Day 2025

 by Randolph May

 

Tomorrow, September 17, is Constitution Day, the day on which we celebrate the 238^th anniversary of the signing of the Constitution of 1787 by thirty-nine Framers in Philadelphia. The signing marked the end of a long hot summer of debate – debate sometimes seemingly as heated as the temperature in the modest Assembly Room of the Pennsylvania State House, the name of which was later changed to Independence Hall.

After the Constitutional Delegates adjourned for a final time, Elizabeth Willing Powell questioned Ben Franklin: "Well, Doctor, what have we got, a republic or a monarchy?" Franklin's response: "A republic, if you can keep it."

Perhaps this is an apocryphal tale. But nevertheless, one that should be a constant reminder to all Americans of good will that the democratic Republic which our Constitution established is not preordained to last forever. It always has been and forever will be dependent upon "We the People" – the Constitution's first three words – to nourish and sustain the American Experiment in democracy.

Now, in the wake of Charlie Kirk's assassination, the fabric of our Republic seems especially frayed. Of course, the societal instability – even breakability – we feel because of increasing acts of violence rooted in political differences did not arise overnight. Far from it. And it has many causes.

But it's blinking reality not to acknowledge that over-the-top overheated political rhetoric – while never ever a justification for acts of violence like the one that killed Charlie Kirk – is likely one of those causes.

I do not intend to point fingers from or at the left or right. That's not what's needed in America now.

Here, on this Constitution Day, one should turn back to the Constitution – and the First Amendment's guarantee of free speech. The guarantee that citizens must enjoy the freedom to speak freely is essential to the continuation of the American Experiment.

But with that freedom, secured by the Constitution if we can keep it, also comes the responsibility of us all to encourage civil discourse and respectful debate about controversial issues, while at the same time adhering to fundamental principles in which we believe.

Voltaire declared: “I disapprove of what you say, but I will defend to the death your right to say it.”

At the Free State Foundation, we have tried to model that behavior since our founding in 2006. And I pledge we will continue to do so.

With friendship and optimism on Constitution Day,