Guest Editorial

Kristian Stout

States risk wasting scarce broadband grant dollars

The federal government is set to award more than $42 billion in new grants to state governments this summer, with the goal of expanding high-speed internet access in areas that currently lack it.
But as this new Broadband Equity, Access, and Deployment program ramps up, it is crucial that states spend the money wisely.
Estimates suggest that extending broadband to all Americans who currently lack access could create up to $314 billion of new economic gains. But to achieve that goal will require state policymakers to overcome the barriers that have stymied past investments, including by ensuring timely access to utility poles and making informed investments that stretch scarce dollars as far as possible.
Congress focused the BEAD program on connecting "unserved" and "underserved" areas, requiring that those who lack connections with speeds of at least 100/20 megabits per second must be helped first before addressing other priorities, such as upgrades, adoption programs, and middle-mile infrastructure. Unfortunately, the National Telecommunications and Information Administration recently introduced some complications that could mislead state authorities.
For example, while BEAD is supposed to adhere to the principle of technological neutrality, the NTIA’s funding sheet shows a clear preference for fiber over wireless and satellite providers. In order to achieve the program’s goals, funds should be distributed equitably to any provider that can meet the law’s requirements for 100/20 Mbps connections. Fiber, fixed wireless, satellite, and cable all can. The priority that states should show is for providers with a proven track record to leverage their experience in security, customer service, and operating the technology at scale.
The NTIA’s funding sheet also required states to ensure the participation of "non-traditional broadband providers," such as municipalities and cooperatives. But using limited grant funds to stand up government-owned networks is a sure way to diminish their impact. Municipal broadband networks might make sense in some rare cases where private providers are unable to deploy, but such systems have generally mired taxpayers in expensive projects that failed to deliver on promises.
The NTIA’s funding sheet also promoted a "low-cost" price point, prohibited usage-based pricing, and introduced the idea of a "middle class affordability" plan. These provisions amount to a system of de facto rate regulation, violating the BEAD’s explicit terms. The NTIA is also pushing states to avoid using contract labor for deployment, despite the fact that many parts of the country are currently experiencing widespread labor shortages.
None of these “asks” are actual requirements of BEAD. In fact, they run contrary to the program’s goal to connect as many households as possible. If states follow these suggestions, scarce funds could be tragically misspent.
Predictable and timely access to utility poles may not be a sexy issue, but it is another challenge that policymakers must grapple with if they hope to close “the digital divide.” All too often, those who own the poles – often municipalities and electric utilities – set lengthy timetables, demand costly permitting fees and impose extraneous requirements on internet service providers who need access to the poles to bring broadband to unserved areas. Every month of delayed broadband expansion costs Americans between $491 million and $1.86 billion in lost economic gains, amounting to more than $22 billion in lost economic gains each year.
One solution under review at the federal level is the FAIR Poles Act, which aims to prevent time-consuming delays in the attachment process. It would ensure that costs are allocated appropriately between pole owners and attachers by applying the same comprehensive regulations to all entities that receive federal broadband assistance. States that have implemented their own pole regulations also will need to factor these access issues into their use of BEAD grants.
To close the digital divide, state governments must make the most of the federal funds they receive, prioritize connecting unserved and underserved populations and rely on capable partners to build robust, future-looking networks. The effective use of these funds will have a lasting impact on communities across the nation, ensuring that all Americans have access to the digital world.

Kristian Stout is media and communication manager for the International Center for Law & Economics.


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