WASHINGTON, September 26, 2023 – Federal and state broadband grants can serve as catalysts for other sources of funding, experts said at the Broadband Breakfast BEAD Implementation Summit on Friday.

The $42.5 billion Broadband Equity, Access and Deployment program is providing an unprecedented amount in federal funds for expanding broadband infrastructure, but some states have estimated their allocations will fall short of the amount needed to get high-speed internet to all of their residents. 

For Steve Coran, an attorney at Lerman Senter and counsel for WISPA, the trade group for fixed wireless internet providers, previous funding programs – the Rural Digital Opportunity Fund, known as RDOF, and the Connect America Fund, or CAF – are a source of hope. The certainty of federal funds, he said, has helped many of his clients secure private investments to serve rural areas.

Using that certainty “to generate additional capital investment is, I think, an underappreciated aspect of the RDOF and CAF programs,” he said.

Willie Heflin, managing director of investment firm Kinetic Ventures, said his experience investing in smaller internet service providers confirmed this. He pointed to a provider who received $187 million over 10 years from RDOF and was able to raise an additional $240 million from equity investors, including Kinetic Ventures.

“They were able to really build a company and provide services for people who weren’t getting it before,” he said.

Federally subsidized projects can also spur network expansion by making it cheaper and easier for communities to connect to nearby infrastructure, filling some of the holes left by funding programs, said Brian Vo, chief investment officer at Connect Humanity.

The extent to which BEAD projects will be able to stimulate private investment will hinge on the availability of affordability funds like the Affordable Connectivity Program, according to Blair Levin, an analyst at New Street Research and former executive director of the Federal Communications Commission’s National Broadband Plan.

“The single biggest delta for the economic models that will drive deployment in rural areas is whether the ACP is funded,” he said. “If it is, that makes the economics a lot easier. And if it’s not, it makes them a lot harder.”

The $14 billion program, established with the 2021 Infrastructure, Investment and Jobs Act, provides monthly internet subsidies of $30 for low-income households and $75 for residents of Tribal lands. It is set to dry up as early as April 2024, with no clear path to refunding.

If you missed the BEAD Implementation Summit, sign up for Broadband Breakfast’s BEAD Starter Pack for $35/month (cancel anytime). You’ll get access to all the videos and each of the three Breakfast Club reports prepared for the BEAD Implementation Summit:

• July 2023 – A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment Program
• August 2023 – Precursors to BEAD Implementation: A Deep Dive Into Prior Broadband Programs
• September 2023 – A Deep Dive into the BEAD Program’s Matching Funds

Already a Broadband Breakfast Club member? Watch the videos!

WASHINGTON, September 25, 2023 – State broadband leaders addressed on Friday their key areas of focus as they look to allocate billions in Broadband Equity, Access and Deployment grants.

The conversation took place at the Broadband Breakfast BEAD Implementation Summit, along with panels of other federal grant program officials, service providers, and investors. The $42.5 billion program is getting under way, with states releasing their initial proposals for implementing it and hearing public comments. Those proposals are due to the National Telecommunications and Information Administration by December 27.

Community outreach

Broadband heads cited engaging with communities – especially around challenges to broadband map data and fostering internet adoption – as being essential to the success of the program.

In New Jersey, broadband office leader Valarry Bullard and her team organized a listening tour. They go to churches and community centers to explain how high-capacity internet can play a role in people’s lives and local programs, without, she emphasized, jargon or acronyms.

“You kind of meet people where they’re at, you know?” she said.

Arkansas broadband director Glen Howie said his team went to all 75 counties in the state to explain how mapping challenges will work and work with counties to set up local broadband committees.

“You go into a county and you tell folks they have an opportunity to challenge their internet availability, they get fired up,” he said.

Mapping and data

As part of their proposals to the NTIA, states are required to outline a process for accepting challenges to the Federal Communications Commission’s map of broadband coverage. That map, now on its third iteration, is based on coverage reported by internet service providers, which is widely considered to be overstated.

Those map challenges will be crucial, both for BEAD and other federal broadband programs, the panel said. 

“It’s the foundation of all of our programs. We spend a huge amount of time on mapping,” said Angie Bailey, North Carolina’s head broadband officer. “We can’t do this work without strong, location-level mapping.”

In Maine, Andrew Butcher and the Maine Connectivity Authority have been investing in broadband mapping efforts for years, he said. A parallel mapping process to the FCC’s has helped them allocate previous broadband funds and confirm coverage reported by providers.

“It has allowed us to have a data-driven conversation, as opposed to a policy of dibs,” he said. “We want to understand where there’s service and where there’s not.”

Timelines

Deadlines, both for submitting initial proposals and awarding subgrants, are on broadband leaders’ minds. Those initial proposals are being submitted in two parts, and states have one year from the approval of part II to award their entire BEAD allocations.

That has Howie’s office in Arkansas worried about completing the challenge process, grant awards, and state rulemaking before the deadline

“The one year, arbitrary timeline that we’re all under at the moment is a huge concern for us,” he said.

Taking time on the initial proposal deadlines is helping states with smaller and newer broadband offices, like Bullard’s office in New Jersey, she said, learn from other states and prepare for the task ahead of them.

“Our plan will be submitted December 27, probably at 11:59,” she said. “It’s giving us some more time for that investment. We’re learning more about our counties… we’re connecting with our community anchor institutions.” 

If you missed the BEAD Implementation Summit, sign up for Broadband Breakfast’s BEAD Starter Pack for $35/month (cancel anytime). You’ll get access to all the videos and each of the three Breakfast Club reports prepared for the BEAD Implementation Summit:

• July 2023 – A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment Program
• August 2023 – Precursors to BEAD Implementation: A Deep Dive Into Prior Broadband Programs
• September 2023 – A Deep Dive into the BEAD Program’s Matching Funds

Already a Broadband Breakfast Club member? Watch the videos!

WASHINGTON, September 22, 2023 – A small Michigan island, Beaver Island, is asking the Federal Communications Commission to require broadband carriers receiving legacy federal funds to lay fiber-optic cable, or face competition from other providers.

The 55-square mile island is the largest in Lake Michigan and had a population of 616, according to the 2021 American Community Survey from the U.S. Census Bureau.

Beaver Island’s Joint Telecommunications Advisory Committee made the request in a September 18 filing to the FCC asking that the commission reconsider its adoption of the Enhanced Alternative Connect America Cost Model, or Enhanced ACAM. That model updates the previous allocation of federal money from the Universal Service Fund to internet providers in rural areas.

The model makes $13.5 billion available through 2028. It allows carriers to continue receiving funding if they upgrade or continue to provide service at 100 Megabit per second (Mbps) upload by 20 Mbps download – regardless of the technology they use to do so.

This, the island’s committee says, will prevent the island from being reached with fiber-optic cable, the highest capacity, most future-proof broadband technology. The Broadband Equity, Access and Deployment program, established in 2021, allocates $42.5 billion for states to expand broadband infrastructure, but disqualifies areas already served by federal funding.

Michigan’s broadband office estimated its portion BEAD funding could provide fiber-based internet to every location in the state currently receiving less than 100 * 20 Mbps service. That covers all of Beaver Island. But the island expects its providers will take the Enhanced ACAM  money and update their older, copper-based equipment to meet speed requirements rather than compete at auction for BEAD grants to build fiber.

“Rather than assuring [sic] those areas affected by the Order will receive adequate service,” the filing reads, referring to the commission’s official adoption of the new model on September 1, “the Order instead all but guarantees they will receive a service that will quickly become outdated.”

The committee  said in its filing that in order for an Enhanced ACAM recipient to prevent an area from being eligible for BEAD funding, it should be required by the FCC to use fiber.

Providers have until September 29 to accept or deny Enhanced ACAM funding.

WASHINGTON, September 28, 2023 – A Mississippi nonprofit is setting up a fund to support connectivity and digital literacy in the state.

The Mississippi Broadband Association is looking to raise $10 million to start the fund, which MSBA Executive Director Quinn Jordan said is intended to ensure newly built broadband infrastructure stays affordable in the state.

“We can build these networks,” he said, speaking at a Fiber Broadband Association webinar on Wednesday, “But if we don’t get people connected, if they don’t have the literacy or capability to do so, what have we really done?”

The initiative, called the Connect and Literacy Fund, is planning to increase ACP adoption in Mississippi. Over 18 percent of the state lives below the poverty line, making them eligible for the $30 monthly internet discount, but less than half that number participate. The MSBA is planning to make ACP sign-up part of the registration process to participate in the fund’s programming.

That programming will focus on teaching people how to use internet services like telehealth and streaming and provide large discounts for tables and PCs. The ACP provides a $100 device subsidy, but this is rarely enough for low-income households to make a purchase, Jordan said.

Difficulty accessing affordable devices is contributing to the digital divide in Mississippi, according to Jordan. He pointed to the fact that over 40% of Mississippians do not have access to a tablet or computer.

“That is a huge number. And it’s a barrier to entry,” Jordan said. “The Connect and Literacy Fund is hopefully going to address that.”

Jordan said the $2.75 billion Digital Equity program, part of the Biden Administration’s Infrastructure, Investment and Jobs Act, will be beneficial, but MSBA’s Connect and Literacy Fund will have a role to play in ensuring the state builds on the gains it makes with the federal funds.

“That money is going to run out,” he said. “What we’re doing is ongoing.”

The ACP might also be short-lived. The $14 billion allocation from the Infrastructure Act is set to dry up in April of next year.

MSBA has spent the last two months developing its programing and is looking to start coordinating events with local anchor institutions in the coming months, Jordan said. 

The Federal Communications Commission, under the behest of Chair Jessica Rosenworcel, may now go after the practice of usage-based billing, a common method by which internet-service providers charge consumers different rates based on how much data they use.

A push by the FCC to eliminate the practice could result in price increases for many broadband users.

Rosenworcel announced a proposal in June to investigate how internet data caps affect consumers, especially the impacts on those with disabilities and lower incomes. Many broadband providers offer tiered pricing based on data usage, limiting how much a customer can use before paying more for their service or facing slowdown in their speeds.

“Internet access is no longer nice-to-have, but need-to-have for everyone, everywhere. As we emerge from the pandemic, there are many lessons to learn about what worked and what didn’t work, especially around what it takes to keep us all connected,” Rosenworcel said. “When we need access to the internet, we aren’t thinking about how much data it takes to complete a task, we just know it needs to get done. It’s time the FCC take a fresh look at how data caps impact consumers and competition.”

But usage-based billing ensures that those who use the most data pay the most money, helping keep costs lower for those who use less data. It is a common practice across many industries. For example, if you operate a business, your accountant would bill you for more hours to do your taxes than you neighbor who only files personal taxes. If you travel farther across the city in an Uber, you’d pay a higher rate than another customer traveling a few blocks. And – since Democrats wants to regulate the internet as a utility – if you use more kilowatts of electricity in your home than your neighbor, you get a higher power bill.  

As James Erwin of Digital Liberty notes, it’s this latter point where the proposition by the FCC really falls apart.

“If one accepts the premise that high-speed broadband is now a necessity, not a luxury, and uses that as justification for outlawing usage-based billing, why shouldn’t the same logic apply to electricity? It has been government policy for close to a century that universal electricity is imperative for access to modern life. Despite this, electric utilities still put meters on our houses and measure our usage to charge us.”

Case for Consumers points out that pricing is one of the most critical decisions by a business and can determine its success or failure.

“This is why letting the market, as opposed to government, set prices is an enormous advantage to consumers, as prices for goods and services necessarily reflect the actual costs incurred and most often land at a point of equilibrium reflecting actual market value at the time and place delivered,” the organization posted on a blog. “This allows businesses to efficiently and economically produce goods and services, as well as improve those goods and services, in order to make a profit while preventing consumers from overpaying their hard-earned money.”

Most internet providers offer tiered plans, which allow light users to pay a much lower rate for a limited amount of data and heavy users to pay a higher rate for unlimited data. An effort by a Democrat-led FCC to eliminate this structure, capping the rate, would likely lead to light users (who often have lower incomes) having to pay more for their internet.

As Case for Consumers notes: “If the government dictated the price of a fill-up (regardless of tank size), then gas stations would set the price high enough to ensure they did not lose money on larger vehicles, meaning the driver of a Geo Metro would pay the same at the pump as the owner of a Chevy Suburban, an absolutely outlandish notion.”

A large reason why the United States enjoyed robust broadband infrastructure during the early days of the COVID-19 pandemic was the ability of internet providers to use the revenue from such tiered pricing systems to continue to reinvest and maintain their systems. Efforts by the FCC to force providers to charge a lower-than-market price would put such long-term stability at risk.

Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

September 28, 2023 – Rep. Cathy Rodgers, R-WA, and Sen. Ted Cruz, R-Texas, sent a joint letter on Tuesday to newly minted FCC commissioner Anna Gomez, urging her to reject proposed expansions to a school broadband subsidy.

FCC Chairwoman Jessica Rosenworcel announced plans in June to expand the program –which provides monthly internet discounts for schools and libraries – to fund Wi-Fi on school buses and Wi-Fi hotspots for students to check out from libraries and schools.

The GOP lawmakers expressed “strong opposition” to the plan, calling it a “mockery of the law.”

They argue the Communications Act of 1934 limits E-Rate benefits to school and library property, making both proposed expansions ineligible for the subsidy.

Senator Ed Markey, D-Mass., supported Rosenworcel’s June announcement.

The proposal will be up for a vote among the five FCC commissioners at the regulator’s October 19 open meeting. Gomez’s recent confirmation gives Democrats a 3-2 majority.

E-Rate is among four programs funded by a portion of the roughly $8 billion in annual money from the Universal Service Fund. Lawmakers are looking to reform the USF’s funding mechanism, which is currently a tax on voice providers.

NTIA announces latest tribal grants

The National Telecommunications and Information Administration announced on Wednesday $74 million in tribal broadband grants.

The money comes from the nearly $3 billion Tribal Broadband Connectivity Program. It can be used to expand infrastructure or to fund other connectivity efforts like feasibility studies and broadband adoption initiatives.

Over $1.8 billion has been allocated under the program with the latest round of awards, which goes to 28 tribal governments in 11 states.

The NTIA said the awards comply with its “equitable distribution” requirement. The agency is required to give smaller grants – up to $500,000 – to tribal governments who do not receive the full grant amount they apply for.

The Government Accountability Office has pushed the NTIA to offer feedback to tribes who are given these significantly reduced grants, saying it would help tribal governments submit more competitive applications in the future.

The remaining $970 million in the program is still up for allocation. Applications are due to the NTIA by January 24 of next year.

Oregon gets $156 million from Capital Projects Fund

The Treasury Department announced Thursday the approval of over $156 million from the Capital Projects Fund for broadband projects in Oregon.

The money will fund a competitive grant program for last-mile infrastructure which the state expects to ultimately connect over 17,000 locations. The program will prioritize projects in areas with current internet speeds of 10 Mbps download and 1 Mbps upload and below and will require all projects to deploy at least 100 * 20 Mbps.

Most of the funding – $149 million – will go to grant awards for successful bidders, with the remaining $7.7 million set aside for administrative costs. Oregon will not receive any additional money from the CPF.

Projects funded by the program will also be required to participate in the Affordable Connectivity Program, a monthly internet subsidy for low-income and Tribal households. The ACP’s future is uncertain, though, with its $14 billion set to dry up in April of next year.

This allocation puts the total CPF awards over $8.4 billion to date. A response to the Covid pandemic, the fund set aside $10 billion for projects enabling work, education, and health monitoring.

Arkansas fiber training program

The Arkansas Community Colleges recently announced a free training program for jobs in broadband infrastructure deployment.

The Arkansas Fiber Academy, subsidized by a partnership with the state’s Office of Skills Development, offers three training programs preparing participants to work as aerial linemen, telecom tower technicians, and underground fiber technicians.

Courses range from 11 days to over three weeks and can be attended at three colleges and universities across the state.

A shortage of qualified workers to deploy broadband infrastructure has been cited by the industry as a potential obstacle to the $42.5 billion Broadband Equity, Access and Deployment program.