Congress hears testimonies on 'disruptive' barriers to BEAD deployment

A House Energy and Commerce Committee hearing today centered on the future of rural broadband funding, where industry leaders testified on the improvements they deem necessary for government funding like the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program to be effective.

Here’s what they had to say.

US Telecom CEO Jonathan Spalter said in addition to financial backing, Congress can take non-funding actions to expedite and improve programs for rural broadband. For example, Spalter said Congress and the National Telecommunications and Information Administration (NTIA) should ensure that states do not engage in “congressionally prohibited rate regulation” as they implement BEAD.

Such regulation will “deter broadband provider participation and risk the sustainability of BEAD-funded networks,” he said. Spalter also spoke against BEAD’s letter of credit requirement, which essentially means that to be approved for funding, a provider must have 25% of the grant amount available in cash through the duration of a buildout. Many have criticized the letter of credit rule, which he contended could “actually reduce the amount of broadband deployed in the next few years using private capital.”

To prepare for the influx of broadband buildouts enabled by BEAD (and the subsequent maintenance of those networks), Spalter said streamlining permitting processes is another key to reducing providers’ deployment costs and timelines.

Meanwhile, Midcontinent Communications (Midco) VP of Government Relations Justin Forde said that an important aspect to better cross-agency coordination would be making broadband programs, their eligibility standards and their requirements more consistent. Entities seeking funding should not be able to “forum shop for the least restrictive program.”

According to Forde, Midco in one instance successfully challenged a provider under the ReConnect program from overbuilding its network in rural North Dakota, but the applicant was able to get funding in that same area under the ARPA Capital Projects Fund program.

To avoid such overbuilding, “government entities awarding funding for broadband infrastructure should promptly report those awards to the Federal Communications Commission and vice versa, so that maps used for granting broadband funding are consistent and everyone works off a common data set in determining areas eligible for funding,” Forde said.

The FCC's National Broadband Map is “an important first step” to achieving this continuity. But ideally, Forde said all agencies would rely on a single map that shows areas that are served, where networks are being constructed by private investment as well as all areas where federal, state or local funding has been awarded, so that funding can be targeted at the areas not yet served.

In addition to BEAD’s letter of credit rule, Forde noted the NTIA has imposed other “disruptive” regulatory requirements as a condition of participation in federal programs. He pointed to rate regulation, wholesale access, net neutrality and affordability as some of those requirements.

Forde called these attempts at “government micromanagement that most providers believe are unnecessary, disruptive to their business and contrary to existing law.”

“At a time when all hands on deck are needed to close broadband gaps, Congress should discourage agencies from adding programmatic obligations that interfere with standard operational practices, making the challenging economics of serving rural, high-cost areas even more difficult or even impossible,” he told the Committee.  

Additionally, Forde noted that many federal programs are designed with “build to” speed requirements that do not allow providers like Midco, which is capable of building fiber, to also deploy its fixed wireless technology “even when it makes the most sense to do so because the area is not suitable for fiber deployment.”

The NTIA's BEAD program has previously gotten pushback against its preference for fiber over other broadband technologies, including from organizations like the Wireless Internet Service Provider Association (WISPA).

In agreement, Scott Wallsten, president of the Technology Policy Institute told the House Committee that federal funding should be technology neutral, “with minimum specifications based on what consumers want.”

Wallsten pointed to research that showed consumers value more bandwidth “a lot at first, but then less and less.” Particularly, he said while a 10 Mbps connection is much more valuable than a 1 Mbps connection, a 1 Gigabit connection is only somewhat more valuable than a 100 Mbps connection.

Central to that argument is the fact that fixed wireless can bring connectivity quicker than fiber deployments, with Wallsten noting the Office of Management and Budget (OMB) requires that regulatory analyses take timelines into account.

“We recognize the importance of time in nearly all regulatory questions. We should for broadband provision, too,” Wallsten told the Committee. “Consumer preferences can be built into choice mechanisms through weights. A gigabit connection should be worth more than a 100/20 connection, and weights can help decide how much more.”