States, NTIA say municipal broadband laws won’t delay BEAD funding

State and federal government officials told Fierce that state laws restricting municipal broadband deployments aren’t expected to delay the distribution of funding from the $42.5 billion Broadband Equity, Access and Deployment (BEAD) Program. The comments came after a report from BroadbandNow last week suggested that might be the case.

BEAD support is expected to be divvied up among all 50 states in the coming months. But, as BroadbandNow noted, rules for BEAD stipulate that states with laws that either restrict or prohibit municipal broadband must disclose whether or not they plan to waive such laws. A total of 17 states have laws some kind of municipal broadband restriction on the books. BroadbandNow argued that in theory, nothing would prevent the National Telecommunications and Information Administration (NTIA) from withholding money from states that decline to dispense with these laws.

Patrick Redmond, Nebraska’s interim broadband director, told Fierce he’s familiar with such concerns but stated there’s no indication that will happen. Nebraska law currently prohibits municipal entities from offering broadband, though state legislators are considering a bill to change that.

“The [Notice of Funding Opportunity] NOFO itself makes it clear that waiving these laws is simply one option among many,” Redmond said. “In our case, we would indicate how our laws will be applied in connection with competition for sub-grants.”

He continued: “I really don’t foresee a long, drawn-out fight over municipal access, nor do we anticipate any delays in funding allocation.”

Asked to weigh in, an NTIA representative reiterated the agency's BEAD rules, which ask states not to pass new laws that would restrict BEAD participation, grant waivers to existing state laws that would limit participation, and disclose any unsuccessful applications for grant funding that may have been impacted by such laws.

“We want to get the best possible networks built, and to do that, we’ve asked states to create a level playing field on which municipalities, cooperatives, and small, medium, and large companies can all compete for these funds,” the representative stated. That said, “there is nothing in our rules that preempts existing state laws.”

In response to a question from Fierce about what will happen to states that decline to waive their municipal broadband restrictions, the NTIA representative said "There is nothing in our rules that any state’s or territory’s BEAD allocation would be delayed or reduced due to a state’s restriction on pre-existing public eligibility to compete for BEAD grants."

This is the same message Redmond got from the agency: “I spoke with the NTIA yesterday and they confirmed that there is nothing in the BEAD NOFO that would indicate a state or territory will see their BEAD allocation delayed or reduced due to restrictions on public eligibility for BEAD grants.”

Similarly, Brandon Carson, Director of Pennsylvania's Broadband Development Authority, told Fierce the state has discussed the issue with NTIA and "does not anticipate a delay in the distribution of BEAD funds."

Pennsylvania law does not outright prohibit municipal broadband but does impose certain restrictions on government entities looking to offer internet services, Carson noted. 

"Although the law does not prevent local governments from competing for BEAD sub-grants, it requires that a political subdivision which seeks to serve as a provider and offer broadband services for a fee either be granted an exemption or, offer a right of first refusal to the local exchange telecommunications company that provides services in the area," he explained.

Under BEAD rules, the state "is required to describe how the law will be applied to the BEAD application process and plans to do so as part of its initial proposal to NTIA," but that shouldn't impact funding timelines.


4/17/2023 1:26 pm ET: This story has been updated with an additional comment from NTIA.