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.

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.

Twitter Thread on the Infrastructure Bill and Broadband Access

Congress is currently hammering out an infrastructure bill that includes a section on broadband. The following Twitter thread from July 23 that provides a response to the broadband section of a recent draft bill that was produced in the course of Congress's ongoing negotiations:

(2) Unfortunately, it appears the latest iteration of the infrastructure bill is more focused on expanding federal regulatory power and control over broadband service rates than on expanding Americans’ access to broadband service.

— Seth Cooper (@CooperFSF) July 23, 2021

(4) The infrastructure bill, part of ongoing negotiating to reach compromise, contains a broadband section that appears to compromise itself. Its regulatory control approach will undermine efforts to expand broadband access. Congress should go back to the drawing board.

— Seth Cooper (@CooperFSF) July 23, 2021

Study: Bad Data Diverting Broadband Subsidies Targeting the Unserved to Already Connected Areas

A Competitive Carriers Association (CCA) study raises serious concerns that, contrary to the FCC's intentions, ratepayer dollars will be used to subsidize the overbuilding of existing broadband networks.

The goal of the $20.4 billion Rural Digital Opportunity Fund (RDOF) is to incentivize the construction of broadband network infrastructure specifically and exclusively in those areas that are, and are likely to remain, unserved.

That, of course, requires a factual appreciation of where "broadband," currently defined by the FCC as delivering download speeds of at least 25 megabits per second (Mbps) and upload speeds of at least 3 Mbps, is – and, more to the point, is not – available.

By all accounts, however, the broadband availability data that currently exists is fraught with problems.

For more information on the Digital Opportunity Data Collection, an in-progress mapping-modernization effort initiated by then-Chairman Ajit Pai in 2017 and funded by Congress at the end of last year, please see "A Primer: The COVID Relief Bill's Broadband Funding Provisions," a December 26, 2020, post to the FSF Blog, and "Congress Should Fund Needed Broadband Maps This Session," a November 2020 Perspectives co-authored by Free State Foundation President Randolph May.

Nevertheless, based upon the belief that existing data does indicate with sufficient accuracy those census blocks completely lacking broadband, the FCC conducted the RDOF Phase I reverse auction at the end of last year. 180 bidders won a total of $9.2 billion in subsidies to connect 5.2 million locations understood to be unserved.

But according to "Missed Opportunity: How the Rural Digital Opportunity Fund Wastefully Subsidizes the Connected," a study the CCA filed with the FCC on May 6, as much as $1 billion of that money – more than 10 percent – instead will go "to wealthy, densely populated areas that already have access to broadband."

High-profile examples include Cupertino, California, the home of Apple Inc.; Fisherman's Wharf in San Francisco; and parts of the downtown Chicago business district.

All told, CCA warns that RDOF Phase I subsidies could be used to overbuild existing, privately funded broadband networks serving nearly 300,000 locations and over 400,000 people.

The CCA therefore urges the FCC to "reaffirm its commitment to closing the digital divide by using its ample authority to prevent scarce, high-cost funds from needlessly subsidizing broadband deployment in areas that already have it."

A Troubling Allegation of Taxpayer-Funded Broadband Overbuilding

With a recent tweet (see below), FCC Commissioner Michael O'Rielly focused attention on a family-owned ISP's claim that government subsidies have been allocated to overbuild its existing broadband service footprint. The expansion of network infrastructure to areas in fact unserved is a worthy goal, one likely to receive increased attention in the months ahead. But sound policy should foster, not threaten, the central role that private investment performs in the deployment of high-speed Internet access to all Americans.

My apologies to Tongue River Communications, WY family business apparently facing government-subsidized overbuilding. If accurate, it’s shameful given many Americans have NO broadband access. All fed broadband funding must strongly & clearly prohibit such waste & target UNSERVED. https://t.co/i2vgkTJXUz

— Mike O’Rielly (@mikeofcc) November 3, 2020

Late last week, the FCC released updated broadband deployment data based upon Form 477 filings. The number of unserved Americans decreased by 46 percent from 2016 to 2019, to 14.5 million. That is largely the result of private investment by broadband providers totaling $1.7 trillion between 1996 and 2018 – including $80 billion in 2018 alone.

As Free State Foundation scholars have argued time and again, however, the use of taxpayer dollars to subsidize networks that compete with privately funded providers undermines future investment incentives and threatens the continued expansion of access to unserved areas.

In a post written for the ACA Connects blog, Robert Jacobson, co-owner (with his wife and son) of Tongue River Communications in Ranchester, Wyoming, describes a concerning instance of the use of CARES Act funding to construct competing network facilities where it already provides service satisfying – indeed, exceeding – the FCCs definition of "broadband (25/3 Mbps).

According to Mr. Jacobson, these subsidies "could put Tongue River Communications on the brink of ruin in no time at all."

While I can't vouch for the veracity of his allegations, to the extent that they are accurate, they serve as a compelling example why government intervention must be limited to those areas where the economics have proven too challenging for private industry. Broadband service providers, large and small, have connected the vast majority of Americans. Government policies should encourage them to continue those efforts.