Mary Guenther: BEAD Non-Deployment Dollars and the Risk of Unfulfilled Broadband Promises
The BEAD broadband program now has roughly $20 billion in leftover funds, and policymakers are debating how best to spend it
The federal government’s big effort to build out broadband is facing a problem you don’t see often in Washington: There’s now more money left over in the program than anyone knows what to do with.
Almost five years ago, Congress committed approximately $41 billion to connect all Americans to high-speed internet as part of its bipartisan infrastructure bill. But in a rare moment of wisdom, the Trump administration revamped the effort last year by nixing a number of ill-conceived rules that had slowed its progress and added to costs. That included removing most requirements unrelated to broadband deployment and opening up more opportunities for traditional fiber cable alternatives — like fixed wireless and low-Earth orbit satellite constellations — to service households.
In short, the initiative got an abundance-style overhaul with a laser focus on delivering on the core goal of getting all Americans connected.
It’s too early to assess the results of the new-and-improved Broadband Equity Access and Deployment Program — aka BEAD — as grant winners were recently announced. However, from a fiscal perspective, there is now about $20 billion, or roughly half of the funding Congress allocated, that won’t be needed for broadband deployment.
Now the question is how that extra funding ought to be used. The law made clear leftover money should be spent on “non-deployment” items, which are primarily related to affordability, adoption, and addressing connectivity for the underserved and community anchor institutions. But the $20 billion now sitting around is vastly larger than the amount Congress envisioned being spent on those priorities.
There have been a host of creative solutions offered in listening sessions, ranging from practical ideas like ensuring devices like home computers are affordable (as was envisioned in statute) to absurd redirections like using the funds to modernize the air traffic control system.
Reserve a portion of the non-deployment funding for connection
One idea that deserves more attention is reserving a portion of the non-deployment funding to ensure all households are connected in case the broadband provider expected to serve them defaults on their obligation. That is, after all, the main focus of the program.
Defaults aren’t a theoretical problem. Broadband providers have withdrawn — voluntarily or involuntarily — from their commitments to past connectivity programs, leaving Americans in the lurch. The Rural Digital Opportunity Fund program saw over one-third of households meant to be covered continue to go unserved. A decade prior, the Connect America Fund left about 50% of households unserved.
It isn’t ridiculous to bear in mind the possibility that some providers will fail to deliver again. In fact, it’s all but guaranteed. Given that an estimated 3.38 million Americans are still not able to access broadband, failing to connect them when Washington has set aside money for a once-in-a-generation investment simply cannot be an option.
A BEAD Reserve Fund would head off this easy to foresee issue and ensure that the households the program is meant to help — which are disproportionately rural and/or Tribal — aren’t subject whims of a single broadband provider when there is such a substantial sum of funds left over for non-deployment.
The Advanced Communications Law and Policy Institute at New York Law School has recommended that a BEAD Reserve Fund should receive approximately $10 billion of these non-deployment dollars, leaving about half of the unobligated funds for originally envisioned non-deployment uses like workforce training and adoption support efforts.
Funding will be clawed back from providers who fail to meet commitments
To be clear, BEAD program guidance requires that funds will be clawed back from providers who fail to meet their commitments. That rescinded cash can certainly be used towards connecting a household via a different provider. However, given the different price points between different kinds of broadband providers (fiber, fixed wireless, satellite, etc.), a simple clawback years down the road may not be enough to cover the bill for households to be served in an alternate fashion.
An example of this issue may already be starting to play out with SpaceX’ Starlink commitments. The company has urged states to sign a contract rider that waived some of the BEAD program’s requirements, arguing that they were largely designed for fiber systems and don’t make sense for satellite constellations. It has also clearly stated that rejection of the rider “could render LEO participation in the program untenable.”
Commerce Secretary Lutnick is urging states not to sign these riders. It remains to be seen how this situation will play out. But Starlink was the cheapest option for most unserved households, so clawing back money from the company alone is unlikely to be sufficient to get Americans connected via a different technology.
Hopefully this remains theoretical because, as Stephanie Weiner, former Chief Counsel at the National Telecommunications and Information Administration, put it, “Remedies to recoup funding essentially put the parties in the position they were in prior to the grant agreement. This may or may not be much of a loss for the broadband provider, depending on the circumstances, but it is a devastating loss to BEAD’s mission and the homes that remain unconnected.” The questions surrounding Starlink underline exactly why we need a BEAD Reserve Fund.
Mary Guenther is Head of Space Policy at the Progressive Policy Institute, where she develops policy solutions around the U.S. government's relationship with commercial space actors. Before joining PPI, she served as Vice President of Space Policy at the Commercial Space Federation and as a Professional Staff Member on the Senate Commerce Committee, focusing on space and emerging technology policy. This Expert Opinion is exclusive to Broadband Breakfast.
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