- BEAD’s new tech-neutral approach could mean many wireline operators ‘simply will not bid,’ said NSR Analyst Blair Levin
- NTIA eliminated requirements related to workforce development, climate resiliency and affordable broadband pricing
- ISPs using fully unlicensed wireless spectrum are now eligible for funds
The deed is done. NTIA has officially rewritten the rules of the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program, essentially forcing states back to square one on their plans to address the digital divide.
As anticipated, the new notice of funding opportunity (NOFO) nixed the BEAD preference for end-to-end fiber. The notice now defines a “priority broadband project” as one that provides service at speeds of no less than 100/20 Mbps with latency less than or equal to 100 milliseconds.
Further, NTIA said it “hereby rescinds all Final Proposal approvals that occurred prior to the publication of this Notice.” This includes proposals from Louisiana, Nevada and Delaware, the states that have already announced which providers will receive BEAD funding.
All states and territories have 90 days to comply with the new NOFO, which also requires them to conduct at least one additional subgrantee selection round (dubbed “Benefit of the Bargain”) to ensure the lowest-cost broadband option, “regardless of technology employed.”
With BEAD funds shifting away from fiber to more fixed wireless access (FWA) and low-earth orbit (LEO) satellite, “there is a distinct possibility that in many places wireline enterprises simply will not bid,” said New Street Research Policy Analyst Blair Levin.
LEO providers like Elon Musk’s Starlink and Amazon’s Kuiper will be able to “cherry pick locations” to make deployment plans more challenging for terrestrial players, Levin wrote in a note to investors.
How much BEAD money Starlink will actually get remains to be seen, given the recent spat between Musk and President Trump. If the rift continues, the White House may signal to NTIA and the states that “they do not have to tip the scales to assist satellite win the grants,” he said.
While the large wireline operators are likely to move on from BEAD, smaller rural carriers “may view the new rules as an existential threat and litigate,” Levin added.
Indeed, he thinks various stakeholders could file lawsuits to stop the new rules from going into effect, but whether that will actually work is less certain. States likely won’t want any more delays, and so far it’s unlikely BEAD deployments will start until 2026 or later.
Industry laments BEAD changes
The prospect of rescinding awards, reopening applications and revising criteria is “the broadband Groundhog Day no one asked for,” said Alexis Schrubbe, director of the Internet Innovation Initiative.
“States that prioritized community-driven networks, built local partnerships, and ran extensive outreach now face immense sunk costs,” she wrote in a blog.
The new NOFO also eliminated many of the other BEAD requirements established in the Biden administration, such as those related to workforce development, climate resiliency and low-cost broadband.
To be clear, BEAD subgrantees are still required to offer at least one low-cost service option. But NTIA said it “prohibits Eligible Entities from explicitly or implicitly setting the LCSO rate a subgrantee must offer.”
Getting rid of labor requirements and workforce development plans “will hinder states’ ability to appropriately manage local workforce needs,” said the Communications Workers of America (CWA) in a statement. It will also make it more difficult “to create the good jobs that would have attracted and retained a well-trained workforce.”
Drew Garner, director of policy engagement at the Benton Institute for Broadband & Society, said NTIA’s “shortsighted” new guidance “will undermine economic development in rural America for decades to come.”
Investing in the cheapest broadband infrastructure is “a self-inflicted wound to American competitiveness,” he added, as China and Europe are “going all in” on fiber to prepare for technologies like AI.
The FWA equation
No surprise, the new BEAD rules offer more flexibility to FWA applicants. Notably, the NOFO states providers using both licensed and unlicensed spectrum (or a combo of both) are eligible for funding.
This is a stark change from the Biden era BEAD guidance, which didn’t classify fully unlicensed spectrum deployments as “reliable” broadband. Now, WISPs that use entirely unlicensed spectrum can join the fray, as long as they can meet the speed requirements outlined in the notice.
Unlicensed fixed wireless further complicates the mapping process for states, according to Levin, as they will have to review the FCC map to determine whether an unlicensed FWA provider currently offers service to any BEAD-eligible locations.
This means individual state broadband maps may have to change. And adding unlicensed FWA to the mix “will reduce the potential market size for all bidders,” Levin concluded.