House Commerce Hearing Critiques NTIA's Handling of BEAD Program

As I previewed in a Monday post to the Free State Foundation blog, the House Energy and Commerce Committee's Subcommittee on Communications and Technology the following day held a hearing on the status of the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program. Participants had much to say about NTIA's management of the program, particularly with respect to timing, clarity, and the approval process.

Committee Chair Cathy McMorris Rodgers (R-WA) in her opening remarks focused on "NTIA's decision to pressure states to regulate the rates charged for broadband service," "unnecessary workforce and climate-related requirements," "an expensive fiber-first agenda," and "unnecessary delays in NTIA's approval process."

Subcommittee Chair Bob Latta (R-OH) touched on similar topics in his opening remarks – and expressed concern that "NTIA continues to add requirements that are contrary to Congressional intent and make this program less attractive and more expensive to the broadband providers needed to deploy to unserved and underserved communities."

In a Written Statement, Misty Ann Giles, Director of the Department of Administration and Chief Operating Officer for the State of Montana, characterized navigating the BEAD Program process as "akin to building a plane while flying it without having the necessary instructions to be successful" and complained that "Montana has often received conflicting or even new and changed guidance after submitting our plans or beginning a previously approved NTIA operational process."

One specific example provided relates to NTIA's recent guidance regarding "alternative technologies" such as satellites and unlicensed wireless. Many, including Committee Chair Rodgers and Subcommittee Chair Latta, support the use of these and other non-fiber distribution platforms in areas where the deployment of fiber would be prohibitively expensive. But Giles, echoing an argument I made a month ago in "BEAD Program Technological Neutrality 'Fix' Falls Short," a Perspectives from FSF Scholars, pointed out that "[w]hile much of the guidance is helpful and needed, it has come at the 11th hour for Montana."

Shirley Bloomfield, NTCA – The Rural Broadband Association CEO, testified that "several concerns, if not adequately addressed, could deter small, community-based providers from participating in BEAD." They include: the accuracy of the FCC's National Broadband Map, prohibitively large project areas, preferences based upon fund-matching ability, higher-than-expected costs and longer-than-expected permitting processes, and the uncertain fate of the Universal Service Fund.

Video of the hearing is available here.

House Commerce Subcommittee to Hold Hearing on BEAD Program

Tomorrow the House Energy and Commerce Committee's Subcommittee on Communications and Technology will hold a hearing titled "From Introduction to Implementation: A BEAD Program Progress Report."

In the hearing announcement, Committee Chair Cathy McMorris Rodgers (R-WA) and Subcommittee Chair Bob Latta (R-OH) state that the "hearing will serve as an opportunity to hear about how the implementation of the program is going, better understand the impact of NTIA's rules, and what to expect going forward as states begin to award funds."

Regarding rate regulation and the statutorily mandated "low-cost broadband service option," a concern Free State Foundation President Randolph May addressed in a Perspectives from FSF Scholars published earlier today, the accompanying Majority Staff Memo asserts that "NTIA is responsible for reviewing and approving these low-cost options and has used this requirement as a way to regulate rates. The Committee considers these rate regulated approvals to be a violation of the IIJA's rate regulation prohibition."

Other topics teed up by the Majority Staff Memo include the disconnect between the clear congressional goal of technology neutrality and NTIA's "fiber-first" bias; the need for permitting reform; and the implementation impact of labor, letter of credit, and Buy America requirements.

The following witnesses are scheduled to testify:

• Misty Ann Giles, Director and Chief Operating Officer, Montana Department of Administration
• Basil Alwan, Chief Executive Officer, Tarana Wireless
• Shirley Bloomfield, Chief Executive Office, NTCA – The Rural Broadband Association
• Blair Levin, Policy Analyst, New Street Research and Non-Resident Fellow, Metropolitan Policy Project, Brookings Institution

The hearing will begin at 10:30 am.

House Commerce, Commissioner Carr Target BEAD Program

In a June 2024 Perspectives from FSF Scholars, I focused a spotlight on insidious efforts by both the National Telecommunications and Information Administration (NTIA) and certain state-level bureaucracies to inject extraneous policy objectives like rate regulation and a fiber-at-any-cost bias – what I termed "devilish details" – into Broadband Equity, Access, and Deployment (BEAD) Program funding decisions. Recent news from the Hill and the FCC demonstrate that others share my concerns.

In a letter dated July 9, 2024, to NTIA Administrator Alan Davidson, House Energy and Commerce Committee Republican leaders wrote that "it appears that the NTIA may be evaluating initial proposals counter to Congressional intent and in violation of the law." And in written testimony prepared for a congressional hearing held that same day, FCC Commissioner Brendan Carr expressed his broad view that the BEAD Program "is going off the rails."

Noting the BEAD Program's unprecedented exemption from Freedom of Information Act (FOIA) requirements, House Energy and Commerce Committee Chair Cathy McMorris Rodgers (WA), Subcommittee on Communications and Technology Chair Bob Latta (OH), and Subcommittee on Oversight and Investigations Chair Morgan Griffith (VA) in their letter demanded greater visibility into why only 16 of the 56 initial proposals submitted by states and territories prior to year-end 2023 had been approved as of July 9, 2024. (The following day that total grew to 17 with the approval of Maryland's submission.)

In particular, the authors pointed to "anecdotal evidence" – the best available under the circumstances – indicating that NTIA "is directing [states] to set rates and conditioning approval of initial proposals on doing so." By way of example, they highlighted an objection by the Virginia Office of Broadband to NTIA's insistence upon "an exact price or formula" for its low-cost service option before its initial proposal would be approved, an impasse which I addressed here.

Chair McMorris Rodgers and Subcommittee Chairs Latta and Griffith therefore requested copies of "all communications between [NTIA] and state broadband offices as it relates to pending [BEAD Program] Initial Proposals" no later than July 23, 2024. They also sought information regarding "[t]he factors or conditions that are preventing state entities from having their initial proposals accepted," including "all instances where a state's initial proposal was not accepted … due in part to the BEAD's low-cost option requirement pricing as a factor in the decision."

The concerns of Commissioner Carr, meanwhile, include but are in no way constrained to rate regulation alone. Labeling the $42.45 billion BEAD program "the slowest moving federal broadband deployment program in recent history" – after nearly 1,000 days, "not one person has been connected to the Internet with those dollars" – he pointed the finger at the convoluted, multistep design of the program and reminded the Subcommittee that this "failure to launch is not only predictable, it was predicted" by various members of Congress.

(For the record, it also was predicted by numerous Free State Foundation scholars: member of the Free State Foundation's Board of Academic Advisors Michelle P. Connolly, Ph.D., FSF President Randolph J. May, FSF Director of Policy Studies and Senior Fellow Seth L. Cooper, and me.)

Laying the blame at the feet of the Biden Administration for "layering on red tape and advancing a wish list of progressive goals," Commissioner Carr faulted specific elements of the BEAD Program as implemented – but not found in the text of the Infrastructure Investment and Jobs Act that lead to its creation – that "pursue a climate change agenda, [diversity, equity, and inclusion] requirements, technology biases, price controls, preferences for government-run networks, and rules that will undoubtedly lead to wasteful overbuilding."

Consequently, Commissioner Carr predicted that, at the end of the day and after all the money is gone, households, particularly rural households, will remain unserved "absent major reforms" that reign in wasteful spending on unrelated Biden Administration priorities and remove unnecessary bureaucratic hurdles.

BEAD Program State-by-State Funding Allocations Announced

On June 26, 2023, the National Telecommunications and Information Administration (NTIA) announced the amount of funding each state and territory would receive from the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program. The focus now shifts to state broadband offices, which have 180 days to submit their Initial Proposals.

The Infrastructure Investment and Jobs Act (IIJA), which established the BEAD Program, specified that every state would receive a minimum of $100 million in broadband infrastructure construction subsidies. Additional allocation decisions reflect the number of "unserved" locations – that is, those that lack access to a high-speed Internet connection at speeds of at least 25 Megabits per second (Mbps) downstream and 3 Mbps upstream (25/3 Mbps) – and "underserved" locations: those where speeds of at least 100/20 Mbps are not yet available.

Congress in the IIJA specified that the FCC's National Broadband Map, unveiled in November 2022 and updated in May, would serve as the definitive source for current service availability information. NTIA's BEAD Program funding allocations, therefore, in part are based on the number of "unserved" and "underserved" locations in a given state as indicated by the National Broadband Map.

As I have noted repeatedly, however, most recently in "Wasteful Duplication by Design: A Case Study on Overlapping Federal Broadband Subsidies," a May 2023 Perspectives from FSF Scholars, the BEAD Program's eligibility requirements, set forth in a Notice of Funding Opportunity (NOFO), treat locations with access to "broadband" provided via satellite or unlicensed spectrum as "unserved."

Accordingly, there is a real danger that BEAD Program money will be used to overbuild existing, privately funded networks. In the above-referenced Perspectives, I focused on a nearby neighborhood here in Colorado where, despite the existence of six competitors, four of which offer speeds that exceed 25/3 Mbps, BEAD Program subsidies might be awarded to yet another provider – simply because of the most-cost-effective technologies selected by those already serving consumers.

The BEAD Program allocation announcement reveals that Colorado is eligible to receive $827 million. Going forward I will keep a close eye on the areas to which that money is made available.

In addition, it is important to keep in mind that the National Broadband Map reveals only where service is available at the time of the data collection – for the updated version released in May, that would be the end of 2022. It does not reflect where federal money has been awarded but construction has not been completed (or even commenced, in many cases).

That responsibility falls to the FCC's other map: the Broadband Funding Map, the release of which I highlighted in a May 2023 post to the Free State Foundation's blog. Intended to facilitate critical interagency coordination efforts – as the Government Accountability Office (GAO) reiterated recently, the existence of over 130 different subsidy programs run by 15 different federal agencies amounts to a "patchwork of programs [that] could lead to wasteful duplication of funding and effort" – Congress required the creation of the Broadband Funding Map to illustrate those areas to which money from other sources (Treasury, Agriculture, and so on) has been committed.

At present, however, the bulk of those hundreds of billions in federal dollars are in process, thereby further complicating oversight efforts. For example, the Colorado Broadband Office, tasked with distributing $162 million just from Treasury's Capital Projects Fund, only began to accept applications on June 20, 2023.

GAO Reiterates Broadband Funding Coordination Concerns

On May 10, 2023, the Government Accountability Office (GAO) released "Broadband: A National Strategy Needed to Coordinate Fragmented, Overlapping Federal Programs," a Statement addressing the status of federal broadband subsidy efforts. It echoes the findings set forth in a May 2022 GAO Report that I summarized in a post to the FSF Blog – and that Senator John Thune (R-SD) underscored in prerecorded remarks delivered to the Free State Foundation's Fifteenth Annual Policy Conference on March 28, 2023.

Troublingly, it also indicates that little has changed over the past twelve months.

As Senator Thune noted, the May 2022 GAO Report concluded that "there are more than 130 federal broadband programs that are administered by 15 federal agencies" – a scenario he characterized as a "spiderweb of bureaucracy." The Statement, meanwhile, focuses on a subset of that total: the 25 programs whose "main purpose" is broadband, 13 of which "overlap because they can each be used for the purpose of broadband deployment," as illustrated in the chart reproduced below.

The Mosaic of 25 Federal Programs with Broadband as a Main Purpose,
as of November 2021, by Purpose Category

Continuing, the Report expressed concern that "[t]his patchwork of programs could lead to wasteful duplication of funding and effort." It therefore made the following recommendations:

• That the National Telecommunications and Information Administration (NTIA), in consultation with other relevant agencies, "present to Congress a report that identifies the key statutory provisions that limit the beneficial alignment of broadband programs and offers legislative proposals to address the limitations, as appropriate."
• That the "Executive Office of the President … develop and implement a national broadband strategy with clear roles, goals, objectives, and performance measures to support better management of fragmented, overlapping federal broadband programs and synchronize coordination efforts."

The publication of the Statement coincided with the appearance of Andrew Von Ah, GAO's Director, Physical Infrastructure, at a hearing held the same day by the House Energy and Commerce Committee's Oversight and Investigations Subcommittee entitled "Closing the Digital Divide: Overseeing Federal Funds for Broadband Deployment." (Indeed, it served as his official witness testimony.)

In terms of updates, the Statement reveals that little concrete progress on those recommendations has been made over the last year:

• NTIA's report to Congress remains in the planning stage – and is not expected until May 31, 2026.
• In May 2022, "the Executive Office of the President was considering if a national strategy was needed. As of this testimony, it has not developed a national strategy for broadband."

As I illustrated in "Wasteful Duplication by Design: A Case Study on Overlapping Federal Broadband Subsidies," a recent Perspectives from FSF Scholars, the status quo unacceptably – and seemingly intentionally – opens the door to redundant grants from multiple sources and the overbuilding of privately funded networks.

GAO once again has raised the alarm and proposed solutions. It is high time that the Biden Administration and Congress respond with meaningful coordinating measures.

FCC Releases Broadband Funding Map

As required by the Infrastructure Investment and Jobs Act, yesterday the FCC released the Broadband Funding Map, a companion to the National Broadband Map intended to "to provide a locations overview of the overall geographic footprint of each broadband infrastructure deployment project funded by the Federal Government."

However, and as I highlighted in "Wasteful Duplication by Design: A Case Study on Overlapping Federal Broadband Subsidies," a recent Perspectives from FSF Scholars, the Broadband Funding Map's ability to prevent overbuilding and redundant funding is curtailed significantly by conflicting eligibility requirements across subsidy programs – including inconsistent minimum speed thresholds and exclusionary lists of approved distribution technologies – that open the door to duplication.

For the record, the Broadband Funding Map describes the neighborhood in the foothills west of Denver that was the focus of my case study as "Not Funded." Given that many federal funding sources, including the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program, have not yet begun doling out dollars, this perhaps is not surprising.

I intend to revisit the Broadband Funding Map periodically as more funding decisions are made. Stay tuned.

Senators Thune, Luján Urge GAO to Revisit Broadband Funding

In a letter dated April 24, Senators John Thune (R – SD), ranking member of the Commerce Committee's Subcommittee on Communications, Media, and Broadband, and Ben Ray Luján (D – NM), subcommittee chairman, request that the Government Accountability Office (GAO) "conduct an additional review of federal, state, and local broadband efforts to determine the effectiveness of each program."

In a recent post to the FSF Blog describing an effort led by Senator Thune to compel the National Telecommunications and Information Administration (NTIA) to align with statutory intent its rules for the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program, I pointed out that in prerecorded remarks delivered to the Free State Foundation's Fifteenth Annual Policy Conference, he cited a May 2022 GAO report cautioning that "there are more than 130 federal broadband programs that are administered by 15 federal agencies."

As I noted in a June 2022 post to the FSF Blog, the GAO concluded that "[t]his patchwork of programs could lead to wasteful duplication of funding and effort" and therefore recommended that the "Executive Office of the President … should develop and implement a national broadband strategy with clear roles, goals, objectives, and performance measures."

To date, no such national broadband strategy has emerged. Fortunately, however, Senator Thune's ongoing broadband funding oversight activities maintain a bright spotlight on this multi-agency, multi-program recipe for duplication, waste, fraud, and abuse.

For instance, his December 2022 oversight letter, to which FSF President Randolph J. May helpfully provided a comprehensive response, brought focused attention to the GAO report's findings. Yesterday's letter to the Honorable Gene L. Dodaro, Comptroller General of the United States, treads a similar path.

Specifically, Senators Thune and Luján request that the GAO investigate a number of topics, including:

• Whether each of the 133 (and counting) federal subsidy programs "were … established in line with Congress' directive on the funding's intended purpose";
• The "statutory basis" for each program;
• The extent to which these programs have met their "specific policy goals";
• The frequency with which – and how – "federal programs' funding [has] overlapped other federal programs";
• The effect of "the fragmented and overlapping approach the federal government [has] taken" on the ability of these programs to accomplish their intended goals;
• Whether the goals set forth in the May 2022 Memorandum of Understanding between the FCC, Department of Agriculture, NTIA, and Treasury Department have been achieved; and
• The extent to which "federal agencies [have] coordinated their broadband programs with state and local broadband funding programs."

As the letter rightly concludes, "[a]ddressing weaknesses in each of these broadband programs will help ensure more Americans are connected to reliable broadband services."

Senator Thune Spearheads Call to Revise BEAD Program Rules

In a letter released earlier today, a group of eleven Republican Senators, led by John Thune (SD), ranking member of the Senate Commerce Committee's Subcommittee on Communications, Media, and Broadband, and including Senate Commerce Committee ranking member Senator Ted Cruz (TX), urged National Telecommunications and Information Administration (NTIA) head Alan Davidson to bring in line with congressional intent the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program's rules.

Specifically, the letter pressed Assistant Secretary Davidson to remove several provisions from the May 2022 Notice of Funding Opportunity (NOFO) that "divert resources away from bringing broadband service to rural America and are inconsistent with NTIA's statutory authority in the Infrastructure Investment and Jobs Act (IIJA)."

The letter targets the following extraneous and counterproductive policy priorities not found within the IIJA yet championed by the NOFO:

• Labor requirements inappropriately designed "to achieve targeted social outcomes";
• A "misguided" bias in favor of government-owned networks;
• A fiber-focused failure to heed "Congress' technology neutral stance in the IIJA" with regard to other viable broadband distribution platforms;
• Affordability and other requirements inconsistent with specific language in the IIJA prohibiting NTIA from '"regulat[ing] the rates charged for broadband service";
• Climate change mandates "not envisioned by Congress" that raise costs; and
• "Buy American" mandates that threaten untimely delays absent "a consistent waiver process."

Senator Thune stepped up his broadband-funding oversight efforts late last year with the release of a letter soliciting input on a wide range of topics, including many of those listed above.

In "Senator Thune's New Broadband Oversight Initiative," a December 2022 post to the FSF Blog, Free State Foundation President Randolph May welcomed the arrival of Senator Thune's oversight letter and wrote that he "couldn't agree more on the need for congressional oversight of the various programs providing funds for broadband."

Mr. May submitted a thorough response, referencing dozens of related FSF scholarly papers, on January 6, 2023.

In prerecorded remarks addressing the FSF Fifteenth Annual Policy Conference on March 28, 2023, Senator Thune emphasized the importance of congressional oversight and highlighted the Free State Foundation's substantive contributions to those efforts:

On rural broadband oversight, as many of you know, Congress has allocated an unprecedented amount of money in federal broadband investments. And there are more than 130 federal broadband programs that are administered by 15 federal agencies. That spiderweb of bureaucracy is exactly why I began an effort last year to ensure there is stringent oversight of how these taxpayer funds are being spent. And I greatly appreciate the Free State Foundation taking the time to provide thoughtful responses to my oversight request.

The other signatories to the letter to NTIA Administrator Davidson are Senators Ted Cruz (TX), Marsha Blackburn (TN), Ted Budd (NC), Shelley Moore Capito (WV), Deb Fischer (NE), Eric Schmitt (MO), Dan Sullivan (AK), J.D. Vance (OH), Todd Young (IN), and Roger Wicker (MS).