WASHINGTON, May 24, 2023 – States should use a reverse auction process to divvy out money from the National Telecommunications and Information Administration’s Broadband Equity, Access and Deployment program, said experts at an American Enterprise Institute event Wednesday.  

States are given two methods to stretch their funding amounts further, said Scott Wallsten, president of Technology Policy Institute. The first is to decide how they will distribute the money and the second is to determine where to set the extremely high-cost threshold, which will indicate where money can be spent for technology other than fiber.  

Reverse auctions where providers bid on the lowest amount of grant funding needed to fund a program are the solution to efficiently distribute limited funds, which are expected to be delivered to the states by June 30, said Wallsten.  

The Federal Communications Commission’s Rural Digital Opportunity Fund reverse auctions showed that winning bids were nearly half of what cost models estimated, which shows just how much dollars can stretch if done correctly, said Wallsten. 

Not all industry experts agree, however. CEO of DTC Communications Chris Townson said in a panel this month that reverse auctions simply create a race to the bottom without considering quality. “Let’s put our money to the things that really matter,” he said. 

We often underestimate the ability of firms to build out, said Greg Rosston of Stanford Institute for Economic Policy Research Wednesday. Firms will respond to lower bids by finding innovative ways to work more efficiently, he said. Companies have accurate information about program costs and understand the risks, he continued. 

Photo of Greg Rosston during the webinar

“We should take advantage of this by harnessing the power of the markets,” he said, urging states to use reverse auctions to stretch the money further. 

NTIA should give direction on competitive grant requirements

Furthermore, the NTIA should set a framework for what states can do to meet the competitive grant requirement, said Rosston.  

The law specifies that states must have a competitive grant process without explaining what that means, he said. As it stands currently, it is unclear how states will decide how to allocate the money awarded to them in the BEAD program, Rosston continued. There is a lot of opportunity for wasteful spending, he said. 

We do not want 50 states and territories struggling to organize their own competitive grant processes, added Wallsten. 

There is nothing preventing the NTIA from asking the FCC to help the states with reverse auction processes by making the software and rules from RDOF auctions available or even running the auctions for the states, said Rosston. We need to make it easy to have states run their competitive processes as required in the law, he stated. 

BOUNTIFUL, May 24, 2023 – The city council in Bountiful, Utah, voted unanimously to approve the building of a city-owned fiber network by Utah-based service provider UTOPIA Fiber Tuesday. 

The open access fiber infrastructure will be owned by the city but operated by UTOPIA Fiber, which will then lease the fiber to internet service providers. 

City council members expressed their resounding support for the program. We believe that the estimates of take rates are conservative and reasonable when compared to like communities, said City Manager Gary Hill, pointing to neighboring town Centerville that has 49 percent take rate on its city-owned network. 

Bountiful will issue $43 million in bonds to fund the program, announced the city. The debt service for the bond will be paid for using system revenues with any excess revenue invested into affordability assistance, city council members said.  

The initial contract term is 10 years with buildout expected to take 2-3 years. The city anticipates that it will make profit on the investment within four to five years of operation. 

In 2022, at the request of residents, the city issued a request for proposals that were released to potential fiber providers to build and operate a city-owned network. In January, Bountiful officials began contract negotiations with UTOPIA. 

“The purpose of the City’s involvement with fiber is to provide a competitive marketplace for internet service providers through an open access network,” read the city’s statement.  

The announcement comes months after West Haven, Utah announced its contract with UTOPIA Fiber for a city-wide network. 

WASHINGTON, May 23, 2023 – Representatives at Tuesday’s Oversight Committee of the National Telecommunications and Information Administration expressed concern that the $42.5 billion Broadband Equity Access and Deployment program is prioritizing fiber builds to the detriment of rural communities. 

The NTIA’s authority and effective legal power was last authorized in 1993. Since then, the communications landscape has changed drastically. 

Recently, the NTIA submitted its 2024 budget request for $117.3 million, nearly double its current authorization. The hearing delved into the inner workings of the agency to ”ensure that NTIA is being good stewards of tax dollars allocated for broadband expansion.” 

Representatives expressed concern that fiber is unjustly prioritized in the BEAD Notice of Funding Opportunity. Building fiber to the premises can be economically impractical for many rural areas. 

In response, sole witness and NTIA Administrator, Alan Davidson, assured representatives that the administration expects many types of technologies to be deployed as part of the BEAD program. 

States are given the prerogative to determine what their best solution for deployment is, he said. States can determine for themselves what price point will qualify a project as an extremely high-cost deployment. 

Although states cannot close off applications to telecom companies based on technology, a fiber company that applies for funding is most likely to receive grant awards unless the area in question is considered an extremely high-cost location.  

Despite this assurance, many representatives, including August Pfluger, R-Texas, expressed concern that rural unserved and underserved locations will remain unfunded throughout the BEAD process. 

We will not accept state plans that do not show conclusive steps on connecting every single unserved address in their jurisdiction, said Davidson. 

Spectrum concerns

For the first time in U.S. history, there is no additional spectrum coming down the pipeline. The NTIA is working on developing a sustainable national spectrum strategy that will represent a government-wide approach to maximizing the potential of the nation’s spectrum resources. 

In April, the NTIA submitted a request for comment regarding the development and implementation of this strategy. It sought comment on the nation’s spectrum needs, how best to engage in long-term spectrum planning, and technology innovations that could better manage the nation’s spectrum resources. 

The NTIA is currently analyzing these responses and is on track to develop a spectrum policy that is “evidence and science based,” said Davidson. It is essential that the nation has a baseline policy to address spectrum conflicts, he said. 

Freeing up spectrum will require interagency coordination to determine where we can repurpose and increase sharing, said Davidson.  

Rep. Doris Matsui, D-Calif., is heading two bills, the Spectrum Relocation Enhancement Act and the Spectrum Coexistence Act that would make updates to the spectrum relocation fund that compensates federal agencies to clear spectrum for commercial use and would require NTIA to conduct a review of federal receiver technology to support more intensive use of limited spectrum.  

“Ensuring the federal government speaks with one voice on spectrum issues is foundational to Americas continued global leadership,” said Matsui. “And the NTIA is at the tip of the spear.” 

The Committee also considered 18 pieces of draft legislation that would elevate the NTIA’s role in coordinating interagency broadband funding, spectrum management, and cybersecurity policy development. One of which is the NTIA Reauthorization Act of 2023 that would “modernize the agency’s policies and mission and authorize its funding to match current funding levels.”