- A leaked memo shows NTIA is flagging “unreasonably expensive” BEAD project areas
- According to Broadband.io, NTIA has given states certain cost thresholds for project proposals
- NTIA hasn’t posted anything official, but analyst Blair Levin said the memo is likely legit
As states continue to submit their Broadband Equity, Access and Deployment (BEAD) proposals, the NTIA seems to already be pushing for changes to the plans.
A leaked memo, initially posted on Broadband.io, said NTIA is using “tailored, state-by-state data to identify outlier, unreasonably expensive projects,” looking at factors such as geography, density and “local needs.”
In cases where NTIA determines proposed project costs are “unreasonable,” states are asking existing bidders in those areas to provide their “best and final offer.” NTIA reportedly stated this is not another BEAD bidding round and that in these “limited cases,” providers already have the information they need to adjust their bid or “stand on their current one.”
Fierce reached out to NTIA for comment and will update this story if the agency responds.
States have been drafting their BEAD plans based on how the NTIA defined a “priority broadband project,” giving them some wiggle room to decide whether to award more funds to fiber or to satellite and wireless technologies. States so far still plan to award most of their BEAD money to fiber and wireline providers, despite protests from SpaceX.
According to NTIA, the so-called “best and final offer” gives providers another chance to compete for funding instead of “awarding all excessively high costs areas to one particular technology.”
New Street Research Policy Analyst Blair Levin said in a note today he believes the memo is likely real and represents the NTIA staff’s current view of BEAD. However, that view may not necessarily align with the opinion of Commerce Secretary Howard Lutnick, who would have the final say on where the BEAD money goes.
NTIA hasn’t published anything about the memo on its website, nor did it mention the numbers it’s using to identify expensive BEAD projects. But Broadband.io, citing “off-the-record state broadband leaders,” reported the agency has given states certain thresholds for costs per project area.
Project areas that are under 65% of the excessive cost threshold should be approved with little to no pushback. Beyond that, states will have to go back and negotiate a lower price with the preliminary subgrantee. If the cost for an area exceeds NTIA’s 85% threshold, that project area will not be approved and instead will be awarded to a lower bidder.
To be clear, this refers to the cost of each project area, not the overall average cost per location per state. The report, which included a document that lists state-by-state cost caps that were apparently leaked from within NTIA, said NTIA isn’t telling states what those specific cost thresholds are.
Small operators stand to face bigger BEAD cost
We’ll have to wait and see if NTIA will formally make an announcement detailing how states will need to change their BEAD proposals. But according to Levin, any changes will likely hurt smaller operators more than large wireline operators.
While operators like Comcast and AT&T are leading in BEAD awards, Levin pointed out the big broadband providers have won less than 25% of BEAD locations and funding, with the rest either going to satellite or smaller, regional operators.
“The wins by the large operators are a fraction of their overall business and any changes to the allocation will have an insignificant impact on their overall business,” he said.