- The interpretation of what constitutes a “priority broadband project” is key for BEAD awards
- Some states may determine that satellite doesn’t qualify as a priority broadband project
- But if cost is the overriding consideration, then satellite could sweep the BEAD winnings
MOUNTAIN CONNECT, DENVER — The National Telecommunications and Information Administration (NTIA) has made it very clear that BEAD grants should focus largely on cost. And the cheapest way to reach unserved areas is via satellite, which costs as little as $349 for Starlink equipment to get up and running.
However, state broadband officers have scrutinized the new BEAD rules, and they’ve honed in on three words: “priority broadband project,” which may offer some wiggle room to give awards to other technologies besides satellite. On the other side of the debate, Brooke Donilon, the new chief of staff at NTIA, also mentioned “priority broadband project” numerous times during a fireside chat at this week’s Mountain Connect event in Denver.
What’s all the hullabaloo about these three words?
The new BEAD rules have taken away the preference for fiber and instead put the focus on a priority broadband project, which means any technology that:
- Provides speeds of at least 100 Mbps download and 20 Mbps upload;
- Maintains latency of less than 100 ms;
- Can easily scale over time to meet growing connectivity needs; and
- Supports deployment of 5G, successor wireless technologies, and other advanced services.
While the speed and latency requirements are straightforward, the language about “scale” and “successor wireless technologies” seems to leave discretion for states to determine whether a technology meets the requirements for BEAD.
This wiggle room is important as states decide whether they’ll simply award all BEAD grants to satellite because those are the lowest cost, or whether they’ll argue that satellite won’t scale for the future.
One of the first questions the moderator at Mountain Connect asked Donilon was how states will use the priority broadband project designation?
Donilon said, “I think that's kind of the heart of the program. That is what we have to look to first in order for industry to compete among one another. They have to first be determined to be priority broadband projects.”
Importantly, she added, “Congress determined that they wanted this to be a state-by-state process that the states would have the best knowledge on the ground of what their needs were. And so, we are giving deference to the states to determine, on a project-area by project-area basis, what's a priority broadband project. So, there's no unreliable broadband as part of this competitive process. The only people that are competing are reliable broadband services.”
Does this mean that states may determine satellite is not a priority broadband project?
That answer won’t be known until after September 4 when all the Final Proposals are re-submitted to NTIA, which will then show its cards.
Thomas Tyler, the state broadband officer for Louisiana, was asked how his state is handling the question of a priority broadband project. Tyler said, “I'm not necessarily ready yet to share the secret sauce on what we're doing. I think the thing to remember is that it's a key factor that states can utilize to help them with their processes and move through to determine which awards they should make.”
Asked if NTIA can override state decisions, Tyler said, “They’ve given some leeway to states, but it’s really TBD at this time. We’re going in with the best plan that we have, and we’ll see what they say.”
Will satellite sweep the winnings?
Many people have pointed out that satellite is already available in most rural places for people who want to fork over the $349 for equipment and pay a monthly rate of $120 for speeds up to 250 Mbps.
And there are lots of pointed questions. Satellite doesn’t require any new infrastructure builds, so why is it even considered for BEAD? If Starlink equipment costs $349, why are Starlink’s bids for BEAD in the $600-per-location range? Why does Elon Musk, the richest man in the world, need taxpayers’ money via the BEAD program? He’s not even friends with Trump anymore.
Steve Carender, director of Special Funding at Surf Internet, said, “I couldn’t request reimbursement for an area that all I needed to do is a [fiber] drop.” In terms of Starlink, he said, “There’s nothing they have to do. It’s not establishing any infrastructure.”
New Street Research policy analyst Blair Levin has written, “We have heard that some states are considering returning all the money to the federal treasury on the grounds that, in their view, spending the money on satellites does not buy anything real for their residents and they cannot in good conscience spend the money where there will be no benefit.”
Donilon said, “Let's say, hypothetically, the whole program is satellite. I don't think that's going to happen, but it's not going to be the satellite that's available today. They have to be a priority broadband project satellite company. That means they have to offer certain speeds. They have to have certain quality of service. Our rule specifically said they had to provide the consumer equipment to the consumer for free, up to three times. I think some argue the biggest impediment to adoption of satellite is marketing.”
So does that mean that taxpayers’ dollars would be spent helping Starlink pay for its marketing? It’s unclear. But the NTIA is putting out a lot of FAQs about the BEAD program and its new rules.
The RDOF factor
Another term that was mentioned a lot at this week’s Mountain Connect was the Rural Digital Opportunity Fund (RDOF).
The telecom industry generally agrees that the RDOF auction that concluded in 2020 was a disaster. RDOF awarded grants to bidders based on the lowest cost. That seemed like a good idea to save taxpayers’ money. But in the end, a lot of unqualified companies won RDOF grants and then defaulted on doing the work because they couldn’t make their business models pencil out.
With BEAD’s focus now on low cost, naturally, everyone is comparing the process to RDOF.
In defense of BEAD’s new rules, Donilon said, “RDOF didn't have this definition of priority broadband project, and that's what Congress put into law. It really protects the BEAD program. There's a critique of RDOF that because it was a reverse auction, it was a race to the bottom. You don't get to a race to the bottom in BEAD because you have to be a priority broadband project to even get in the race.”
So, based on Donilon’s comments as well as those of state broadband officers, it does seem that much of BEAD will depend on those three words.