Effects of BEAD Rules Revamp on Providers Still Unclear

In many cases, providers that submitted bids to cover a territory might reapply just to see what happens, said Casey Lide of Keller and Heckman, who has fiber experience. Probably only a few won't resubmit at all, he said, and it's more likely that subgrantees amend their applications, reducing some of the remote areas they might have proposed to serve by fiber on the assumption that low earth orbit satellite operators will seek those locales. The revised rules emphasize scalability, with state broadband offices making the determination if a project is scalable or not, Lide said. There could be variations among states on whether LEO is determined to meet that scalability requirement, he noted.

Fiber Broadband Association President Gary Bolton told us that the emphasis on scalability in the new NTIA guidance means that fiber projects and operators will remain strong BEAD contenders. Other technologies can qualify as priority broadband projects under the new rules, "but they have to be well-engineered," he said. BEAD applicants have the burden of clearly demonstrating that they can meet the new requirements while also scaling up to meet the speed requirements of, for example, 5G and 6G, he said.

The BEAD rules' revision also creates new deadlines. States have 90 days from the June 6 release to submit a final proposal to NTIA, and within that time, they have to conduct at least one bidding round to allow subgrantees to apply for BEAD funding for eligible locations.

Maryland on Thursday became the latest state to release a BEAD proposal under NTIA's revised rules. The Office of Statewide Broadband is seeking BEAD applications by July 24, noting that Maryland is on track to close its remaining coverage gaps in mostly rural, low-income and difficult-to-serve areas. Including Maryland, 34 states, Washington, D.C., and the Northern Mariana Islands started new rounds, known as the "Benefit of the Bargain" round, as of Friday, according to NTIA's BEAD progress dashboard.

The tight time frame could make it a challenge for providers to craft a BEAD bid if they hadn't already developed one, Bolton said. He noted that at least some of his association's members that were previous BEAD applicants won't reapply because they're focused on other, nonsubsidized network expansions. "There's a high level of frustration" with states that were ready or almost ready to distribute awards and now have to start over.

However, in its BEAD restructuring, NTIA removed a variety of requirements it deemed to be significant regulatory burdens, including those dealing with labor and workforce development, open access and low-cost service offerings. Bolton said that might make BEAD more attractive to operators that hadn't bid before, as they face less red tape.

Ultimately, BEAD will likely "end up in good shape," Bolton said. "It's still a great opportunity."

Best to 'Stay in the Game'

"The smartest thing a fiber applicant can do is resubmit their application and stay in the game," emailed consultant Carol Mattey, citing states' efforts to make it easy for existing applicants to reapply. Some fiber providers may initially have been discouraged from reapplying because the new NTIA guidance prioritizes lowest-cost bids, she noted. But NTIA has made clear that states have significant discretion in deciding which applications are priority broadband projects, so "fiber operators shouldn't panic and assume they are going to lose."

Mattey said there ultimately shouldn't be a big change in the number of bidders in a given state. It's unlikely that the regulatory requirements adopted in the Biden administration deterred broad participation in BEAD, nor will their elimination mean a groundswell of new participants, she said. Some prior applicants might drop out, and more fixed wireless providers will bid, but the overall net number could be around the same in many states, she said. However, she echoed concerns that it could be difficult for providers that didn't apply before "to pull together an application documenting their financial, managerial and technical capabilities -- certified by a licensed Professional Engineer -- in the next couple of weeks."

States that already announced BEAD provisional awards face an additional challenge under the new rules, since providers will be able to underbid those provisional award amounts, Mattey said. Provisional awardees "are going to have to face some hard choices -- reapply at the same price point and hope for the best, or sharpen their pencils to shave the numbers lower in the hopes of still winning."

Jake Varn, an associate manager with Pew’s broadband access initiative, said states have indicated they anticipate that existing applicants will continue to participate, and more providers will come with the reopening of the prequalification process. Whether fiber operators greatly modify the territories they had planned on pursuing under BEAD will depend on how much unlicensed fixed wireless (ULFW) operators participate now, he said.

A study by Virginia Tech researchers and broadband data consultancy WorksPublic found that by considering locations with ULFW service to be "served," the BEAD restructuring added at least 842,000 broadband serviceable locations to that category. That's a 12% reduction in the number of unserved and underserved locations nationwide, the study said, with 10 states seeing their unserved and underserved locations decrease by more than 25% because of ULFW.

Varn also pointed out that BEAD's new rules make clear that applicants are allowed to exclude individual locations in a project, such as very-high-cost areas. The aim is to make that remaining project -- minus those excised locations -- more competitive eventually, he said. Meanwhile, the excised locations would be eligible for other providers, such as LEO satellite operators, he said, adding that it was inevitable that some locations wouldn't get bids, even with BEAD underwriting, and LEO would be the solution.

'Serious Logistical Challenge'

The 90-day window "is a serious logistical challenge for everyone involved," Varn said. On the plus side, he noted, a lot of states had already received applicants -- 47 were somewhere in the process of collecting bids and opening applications. Their difficulty will come in having to reshape their programs and carry previously submitted bids into new rounds.

Jessica Dine, a policy analyst at New America's Open Technology Institute and Wireless Future, said that while the restructuring eliminated numerous rules that were potentially impeding participation, it also created new barriers and issues. For one, providers that previously applied won't be reimbursed for the costs of reconfiguring their bids and reapplying, so the guidance is indirectly benefiting larger providers that can absorb those costs, she said.

It remains to be seen whether the restructured BEAD rules will have a chilling effect on fiber providers' participation, Dine said. The program now puts a greater emphasis on the lowest-cost provider winning, and fiber will likely lose in many cases against LEO, she said. However, the restructuring could also limit LEO and ULFW applicants. Under old BEAD rules, states' program rollouts were more staggered, giving satellite and ULFW operators time to ramp up capacity to meet speed commitments. The tighter deadline for all states and territories gives them far less ramp-up time, she said.

Keller and Heckman's Lide told us that provider participation in the restructured BEAD program could vary around the U.S., with LEO and ULFW being a bigger competitive presence in some states than others. Larger Western states could see more LEO impact, he added, while fiber projects could be challenged to come within 15% of the cost of an LEO provider for far-flung locations.