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A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment (BEAD) Program

What’s next for BEAD implementation?

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The Broadband Equity, Access and Deployment program will invest $42.5 billion in high-speed internet across the country. With White House funding announcement on June 26, 2023, state broadband offices have begun to react and release reports on their next steps in the landmark broadband infrastructure measure. 

States react to award allocations

The BEAD program is implemented by the Commerce Department and its National Telecommunications and Information Administration allocates funds directly to state broadband offices, which are in charge of developing their own programs and issuing subgrants to qualifying internet service providers. ISPs can include private, public/municipal, or cooperative entities. States have a lot of work to do to prepare for the federal funding coming down the pipeline.

In late 2022, the National Telecommunications and Information Administration awarded BEAD planning grants that funded state processes in developing a five-year action plan for BEAD awards. States have 270 days from the receipt of planning grants to release their five-year plans intended to “provide a foundation for alignment with future initial and final proposals.” 

The NTIA has provided states with a five-year action plan template that includes a statement of a clear vision for broadband deployment and digital equity. It outlines goals and objectives that ensure all residents will have access to high-speed internet and empower local municipalities to develop and implement lasting broadband infrastructure across the state or territory.

Additionally, states must list all existing broadband programs or offices, relevant partnerships with stakeholders, and a needs and gaps assessment with obstacles and barriers residents face in connecting to the internet. 

State digital equity plans must identify the barriers to digital equity and measurable objectives for documenting and promoting the availability, affordability and accessibility of digital equity programs. They must provide an assessment of how the objectives will impact and interact with other state economic and social goals. 

Louisiana was the first state to publicly release its five-year and digital equity plans in May. Since then, Delaware, Hawaii, Idaho, Maine, Montana, North Carolina, Ohio and Utah, have released drafts of their five-year plans for public comment. Maine, Michigan, Montana and Utah also released their draft digital equity plans. And Virginia and Louisiana have both released the first volume of their draft BEAD Initial Proposals. 

Analysis of states’ five-year action plans 

Although its deadline is August 12, Utah posted its draft five-year plan for comment in early June. Its public comment period closed early July. The state’s plan highlights the role of public private partnerships and develop a middle mile prioritization strategy to reach all unserved and underserved areas of the state, said Utah Broadband Office Director Rebecca Dilg.

While Utah’s plan focused heavily on middle mile prioritization, Maine’s primary strategy is to “prioritize funding to maximize impact, balancing urgency, universality, and equity” by “managing the dynamic tension of designing solutions for everyone while prioritizing those who are most disadvantaged.”

The focus of its five-year action plan is to design strategies to expand and enhance the foundation for digital equity by raising awareness and strengthening feedback loops.

To meet these goals, Maine says it will “tell a broad range of stories in various mediums to illustrate the real impact of the digital divide on people and communities.” Its approach focuses on its vision to improve the lives of its residents by leveraging relationships and existing programs. 

By contrast, North Carolina’s five-year action plan focuses primarily on BEAD’s role to supplement programs supported by the American Rescue Plan Act funds. 

North Carolina has already invested more than $50 million in state funds and $272.2 million in ARPA funds to connect more than 145,000 unserved homes and businesses, it stated in its plan. In addition to ensuring that BEAD funds build infrastructure to 100 percent of all underserved households, high-cost locations, and community anchor institutions, the state plans to use the remaining funds on affordability programs. It wants to ensure a high take rate on broadband deployment.

Additionally, the state has already invested $50 million to create awareness and support digital literacy and skills training programs that help its residents participate in the digital economy, it said. It hopes to continue to promote enrollment in the Affordable Connectivity Program to include 1 million North Carolina households, currently 774,327.

Meanwhile, Ohio has outlined a simple four-pronged vision to achieve its goals with BEAD funds: Promote the creation of world class broadband networks across the state via the use of best-in-class technologies; enable participation in the modern economy; empower Ohioans through training, device access and digital skills; and bring reliable, affordable highspeed internet to every Ohioan.

The state’s goals to achieve these objectives include plans to connect community anchor institutions to serve as digital hubs with at least 1 Gigabit per second (Gbps) symmetrical service, expand telehealth access and usage via targeting programming, expand access to remote education opportunities, invest in workforce development, and remove barriers to deployment.

Ohio is focusing its attention on high-quality investments that will benefit its residents for decades to come and will set a precedent within the state for high quality service. “We are confident Ohio will continue to meet all federal requirements, from the challenge process to the initial and final proposals,” said Brian Bohnert, senior public information office in Ohio’s Department of Development, told Broadband Breakfast.

The state’s five-year action plan submitted, BroadbandOhio has pivoted to working on its initial proposal, TK said. “Ohio will have all the required components of the initial proposal done well before the end-of-year deadline.”

Montana is the nation’s fourth largest state, but ranks number 44 in population: It has a population density of 7.4 people per square mile. It also has the unique topography of two distinct geographic regions: the Great Plains and the Rocky Mountains. In light of these barriers, which are likely to present significant costs, its five-year action plan outlines steps to reach unserved locations in “the most high-impact and cost-effective way possible.”

The state’s second aim is to develop programs and partnerships that “address core factors impacting digital participation for Montanans.” Included in that goal are initiatives to further the state’s IT strategic goals for each individual state agency.

While Montana outlined a basic structure for its state challenge process, Louisiana was the only state that detailed its challenge procedures in the five-year plan. Louisiana’s plan outlines key activities the state will implement to encourage digital inclusion, including creating a digital equity platform that tracks clearly defined access and affordability metrics such as service availability, speeds, and prices in unserved areas.

The state will also design future grant programs to prioritize access and affordability for covered populations. It will use accessible online resources, community centers, libraries, and other resources to promote and host in-person events that educate on available programs.

Due to each state’s unique situation, each five-year action plan lays out different priorities and goals. 

Massachusetts, which will receive $147 million, told Broadband Breakfast only that plan development is ongoing. It has adopted a statewide Digital Equity Survey that seeks input from Massachusetts residents about their barriers to internet access, affordability, and adoption.

B.J. Tanksley, director of the Office of Broadband Development in Missouri, told Broadband Breakfast that the state is working diligently to prepare for BEAD funding by hosting a 23-stop tour around the state to hear from residents about the strengths and challenges of each region of the state. “During the tour we gathered valuable insight that will serve the team through our efforts,” he said, stating that Missouri is wrapping up its planning efforts and is “on track” to submit its challenge process, initial proposal, five-year plan and digital equity plan in the coming months.

How were BEAD allocations determined? 

Congress directed that the BEAD allocation process be composed of three segments: Minimum award amounts for states and territories, high-cost locations, and remaining funds. Each state was guaranteed to receive at least $100 million and territories a minimum of $25 million. High-cost allocations, which represent 10 percent of the total program funds, target unserved areas where the cost of building broadband infrastructure is higher than construction in other unserved areas across the country. The remaining funds were divided among the states based on the number of unserved locations in each. 

State allocations were based on the second version of the Federal Communications Commission’s national broadband map, released early June.

Awardees are required to release their five-year action plan for BEAD funding and state Digital Equity plans as well as an initial proposal for its plan to implement the subgrantee process in which states will allocate funds to eligible entities to build broadband infrastructure. States will have access to at least 20 percent of their total allocations once the initial proposal is approved by NTIA officials.

Final proposals are due no later than 365 days after the approval of the initial proposal and must include the state’s subgrantee selection process, its plan for allocating funds to subgrantees, a timeline for the project, a certification from subgrantees that they will service all unserved and underserved locations and an oversight and accountability process.

Additionally, states are required to present matching funds of at least 25 percent of projects costs, assess climate-related threats to broadband infrastructure, make initial proposals available for public comment, and develop a challenge process to allow commenters to contest the state’s claims on whether certain locations have broadband service.

As part of the program structure, fiber projects are prioritized for all areas except for those that are determined by the state or territory to be “extremely high cost” locations. 

Analyzing the allocation amounts 

At the White House announcement of the funding amounts on June 26, President Joe Biden said: “These investments will help all Americans. We are not going to leave anyone behind.” In addition to connecting more Americans, the fund will also provide more high paying jobs and invest in American manufacturing, he continued.

Texas is the highest awarded state with more than $3.3 billion and California the second highest with $1.8 billion. Nineteen states are set to receive more than $1 billion in funding. Other high awardees include Alabama, Georgia, Louisiana, Michigan, Missouri and North Carolina. Each state is set to receive a baseline of $107.7 million.

“It’s good to see our hard-earned tax dollars coming back to Texas, and you can be certain that each of those dollars will be spent wisely,” said Texas Comptroller Glenn Hegar in a statement following the allocation announcement.

Hegar expects that the Texas Broadband Development Office will begin accepting applications for the BEAD program in 2024. “Texas has a significant share of unserved areas spread over a vast and geographically diverse landscape,” said Hegar. “I am encouraged that NTIA recognizes the challenges we face in Texa..”

Other state broadband offices expressed their support for the allocation announcements. Minnesota was awarded $651 million, which followed closely with predictions from the Advanced Communications Law and Policy Institute at the New York Law School, which predicted that Minnesota would receive $620 million.

“In Minnesota, we’ve made historic investments to connect more homes, businesses, and communities with the high-speed internet that today’s economy requires,” said Gov. Tim Walz in June. “The funding will help us make sure those efforts reach each and every household across our state.” The state has not released its digital equity plan or five-year plan.

Pennsylvania Broadband Development Authority attributes its allotment of $1.16 billion through BEAD to the work of Penn State Extension, which developed and updated state broadband service availability maps to help the state in its challenges to fix discrepancies in the FCC maps. 

According to the Pennsylvania BDA, the work helped identify more than 50,000 service-availability claims that were incorrectly reported, 28,000 of which were upheld by the FCC and resulted in an estimated $117 million increase in the state’s share of federal funding. 

Wyoming is working with consultants to gather public input from many sectors of its residents, electorate and businesses to determine the best way to invest their funds, Elaina Zempel, broadband coordinator at Wyoming Business Council, told Broadband Breakfast.

“The amount of funds does not solve Wyoming’s connection issues but gets us a long way down that road,” she said. Zempel reported that the state’s 5-year action plan and digital equity plan are set to be released soon for public comment.

For Wyoming, topography and population density is a major concern and its broadband office is exploring many different options that will provide high-speed internet to its residents, said Zempel.

Utah received $317 million, an increase from most estimates which put it in the high $200 million range. “Utah has led the way in bringing broadband to our rural communities, installing it in our state freeway systems and connecting our anchor institutions,” Utah’s Dilg told Broadband Breakfast. “The $317 million will be a huge asset to encourage affordable broadband expansion to the last unserved locations,” she said. 

Missouri was likewise optimistic about award amounts. “While $1.7 billion is on the higher end of what we estimated, we believe it is reflective of the reality in our state. We have a large number of unserved locations and a number of those locations fall within the high-cost criteria,” said Tanksley of the state. 

Ohio called the $800 million it is set to receive “game changing,” said an official from the state.

Critics of the BEAD funding process

The BEAD program allocates a minimum of $100 million to each state, the District of Columbia and Puerto Rico, regardless of the need or population in that state. As a result, several small states with a greater percentage of residents connected to high-speed internet received more money per capita than larger states.

An analysis of the FCC’s broadband data by Broadband Now found that 99.8 percent of Rhode Island residents have broadband access. The state received more than $108 million in BEAD funds, equating to over $49,000 per unserved resident. The District of Columbia similarly received $30,000 per unserved resident.

These per capita awards provide a stark contrast to states that have the lowest percentage of broadband access and large states. West Virginia, for example, will receive less than $2,100 per unserved resident and Texas less than $900, based on FCC released data on the number of unserved locations in each state.

Additionally, many experts have raised issue with the FCC’s national broadband map, claiming that it inaccurately represents the unserved and underserved areas of the country and is detrimental to grant and subgrant processes that seek to provide funds to areas that most need it.

The Reid Consulting Group analyzed more than 14 million consumer-initiated speed tests over a three-year period in Ohio. The resulting map provides a stark difference to the FCC maps, which are based on Internet Service Provider coverage claims. RCG’s map shows over 50 percent of the state receives below 100 download and 20 upload Mbps capacity, where the FCC map reveals the opposite, with the vast majority of the state receiving more than 100 * 20 Mbps.

Ohio was not the only state that displayed similar discrepancies. Mapping discrepancies are a serious concern for the industry as subsequent FCC maps and state challenges will denote the amount of funds each subgrantee will be awarded for specific areas in each state.

Mike Conlow, a broadband data and internet policy analyst and blogger, released a report in May that pointed out the filing issues that occur when ISPs report on their own data.

According to Conlow, almost 40,000 locations in Michigan were moved from unserved to underserved or served in the second version of the FCC maps following ISP filings that potentially cost the state millions of dollars in BEAD allocations. Although the filings were compliant to FCC rules, they were based on the “maximum advertised” throughput instead of the “maximum actual.” 

Conlow also highlighted the issue that the law requires that 10 percent of the total BEAD dollars go to areas that are more than 80 percent unserved, which could present a significant problem for those states that have widely dispersed unserved locations.

Yet another concern is the NTIA’s requirement that grant applicants must provide a letter of credit to demonstrate their financial capacity to meet the program’s obligations throughout the construction process. A letter of credit is a document a bank provides on behalf of a network operator to guarantee that in the event of default of the build, the bank will reimburse the agreed upon funds to the NTIA.

Subgrant awardees are required to submit a letter of credit of 25 percent of the project costs on top of the 25 percent match requirement. With limited exceptions, the NTIA will enforce this regulation rigorously, the Commerce agency has said.

Experts claim that due to the large investment, banks insist on cash collateral, which significantly increases the cost of receiving grant funds. Furthermore, the cash held by banks as collateral is essentially untouchable during the project, which limits the capital available to invest in the projects.

Despite these concerns, some experts believe that the $42.5 billion allocated under the BEAD program will be enough to connect the “vast majority” of American households to high-speed internet, as heard during a Broadband Breakfast Live Online event on July 5.

Business consultant group Cartesian believes that some states will be able to deploy fiber to every location while still others will have money left over for affordability programs.

Next step: Challenge Process Coordination

At the moment, states are still grappling with the next steps of the challenge process coordination. “The looming concern facing us right now is development of the online state challenge process,” said Utah’s Dilg. “Requiring each state to do it rather than a central process is stretching our resources a bit and feels duplicative of the FCC map challenge.” 

Dilg stressed that although the challenge process will be difficult, Utah has a history of developing and maintaining its own broadband availability maps and that it is “confident and working on some ideas that will make it another valuable tool for pinpointing unserved broadband locations.”

Montana specified that it would collect challenges from institutions based on the FCC’s most recent map of broadband service availability in the state and will evaluate challenges based on successful applications. It will submit these challenges to NTIA for review and approval, and to be added to the FCC’s map. 

Louisiana included much more insight into its proposed challenge process, stating that it will adopt the model challenge process as provided by the NTIA which outlines a highly controlled system in which the NTIA will review and approve each challenge process and its results. 

The state’s broadband office, ConnectLA, will allow challenges to the map data only on the identification of eligible community anchor institutions, existing broadband serviceable locations, enforceable commitments, and planned service. Challenges may be submitted by nonprofit organizations, units of local and tribal governments, and broadband service providers.