States approach readiness for the broadband rollout, but Washington’s nod is elusive

Washington, DC (March 24, 2025) - Three years and five months after the Infrastructure Investment and Jobs Act (IIJA) passed, the BEAD Program still hasn’t connected a single person to broadband, but it is on the brink of being able to do so on a large scale, if Washington gives a green light. Most states have now opened a project application window, and 24 states have closed one. Three states, Louisiana, Delaware, and Nevada, are only waiting for a sign-off from the National Institute of Standards and Technology (NIST) to start allocating money to projects.

At the same time, Washington continues to mull changes. On March 5, a richly informative, if occasionally testy, hearing in the House Energy and Commerce Committee probed the BEAD experience and stressed the disappointingly slow rollout of the landmark federal program which was intended to ensure that every serviceable location in the United States has access to broadband. At the same time, a “SPEED for BEAD Act” was introduced, which would have resulted in a more administratively streamlined and industry-friendly program if it had been enacted two or three years ago. At this stage, however, it’s not clear that changing the rules when states are “at the one-yard line,” as former NTIA deputy administrator Sarah Morris summed it up, would help. Industry voices have favored the law, however, since it will ease their compliance going forward.

While no BEAD Final Proposals have been posted since late 2024, a flood of them is due over the next few months. The NTIA will have its work cut out for it, expeditiously approving state Final Proposals so that construction can get started, while still meeting any needs arising from policy changes in Washington. Hopefully, the agency will meet everyone’s urgent desires to keep the program on the fast track of progress that it has finally achieved and not veer off into more delays.

BEAD implementation status in the states

While many state broadband office websites contain outdated language, perusal of web pages and guidance documents suggests the following classification of where states are currently in terms of broad BEAD implementation stage:

Table 1: Where states are in the BEAD process

By now, it appears that almost half of states have closed at least one project application intake round. Among these, some, like New York, are in the midst of a second project application intake round. Others, like Arizona, Vermont, and Pennsylvania, have announced one. Still others, like West Virginia, appear to have completed all their application project intake.

States like Colorado, Kansas, and Pennsylvania have provided some information about the applications received. For example, Pennsylvania reports that it has received 239 applications from 26 participating applicants, which jointly cover 97% of the state’s BEAD eligible locations. Consistent with the experience of BEAD frontrunner states, Louisiana and Delaware, these report-outs suggests robust participation, mostly by fiber-focused ISPs, with projects jointly covering the vast majority of BEAD eligible locations. The national picture remains unclear about the adequacy of BEAD funding to achieve the program’s ambitious universal coverage goal.

Since late 2024, when three BEAD Final Proposals appeared, no more have been posted for public comment, which would be the first step towards submission and approval. The hiatus in Final Proposal submissions is consistent with existing timelines, yet it may also reflect hesitancy on the part of states to publicly commit to plans at a time when national changes to BEAD are widely expected, e.g., with respect to the treatment of LEO satellite or the allowable uses of non-deployment funds.

However, Final Proposal deadlines are fast approaching. Kansas and West Virginia are due in April; Pennsylvania and Washington in May; and Colorado, Illinois, Kentucky, Maine, New Hampshire, and Oregon in June. Some states may need more time, and the BEAD NOFO allows states to request extensions. But states that are on track to meet these deadlines will need to start posting Final Proposals for public comment very soon. Hopefully, the NTIA is ready for a busy summer getting state BEAD plans expeditiously approved so that BEAD subgrantees can begin work.

NIST is another potential bottleneck. Although Louisiana, Delaware and Nevada received NTIA approval over two months ago, they are reportedly waiting on NIST approval before they can proceed to sign subgrant contracts and launch construction.

Sufficiency of BEAD funding will vary widely among states

Texas, which opened a window for BEAD challenges from January 10 to 24, recently revealed that, contrary to previous expectations, it now expects to have as much as $1 billion in BEAD funds over and above what is needed to achieve statewide universal broadband coverage. While recent FCC data would suggest that upwards of 600,000 locations are unserved or underserved, some of these are covered by preexisting federally- or state-funded deployment commitments, and the challenge process provided a further opportunity for ISPs in Texas to disqualify locations from BEAD eligibility because they already cover the locations. For example, they may have deployed too recently for their coverage to show up in FCC maps, or they commit to preempt BEAD by deploying there within the next few months.

This raises the question of how many other states have been, or will be, pleasantly surprised by challenge process outcomes that reduce the need to stretch BEAD funds. Some states are still working on the challenge process or awaiting approval, while others haven’t posted challenge process outcomes in a convenient, public-facing format. But a few states are shown in Table 2:

Table 2: Available BEAD funds per location has changed post-challenge process

Table 2 also includes recent FCC data on unserved and underserved locations for comparison. Two patterns are striking:

1. Most to all states seem to have experienced a reduction in the reach of BEAD eligibility as a result of the challenge process. This was not necessarily anticipated, since non-eligibility could also be challenged. It was widely suggested that ISPs overreport coverage in the FCC maps, and local governments and community organizations had an opportunity to demonstrate that the maps overstated coverage and additional locations should be BEAD eligible. Some did, but far more changes went in the other direction, removing locations from BEAD’s target list.
   
   
2. State-by-state patterns vary widely, from slight reductions in overall BEAD eligibility, as in California, to huge reductions, as in Virginia.

As the sixth column in the table shows, BEAD funding per eligible broadband serviceable location (BSL) as estimated by the FCC was relatively even, albeit with more money for states with small coverage gaps since there was a $100 million floor. The post-challenge BEAD funding per eligible BSL varies much more because of the ways the map changed from FCC coverage to BEAD eligibility.

There are a lot of reasons why BEAD funding sufficiency will differ across states. States made different choices about how to run the BEAD challenge process. Deployment occurred between FCC data collection and BEAD challenge and was affected by the different ways states spent ARPA State and Local Fiscal Recovery Fund (SLFRF) and Capital Projects Fund (CPF) dollars. More fundamentally, broadband deployment costs are heavily affected by population density and terrain. And the subsidy costs of broadband deployment can be impacted by the skill with which state broadband offices leverage competition among applicants to induce them to put private matching capital in the game. Louisiana’s statewide average cost of just $3,300 per location in BEAD subsidies for 95% fiber deployment reflects partly terrain and partly the broadband office’s skill.

By contrast, some states will find themselves in the position of Nevada. Nevada needed over $11,000 per location to achieve statewide universal coverage, even with 11% of locations allocated to LEO satellite service planned by Amazon Kuiper, and had to supplement its BEAD allocation with other funding. Many states, like Nevada, have well below $11,000 per location in BEAD funds, so similar subsidy costs of deployment per location would leave them short of funds necessary to achieve universal coverage. We can expect to see many states enjoying large windfalls of tens or hundreds of millions of dollars in BEAD non-deployment funds, even as other states come up short.

The large amounts of BEAD non-deployment funds that are likely in many states heighten the importance of potential policy changes emanating from Washington, DC.

Congress seeks “speed for BEAD”

While states follow through on their plans, changes are underway in Washington, DC. March 14 was the last day at the NTIA for Evan Feinman, who led the BEAD Program since 2022. In a parting e-mail, Feinman congratulated staff on the progress that BEAD has made but expressed some concerns as well.

Feinman predicted that the new administration will soon be “removing the ‘woke’ requirements [such as] provisions related to labor and wage, climate resiliency, middle class affordability, etc.” He considers that “not... significant” because those provisions “were inserted by the prior administration for messaging/political purposes and were never central to the mission of the program, nor were they significant in the actual conduct of the program.” Not everyone has found the labor, pricing, and climate provisions of BEAD so innocuous, and they have been blamed for some of the slowness in the national BEAD rollout. States had to draft plan content to satisfy these provisions, and in some cases, they impact subgrantee selection.

At the same time, Feinman expressed concern about a potential BEAD slowdown while Washington considers changes and about a program pivot in favor of LEO satellite at the expense of fiber, which “will be a disservice to rural and small town America.”

The BEAD program was also a top subject of discussion at a March 5 meeting of the House Energy and Commerce Committee, entitled “Fixing Biden’s Broadband Blunder.” At the same time, Rep. Richard Hudson (R-NC) introduced the “SPEED for BEAD Act,” with the stated intention of accelerating BEAD-funded broadband deployment. The draft law’s title is consistent with the most prominent theme of the hearing: a shared concern about BEAD delays. Some members criticized the BEAD Program for failing to connect a single location to broadband nearly three and a half years after the IIJA created it, while others defended the deliberate rollout as appropriate for effective planning. But all the committee members, as well as panelists Grant Spellmeyer of ACA Connects, Tim Donovan of the Competitive Carriers Association, Greg Hale of LTC Connect, and Sarah Morris, former NTIA deputy administrator, agreed on the “speed for BEAD” goal of making the program finally bear fruit.

As drafted, the SPEED for BEAD Act would:

1. Change the program’s name to Broadband Expansion, Access and Development;
2. Define the “gigabit service” for community anchor institutions (CAIs) as gigabit download, not symmetric;
3. Return funds unused by states to the Treasury rather than redistribute them to other states;
4. Restrict the use of BEAD non-deployment funds to (a) unserved and underserved locations, (b) CAIs, (c) data collection, broadband mapping and planning, (d) internet and Wi-Fi for certain apartment buildings, and (e) telecommunications workforce programs;
5. Allow BEAD subgrantees to remove from their projects locations that would unreasonably increase costs;
6. Remove workforce requirements on BEAD subgrantees;
7. Remove the letter of credit (LOC) requirement for some BEAD subgrantees;
8. Treat all 100/20-capable, low-latency technologies as “reliable,” without eliminating the “priority broadband project” concept that was the basis for the NTIA’s decision to prioritize fiber;
9. Interpret the “no regulation of rates” clause to remove pricing requirements, while not explicitly eliminating the low-cost service option.

These changes would make the BEAD Program more industry-friendly and administratively streamlined. Some key pain points for aspiring BEAD subgrantees would be removed, which is probably why industry voices like ACA Connects leader Grant Spellmeyer, Fiber Broadband Association leader Gary Bolton, INCOMPAS leader Chip Pickering, and NTCA leader Shirley Bloomfield, have made supportive statements. If the SPEED for BEAD Act passes, some ISPs that declined to participate in BEAD will wish they had done so, since the act takes away many of the program’s downsides for industry.

However, it would be challenging to implement the legislation now, since, as shown above, many states have already closed project application windows, and most are already engaged in subgrantee selection. For states, the SPEED for BEAD Act would mean more administrative pain now, as they implement its changes, but less later, as they enforce fewer “Special Award Conditions” on BEAD subgrantees. BEAD subgrantee ISPs could benefit from the removal of some obligations, constraints, and compliance burdens but would be disappointed if the act is deemed to require backtracking on awards that have been made.

BEAD and the Future of USF

While BEAD was the primary topic of conversation in the House Energy and Commerce Committee hearing, the future of the Universal Service Fund (USF) was also discussed. The connection is important to understand. The FCC’s Universal Service Fund has operated in some form for decades, although in its modern form it was established by the Telecommunications Act of 1996. Its job has always been to cross-subsidize rural and high-cost telecommunications networks, using fees collected in denser, lower-cost areas, as the networks themselves change with evolving technology, especially from landline telephony a few decades ago to broadband today. But the USF’s constitutionality, at least as it’s currently administered, is being challenged in Consumers Research vs. FCC. The case will be heard by the Supreme Court on March 26, as part of a broader judicial reexamination of the delegation of congressional power to federal agencies in the wake of the 2024 Loper Bright v. Raimondo decision.

BEAD is a one-off program, which covers only the capex costs of building new networks. It’s built on the hope that a one-time investment can solve a problem permanently. Once built, BEAD networks will generally become eligible for USF subsidies on an ongoing basis. The ongoing USF subsidies as well as the BEAD capex subsidies are important to a project’s viability. The role of USF in making BEAD projects viable is illustrated in Figure 1.

Figure 1: BEAD grant economics and the USF

Figure 1 shows the economics of a not-yet-built network whose expected capex (capital expenditure) costs to build would exceed the expected present value of customer revenues even before expected opex (operating and maintenance expenses incurred on an ongoing basis) is taken into account. Without subsidies, the network will, therefore, not be built.

However, the present value of anticipated combined revenues from customers and from the USF exceeds the present value of opex, so the network is commercially sustainable once built and even promises to earn a future profit. The prospect of which can motivate profit-seeking investment ex ante, albeit not enough of it to cover the network’s capex cost.

Without USF, the economics of the project look like Figure 2:

Figure 2: Disappearance of USF funding jeopardizes project viability

The key difference is that, without USF, a major revenue source disappears. This change alters the economics of the entire project. In this case, customer revenue is still enough, though only just, to cover opex. But that leaves very little profit, so there will be very little willingness to invest private capital in building the network. For the BEAD program to induce a private ISP to commit to the project, in a world without USF, it would need to offer a grant that covers nearly the entire capex cost.

That goes against BEAD rules, which require a 25% match, unless a waiver is provided. If the subsidy is any less, the ISP will walk away. It’s safe to say that the successes that BEAD has achieved so far in getting project applications and deployment commitments from private ISPs owe much to the USF. BEAD applicants and subgrantees look forward to USF as a source of financial support for operations in areas where the private return on investment would be low. If USF were to disappear or be drastically curtailed, some BEAD subgrantees would become unwilling to proceed with their projects, and BEAD networks that do get built will be more vulnerable to financial disruption and failure.

Conclusion

While BEAD is on the verge of bearing fruit at the state level, it faces uncertainty at the federal level. With favorable decisions by the NTIA and about the USF, BEAD is on track to expand broadband dramatically by the end of the decade and largely achieve its ambitious goal of universal coverage with mostly future-proof end-to-end fiber technology, but there are a few tripwires still ahead