Broadband Trade Groups Not Fans of Proposed Federal Grant Update
OMB is proposing making it easier for agencies to cancel awards and eliminating milestone-based payments
WASHINGTON, July 15, 2026 – Two broadband trade groups aren’t excited about a White House plan to change how federal grants are administered.
The Office of Management and Budget circulated a proposal in May that would make it easier for federal agencies to terminate grant funding and eliminate milestone-based or “fixed amount” awards that are common for broadband deployment projects.
Comments were due Monday.
Broadband advocates and others had been concerned about the proposal when it was released. Several Democratic lawmakers and Sen. Susan Collins, the Republican from Maine, have asked OMB Director Russell Vought to rescind the proposal.
The $42.45 billion Broadband Equity, Access, and Deployment program would be exempt from the expanded termination provision, and its existing fixed amount awards likely be nullified, but the program would likely be subject to a host of new prohibitions, according to an analysis from Benton Institute for Broadband & Technology editor Kevin Taglang.
If OMB’s proposal is adopted and BEAD’s more than $21 billion in “non-deployment” funding is made available after Oct. 1, 2026, when the rules would go into effect, they would be subject to the new grant provisions, noted Alexis Schrubbe, a program manager at Ready.net and former Stanford researcher. That would include a prohibition on diversity initiatives.
The Fiber Broadband Association and NTCA, which represents rural ISPs, each submitted comments to OMB telling the agency its proposed changes would make broadband grants less effective.
NTCA said the agency should ditch plans to make it easier for agencies to terminate awards, saying the extra risk would make companies, especially small ones like its members, less able to undertake federally funded network builds.
“Programs that carry the risk of changing or being scaled back mid-stream would undermine that investment confidence, ultimately shocking and shrinking the overall pool of resources available to support rural communities,” wrote Joshua Seidemann, NTCA’s vice president of policy and industry innovation.
FBA vice president of public policy Marissa Mitrovich agreed expanded termination authority “increases investment risk for broadband providers” and said OMB should provide “explicit, objective guidance” on termination standards, or exempt broadband projects altogether.
Both NTCA and FBA also said OMB should preserve fixed amount awards.
“It would be counterproductive to have an agency constantly reviewing whether an awardee’s expenditures are truly cost effective. All that is needed is that the deployment is finished on time and within budget,” Mitrovich wrote.
FBA feared BEAD participants would actually be affected by the change, despite Benton’s read that it would apply to future grants without changing existing awards.
“Requiring cost reimbursement [rather than fixed amount awards] would impose significant new administrative burdens on every grantee and subgrantee,” Mitrovich wrote. “Organizations would need to establish indirect rate costs, build federally compliant invoice and expense tracking, and expand administrative oversight – diverting award dollars from delivering services to the American people to meeting federal compliance requirements.”
USTelecom, the major broadband industry group, also asked that OMB clarify existing grants would not be affected by the rule change. The group said that was consistent with OMB's typical practice.
"Federal agencies have issued program-specific guidance and approved deviations and exceptions under the existing framework, and recipients have structured their programs and obligations in accordance with that guidance," wrote Diana Eisner, USTelecom's vice president of regulatory and legal affairs.
Comments flooded OMB’s docket on the change. They numbered nearly 500,000 in total when the window closed Monday.
Benton did not submit comments in the docket, nor did other broadband public interest groups, according to a person familiar.
Arielle Roth, head of the National Telecommunications and Information Administration, which is managing BEAD, was asked about the issue during an oversight hearing earlier this month.
Rep. Rob Menendez, D-N.J., asked Roth, “could assure me that the OMB proceeding on grant administration is not an effort to claw back non-deployment funds?”
Roth said she was “not familiar” but that NTIA was “operating under the assumption that states will be able to use their nondeployment funds.”
Update: This story was updated to include comments from USTelecom.
