The Fight Over Virginia’s BEAD Low-Cost Option Appears Over
The state ultimately did set a price cap for low-cost plans. But at $75, it's higher than rates seen in other states.
Jake Neenan
WASHINGTON, August 1, 2024 – The fight over Virginia's low-cost service requirement for participants in the $42.5 billion Broadband Equity, Access, and Deployment program appears to be over. It ended with something of a compromise.
The Infrastructure Act, which stood up the BEAD program, requires providers to offer a “low-cost broadband service option” to low-income households on BEAD-funded infrastructure. States, the entities ultimately awarding grants under the program, have some leeway to define what exactly that looks like, but the federal government has shown a preference for a specific price cap or formula that would be used to arrive at one.
Last year, Virginia proposed letting providers put forward and justify their own affordable options as part of the grant application process, which the Biden administration's National Telecommunications and Information Administration said wasn't going to fly.
The state asked the agency in December to approve its BEAD proposal, a necessary step before fielding grant applications, without changes. Virginia argued that setting a price would amount to rate regulation, which the Infrastructure Act barred states and the NTIA from doing.
Virginia’s plan was finally approved by the NTIA last week, and its low-cost option set a price cap of $75 per month. That’s of course something the state tried to avoid doing, but the cap was closer to market-rate prices than low-cost options set in other states and higher than the $30 suggested by the NTIA.
Providers applying for BEAD grants in the state will have to justify the affordability of their low-cost plans for eligible households added to their footprint. The low-cost option must be made available to those who qualified for the now-shuttered Affordable Connectivity Program. That’s a household income at or below 200 percent of the poverty line or participation in food stamps, free or reduced school lunches, or other low-income assistance programs.
House Energy and Commerce Committee Republicans have accused the agency of violating the Infrastructure Act by pushing for state plans that cap prices for low-cost plans, pointing to its dispute with Virginia, and requested NTIA’s communications with state broadband offices last month. Some ISP trade associations have also asked the agency to rework the policy, calling some states’ prices “unrealistically low.”
Alan Davidson, the NTIA administrator, has defended the policy in congressional hearings.
“You have to be able to understand what is affordable,” he told lawmakers in May, adding, “We do not believe the states are regulating rates here. We believe that this is a condition to get a federal grant. Nobody’s requiring a service provider to follow these rates, people do not have to participate in the program.”
