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10 tips for state broadband offices about BEAD planning budgets

Louisville, Kentucky (August 2, 2022) - States recently passed two Infrastructure Investment and Jobs Act (IIJA) milestones by submitting letters of intent to participate in the Digital Equity Act (DEA) and Broadband Equity, Access, & Deployment (or BEAD) programs. Deadlines were July 12 and 18, respectively. The next milestone, which is coming up on August 15, is for states to request initial planning funds of up to $5 million. 

The office identified in the states’ letters of intent as point of contact for the BEAD program — in most cases, the state broadband office — must submit a project narrative of 1,000 words or less, a budget narrative, and a detailed budget. Templates are available for these documents. The budget is high level, featuring broad categories, and will leave states with some room to adapt. Still, in order to write it, states need to put some thought into what they’ll do with $5 million of BEAD planning funds.

Here are 10 tips from your friendly neighborhood broadband policy specialist.

1.  The BEAD and DEA programs should work together.

The DEA applications that were due on July 12, 2022, included a budget. All states applied. States can therefore expect two funding streams for broadband-related planning: $5 million for BEAD, and smaller amounts for DEA that vary by state. And, as of the time of writing, some kind of budget for the DEA planning funds has already been submitted. The BEAD planning budget should complement it.

The BEAD and DEA programs themselves are complementary. BEAD is focused on infrastructure, and DEA on adoption and use. But access is a prerequisite for adoption, and adoption improves the business case for building infrastructure. The National Telecommunications and Information Administration (NTIA) encourages states to plan the programs jointly, and that makes sense.

With this in mind, state broadband offices, while preparing their BEAD planning budgets, should review their DEA planning budgets, and sketch out BEAD planning activities that support them. Some activities, such as survey research or stakeholder engagement, should meet the planning needs of both programs.

2.  Plan for the initial proposal, as well as the five-year action plan.

States that apply for and receive planning funds must, in return, produce a five-year action plan within 270 days. State broadband offices should make sure that they’re budgeting for the activities they’ll need to undertake in order to meet that requirement. At the same time, states should plan for the next BEAD milestone: the initial proposal, in which states will tell the NTIA in detail how BEAD money will be allocated to achieve universal broadband availability. 

The initial proposal deadline is unknown because a 180-day shot clock will be triggered by the NTIA’s allocation of BEAD funds among states on the basis of the new FCC broadband coverage data. But we do know the requirements for the initial proposal, from the BEAD notice of funding opportunity (NOFO). And we know that there is no separate, dedicated funding stream for the work states will have to do to prepare it. So, states should plan their spending so that they’ll have money left over if the action plan is submitted and the initial proposal isn’t due for a few more months.

States would also be wise to start working on their initial proposals even before the action plans are submitted. The window between the action plan and initial proposal deadlines is likely to be short, and some of the requirements of the initial proposal are difficult. It’s possible that states will need to revise their initial proposals in light of NTIA feedback on action plans, but they won’t need to start from scratch. An early start on the initial proposal will be a good investment. 

3.  Work backward from the goal to figure out what you need to do.

The BEAD NOFO contains a list of 18 (bullet and sub-bullet) requirements for the five-year action plan, and 19 requirements for the initial proposal. Read these requirements carefully, and then work backward from the deliverables to a set of activities to figure out what you need to do during the planning stage. 

If you’ve drafted a work plan for BEAD planning already, check it against the requirements to see if you’re budgeting for the activities you need in order to meet them all.

4.  Do a mix of staffing up and hiring consultants.

Few, if any, state broadband offices have the staff they need to meet the BEAD challenge. To build capacity, they face a choice between (a) adding staff to the broadband office, and (b) hiring consultants. Generally, a mix of the two approaches is best.

Consultants can quickly bring on a lot of specialty expertise that state broadband offices would struggle to recruit, especially if they have to do it fast. Also, management problems arise from embedding high-level expertise in organizations where the chain of command is ill-equipped to direct and assess their work. What functions should be outsourced to consultants will vary by state, but most, if not all, states will benefit from some outsourcing.

On the other hand, some decisions are not merely technical, but depend on what kind of future the state wants. Local civil servants, rather than hired consultants, are often more appropriate to make those decisions. State broadband offices need substantial capacity to manage consultants and understand what they’re advising. And the state will need some institutional memory in order to maintain and oversee BEAD-funded infrastructure in the long run. So, state broadband offices should be hiring people, too.

5.  Top budget priorities are (a) stakeholder engagement, (b) mapping for eligibility determination, and (c) estimating cost and timeline for universal access.

The lion’s share of BEAD planning budgets should focus on three major activity areas that are critical to a successful implementation of the BEAD program.

Stakeholder engagement, as the IIJA and the BEAD NOFO strongly emphasize, should inform all the decision-making under the BEAD program, and will involve a high level of effort. Outreach can take many forms, but should include email campaigns and/or meeting cadences with local government associations, community organizations, the ISP industry, and/or the public. State broadband offices should try to identify all major policy decisions, and then plan stakeholder engagement so that these policy decisions can be demonstrably made on the basis of stakeholder input, while still comprising a coherent policy.

Mapping is critical for identifying broadband coverage gaps. Although the FCC will soon be releasing new broadband coverage data based on an improved methodology, we recommend that states engage in their own data-collection activities. This can help ensure that every broadband serviceable location lacking 100/20 coverage (unless it’s due to be served under a funded deployment commitment) will be targeted by BEAD.

Estimating the cost and timeline for universal access is a challenging engineering task, and is likely to consume a substantial portion of BEAD planning budgets.

6.  Budget for workforce planning, affordability strategies, and studying obstacles to deployment.

BEAD planning also requires, at both the action plan and initial proposal stages, an intentional focus on the broadband deployment workforce, broadband affordability, and policy obstacles to broadband deployment. The action plan requires that they be studied, while the initial proposal looks for more details and prescriptive solutions. These are new tasks for many state broadband offices.

Addressing these requirements will likely require specific activities and dedicated budgets in most states, but probably not as much as for stakeholder engagement, mapping, and cost estimation. Hard choices may need to be made, however, and it’s critical that states’ plans focus on making internet access affordable to the whole population. Planning in these areas should be informed by close engagement with the broadband industry.

7.  Consult with the ISP industry to find workforce and deployment pain points.

With respect to workforce and deployment, state broadband offices should ask internet service providers (ISPs) about their pain points. State government may be able to help recruit and/or train people for the jobs that ISPs building broadband networks sorely need. State or local governments can help expedite permitting processes. States should find out whether Affordability Connectivity Program (ACP) participation, a BEAD requirement, is a major barrier for ISPs, and if so, what might be done to help.

8.  Do your own mapping to make sure you find ALL the broadband coverage gaps.

The overriding goal of the BEAD program is to achieve universal broadband coverage. For that, state broadband offices need to know where all the broadband serviceable, but unserved or underserved, locations are. 

It’s helpful that the FCC, in fulfillment of a Congressional mandate under the Broadband DATA Act of 2020, is taking up this challenge, and will soon be releasing new maps, granular to the location level, that report available internet service speeds throughout the United States. The new maps should be a big improvement over the traditional Form 477 data. 

But it would be unwise to put complete trust in this brand-new data-collection process. States should conduct their own mapping and geoanalytic work to find the locations that need service, so that they can check the FCC’s work.

9.  Cost and timeline estimation must involve engineering, but can be assumption-driven to some extent. 

One of the requirements for the BEAD five-year action plan is that states include “the estimated timeline and cost for universal service.” 

This is a difficult requirement to meet. It also raises a lot of questions. What technology, or mix of technologies, should the state assume will be used to provide universal service? How should the state deal with the large uncertainties in any such cost-estimation exercise? How rigorous and detailed should the methodology for these cost estimates be?

Some very crude estimation methods, e.g., mere extrapolation based on a uniform cost per location passed, might be rejected by the NTIA, and in any case would ill serve the state’s planning needs. On the other hand, to design a statewide network that’s ready to build simply for cost-estimation purposes would be overkill. ISPs will develop their own network designs when they apply for grants. We recommend that cost estimation be treated as a serious engineering problem, accounting for topography, backhaul and availability of utility poles and so on, but it can be somewhat assumption-driven. Multiple scenarios should be considered, including best case vs. worst case, and all-fiber vs. some allowance for wireless alternatives in the highest cost areas.

A crucial bit of work that the cost estimates need to do is to guide the state’s determination of the “extremely high cost per location threshold.” This is the cut-off where states will stop automatically selecting end-to-end fiber projects over other technologies, and start considering other, cheaper-to-deploy technologies instead. If this policy variable is set too low, states will get less fiber than they should. But if it is set too high, states might run out of money before achieving universal service. The cost-estimation process will be critical to getting it right. 

10.  In designing the low-cost option, work with what ISPs already offer.

In addition to universal broadband access, affordability is one of the BEAD program’s goals. To that end, BEAD will require that grant recipients offer a “low-cost broadband option.” But the NTIA leaves it to states to define what that will mean.

States would be wise to work with ISPs and other local stakeholders to define the BEAD low-cost option so that the category covers existing, viable, low-cost internet programs that many providers already offer. If they don’t, the need to price, market, and administer a specially priced plan for only the small number of customers living in BEAD project footprints would likely deter many ISPs from seeking BEAD grants at all, thereby reducing the competitiveness of the program.

State broadband offices should plan to consult with the ISP industry about how they would like to make broadband service more affordable to low-income households, and then incorporate into the BEAD action plan and initial proposal a definition of the BEAD low-cost option that is economically feasible for the industry, while making quality internet service affordable to people in need.

About the author:Nathan Smith is a Broadband Policy Specialist with Connected Nation, a national nonprofit working to close the Digital Divide for all people in the United States. Previously, Smith led the Arkansas State Broadband Office and developed and administered the Arkansas Rural Connect broadband grant program, which allocated roughly $100 million in federal coronavirus aid to connect tens of thousands of Arkansan households to the internet during the early pandemic lockdowns. Among other writings, his Ph.D. dissertation, “Complexity, Competition, and Growth,” explores the economic theory of technological change.