BEAD at 'Significant Risk' That Rules Changes Will Benefit SpaceX: Outgoing Director

Industry experts questioned what will happen to Louisiana, Nevada and Delaware, which already selected BEAD projects and received approval under former President Joe Biden's NTIA. They are also worried about Musk's possible role in changing the rules for BEAD to support his company. Musk was a top donor to President Donald Trump's campaign and is now a leading adviser.

Christopher Ali, professor of telecommunications at Penn State University, said he has known Feinman for years, dating back to the days when the now-former BEAD director led broadband efforts in Virginia. “I appreciate that he left with a bang,” Ali said in an interview Monday, referring to the leaked email. It’s “a very important warning about the problem of putting all our BEAD eggs into the Starlink basket,” he said: “Evan kind of sounded the alarm for a lot of us as well.”

Ali is “very worried” about opening BEAD to include Starlink “not as an extreme high-cost option, but just as a regular option for funding.” One of his concerns is “the geopolitical issue of Elon Musk controlling American broadband.” Musk “has been known to be quite fickle with turning on and off the connectivity spigot in different countries or at least using Starlink as a bargaining chip to get his way,” Ali said. The LEO industry is dominated by SpaceX. “We’re not actually including LEO; we’re just including Starlink into the funding package, and I don’t like the idea of funding monopolies.”

Ali questioned whether Starlink could consistently meet BEAD's connectivity requirements. “This seems very much the politics of ‘good enough,’” he said. But he also questioned whether members of Congress will stand up to the Trump administration on something that SpaceX and Musk want.

BEAD changes are “holding up states that are ready to go,” said Drew Garner, director-policy engagement at the Benton Institute for Broadband & Society. Garner cited the three states NTIA approved, as well as West Virginia, which has a final plan ready for approval.

“The results of BEAD so far are remarkable -- it’s looking like a very successful program,” Garner said. “But the administration is saying stop,” and the indication is it wants to “push money to LEO providers under the guise of cost-effectiveness.” That’s “ironic” because Starlink service is more than twice as expensive as fiber, he said. “They’re going to end up charging households more for slower, less reliable service.” Some Republican states are pushing back “quietly” and “in private,” Garner said: “I don’t know if we’re going to see anyone go public, so I’m not hopeful.”

Starting Over?

“We share concerns about potential shifts in BEAD,” a spokesperson for nonprofit Connect Humanity said in an email. “While LEO satellites have a role in reaching some of the very hardest-to-serve areas, fiber remains the best long-term investment for the vast majority of communities,” the spokesperson said: “Communities across the country have been promised connectivity, and states are now on the verge of getting shovels in the ground. … It’s so important that states can move forward with the BEAD proposals they’ve already developed.” Connect Humanity has argued for keeping BEAD's fiber focus (see 2503170004).

Jeffrey Westling, American Action Forum director-technology and innovation policy, said the Trump administration could make limited changes to BEAD without restructuring it. Rethinking the types of technologies that can compete in the bidding or the weight they receive "will obviously require additional work, but … could be implemented without too much backtracking or delays,” he said.

“The real concern is whether the NTIA will essentially start the entire process over,” Westling said: “Signaling to industry that the NTIA will commit to a full reset means that all aspects of the program may need to be relitigated, adding significant costs and delays.”

New Street’s Blair Levin wrote in a recent research note that in addition to the three states that have finalized BEAD plans, others have logged hundreds of applicants who want to participate. Starlink has apparently not filed in any state, he added.

“While that rhetoric pointed to significant changes ahead, the states have been proceeding under the existing rules set in the Biden Administration, making significant progress in ways generally not reflected in the DC discussions,” Levin wrote. Republicans aren’t “wrong to argue that the current rules and processes are burdensome,” he said: “Our point is simply that the data demonstrates that the interest in building to unserved and underserved locations is strong enough to create high participation levels despite the costs.”

WISPA sees changes as making the program better, a spokesperson emailed. The organization “is encouraged that NTIA appears to be righting the ship and getting BEAD back on track; and we are working to ensure that companies that already provide broadband are not needlessly overbuilt, and small companies who want to participate for BEAD grants can meaningfully do so.”

Most proposed changes are “in keeping with the original spirit of BEAD,” said Kristian Stout, director-innovation policy at the International Center for Law & Economics. “We want to close the digital divide, and satellite is just one technology among many that are capable of dealing with some portion of that gap.”

It wouldn't be surprising if states took a wait-and-see approach and paused their efforts until Commerce provides guidance, though that delay could particularly set back colder states, with limited construction seasons, consultant Angie Kronenberg told us. Some of the potential program changes that Feinman identified in his letter -- such as axing the prevailing wage requirements -- wouldn't need to cause delays, Kronenberg said. But it's hard to proceed without Commerce guidance on how to address its change from a fiber preference, she said.

Congress "very carefully negotiated" BEAD, with the intent being scalable, high-speed broadband, Kronenberg said. The goal was clearly to get fiber out as far as was feasible, she added. It's concerning that there could be a change in how Commerce wants calculations done so that more money goes for satellite broadband, as it's expensive to purchase monthly, and it doesn't enable mobile connectivity the way fiber networks can carry traffic to mobile towers, she said.

Feinman Letter

Among the BEAD changes that will "definitely happen," Feinman wrote, are the elimination of "'woke' requirements," such as provisions related to climate resiliency, prevailing wages and middle-class affordability. He said those steps shouldn't be significant to BEAD, as they "were never central to the mission of the program, nor were they significant in the actual conduct of the program." Also expect "a 'pause' that isn't a pause" as the Trump administration makes changes "but doesn't want to be seen slowing things down." States, he wrote, will be told to slow or stop their subgrantee selection.

Feinman said the net result of the Commerce changes-to-come will be delays in broadband deployment, though it could address problems via waivers and avoid slowdowns. Also, as a result, more people will get LEO broadband from providers like SpaceX or Amazon's Kuiper, and fewer will obtain fiber, he said. That number could be large, "depending on where the admin sets the threshold limit, and whether states are permitted to award projects above the new threshold on the basis of value per dollar, or if they're forced to take the cheapest proposal, even if it provides poorer service," he said. The wireless industry "will be, effectively, shut out of the BEAD program," with few locations that will be able to compete on price with LEO.

Louisiana, Nevada and Delaware, with approved final proposals, "remain in limbo," since Commerce's National Institute of Standards and Technology is reviewing the proposals' budgets, Feinman said. "This makes no sense -- these states are ready to go, and they got the job done on time, on budget, and have plans that achieve universal coverage," he added. "If the administration cares about getting shovels in the ground, states with approved Final Proposals should move forward, ASAP." States that have completed their work but lack approved final proposals -- West Virginia for now, with other states to join that club -- "also remain in limbo," Feinman noted. "If the administration cares about getting things done, they should allow any state that comes forward with a Final Proposal under the old rules in the next couple of months to move forward with that plan."

Feinman said there has been no decision about handling the 30 states that are conducting subgrantee selection. "The administration simply cannot say whether the time, taxpayer funds, and private capital that were spent on those processes will be wasted and how much states will have to re-do."