BEAD Won't Repeat Past Mistakes, NTIA Says; Critics See Red Flags

ASPEN, Colo. -- NTIA won't repeat the mistakes made in past federal efforts to narrow the digital divide, said Evan Feinman, director of its Broadband Equity, Access, and Deployment (BEAD) Program, Tuesday at Technology Policy Institute's Aspen Forum. This time, he said, "we are going to solve this problem" and avoid the top-down approaches that missed unserved or underserved locations and didn't use ideal technology. But critics see danger signs.

Mark Jamison, director of University of Florida's Public Utility Research Center, said past efforts to expand broadband used some tools that NTIA is also employing in BEAD, "and often times didn't go well." Big money vacuums include programs that satisfy multiple agendas, like BEAD's emphasis on helping municipalities and startups get into broadband even though such providers have higher costs and high failure rates, he said. The focus on fiber, which is expensive, comes as many low-income households prefer mobility, and reduces technology opportunities, he said. Vagueness throughout the BEAD Notice of Funding Opportunity "is an opportunity for a political lever to be pulled" in awarding projects that might not be lowest cost, he said. Jamison said states need to collectively interpret and implement requirements and do so transparently.

Jamison said the last major federal digital divide effort, with about $7 billion spent in 2008 and 2009, resulted in no expanded broadband because a lot of the efforts were duplicative and there was a lack of a rigorous price competition process.

Multiple policy objectives throughout BEAD put the objective of closing the digital divide "pretty low on the totem pole," said Duke University economics Professor Michelle Connolly. They include weight given to use of American suppliers, use of unionized labor or project labor agreements and the lack of data caps, she said. She said the focus on affordability for middle-class families "seems like an entry into rate regulation," she said. Their net result "could easily lead" to less than 100% coverage of all Americans by the program's end, she said.

BEAD and other Infrastructure Investment and Jobs Act (IIJA) programs were designed not just to build networks but to get to "meaningful use" of the connectivity, said Wilkinson Barker's Evelyn Remaley, who previously was NTIA acting administrator. She said states need to think about how IIJA digital equity funds can go toward digital devices so people can participate in digital society. She said BEAD also wants states to look at connecting the dots on other funding sources, such as from other federal agencies and their own coffers. She said states need to think about the long-term sustainability of their BEAD plans: "This is not a short-time program; it's a once-in-a-generation program." State BEAD applications must ensure they're bringing in competition and not inadvertently forestalling the whole suite of available tech, even though fiber is preferred, she said.

If state plans don't accomplish universal coverage, they will be sent back to the state, Feinman said. He said those plans will differ from state to state. “This will be a data-driven program” with subgrantees chosen by cost to taxpayers, he said. NTIA will put out data that will reflect a rebuttable presumption of the cost for serving an area, with providers able to challenge that estimate, he said. He said the BEAD design was to go to a community and say, "This is what we think you need. Will this work?" he said. “We're going to solve the problem 56 different ways, 50 states, six territories,” crafted with local and tribal leaders, he said.

Fiber can cost $83,000 to $120,000 per passing because of Colorado's mountainous terrain, state Broadband Office Executive Director Brandy Reitter said. She said the state is considering an option of a mix of fiber for some areas and an alternative technology for others; otherwise there won't be enough money to provide 100% fiber, she said. About 14% of state residents are unserved or underserved, but affordability is a barrier to more Coloradans than physical access, she said. She said bringing down price points and subsidies must be priorities. She said Colorado has focused most of this year on building internal capacity of staffing and consultants in its broadband office and other agencies, she said. Colorado is setting aside some BEAD money to provide resources and grant writers to communities that can't afford to do broadband planning on their own, she said.

Asked how NTIA sees the risk of new rural providers using their monopolies to hike prices, Feinman said network operations have a business incentive to offer affordable service. He said sub-grantees can also assign weight based on pricing. Longer term, post-BEAD, there should be new consideration about how subsidy and USF funding is directed at telecommunication networks, he said.

Neighbors' Digital Divides

Canada is making good progress to closing its digital divide, but Mexico is far more challenged, regulators from those nations said.

“I give us a B+, working toward an A-,” said Ian Scott, Canadian Radio-Television and Telecommunications Commission (CRTC) chairman. He said 90% of Canadians have access to download speeds of at least 50 Mbps, though it’s less than 50% in rural areas and even lower among indigenous communities. LTE reaches 98% of the population, he said.

With CRTC having $750 million in funding to target the most problematic areas and the government committing more, “the funding is now there” to bridge the nation’s digital divide, Scott said. However, labor availability could be a hurdle to expanding networks to those unserved or underserved areas, he said. He said the federal and provincial governments are cooperating on digital divide issues, but there's a challenge in different infrastructure rules in different parts of the nation and a lack of federal jurisdiction.

Canadians are widely dissatisfied with fixed and mobile rates they pay, Scott said. A challenge is that two-thirds of the Canadian land mass has a total population of 135,000 people, creating a challenging business case for connecting them, he said. It introduced mandatory MVNOs to try to drive down wireless rates, he said. Broadband pricing is more challenging because there hasn't been much price competition between cable and telcos. He said wholesale mandates to try to create competition have struggled to get rates right. “I’m not sure we found the sweet spot,” he said. “Certainly industry doesn't think we have.”

About 25% of Mexicans have no internet access at all, said Ramiro Camacho Castillo,Federal Institute of Telecommunications commissioner. During the pandemic, when kids couldn’t attend school either in person or virtually, the government used TV channels to broadcast school lessons, he said. He said the pandemic has sensitized society to issues of the digital divide and access. He said lack of fixed and wireless internet competition has been a problem.