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ACA Connects Summit

Small and Mid-Sized ISP BEAD Participation a Question; NTIA Eyes 'Pain Points'

Many small and mid-sized internet service providers (ISP) have doubts that they will participate widely if at all in the broadband equity, access and deployment (BEAD) program. At ACA Connects' annual summit Wednesday in Washington, President Grant Spellmeyer said members are concerned "about where BEAD is headed" on project requirements and conditions. "Places like Pennsylvania have got some troubling provisions that are slowing members down," he said. "I think you're going to see wildly disparate results across the 50 states." One ISP that operates in multiple states told us it's leaning away from participating in the states with particularly onerous conditions.

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NTIA Administrator Alan Davidson told the ACA audience that the agency "want[s] to hear where the pain points are." NTIA is "doing all we can to try to streamline the program," he said. Not all aspects are under NTIA's control, but it can streamline environmental and historical permitting issues involving federal land, he added. "Stay tuned for more," Davidson said. NTIA has required states to show how they will handle a surge of permits, and Davidson said the agency needs to keep pressure on states on this issue. He acknowledged that while the federal government wants maximum participation in BEAD, "it doesn't always feel that way."

BEAD funding should be sufficient to achieve universal connectivity, but there are signs it won't because of project requirements, FCC Commissioner Brendan Carr said. A dozen states have indicated they won’t have sufficient funding. “There’s still time to course correct,” Carr told the ACA Connects audience.

Spellymeyer said he doesn't expect BEAD to reach its universal connectivity goal. One big variable is how aggressive some major providers, such as Charter Communications and T-Mobile, will bid, he said.

If the White House wants to maximize BEAD funding and achieve universal access, "it must not only acknowledge, but address the warning lights that threaten connectivity progress," NCTA blogged Wednesday. Warning lights include "the extraneous conditions that [the] Administration has adopted or is insisting that states adopt when crafting eligibility rules or preferences for broadband builds," it said. Similarly, the FCC's proposed net neutrality rules are a connectivity barrier, it said. Instead, there must be a focus on "removing obstacles that slow deployment like unreasonable terms for access to utility poles," it said.

BEAD "is clearly falling behind a little bit" in terms of timing, Spellmeyer told reporters at the ACA summit. Louisiana being the only state so far to get full BEAD plan approval (see 2312140069) is somewhat surprising, Spellmeyer said. Aside from Louisiana, it's unlikely that other states will have grants awarded and construction started before the November election, he said. Spellmeyer said he would have predicted one year ago that numerous projects would be underway by this September.

NTIA "is progressing along against our benchmarks well,” Davidson said.

Indiana-based fiber network operator MetroNet traditionally hasn’t done subsidized builds, but with rising costs, it’s reconsidering, CEO Dave Heimbach said. He said state and American Rescue Plan funds come with fewer strings and are more appealing to pursue than BEAD. He said numerous states essentially imply rate regulation in their BEAD programs. Prevailing wages and the letter of credit also are a concern, Heimbach added. He said there are “pockets” of BEAD that could be of interest to MetroNet.

Multiple operators said pole permitting and pole attachment issues remain a major headwind to deployment. MetroNet is negotiating several dozen pole attachment agreements, and Heimbach said few electric utilities are accommodating and easy to work with. Utilities are “largely ignoring” FCC rules on timelines for responding, or have undue make-ready restrictions, he said. MetroNet is increasingly going underground instead of on poles, even though it’s costlier and takes longer, said Heimbach, saying 80% of builds last year were underground, compared with 50/50 underground to aerial four or five years ago.

Heimbach said MetroNet is facing pitched fiber competition in some areas. He pointed to central Florida, where there are six companies, including MetroNet, building fiber. Heimbach said MetroNet doesn’t like competing with fiber operators, so it increasingly must be “more nimble” in its build strategy. Fixed wireless and satellite broadband aren’t prevalent competitors, as MetroNet isn’t targeting either rural areas or “NFL cities,” In the past three to four years, SpaceX’s Starlink has become a sizable competitor to Alaska's GCI, particularly for residential broadband, said GCI Vice President-Legal and Regulatory Dave Hymas.

Summit Notebook

Following NTIA's approval of Maine's digital equity plan last month (see 2402150034), many more states will have digital equity plans accepted in coming weeks, NTIA's Davidson predicted. He said $800 million in digital equity grants will be awarded this year. "States have a lot of different and really interesting ideas," he said.

The increasing challenge broadband providers face in seeing a good rate of return on their investments is “a huge flashing warning sign” for regulators, Carr said. There’s increased regulatory interest in “fair share” proposals that would see Big Tech and digital advertisers bear some Universal Service costs. Carr said federal policies in the aggregate are hammering cable ISPs. Federal spending on broadband access while not further streamlining permitting rules “is like stepping on the brakes and the gas at the same time.”

National Content & Technology Cooperative CEO Lou Borelli said it's working on creating an over-the-top streaming bundle of 35-40 channels that members could offer as a video product. He said it's aimed at providers who are "going hard at the broadband-only environment" and eschewing linear video.

The FCC commissioners are getting along "surprisingly" well, Carr said. He said the time when the FCC was 2-2 might have created trust and relationships that “are continuing to pay dividends." "All five of us do get along well," echoed Commissioner Anna Gomez. "It's been a delight." Gomez and Commissioner Geoffrey Starks spoke of the need for saving ACP.