The Department of Commerce’s National Telecommunications and Information Administration (NTIA) has released a Policy Notice modifying and replacing certain requirements outlined in the Broadband Equity, Access, and Deployment (BEAD) Program Notice of Funding Opportunity,1 which was published on May 12, 2022. Specifically, NTIA has: (1) adopted a technology-neutral approach for the BEAD subgrantee selection process; (2) eliminated several BEAD requirements; and (3) temporarily rescinded approval for all non-deployment funding. States and territories have 90 days to implement such reforms in their subgrantee selection process.
Bottom Line: NTIA has released a Policy Notice making significant changes to the BEAD Program. NTIA has rescinded its approval of final spending plans from Louisiana, Delaware, and Nevada, which were approved under the Biden administration. Entities awarded funding under the original BEAD framework must now re-bid to continue participating. NTIA has eliminated the BEAD fiber preference in favor of a technology-neutral approach. NTIA has temporarily rescinded approval for all non-deployment funding and will release forthcoming guidance. Eligible Entities will have to run at least one additional subgrantee selection round for every BEAD-eligible location; however, Eligible Entities will not be required to re-do their challenge process. These BEAD changes will likely be seen as a win for the satellite industry. It is expected that billions of dollars could be scooped up by SpaceX’s Starlink satellite Internet constellation, funding which could ultimately serve areas outside of each state including urban areas and other parts of the world.
Background
The Infrastructure Investment and Jobs Act (IIJA) established the BEAD Program, which provides $42.45 billion of funding to achieve high-speed broadband access throughout the U.S. This long-anticipated Policy Notice provides updated BEAD guidance for Eligible Entities (i.e., States, Territories, and the District of Columbia).
Policy Notice
Each Eligible Entity must comply with this Policy Notice to receive approval of its Final BEAD Proposal.
Elimination of BEAD Requirements
Eligible Entities must now eliminate several requirements related to BEAD application scoring, subgrantee agreements, and subgrantee reporting requirements. NTIA has prohibited Eligible Entities from imposing any of the obligations removed by this Policy Notice on subgrantees as part of the BEAD Program.
Labor, Employment, and Workforce Development Requirements
NTIA has eliminated requirements in the NOFO related to labor, employment, and workforce development. NTIA states that central planning and diversity, equity, and inclusion (DEI) requirements “disadvantage both workers and providers, drive up costs, and undermine broadband buildout, especially in rural communities the [BEAD] Program is intended to help.” As such, NTIA has eliminated the following sections of the NOFO: (1) “Fair Labor and Highly Skilled Workforce;” (2) “Advancing Equitable Workforce Development and Job Quality Objectives;” (3) “Civil Rights and Nondiscrimination Law Compliance;” and (4) “Contracting with Small and Minority Businesses, Women’s Business Enterprises, and Labor Surplus Area Firms.”
Climate Change Requirements
NTIA has eliminated the requirements in the NOFO related to climate change. Specifically, NTIA has eliminated the “Climate Resilience” section of the NOFO and the related Initial Proposal and Final Requirements.
Open Access/Net Neutrality
NTIA has eliminated the requirements in the NOFO related to open access and net neutrality. NTIA has specifically eliminated the “Consumer Protections” section of the NOFO that required Eligible Entities to “ensure that each prospective subgrantee does not impose data usage caps on any plans offered under a Funded Network or impose unjust or unreasonable network management practices.” NTIA further eliminates the “Interconnection Requirements and Wholesale Access” section of the NOFO.
Local Coordination and Stakeholder Engagement
NTIA has eliminated the requirements in the NOFO related to local coordination and stakeholder engagement. NTIA has eliminated the “Local Coordination” and “Public Notice” sections of the NOFO and the related Initial Proposal and Final Proposal content requirements.
Non-Traditional Broadband Providers
NTIA has eliminated requirements in the NOFO that favored non-traditional broadband providers (such as municipalities or political subdivisions) by requiring Eligible Entities to justify awards to traditional providers when a competing proposal from a non-traditional provider was submitted. Specifically, NTIA has eliminated the “Consider All Provider Types” section of the NOFO and the related Initial Proposal and Final Proposal requirements.
Middle Class Affordability Plan
NTIA has eliminated the requirement for Eligible Entities to develop, implement, and provide updates on a middle-class affordability plan.
Low-Cost Service Option
NTIA has eliminated certain requirements related to the BEAD low-cost broadband service option (LCSO). Specifically, NTIA has eliminated the “Affordability and Low-Cost Plans” section of the NOFO and the related Initial Proposal and Final Proposal requirements. Accordingly, subgrantees are no longer required to offer a specific LCSO rate set by an Eligible Entity.
The IIJA requires BEAD subgrantees to “offer not less than [one] low-cost broadband service option for eligible subscribers” and prohibits NTIA from regulating the rates charged for broadband service. While BEAD subgrantees must still comply with the statutory provision to offer at least one LCSO, NTIA has prohibited Eligible Entities from explicitly or implicitly setting the LCSO rate a subgrantee must offer.
The IIJA requires Eligible Entities to require potential BEAD subgrantees to propose an LCSO as part of their applications that meets certain speed and performance criteria. The LCSO must offer speeds of at least 100/20 Mbps and latency performance of no more than 100 milliseconds.
The IIJA directs NTIA to define “eligible subscriber” for the BEAD low-cost broadband service option. The NOFO adopted the eligibility requirements of the FCC’s Affordable Connectivity Program, which is no longer operational. As such, NTIA has redefined “eligible subscriber”2 to match the eligibility criteria for the FCC’s Lifeline Program.
Technology Neutral
NTIA has eliminated the technology preferences imposed on Eligible Entities and has adopted a technology neutral approach for the BEAD subgrantee selection process. The NOFO limited priority broadband projects to those using end-to-end fiber. In doing so, the NOFO relegated other technologies, including terrestrial wireless and low Earth orbit (LEO) satellite services, to a third-tier status, which disadvantaged these technologies in the NOFO subgrantee selection process. As such, NTIA has eliminated the “Fiber Preference” section of the NOFO and permits Eligible Entities to select from all qualifying technologies. This gets rid of a significant impediment previously faced by providers of fixed wireless service and satellite service who wished to obtain BEAD funding.
Priority Broadband Projects
The IIJA requires Eligible Entities to prioritize funding for “Priority Broadband Projects.” The NOFO limited this definition to end-to-end fiber. NTIA has replaced the definition of “Priority Broadband Project” to a project that provides broadband service at speeds of no less than 100/20 Mbps, has latency less than or equal to 100 milliseconds, and can “easily scale speeds over time to meet the evolving connectivity needs of households and businesses and support the deployment of 5G, successor wireless technologies, and other advanced services.”
Any applicant may seek to have the Eligible Entity treat its application as a Priority Broadband Project regardless of the technology used. However, the applicant’s project must still meet the required speed and latency standards and show a path forward for increasing those speeds.
Eligible Entities may not categorically exclude any given technology from consideration as a Priority Broadband Project. NTIA reserves the right to reverse an Eligible Entity’s determination that a project does or does not meet the standard for a Priority Broadband Project if such determination is “unreasonable.”
Technologies Eligible for Participation
NTIA has eliminated the NOFO’s structure for prioritizing technology. Fiber-optic technology, cable modem/hybrid fiber-coaxial technology, LEO satellite services, and terrestrial fixed wireless technology utilizing entirely licensed spectrum, entirely unlicensed spectrum or a hybrid of licensed and unlicensed spectrum,3 may be used in applications for Priority Broadband Projects so long as the technologies employed in the project meet the technical performance requirements in the NOFO and are sustainable.
Subgrantee Selection
NTIA is requiring all Eligible Entities to conduct at least one additional subgrantee selection round for every BEAD-eligible location, dubbed the “Benefit of the Bargain Round.” Eligible Entities must rescind all preliminary and provisional subaward selections and notify applicants that a further round of applications will be considered before final awards are made.4 Notably, Eligible Entities that have already completed subgrantee selection must conduct at least one additional round. Eligible Entities will have 90 days to comply with the obligations outlined within the Policy Notice and submit an updated Final Proposal. NTIA will complete its review of each Final Proposal within 90 days of submission.
To the extent an Eligible Entity has a prequalification process, such process must be reopened to all interested applicants. NTIA states that existing qualified applicants do not need to resubmit prequalification documentation. Applicants that previously failed prequalification may update their materials and seek prequalification again.
Where an applicant elects to stand on its existing subgrantee application received prior to the release of the Policy Notice, the application will be rescored and the applicant may receive a BEAD funding award during the Benefit of the Bargain Round. NTIA emphasizes that no BEAD subgrantee will be permitted to recover costs to comply with the regulatory burdens eliminated in the Policy Notice. Applicants may propose to exclude select broadband serviceable locations (BSLs) that the applicant determines are excessively high-cost locations from the project area.5 Eligible Entities must evaluate such proposals based on the scoring rubric discussed below.
Scoring Rubrics
NTIA has revised the scoring criteria previously adopted in the NOFO. Eligible Entities must prioritize Priority Broadband Projects over non-Priority Broadband Projects. If an Eligible Entity determines that selecting a Priority Broadband Project would impose excessive costs on the entity, it must select a lower cost non-Priority Broadband Project.
NTIA has declined to adopt a national cost threshold over which a project would be deemed to impose excessive costs.6 However, NTIA may reject any proposed deployment project or specific BSL connection for which costs to deploy are excessive, as determined by NTIA based on the cost characteristics of the area to be served.
Eligible Entities are required to score competing applications using the following criteria:
- Primary Criteria: in deciding among competing applications covering the same general project area, Eligible Entities must choose the option with the lowest cost based on minimal BEAD Program outlay. The Eligible Entity must select the combination of project proposals with the lowest overall cost to the BEAD Program. When comparing competing proposals, Eligible Entities must assess the total BEAD funding that will be required to complete the project (i.e., the total project cost minus the applicant’s proposed match) and the cost to the Program per location (i.e., the total BEAD funding that will be required to complete the project divided by the number of BSLs the project will serve).
- Secondary Criteria: if an application to serve the same general project area proposes a project cost within 15 percent of the lowest-cost proposal received for that same general project area on a per BSL basis, the Eligible Entity must evaluate competing applications based on the following three criteria: (1) speed to deployment; (2) speed of network and other technical capabilities; and (3) preliminary/provisional subgrantees (i.e., for locations where Eligible Entities have already identified preliminary or provisionally selected subgrantees, Eligible Entities may give additional weight to those applications in the Benefit of the Bargain Round). The relative weighting of these three criteria is up to the Eligible Entity. This gives wiggle room to those that have already been provisionally awarded funding and a possible out for the state to proceed with its original plans.
Optimizing BEAD Locations
While Eligible Entities are not required to redo their challenge process, the Policy Notice adopts several measures that Eligible Entities must implement to ensure that the lists of BEAD-eligible locations are accurate and to prevent overbuilding of networks. Specifically, Eligible Entities must: (1) investigate and account for locations that do not require BEAD funding using the reason code process set forth in the Final Proposal Guidance; (2) modify BEAD-eligible location lists to include locations no longer served due to a default or change in service area on a Federal enforceable commitment; (3) account for BSLs with access to existing unlicensed fixed wireless provider (ULFW) networks to prevent overbuilding7; and (4) revise their list of eligible Community Anchor Institutions (CAI) to ensure their designations conform with the statutory definition of CAI as established by the IIJA.
Non-Deployment Funding
Funding for allowable non-deployment purposes is under review and NTIA will issue updated guidance in the future. As of the date of the Policy Notice, NTIA has rescinded approval of all non-deployment activities approved in Initial Proposals. NTIA will not reimburse Eligible Entities for any new costs associated with previously approved non-deployment activities incurred after the date of this Policy Notice.
Alignment with Prior Guidance
With the release of this Policy Notice, NTIA has rescinded the following Policy Notices: (1) “Broadband Equity, Access, and Deployment (BEAD) Program: Selecting the Most Robust, Affordable, Scalable Technology, released June 26, 2024;” and (2) “Broadband Equity, Access, and Deployment (BEAD) Program: Alternative Broadband Technology Policy Notice, released December 12, 2024.”
Modification of Initial and Final Proposals
NTIA has rescinded all final Proposal approvals (Nevada, Louisiana, and Delaware) that occurred prior to the publication of this Policy Notice. To comply with this Policy Notice, each Eligible Entity must submit a letter to NTIA within 30 calendar days requesting an Initial Proposal correction to incorporate the terms of the Policy Notice into its Initial Proposal. Failure to do so could result in the Eligible Entity not receiving any funding.
Next Steps
Although only three Eligible Entities have received final approval, all 56 Eligible Entities have concluded their state challenge process and 41 Eligible Entities have begun, but not finished, selecting service providers. All Eligible Entities must hold at least one new subgrantee selection round under the revised BEAD rules. All preliminary and provisional BEAD grant awards have been rescinded and must be evaluated under the new criteria set forth in the Policy Notice. States will have 90 days to comply with the Policy Notice and to submit a Final Proposal based on the results of the Benefit of the Bargain Round. While timing with respect to the release of funding is not set in stone, Department of Commerce Secretary Howard Lutnick has stated before Congress that BEAD funding will be released by the end of 2025.
References
1 NTIA, Notice of Funding Opportunity, Broadband Equity, Access, and Deployment Program (May 12, 2022), NOFO.pdf (doc.gov).
2 Eligible Subscriber is now defined as “any household seeking to provide the same documentation necessary to confirm eligibility as is required under the Lifeline Program.”
3 NTIA has determined that unlicensed fixed wireless service technology should be permitted to participate in the BEAD application process so long as it meets the technical criteria specified in Appendix A of the Policy Notice. Providers utilizing such service must demonstrate that they have taken the steps necessary to resolve potential interference and capacity constraints associated with such technology. The guidelines set out in Appendix A are not clear and leave room for the states to interpret. For example, a state could interpret unlicensed spectrum to not be sustainable due to interference concerns, congestion, or the risk of being clawed back and repurposed by the FCC in an effort to make more licensed spectrum available to mobile carriers outside of the BEAD program.
4 Delaware, Louisiana, Nevada, and West Virginia have all completed BEAD service provider selection. Such Eligible Entities will have to rescind all preliminary and provisional subaward selections. 41 other Eligible Entities have begun, and not yet finished. selecting service providers.
5 Under the Policy Notice, with respect to these excluded areas, Eligible Entities must solicit bids from other potential applicants. Alternatively, NTIA notes that applicants may propose a “multi-provider solution.”
6 NTIA did note that Nevada set a cost threshold of $200,000 per location and awarded funding to 24 grantees that had costs of $100,000 or more per location. These were deemed too high and were rejected as unreasonable.
7 In accounting for unlicensed fixed wireless locations, states need to be leery of the interference and congestion issues that could occur if too many users are trying to use unlicensed spectrum at the same time. While NTIA attempted to set forth guidance in Appendix B on the use of ULFW, that guidance is not clear. Unlicensed spectrum should be used as a last resort due to its unprotected interference status and potential to be clawed back and used for other purposes. For example, the CBRS GAA spectrum put into use less than four years ago is already being targeted by AT&T to become licensed spectrum that would be auctioned to the highest bidder and displace current users.
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