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'Duplicative Spending'

Cruz Seeks States' Return of Unused BEAD Funding, Wants NTIA to Reconsider Non-Fiber Tech

Senate Commerce Committee ranking member Ted Cruz, R-Texas, recommended Friday that states “that have more than adequate funding through” other federal programs to deploy connectivity in unserved areas “should return unused” funding from NTIA’s $42.5 billion broadband equity, access and deployment (BEAD) program. Cruz warned in his report that NTIA has engaged in what he sees as “unnecessary, duplicative spending and anti-competitive, anti-consumer technology bias” in its BEAD implementation. Cruz has actively participated in the review Communications Subcommittee ranking member John Thune, R-S.D., has been conducting into the Biden administration’s handling of broadband money from the 2021 Infrastructure Investment and Jobs Act (see 2212060067).

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NTIA’s June announcement of BEAD allocations to states without addressing GOP misgivings about its rules for the program (see 2206090072) means the program will likely “waste billions of dollars in duplicative subsidies and divert funds away from truly unserved rural areas,” Cruz said in his report. NTIA “did not consider whether a location would be served in the near future through funding from a previous federal program,” which resulted in the agency allowing funding for more than 5 million “locations that are already being funded by other federal programs.” He believes NTIA didn’t adequately account for the FCC’s broadband map overestimating the number of unserved locations.

If funding from other programs had been considered, seven states would have had zero unserved locations,” Cruz said. He cited instances in 10 states and other entities in which allocations amount to “more than $10,000 per unserved location,” including “$547,254 per unserved location in Washington, D.C.” The report noted instances in which locations that “will receive taxpayer-subsidized fiber-to-the-home service include mansions, beachfront resort communities, and mountain vacation homes.” They include Lewes, Del., Nantucket, Mass., and Vail, Colo.

Cruz urged NTIA to “revise BEAD rules so less costly technologies that are capable of meeting the IIJA broadband standard, like satellite and fixed wireless, are subject to a level playing field.” The Biden administration’s “bias against non-fiber broadband will drive up costs by billions of dollars and likely deprive some communities of any broadband access at all,” Cruz said. “Count me skeptical” that the BEAD funding will be “enough money to deliver broadband to every American” given the agency’s actions so far.

NTIA, Senate Commerce Democrats, House Commerce Committee Republicans and panel Democrats didn’t comment. Cruz’s report drew mixed reactions from other stakeholders.

Cruz’s “comments and recommendations” are “flawed,” American Association for Public Broadband Chair Angela Bennink told us. “Each state is building a ‘deduplication’ process to ensure that federal or state funds are not being allocated twice to the same location. Additionally, the states are well aware that the FCC data has flaws. It is living data that is constantly updated and gets better each round.” The “American people have paid a lot in the recent past for broadband service that now needs to be rebuilt with more taxpayer funding,” Bennink said: “BEAD is designed not to make that mistake again. What Sen Cruz’s report is suggesting is that we choose the cheapest solution and not the best solution. This is not in the best interest of Americans, especially those on the other side of the digital divide.”

The report has "very little to do with internet access and a lot to do with an incoherent political agenda to discredit government programs," emailed Christopher Mitchell, Institute for Local Self-Reliance director-community broadband networks. He acknowledged it correctly addresses that states have problems with identifying underserved, unserved, “or even a legitimate location.” Cruz “correctly attacks previous government broadband programs for delivering too little for the taxpayer investment and yet proposes repeating those mistakes,” Mitchell said: Spending money on wireless technologies “may only resolve the problem for a few years but then will require yet another round of subsidies to keep rural households connected.”

Cruz “is right to note the potential for waste, but to do so at this early stage seems overtly political,” said Derek Turner, Free Press senior adviser-economic and policy analysis. The FCC’s current broadband coverage “data is arguably more accurate than prior data,” but “it nonetheless includes locations that are already served, and also misses some locations that are truly unserved. This is why” FP “has always stressed that in the context of deployment subsidies, maps should be a starting point for determining where funds are needed.” He noted Congress’ “bipartisan BEAD plan gives each state ample flexibility when making final determinations of where to spend these funds, and NTIA retains additional oversight as well.”

Wireless ISP Association Vice President-Government Affairs Matt Mandel urged NTIA to adopt Cruz’s recommendations “so that it can truly work to eradicate the digital divide.” NTIA's BEAD notice of funding opportunity “strays radically” from ensuring tech neutrality, Mandel said: “This not only undermines billions of dollars of private investment,” but will also “inhibit or prevent broadband investment by the very players most likely and able to do so in the future.”

There’s “a big problem with coming in and using government dollars to compete with existing private investment: you deter future private investment where it is needed,” tweeted Taxpayers Protection Alliance Executive Director Patrick Hedger. “No one wants to compete with the government someday.” Republican former FCC Commissioner Mike O’Rielly praised Cruz’s report as “incredibly valuable to minimize duplication and waste.”