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.

Roth's NTIA Takes Early Aim at Rate Regulation

On July 30, 2025, Arielle Roth officially assumed the role of Assistant Secretary of Commerce for Communications and Information, a position that includes serving as Administrator of the National Telecommunications and Information Administration (NTIA). Days later, NTIA released updated Frequently Asked Questions (FAQs) regarding the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program. Notably, the revised FAQs underscore a significant policy shift from the Biden Administration's approach, one that aligns with Congress's explicit prohibition against broadband rate regulation.

This latest version of the FAQs builds on the BEAD Restructuring Policy Notice (BEAD RPN) that was released in early June. The BEAD RPN made numerous substantive changes to the Notice of Funding Opportunity (NOFO) that the Biden Administration NTIA issued in May 2022, including several addressing the low-cost service option (LCSO) requirement for BEAD Program grant recipients.

Under the NOFO, NTIA imposed prescriptive price and service terms for the LCSO. These included effective mandates on the maximum monthly rate, restrictions that, in substance, amounted to prohibited rate regulation.

The RPN eliminated those requirements: "BEAD subgrantees must still comply with the statutory provision to offer at least one LCSO, but NTIA hereby prohibits [states] from explicitly or implicitly setting the LCSO rate a subgrantee must offer." The updated FAQ expounds upon this point:

The IIJA prohibits NTIA or the Assistant Secretary from engaging in rate regulation. Because the Assistant Secretary must approve the LCSO in the Final Proposal, the rate contained may not be the result of rate regulation. The RPN addressed this fundamental flaw in the BEAD NOFO. The RPN eliminated BEAD NOFO requirements dictating price and other terms for the required low-cost service option.

In addition, the FAQ notes that, "[p]er the RPN, states may not apply state laws to reimpose LCSO requirements removed by the RPN."

This, of course, is a sharp departure from the Biden Administration's deeply flawed approach. As I described in a February 2024 Perspectives from FSF Scholars, "Virginia Flags NTIA's Impermissible Pressure to Regulate Broadband Rates," NTIA sought to compel Virginia to "specify an exact price or formula" for the LCSO.

That demand directly conflicted with Section 60102(h)(5)(D) of the Infrastructure Investment and Jobs Act, which states that "[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."

By making explicit that neither NTIA nor a state may dictate broadband rates, the RPN and the updated FAQs realign BEAD Program implementation with the letter of the law. In doing so, they empower grant recipients to develop sustainable offerings. They also foster competition, innovation, and continued private investment (to the tune of $2.2 trillion and counting).

Released in the first few days of Roth's tenure as NTIA Administrator, these updated FAQs are a welcome indicator that, going forward, the BEAD Program will hew far more closely to congressional intent.

A Revisionist History of the BEAD Program Ignores Congressional Intent

Today's Policyband (subscription required) included a useful pointed critique of a July 9 Washington Monthly article suggesting a clandestine plot by Republican lawmakers to sabotage from within the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program. But there is even more that can be said by way of rebuttal.

The extraneous, partisan policies layered on top of the Infrastructure Investment and Jobs Act (IIJA) by the Biden NTIA were not the issue, authors Paul Glastris and Kainoa Lowman insist. Instead, they make the unsupported claim that "the complexity and delays of the BEAD program and the broader failure of Washington over many years to solve the digital divide is overwhelmingly the result of telecom monopolies whose economic and political power previous administrations unleashed."

Likening NTIA's Notice of Funding Opportunity to an "everything bagel," the piece nevertheless goes to great lengths to assure us that requirements not found in the IIJA – promoting policies relating to labor standards, climate threats, net neutrality, third-party (so-called "open") access, and so on – "were not major time sinks." The real impediment, they suggest, was "incumbents' goal of avoiding competition to their existing infrastructure." The truth, meanwhile, is that lawmakers appropriately took reasonable steps to prevent the use of federal subsidies to overbuild privately financed networks to prevent waste and encourage additional private investment.

In the IIJA, Congress, exercising its authority under Article I of the Constitution's Spending Clause, reached a relatively rare bipartisan compromise. That compromise sought to learn from the mistakes of the past – mistakes that the authors describe at length – and once and for all connect those remaining locations not yet served by privately constructed broadband Internet infrastructure.

According to USTA | The Broadband Association, providers have invested nearly $2.2 trillion in broadband infrastructure since 1996 – including $94.7 billion just in 2023. Largely because of that capital spending, the FCC reported in May that "110 million homes and small businesses (95 percent) have access to a terrestrial fixed service with speeds of 100 Mbps download and 20 Mbps upload (100/20) or greater."

What the authors willfully choose to ignore is that the stated goal of the IIJA was to subsidize the prohibitively high price tag to connect primarily rural locations still "unserved" – not to use taxpayer dollars to compete with these existing, privately funded networks, which of course would disincentivize future investment.

Accordingly, Congress in the IIJA defined "unserved" as without access to speeds of at least 25/3 Mbps and "underserved" as lacking access to speeds of at least 100/20 Mbps; designated the FCC's then-under-development National Broadband Map as the definitive source of location-specific service availability information; established a challenge process to verify that information; and enlisted state-level offices to determine how best to overcome the unique geographic, financial, and other factors encountered within their borders.

To be sure, in practice BEAD Program implementation has left much to be desired. To suggest, however, that measures agreed to by Congress to avoid the wasteful overbuilding of existing broadband infrastructure using taxpayer dollars somehow tell a "story … of how telecom monopolies are behind the failure of government to solve the digital divide" ignores both the substantial role played by Biden NTIA overreach and the well-documented – in the article itself, no less – mistakes of the past.

Instead of engaging with the IIJA's actual text and structure, the authors rely on a convenient – but wrong-headed – narrative to try to deflect accountability away from those truly responsible and onto those that have invested the trillions necessary to connect nearly every location in the U.S.

House Commerce, Commerce Department Commence BEAD Reforms

Multiple efforts are underway to reform the beleaguered $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program.

Representative Richard Hudson (R-NC), Chairman of the House Energy and Commerce Committee’s Subcommittee on Communications and Technology – and Keynoter at the Free State Foundation's upcoming Seventeenth Annual Policy Conference – recently introduced legislation designed to "eliminate the burdensome Biden regulations so that we can get money out the door and shovels into the ground as soon as possible."

In his Opening Statement before "Fixing Biden's Broadband Blunder," a hearing held on March 5, 2025, Chairman Hudson unveiled the Streamlining Program Efficiency and Expanding Deployment (SPEED) for BEAD Act. In the accompanying Press Release, he pointed out that "not a cent of the BEAD funds have been put towards actual deployment for even one household. This is unacceptable. Our rural communities need to be fully connected, and this legislation will do that."

Specifically, the SPEED for BEAD Act would:

• Clarify that BEAD Program money is to be used for two purposes: broadband deployment and workforce development. Consistent with that refined focus, the bill would replace the word "Equity" with the word "Expansion" in the program's title.

• Expressly require the return to the U.S. Treasury of unused funds.

• Prohibit the consideration, when awarding grants, of the following: prevailing wages, project labor agreements, union workforces, collective bargaining, local hiring, commitments to union neutrality, labor peace agreements, workforce composition (or the reporting thereof), climate change, the regulation of network management practices (including data caps), open access requirements, and certain letter of credit requirements.

• Provide applicants greater flexibility with respect to service area.

• Expand the definition of "reliable broadband service," consistent with the principle of technological neutrality, to include "any broadband service that meets the performance criteria … without regard to the type of technology by which such service is provided."

• Expound upon the existing ban on the regulation of rates (see below).

Regarding rate regulation, the bill makes clear that neither NTIA nor the states may:

[R]egulate, set, or otherwise mandate the rates charged for broadband service or the methodologies used to calculate such rates, for consumers generally or for any subset of consumers, including through the capping or freezing of such rates, the encouragement of another entity to regulate such rates, or the use of rates as part of an application scoring process.

The SPEED for BEAD Act explicitly would ban any such forms of rate regulation even if approved prior to its enactment or adopted "in conjunction with the requirement to offer a low-cost broadband service option."

The same day, Secretary of Commerce Howard Lutnick issued a Statement announcing that:

Under [his] leadership, the Commerce Department has launched a rigorous review of the BEAD program. The Department is 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. Additionally, the Department is exploring ways to cut government red tape that slows down infrastructure construction.

Since the passage of the legislation that created the BEAD Program, the Infrastructure Investment and Jobs Act, in 2021, FSF scholars repeatedly have criticized the Biden Administration for its prioritization of extraneous policy preferences that discouraged proven broadband providers from participating, raised costs, and ground implementation to a standstill.

They include impermissible rate regulation, inappropriate labor- and climate-related mandates, the unjustified promotion of government-owned networks, and a pro-fiber bias that brazenly defied the statute's technologically neutral intent. 

 

Report Proposes Much-Needed Repairs to Beleaguered BEAD Program

The Advanced Communications Law & Policy Institute (ACLP) at New York Law School today released a "BEAD Acceleration Checklist" that "offers … a series of straightforward recommendations for accelerating the award of BEAD grant funds [that] focus on freeing BEAD from its bureaucratic shackles."

Those of you who have been following the Free State Foundation's extensive scholarship on the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program – and, more broadly, the deeply flawed Biden Broadband Plan for which it serves as the centerpiece – will find familiar many of the fixes set forth in "How to Free BEAD From its Bureaucratic Shackles."

In a companion op-ed published by Broadband Breakfast, Michael Santorelli, Director of the ACLP and co-author (along with ACLP Senior Fellow Alex Karras) of the report blamed the Biden Administration for the BEAD Program's ongoing failure to bring broadband to even one unserved location, pointing the finger specifically at "excessive bureaucracy, regulatory overreach, and a misguided approach by the Biden administration, which prioritized its political agenda and program micromanagement over connecting people to broadband."

In the report itself, the co-authors urge the Trump Administration to make seven course corrections, which include:

• Eliminating all rules and requirements not expressly prescribed by the Infrastructure Investment and Jobs Act (IIJA) – that is, the legislation that established the BEAD Program. In "NTIA's BEAD Program Needs Revisions to Succeed," an October 2022 Perspectives from FSF Scholars, Michelle P. Connolly, Ph.D., a member of the Free State Foundation's Board of Academic Advisors and Professor of the Practice within the Economics Department at Duke University, identified five superfluous "subgrantee requirements" included in NTIA's Notice of Funding Opportunity: "Buy American" requirements, union labor-related mandates, middle-class "affordability," network management practice limitations (including data caps), and the unreasonable prioritization of municipal broadband.

• Prohibiting rate regulation. As I pointed out in "Virginia Flags NTIA's Impermissible Pressure to Regulate Broadband Rates," a February 2024 Perspectives, while the IIJA does require that grant recipients make available a "low-cost broadband service option," it also explicitly bans the regulation of rates. And as Free State Foundation President Randolph May argued in "Government Price Controls Jeopardize the BEAD Program's Success," a September 2024 Perspectives, attempts by NTIA and the states to require below-market rates amount to price caps, which "lead to suboptimal levels of supply" and undermine the "policy goal of achieving universal broadband access because experienced ISPs will be discourage from participating."

• Clarifying the role of low-Earth orbit (LEO) satellites. In "BEAD Program Softens Stance on 'Alternative' Technologies," a January 2025 post to the FSF Blog, I explained that while revised NTIA guidance opened the door in certain extremely high-cost situations to "alternative technologies" – that is, LEO satellites and unlicensed spectrum – it fell well short of putting these distribution platforms on an equal footing with other "Reliable Broadband Service" options.

• Removing "extraneous requirements," including those referenced in the first bullet point above as well as those relating to climate change and other policy preferences, from NTIA's BEAD Program "Terms and Conditions."

• Prohibiting the states from imposing their own "extraneous" and "burdensome" requirements beyond that which the IIJA requires.

• Strongly encouraging states to prioritize public-private partnership applications involving established broadband service providers with a proven track record of success.

• Allowing states to adjust project-service areas so that they "align with the realities of broadband network deployment."

Affordable Connectivity Program Ends, ISPs Voluntarily Fill the Void

On June 1, the Affordable Connectivity Program (ACP) officially came to an end, at least for now. Some hold out hope that Congress still might appropriate additional funding. In the meantime, Internet service providers (ISPs) have stepped in to make available to low-income households broadband service plans priced at or below $30 per month until at least the end of 2024.

Through April, the ACP provided to eligible households a $30 monthly subsidy ($75 on Tribal lands and, as I described in an August 2023 post to the FSF Blog, up to $75 in certain high-cost areas) that they could apply to their choice of broadband service plan offered by a participating provider. In May, the $14.2 billion appropriated by Congress in 2021's Infrastructure Investment and Jobs Act was close to running out, so participating households received only a partial benefit.

In a press release marking the program's final day, FCC Chairwoman Jessica Rosenworcel noted that over 23 million households participated in the ACP; urged Congress to provide additional funding; and highlighted the Lifeline program, which offers a $9.25 monthly benefit to a smaller set of eligible households. For one, Lifeline limits eligibility to those households whose income is less than 135 percent of the Federal Poverty Guidelines, a threshold that Free State Foundation President Randolph J. May urged Congress to adopt on numerous occasions, must recently in "The Conservative Case for Saving the Affordable Connectivity Program by Reforming It."

As the White House highlighted in its own press release, however, in the wake of the ACP's demise, fourteen ISPs have made voluntary commitments "to offer plans at $30 or less to low-income households through 2024, so that families across America can continue accessing low-cost Internet." That list includes AT&T, Comcast, Cox, Charter Communications, and Verizon, as well as a number of smaller ISPs that serve rural areas.

FCC Chairwoman Rosenworcel to Congress: Absent Additional Funding, Affordable Connectivity Program Will End in April

In letters to congressional leaders dated January 8, 2024, FCC Chairwoman Jessica Rosenworcel warned that the Affordable Connectivity Program (ACP), a broadband-service subsidy relied upon by over 22 million lower-income households, is projected to run out of money at some point in April of this year.

Established by the Infrastructure Investment and Jobs Act (IIJA) in 2021, the ACP provides eligible households with between $30 and $75 per month to be applied toward (and which, in many instances, covers) a monthly broadband subscription from the participating Internet service provider (ISP) of their choice. Absent additional congressional action, the ACP will end when the hefty initial appropriation – $14.2 billion – is depleted.

In October 2023, the Biden Administration asked Congress to appropriate sufficient funding to extend the ACP through the end of 2024: $6 billion. Chairwoman Rosenworcel's letters echoed that request, as did a White House Fact Sheet released the same day.

As Free State Foundation President Randolph May noted approvingly in an October 2022 Perspectives from FSF Scholars, the ACP "enables millions of lower-income consumers to participate on a relatively equal footing in the competitive marketplace for high-speed Internet access." He therefore called for Congress to "extend and revise" the ACP, specifically by "target[ing] its limited resources to those most in need."

And as I have pointed out in a series of posts to the FSF Blog, the ACP enjoys bipartisan support.

According to Chairwoman Rosenworcel, "the Commission expects to begin taking steps this week to start orderly wind-down procedures to give participating providers, households and other stakeholders sufficient time to prepare for the projected end of the ACP."

Those actions will include: (1) providing ISPs with "guidance on the timing and requirements for notifying participating households," (2) setting a date after which no additional households may enroll, and, ultimately, (3) formally determining a date certain for the program's termination.

Biden Administration, Democratic Senators: Fund the Affordable Connectivity Program

As the clock ticks steadily toward the moment in early 2024 when the Affordable Connectivity Program (ACP) runs out of money, the Biden White House and a group of 32 Democratic Senators recently added their voices to the bipartisan chorus calling for additional funding.

Created by the Infrastructure Investment and Jobs Act (IIJA), the ACP provides a monthly subsidy – up to $75 on qualifying Tribal lands and in certain high-cost areas, $30 elsewhere – that eligible lower-income households can apply toward a high-speed Internet access subscription. It also makes available up to $100 for the purchase of a connected device.

At the end of August, more than 20 million households had signed up for the ACP. Consequently, it is expected that the $14.2 billion initially appropriated will have been spent by some point early next year.

In an August 2023 post to the FSF Blog, I highlighted calls, from both sides of the aisle, for Congress to appropriate additional money to the ACP. I also noted that Free State Foundation President Randolph May, on multiple occasions, has urged Congress to extend the ACP – but also to "revise the program's eligibility requirements to target its limited resources to those most in need."

More recently, panelists at a Broadband Breakfast online event on October 11, 2023, spoke of the ACP's importance – one, Debra Lathen, President, Lathen Consulting LLC, described it as "critical" to the success of the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) program.

In addition, 32 Democratic Senators, led by Jacky Rosen (NV), wrote in a letter to congressional leaders dated October 19, 2023, that, "as you finalize a government appropriations package, we urge you to include full funding for the ACP as well as a long-term solution that provides a sustainable, responsible funding stream, so that millions of Americans don't lose access to critical connectivity services."

And in an October 20, 2023, letter to House Speaker Pro Tempore Patrick McHenry, Shalanda D. Young, Director of the Office of Management and Budget, highlighted the importance of additional funding to "avoid the risk that millions of Americans lose access to affordable high-speed internet."

According to Communications Daily (subscription required), the White House is "is expected to seek about $4 billion in additional money for the [ACP] as part of a second part of the supplemental federal funding request it will send to Congress this week."

Support Grows for Extending the Affordable Connectivity Program

The number of households participating in the Affordable Connectivity Program (ACP) has surpassed 20 million – up from over 17 million just three months ago. Fortunately, the chorus of voices urging Congress to replenish the ACP's dwindling coffers, which could run dry early next year, simultaneously grows louder.

The ACP provides eligible households with a one-time subsidy (up to $100) to purchase a connected device and as much as $30 per month ($75 on qualifying Tribal lands) to apply to a broadband service subscription. It was created by Congress in 2021, which appropriated $14.2 billion in a one-time lump sum.

In "FCC Votes to Increase Broadband Subsidy in High-Cost Areas," a recent post to the FSF Blog, I pointed out that the Commission's 4-0 vote at the August Open Commission Meeting to increase the monthly stipend in certain expensive-to-serve areas to as high as $75 will accelerate the date upon which the ACP doles out its last dollar. Likewise, the roughly 3 million additional households that have enrolled in the ACP since May place greater financial stress on the finite funds available.

Calls to extend the ACP's lifespan through additional appropriations have come from multiple directions:

• In a letter last week, 45 members of Congress – 29 Democrats and 16 Republicans – urged House and Senate leadership "to include full funding for the [ACP] in the upcoming government appropriations bill to ensure that households can access the broadband they desperately need" – and concluded that "[f]ailure to extend funding would not only leave millions of families without access to the internet but also hinder our long-term competitiveness as a nation."
• In an August 1, 2023, letter to House Speaker Kevin McCarthy, Office of Management and Budget Director Shalanda D. Young wrote that "the Administration … believes that the Congress must act quickly to ensure continued funding for programs that lower costs for families, such as expanded access to affordable, high-quality child care and high-speed internet."
• In a June 2023 blog post, I highlighted a letter from eight Republican Senators encouraging President Biden to "repurpose a portion of unobligated emergency COVID relief funds to ensure the continuity of funding for [the ACP], while we explore alternative sustainable funding mechanisms and updated parameters."
• At a June oversight hearing held by the House Energy and Commerce Committee's Communications and Technology Subcommittee, FCC Chairwoman Jessica Rosenworcel reportedly described the ACP as "the best program we have ever developed to [address affordability], and we've got to make sure it continues…. If Congress were to fail to appropriate new funds for the Affordable Connectivity Program, we would … cut families off." And in the August 14, 2023, press release marking the 20 million+ ACP enrollment milestone, she stated "[w]e've made too much progress in helping families get online to turn back now."

Free State Foundation President Randolph May also has vocalized his support for the ACP on several occasions (here, here, and here), arguing that Congress should extend it but also "revise the program's eligibility requirements to target its limited resources to those most in need."

FCC Votes to Increase Broadband Subsidy in High-Cost Areas

At this morning's Open Commission Meeting, the FCC approved by a 4-0 vote a Sixth Report and Order increasing the Affordable Connectivity Program (ACP) monthly benefit from $30 to as much as $75 in high-cost areas where the broadband service provider is able to demonstrate a "particularized economic hardship."

As a direct consequence, the date upon which the $14.2 billion appropriated by Congress will run dry, which is expected to arrive at some point next year, likely will come even sooner. As Free State Foundation President Randolph May wrote in an April op-ed, Congress therefore should "extend it, while mending it."

The ACP was created in 2021 by the Infrastructure Investment and Jobs Act (IIJA). It provides up to $100 dollars toward the purchase of a connected device and a monthly subsidy of $30 ($75 on qualifying Tribal lands) to eligible lower-income households. As of May 2023, over 17 million households were participating in the ACP.

Mr. May first wrote about the ACP in an October 2022 Perspectives from FSF Scholars. He concluded that "a fiscally responsible, targeted American Connectivity Program represents the preferred, marketplace-based approach to subsidizing broadband service." He therefore urged Congress to "extend the lifespan of the ACP through legislation that appropriates additional dollars" – and at the same time "revise the program's eligibility requirements to target its limited resources to those most in need."

In "The Affordable Connectivity Program: Time Is of the Essence for Congress to Act," a Perspectives published in March of this year, Mr. May took note of the accelerated predictions regarding when the ACP will run out of money – according to one observer, that could happen as soon as "early next year" – and in response repeated his "call for Congress to act without further delay to extend and revise the ACP."

The action taken by the FCC today, which will increase the monthly subsidy by up to $45 in certain high-cost areas, will place even greater strain on the dwindling, finite pool of money available.

Specifically, and as required by the IIJA, the Sixth Report and Order defines "particularized economic hardship" – that is, where "a provider is unable to cover the costs of maintaining the operation of all or part of its broadband network at the standard discount level in a high-cost area where the provider seeks to offer the high-cost area benefit" – and establishes implementing rules and processes pursuant to which increased subsidies will be made available.

In a June 2023 post to the FSF Blog, I highlighted a letter from a group of eight Republican Senators to President Biden proposing the redirection of unused COVID-19 relief dollars to the ACP "while we explore alternative sustainable funding mechanisms and updated parameters." While that might serve as a short-term fix, ultimately Congress must take direct action to ensure that the ACP continues on an ongoing, fiscally responsible basis.

GOP Senators to Biden: Use COVID-19 Dollars to Extend ACP

According to Light Reading and other news outlets, on Tuesday a group of 8 Republican Senators identified for President Biden a stopgap funding source for the Affordable Connectivity Program (ACP): untapped COVID-19 relief money.

The ACP, which provides eligible households with a $30 monthly subsidy ($75 on Tribal lands) to apply toward their choice of broadband service and up to $100 for a connected device, was created by the Infrastructure Investment and Jobs Act of 2021 (IIJA). Congress filled the ACP's coffers with $14.2 billion on a one-time basis.

Without question, $14.2 billion is a hefty sum. However, given that (1) to date nearly 19 million households have signed up for the ACP, and (2) the FCC continues to encourage consumer participation through outreach grants, that money soon will run out – perhaps as early as the first quarter of 2024.

Accordingly, many have called upon Congress to appropriate additional funds to extend the ACP's lifespan. That group includes Free State Foundation President Randolph May, who urged Congress to "extend it, while mending it" in a Real Clear Markets op-ed published in April of this year.

And in a March 2023 Perspectives from FSF Scholars, Mr. May wrote that:

Congress should extend the worthwhile ACP program promptly by appropriating additional funding. At the same time, it can consider revising the program to better target the ACP benefit to those lower-income households most truly in need and adopting measures to minimize, to the extent possible, any waste, fraud, and abuse in the program.

Notably, the ACP has bipartisan support. In written testimony submitted prior to her participation in an oversight hearing held yesterday by the House Energy and Commerce Committee's Communications and Technology Subcommittee, FCC Chairwoman Jessica Rosenworcel wrote that "I strongly support funding the Affordable Connectivity Program into the future to help more families get and stay connected to the high- speed internet they need to participate in modern life."

Speaking during that hearing, Chairwoman Rosenworcel reportedly stated that:

As a result of the bipartisan infrastructure law, we've got lots of funds to help with the deployment in largely rural areas, but we're also going to need funds and efforts to address affordability. ACP is the best program we have ever developed to do that, and we've got to make sure it continues.

Earlier this week, Senator Roger Wicker (MS) and 7 of his Republican colleagues reportedly wrote to President Biden to share a novel short-term solution: "repurpose a portion of unobligated emergency COVID relief funds to ensure the continuity of funding for this program, while we explore alternative sustainable funding mechanisms and updated parameters."

Senator Wicker's coauthors include Mike Crapo (ID), Kevin Cramer (ND), Thom Tillis (NC), Shelley Moore Capito (WV), J.D. Vance (OH), James Risch (ID), and Todd Young (IN).

As did Chairwoman Rosenworcel in her House testimony, the letter's signatories emphasized the interdependent relationship between (1) the hundreds of billions in federal subsidy dollars, including the $42.45 Broadband Equity, Access, and Deployment (BEAD) Program, targeting broadband infrastructure expansion, and (2) the ability of lower-income Americans to pay for the service that that massive public investment makes possible.

Specifically, they pointed out that, as those subsidized networks "become operational, the significance of the Affordable Connectivity Program will become even more important as it ensures our constituents can benefit from these historic investments in connectivity."

In response, a White House spokesman stated that "[w]e look forward to working with members of both parties to extend funding for the program so that it can keep lowering high-speed internet costs for tens of millions of American families."

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.

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). 

Senate Broadband Oversight Focuses on Department of Agriculture

With the Department of Agriculture's ReConnect Program poised to distribute this fiscal year an additional $1.5 billion in broadband infrastructure subsidies and amid reports that the 2023 farm bill could provide that agency with even more construction funding, I am encouraged by the news that a bipartisan group of Senators is taking action to prevent (1) waste, fraud, and abuse, and (2) the use of federal dollars to overbuild existing, privately financed networks.

On January 30, 2023, Senators John Thune (R-SD), Ben Ray Luján (D-NM), Amy Klobuchar (D-MN), and Deb Fischer (R-NE), all members of the Senate Committee on Agriculture, Nutrition, and Forestry, reintroduced legislation designed to "streamline and bolster U.S. Department of Agriculture (USDA) Rural Development broadband programs and ensure that their funding is being targeted to rural areas that need it the most."

Seth L. Cooper, Free State Foundation Director of Policy Studies and Senior Fellow, detailed the specific provisions of the Rural Internet Improvement Act of 2022 in a December 2022 post to the FSF Blog. The Rural Internet Improvement Act of 2023, like the 2022 version, would combine Rural Utility Service (RUS) broadband loan and grant programs, specify that no more than 10 percent of locations targeted by a funded project already have access to broadband, encourage greater broadband provider participation, improve the challenge process, and promote greater interagency coordination with the FCC and NTIA.

The RUS manages multiple broadband subsidy programs, the largest being the ReConnect Loan and Grant Program, which to date has distributed more than $3 billion. In a recent interview, RUS administrator Andrew Berke stated his expectation that the ReConnect Program will dole out an additional $1.5 billion in 2023.

In addition, news reports indicate that the next farm bill could appropriate still more money to RUS – Representative David Scott (D-GA), ranking member of the House Committee on Agriculture, identified as his top priority that "[w]e must ensure that appropriate funding is given to USDA to help us bridge the digital divide between rural and urban America" (emphasis added) and argued that "USDA knows what works for our rural communities better than many other Federal agencies."

Considering that (1) tens of billions in taxpayers dollars have been appropriated for the expansion of broadband infrastructure but not yet put to use, and (2) the vast majority of those subsidies will flow to rural areas – after all, at this point in the rollout of broadband "unserved" and "rural" are virtually synonymous – regardless of the distributing agency, it is not at all clear that any additional funding is "appropriate" at this time.

In "Absent Oversight, the Broadband Funding Faucet Likely Will Overflow," a November 2022 Perspectives from FSF Scholars, I drew attention to the concerning potential that, given the large amount of money involved and absent better interagency coordination and oversight, the number of different agencies sharing responsibility for government-led efforts to extend broadband connectivity to those areas that remain unserved could lead to substantial waste and inefficiencies.

But as Mr. Cooper wrote, it is equally true that "intra-agency coordination of broadband deployment subsidy programs through streamlined processes or merging of disparate programs is no doubt essential to ensure that precious tax dollars are spent wisely and that duplicative efforts and other forms of fraud, waste, or abuse are avoided" (emphasis added).

As you may recall, Free State Foundation President Randolph May received a letter from Senator Thune on December 6, 2022, soliciting input on, among other things, the potential for waste, fraud, and abuse as a result of the sheer number of federal broadband subsidy programs, including those administered by the Department of Agriculture.

In his response, Mr. May wrote that "[g]iven the large number of separate programs, it seems self-evident that some of them should be combined and/or eliminated so that there are many fewer programs and fewer agencies disbursing subsidies. This would increase manageability and facilitate accountability and meaningful congressional oversight." He therefore referenced with approval the introduction the Rural Internet Improvement Act of 2022.

In addition, Mr. May drew attention to the fact that the ReConnect Program (1) opens the door to rate regulation via a preference for applicants that provide "at least one low-cost option"; (2) inappropriately encourages applicants to "commit to net neutrality"; and (3) permits grant and loan recipients to apply that assistance in areas where up to 50 percent of locations already are served, in many instances by privately funded networks, "thus disincentivizing further private investment." As noted above, the Rural Internet Improvement Act of 2023 would decrease that threshold to 10 percent.

Letter to Senator John Thune Regarding Oversight of Broadband Subsidies

 

 Free State Foundation President Randolph May sent a letter today to Senator John Thune, former Chairman of the Senate Commerce Committee, in response to Senator Thune's request for responses to a wide-ranging set of questions relating to the implementation of the Infrastructure Investment and Jobs Act (IIJA) and other programs disbursing funds to advance broadband deployment, as well as questions focused more generally on broadband issues. The letter's Introduction is below:

  

Introduction

The Free State Foundation's big-picture position regarding broadband deployment is that the role of marketplace innovation and competition, fueled by over $2 trillion in private capital investments since 1996 and $86 billion in 2021 alone, should be acknowledged, protected, and encouraged. And in those increasingly limited locations where challenging economic realities justify targeted government intervention to close remaining digital divides, marketplace competition should be replicated to the greatest extent possible to maximize overall consumer welfare while promoting fiscal responsibility.

In practical terms, first and foremost, this means that taxpayer dollars should never be used to subsidize the "overbuilding" of existing, privately funded networks that are already meeting consumer needs. Government subsidies should be applied judiciously solely to unserved areas. Then, and only then, should subsidies be directed to areas properly deemed "underserved." And in no event should subsidies be awarded in a manner that artificially tilts the competitive landscape toward government-preferred service providers, whether municipal or cooperative systems, or providers that choose to deploy fiber (or both). In other words, to the maximum extent possible, economic efficiency should serve as the overarching guiding principle so that all Americans can reap the benefits that accrue from the operation of marketplace forces.

In addition, great care must be taken to prevent waste, fraud, and abuse. Unfortunately, the scattershot nature that defines the current multi-agency, multi-program approach to disbursing broadband subsidies inevitably invites such abuse. Meaningful oversight, such as this effort you have initiated, is essential to achieve a coordinated, government-wide approach that helps avoid waste and ensures that taxpayer dollars are expended prudently. Effective oversight also will help inform efforts by law enforcement officials to hold parties accountable for fraud and other abuse of subsidy dollars.

Moreover, it is important that Congress require the FCC to continue to remove obstacles that delay deployment of broadband infrastructure and raise the costs of deployment. This may require granting the FCC more explicit authority to preempt various state and local regulations and practices relating to infrastructure siting that continue to pose unnecessary impediments to rapid deployment of both wireline and wireless services, including small cell 5G broadband facilities. It also may require measures to streamline infrastructure siting on federal lands.

And Congress should require the FCC to complete in a timely fashion its ongoing pole attachment proceeding and ensure that the final rules require prompt resolution of pole attachment disputes. Furthermore, Congress should eliminate the existing exemption from FCC-imposed limits on rates for attachments to poles owned by municipalities and electric cooperatives.

Finally, efforts spearheaded by Congress to expand broadband connectivity should not be allowed to be waylaid by extraneous supposed policy priorities, such as preferences for labor unions, "net neutrality," or various forms of rate regulation, however disguised or denominated. Attempts to impose these controversial extraneous policy preferences through the conditioning of federal broadband subsidies only serve to distract, delay, and drive costs higher. They are even more harmful now given the inflationary pressures currently wreaking havoc on projected price estimates.