BEAD’s progress and variety: Some states are charging ahead but some will need more time, and BEAD mapping is complicated

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by Dr. Nathan Smith, Director, Economics and Policy 

Bowling Green, Ky. (October 15, 2024) - Last month, we did a lookback over the Broadband Equity Access and Deployment (BEAD) program’s experience, but things are moving fast now. As the three-year anniversary of the passage of the Infrastructure Investment and Jobs Act approaches on November 15, BEAD hasn’t connected anyone yet, but a lot is in motion.

Application windows are open. Louisiana is ahead of the game and should complete its subgrantee selection soon. Some states, though, will need extended time. States vary a lot in how they define project areas and how they plan to deal with overlaps.

BEAD’s first legal headwinds appeared when internet service provider (ISP) Cox Communications sued Rhode Island for its ambitious use of speed tests to identify underserved areas. We still don’t know whether industry will step up with robust participation in BEAD. LEO satellite and fixed wireless services, addressed through new alternative technology guidance, seem to ensure that the NTIA will be able to claim some sort of success in its “internet for all” goals. But the real successes of BEAD will come where “priority” fiber projects enable disadvantaged areas to leapfrog to some of the best connectivity available.

Open application windows

First things first. Some states have grant application windows open right now. Here’s the list of what ISPs interested in expanding their networks using BEAD funds can apply for right now:

• Arkansas ($1.024 billion in BEAD funds) — The Arkansas State Broadband Office is taking comprehensive preregistration applications here. The window has been open since July, and no closing date is set.
• Colorado ($826.5 million) — The Colorado Broadband Office is taking BEAD project applications (no need to prequalify) until October 28 here. Applicants can explore Colorado’s project area map to find areas they would like to apply for.
• Kansas ($451.7 million) — The Kansas Office of Broadband Development continues to accept non-mandatory preregistration applications through its portal.
• Maine ($272.0 million) — The Maine Connectivity Authority's mandatory prequalification round is open until October 18. Its posted prequalification guidance describes what applicants will need before submitting applications through its portal.
• Massachusetts ($147.4 million) — The Massachusetts Broadband Institute has launched its BEAD prequalification process, to close on October 28, with guidelines and an application page.
• Michigan ($1.56 billion) — The Michigan High-Speed Internet (MIHI) Office is accepting prequalification applications. The window will remain open until 30 days after the project application window opens.  
• New Mexico ($675.3 milion) — The Office of Broadband Access & Expansion has a mandatory prequalification round open until November 1.
• North Carolina ($1.53 billion) — The North Carolina Department of Information Technology’s Division of Broadband and Digital Equity has a BEAD prequalification round open until November 1.
• Tennessee ($813.3 million) — The Tennessee Economic and Community Development broadband office is accepting Letters of Intent until October 23.
• Virginia ($1.48. billion) —  The Virginia Department of Housing and Community Development is inviting Letters of Intent for BEAD until November 30.
• Wyoming ($347.9 million) – The Wyoming Business Council reopened its prequalification window and will accept submissions until October 16. It plans to start receiving project applications on October 21.

For prequalified bidders only:

• Delaware ($107.7 million) — The Delaware Broadband Initiative is accepting project applications for scoring until October 18, 2024, but only from applicants who are prequalified.
• Montana ($629.0 million) – The ConnectMT Broadband Program appears to have extended its main round application deadline to October 31, 2024.
• West Virginia ($1.21 billion) – The West Virginia Department of Economic Development has announced that it will accept full applications through October 24 from entities that have already submitted Pre-Applications and received instructions for the Full Application.

Recently closed application windows include Nevada’s window for project applications (October 10), Wisconsin’s window for letters of intent (October 1), and New York’s optional prequalification round (September 30).

Some ISPs interested in BEAD might also want to participate in Arizona’s BEAD “Market Sounding,” which is open until November 7, featuring an opportunity for public comment on Arizona’s project areas map.

Louisiana the frontrunner

Throughout the BEAD process, Louisiana has been the frontrunner, getting things done ahead of other states. It achieved NTIA approval of its Initial Proposal, Vol. II (link downloads a PDF) on December 15, 2023, five months ahead of any other state. Since then, its steady execution has proceeded through project area design (released April 18), a prequalification round (July 1-14), and round 1 (August 15-29) and round 2 (September 11-25) of project application intake. Everything seems to be on track, but time is short.

The BEAD NOFO (PDF) requires that Final Proposals be returned within 365 days of Initial Proposal approval, so Louisiana’s is due on December 15, 2024. They must also be posted for public comment. Typically, public comment lasts 30 days, with a few more days to integrate feedback, which pushes back the date when Louisiana needs a complete Final Proposal to early November. Before that, Louisiana will need to finish evaluating and scoring all the applications it has received and execute a complex deconfliction process, described in the Initial Proposal, as it strives to find solutions for all 1,853 project areas and the 139,836 BEAD-eligible broadband serviceable locations (BSLs), using its $1.355 billion in BEAD funds.

Moreover, the broadband office promises on its website to implement the latest NTIA guidance on alternative technologies, even though the guidance is pre-decisional.

Louisiana’s impressive, high-capacity broadband office has accomplished a lot, but the hardest part is now. If it succeeds, its example will be closely studied by other states. If it falls short, that is understandable, and the IIJA and the NOFO empower the NTIA to grant an extension. The first household to get a new internet service from the BEAD program will probably be in Louisiana, sometime in 2025.

Some states will need more time

While critics complain that BEAD has moved too slowly, a deliberate rollout was baked into the IIJA statute. Some early forecasts were much too optimistic, partly because they didn’t allow for NTIA approval turnaround times in between the statutorily-defined “shot clocks." Some NTIA actions have been slower than might have been expected, either because the NTIA manipulated the timeline to help states (for example, the rather late announcement of BEAD allocations on June 30, 2023, ensured that states had time to complete their Five-Year Action Plans before they pivoted to drafting their Initial Proposals) or because some tasks, e.g., working with states to craft BEAD-compliant and effective Initial Proposals, proved more difficult than Congress foresaw.

With 53 states and territories now having fully approved Initial Proposals, the 365-day shot clock is ticking for states to get subgrantee selection done, but it’s already evident that some states will need more time. Oklahoma, for example, got approval of its Initial Proposal, Vol. II on August 1, 2024, but only launched its BEAD challenge process on September 23. After giving due time for eligible organizations to submit map challenges, for rebuttal of map challenges, for adjudication of challenges versus rebuttals, and then for NTIA to review and approve the state’s submitted post-challenge BEAD eligibility maps, Oklahoma will have only a few months left to execute a subgrantee selection process that, as described in Oklahoma’s Initial Proposal, would require the full 365 days.

It was partly in the interests of giving states more time that the NTIA decided last year to split the Initial Proposal into Vol. I, which defined an initial BEAD-eligible list and set the terms of state BEAD challenge processes, and Vol. II, which defined the subgrantee selection process. States got approval of Vol. I before approval of Vol. II and could launch their BEAD challenge processes before the 365-day shot clock for subgrantee selection started ticking. Many states did, but not all.

Other reasons for delay include staff and consultant turnover, project area design difficulties, collisions between BEAD rules and state laws, slow NTIA approval of challenge process results, incomplete policy decisioning in the Initial Proposal, and trailing guidance from the NTIA, such as the alternative technology guidance referenced above, released after most states’ Initial Proposals had already been approved.

The use of prequalification rounds by most states, partly in the hope of saving time, with the idea that broadband offices could review and approve organizations’ qualifications before they finalized BEAD eligibility lists, adds a step and may sometimes lengthen the process. The Extremely High Cost Per Location Threshold, which could have been explicitly set in the Initial Proposal, was deferred by all states to be determined during the subgrantee selection process, creating another potential source of delays and possible objections from providers.

Fundamentally, the BEAD program’s premise of having states fully solve broadband coverage gaps and lock in ISP commitments to achieve internet for all in just 365 days always looked optimistic. Aggressive deadlines help cut through bureaucratic gridlock, however, and broadband delayed is broadband denied. There are also downsides to having BEAD funds promised but not yet provided, since unsubsidized network construction can be deterred, in the meantime, by the threat of future BEAD-subsidized competition. So, there are good reasons to hurry. The NTIA will have a delicate task giving some states much-needed extensions, while still keeping the pressure on.

Project area planning

With almost all Initial Proposals now fully approved, it’s becoming possible to summarize how states have made some big decisions in how to run BEAD. One of the most important and fascinating decision points is project area planning. Here are the main patterns.

First, some states, like South Dakota, Iowa, and Minnesota, let ISPs propose their own areas at the location level. But most states predefine project areas in some way. South Carolina’s project areas are non-binding, so it looks like project areas will actually be ISP-defined, though ISPs are “encouraged” to offer full coverage of project areas based on ZIP Code Tabulation Areas.

Second, where project areas are predefined, most states require subgrantees to serve every eligible BSL in the project area, but some, like Kentucky and Virginia, allow them to omit a few.

Third, predefined project areas are sometimes based on preexisting geographies, such as census blocks, census block groups, utility districts, school districts, municipalities, counties, ZIP Code Tabulation Areas, or equally sized hexbins, while in other cases, broadband offices commit to create and publish custom geographies to serve as BEAD project areas, with methodologies that vary greatly in the level of detail provided.

Fourth, some states that plan to predefine custom BEAD project areas have plans for industry input, either as the starting point for project area predefinition, or as public comments on project areas that the broadband office creates.

Fifth, states vary in their openness to multi-area projects. Some states try to rule them out and will only accept applications for single-area projects. That raises the question of what happens if an ISP bids on several nearby project areas and then declines awards when it wins some, but not all, of a group of project areas that must go together to comprise an economically viable network deployment. Other states welcome multi-area projects, sometimes volunteering cogent argumentation about why they are needed, and have plans for joint consideration and award of multi-area projects.

Sixth, to a question in the NTIA Initial Proposal template about how states will “de-conflict” overlapping project areas — the term was a neologism when the NOFO was published in 2022 but has emerged as a mission-critical area of practice — some states declare that they have avoided a need for deconfliction, while others embrace deconfliction and propose methods in various levels of detail. However, there is no convergence on any deconfliction best practices. Every state is different, and most or all approaches seem to be somewhat underspecified.

Past broadband grant programs have occasionally had to face challenges of the kind that are now being called deconfliction, but on a smaller scale, because they were not obligated to achieve universal broadband coverage in one big push. Thus, the FCC’s Rural Digital Opportunity Fund (RDOF), launched in 2020, which combined universal coverage as a soft target with a built-in expectation that it would need to settle for low-hanging fruit, featured predefined project areas, and simply let multi-area bidders decline awards when they didn’t win everything they needed. The resulting coverage gaps were acceptable for RDOF but would not be acceptable for BEAD. Other programs, such as USDA ReConnect, could accept ISP-defined project areas because they were designed to make incremental progress.

Deconfliction is an inherently difficult problem arising from pursuing universal coverage through competitive grantmaking. 

Cox Communications sues Rhode Island

The BEAD program’s difficulties in settling what BSLs to target were dramatically highlighted on September 23 when Cox Communications filed a lawsuit (PDF) against the state of Rhode Island for rejecting many of its coverage claims as an outcome of the BEAD challenge process.

Like many other states, Rhode Island, with small coverage gaps and upwards of $40,000 in BEAD funding per official unserved or underserved location, aimed for increased program reach by modifying the FCC National Broadband Map, which reports provider-reported speeds, using speed test evidence. Also, like other states, it applied the principle of “area challenge,” which permits tentative correction of the broadband coverage maps based on sample of locations taken to be representative of a larger area. But it was unusual in proactively reclassifying many BSLs as underserved based on adverse Ookla speed test data without input from residents or organizations representing them.

Cox’s lawsuit objects that Rhode Island will target BSLs that it already serves adequately, and that the evidentiary standards and timelines for rebutting the challenges were unreasonably difficult. Rhode Island’s BEAD challenge map is posted here. While Rhode Island has some specifics that should limit the national impact of the case, it may foreshadow other legal headwinds that the BEAD program will face going forward. The BEAD program will sometimes fund new network infrastructure for places that some incumbent ISPs feel they already adequately serve.

Will industry step up to apply for BEAD grants?

While states’ plans are mostly in place, and some states are accepting applications, the biggest single factor in BEAD program success remains unknown, namely: how will the broadband industry respond?

BEAD can’t succeed without industry. Its only plan for deploying broadband is to pay ISPs up to 75% of their capital costs to do it. ISPs are overwhelmingly private companies. If the BEAD grants are reasonably industry-friendly to apply for, and ISPs can make money from the networks they can use BEAD funds to build, they’ll step up. If they don’t, BEAD fails. There’s no Plan B.

In Louisiana, the frontrunner, 33 ISPs prequalified to apply for Louisiana’s BEAD program (labeled GUMBO 2.0). That’s the best public-facing evidence of ISP participation in BEAD so far. But just because they prequalified doesn’t necessarily mean they’re submitting projects. Louisiana’s Final Proposal, if released for public comment on schedule in November, will provide the first clear window on the broadband industry’s demand for BEAD grants.

While ISP demand for broadband grants is generally robust, programs are sometimes undersubscribed. For example, Texas’s BOOT I broadband grant program launched in March 2023 with $363.8 million in ARPA CPF money to spend, received only $180 million in project applications, and awarded only $12 million worth of projects on June 3, 2024. State BEAD programs will need to do a lot better than that.

Will BEAD really achieve ‘internet for all?’

Ultimately, the goal of the BEAD program is to achieve “internet for all,” in the sense that every broadband serviceable location in the United States should have access to broadband internet service at speeds of 100 Mbps download, 20 Mbps upload, preferably by the “reliable” technologies of fiber, cable (coax), licensed fixed wireless, or (anomalously) DSL. (Although DSL is defined as a “reliable” broadband technology, it generally can’t meet BEAD’s bandwidth standards.) Will BEAD achieve the goal?

Yes and no.

In one sense, the goal is already achieved. Starlink claims on the FCC National Broadband Map that it offers 100/20 low-latency internet service from its low-Earth orbit (LEO) satellites to almost every location in the United States, although it is less clear from Starlink’s website that the company actually expects all customers to enjoy that level of performance. Amazon’s Project Kuiper aims to offer a second LEO satellite service based on the same technological principle. The NTIA’s latest alternative technology guidance seeks to incorporate LEO satellite and unlicensed fixed wireless into its nationwide solution. It seems clear the NTIA will be able to claim success in some way.

But BEAD didn’t create Starlink. What BEAD will do is to build a lot of terrestrial networks, of which most will probably be “priority” projects that use end-to-end fiber. Casual extrapolation from broadband grantmaking by federal and state agencies in the recent past would suggest that BEAD funds should suffice to achieve universal coverage with mostly fiber builds. But there’s a low-hanging fruit effect at work, whereby the last served are usually the hardest, and many will be foreseeably uneconomic to operate even if BEAD grants pay the capex cost of building the network. This cost escalation could curtail BEAD’s fiber ambitions.

In the best cases, BEAD’s successes will be a bit ironic, in that areas long digitally disadvantaged will not only catch up with better-connected neighboring areas but leapfrog them. BEAD’s priority projects will offer gigabit service, along with special pricing. Most American locations at the time of writing do enjoy access to 100/20 service, but do not have fiber-optic gigabit service available. For the lucky residents of BEAD priority project footprints, an internet service famine will turn into an internet service feast.