Late last week, NTIA indicated that, after long last, it had finally approved the last 3 BEAD Volume 1s (V1), endorsing plans submitted by Florida, Maryland, and Minnesota. This occurred a little over a year after Louisiana became the first state to release a draft of its Volume 1. BEAD V1s detail how a state will administer its Challenge Process (CP). In theory, the CP will refine the FCC broadband availability data and yield more granular state maps that precisely identify all BEAD-eligible locations (i.e., those that remain unserved or that are considered underserved).

Via BBE, the ACLP at New York Law School has been closely tracking each iteration of Volumes 1 and 2 issued by the 50 states. Each Volume has benefited from public input and NTIA feedback. In most cases, states have traded updated drafts with NTIA to “cure” issues and shortcomings in these proposals. Volumes that have passed muster have been formally approved by NTIA. Receiving approval of a V1 allows states to launch their CPs; approval of Volume 2 (V2) permits states to launch their BEAD grant programs, which must be wrapped up within 1 year.

Trends & Observations

The following summarizes trends the ACLP has observed in the evolution of V1s across the 50 states. Over time, we will offer similar analyses of V2s (as of today, only 7 states have had their V2s approved by NTIA; none has launched their BEAD program yet).

Erratic Timing

States have been all over the map (pun intended) when it comes to launching and completing their CPs. NTIA has a handy tracker of all ongoing and completed CPs. An initial wave of states that have already completed their CPs and submitted their results to NTIA for approval include, among others, CO, DE, KS, LA, and VA. The bulk of states are still administering their CPs, and a handful, like FL, MD, and MN, have yet to start them (at least one state, NC, is pushing its CP to later this year).

This scattershot approach to CPs does not appear to have had any practical impact on BEAD stakeholders, save for the administrative burdens of participating in these processes. Moreover, NTIA has yet to sign off on the CP findings of states like KS, LA, and VA, which submitted their results months ago. Every day that passes without NTIA authorization of CP results compresses the BEAD timeline for states that have had their V2s approved.

Bend the Knee

Make no mistake – NTIA is in charge of administering and overseeing every aspect of BEAD. States are responsible for developing plans for allocating BEAD funding (via V1 and V2) that reflect their laws and general approach to bolstering broadband availability, but those plans are being carefully reviewed and cured relative to NTIA’s preferred approaches for the program. Ongoing debates about state-level concerns over NTIA’s low-cost option and middle-class affordability requirements illustrate the tension that can arise because of NTIA’s my-way-or-the-highway stance.

A less discussed but equally illustrative example of this dynamic has been evident in NTIA approvals of state V1s. For example, a key step before opening a CP involves modifying the FCC map to reclassify certain locations as unserved or underserved. NTIA proposed two presumptively acceptable pre-CP map modifications, including labeling as underserved any location that only receives DSL. By the ACLP’s count, 40 out of 50 states adopted this modification (a handful of states, including AK, IA, NE, TN, TX, and VA, did not apply any modifications to their maps).

Early V1 drafts released by the states included a host of additional, oftentimes novel proposed modifications. For example, CO, MI, and several other states wished to certify that every single unit in a multi-dwelling structure had access to a broadband connection before they would label that MDU served (NTIA and the FCC approach this issue much differently). A number of other states also wished to reclassify as unserved or underserved locations that receive fixed wireless broadband over licensed spectrum and/or cellular networks.

Per ACLP tracking, which is summarized in our table outlining States’ Pre-CP Map Modifications, the NTIA review, curing, and approval process for state V1s resulted in a significant regression to the mean, with the mean being NTIA’s model challenge process. In almost every instance, states excluded most of their novel pre-CP modifications, opting instead for 1 or 2 pre-approved modules for refining a challenge map (changes made between early drafts and later drafts are indicated in red).

Licensed v. Cellular FWA

Among the more contentious issues implicated by state CP proposals has been the treatment of locations that receive broadband service via fixed wireless access (FWA).

Initially, some states proposed reclassifying locations that only received licensed FWA as underserved. Only 3 states proposed a similar approach to Cellular FWA. Over the course of the NTIA review and approval process, and likely as a result of aggressive lobbying by the licensed FWA industry, NTIA all but eliminated proposed modifications for licensed FWA from state V1s (a modification in Missouri’s V1 not specifically focused on licensed FWA will likely encompass primarily FWA-served locations). At the same time, 11 additional states adopted a cellular FWA modification.

Bottom Line

The upshot of this top-down review and approval model imposed by NTIA is some uniformity across the country vis-à-vis challenge processes. The downside for states is an erosion of their ability to structure their CPs – and other components of BEAD – as they wish. Instead, NTIA has used the Initial Proposal approval process to make states conform, as much as possible, to its vision for broadband deployment.

Michael Santorelli is the Director of the ACLP.

On May 7, the ACLP participated in the Broadband Communities Summit in Houston, TX. The ACLP was invited to provide a standalone presentation on “Equity-Driven Broadband Planning in Served Communities.” A copy of the presentation is available here.

A core theme of the presentation is that served communities – i.e., those cities and towns with few or no BEAD-eligible locations – should focus vastly more resources on demand-side issues. If local officials are truly invested and interested in closing digital divides, then served communities should focus on addressing barriers to broadband adoption in under-adopting communities rather than building duplicative broadband networks or offering significant concessions to entice new entrants.

In support of this argument, the presentation highlighted:

• The extent to which communities across the country are served;

• How broadband maps being refined through the BEAD process will offer the best look yet at broadband availability;

• The positive impacts of ACP vis-à-vis bringing more people online;

• The persistence of stubborn barriers to broadband adoption among seniors, people with disabilities, low-income households, and others;

• The need for a holistic approach to closing adoption gaps by demonstrating the usefulness of broadband to those who think they do not need it; and

• The importance of long-term digital equity planning to ensure the sustainability and help with the scaling of successful demand-side programs.

Michael Santorelli is the Director of the ACLP.

The ACLP has published an op-ed in the Buffalo News regarding the New York State Municipal Infrastructure Program (MIP). The op-ed urges the NY legislature and governor to adopt a budget amendment that would clarify that MIP funds must only be spent on supporting broadband deployment in unserved and underserved areas. The op-ed builds upon testimony that the ACLP provided to the NY legislature in January on this issue, as well as a letter that it submitted to legislative leaders.

The ACLP was also recently a guest on The Capitol Pressroom, a podcast focused on NYS politics. The show focused on municipal broadband efforts in New York State.

Unfortunately, the legislature and governor failed to act in the way recommended by the ACLP. Some have celebrated this decision as a win for municipalities. In reality, using the MIP to support overbuilding in served areas may mean that some parts of New York State remain without any access, even after the state allocated $715M in BEAD funding.

Michael Santorelli is the Director of the ACLP.

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Today the ACLP sent a letter to the New York State Legislature supporting a proposed amendment that would ensure that all available funding for broadband expansion targets only locations that are unserved and underserved. A copy of the letter is available here.

Michael Santorelli is the Director of the ACLP.

The ACLP at New York Law School has released the latest installment in its “Navigating the BEAD Weeds” series. This analysis examines the tiered approach to vetting prospective BEAD subgrantees developed by NTIA and adopted by the states. The full analysis is available here.

As an overview, the analysis:

• Details how NTIA, through its guidance and waivers, has allowed for the creation of a tiered approach to vetting prospective BEAD subgrantees. Experienced ISPs will be subject to rigorous screening, while less experienced entities with little or no track record in the broadband space will have a much lower bar to clear.

• Highlights how, in practice, this tiered approach resembles the flawed vetting procedures used during previous federal broadband funding programs.

• Offers recommendations to NTIA and the states for bolstering vetting processes for inexperienced applicants, streamlining the process for established ISPs, and otherwise amending the screening criteria to prevent another LTD debacle.

Summary

• BEAD grants are available to any entity that wishes to apply. NTIA, which oversees BEAD, has acted on several fronts to ensure that as many entities as possible, including non-traditional ISPs (municipalities, electric utilities, cooperatives, private equity-backed new entrants, etc.) participate in the program.

• NTIA’s efforts have resulted in the creation of a tiered approach to vetting prospective BEAD subgrantees. On the one hand, NTIA guidance details rigorous vetting procedures for established ISPs – i.e., those entities with established networks and track-records in leveraging grant funds for network expansion. On the other hand, NTIA has carved out numerous exceptions to this framework for smaller and inexperienced ISPs.

• NTIA has justified this tiered approach as necessary to facilitating participation in BEAD for those entities that might be discouraged by having to comply with rigorous vetting criteria. In reality, however, NTIA has enshrined a vetting framework for inexperienced ISPs that is eerily familiar to the lax standards applied to participants in previous federal funding programs.

• The ongoing fallout of the flawed RDOF program illustrates the dangers that lie ahead. The FCC’s failure to rigorously vet RDOF participants led to the two biggest winners of funding having their awards rescinded because, after looking more closely at their capabilities, it became clear that these entities were incapable of meeting their obligations. Since then, numerous other RDOF winners have defaulted on their awards, and more are seeking amnesty to do the same.

• NTIA risks leading BEAD down a similar path if it maintains its tiered approach to vetting prospective subgrantees. Fortunately, there is still time for NTIA to work with states to prevent waste, fraud, and abuse in BEAD. This analysis offers the following recommendations to avoid this fate:

  1. NTIA must level the playing field vis-à-vis vetting all participants in a similarly rigorous manner.

  2. NTIA must encourage states to assign greater weight to past performance in past federal funding programs when scoring applications.

  3. NTIA must encourage states to reward experience in the broadband sector and develop additional safeguards when reviewing applications from inexperienced ISPs.

  4. NTIA and the states must develop more robust accountability procedures and criteria for clawing back funds for under- and non-performance.

  5. NTIA and the states must do more to maximize transparency in the award and deployment of BEAD funds.

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.

The ACLP has released the latest in its series focused on Navigating the BEAD Weeds: “Maximizing BEAD’s Reach.” The analysis is available online here.

The BEAD Weeds series stems from the ACLP’s ongoing tracking and analysis of each state’s BEAD Initial Proposal. Each installment is meant to highlight positive and negative trends evident in these proposals and provide folks with materials for use in support of education and outreach at the federal and state levels.

The analysis highlights the myriad ways in which states are attempting to ensure that BEAD funds go as far as possible vis-à-vis closing their digital divides. Some states have sought to address this issue by establishing very large BEAD project areas (PAs) and requiring subgrantees to serve every unserved and underserved location in those PAs. In the view of these states, a major upside of this approach is its simplicity since it will not require much effort to deconflict overlapping proposals. In practice, however, large PAs might prove daunting and impractical for many prospective applicants, an issue that the ACLP tackled in its previous BEAD Weeds installment on PAs.

In response, several states have adopted novel approaches to stretching BEAD funds as far as they can go that involve smaller PAs. These approaches include:

• Alternative Percentages, which allow applicants to propose serving less than 100% of a PA.

• A variety of Deconfliction techniques, many of which allow applicants to sever overlapping locations from their proposals.

• Approches to address Leftover and No-Bid locations.

The latest document examines an array of approaches as best practices that states and NTIA might embrace as Initial Proposals are finalized and BEAD programs begin to roll out.

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.

The ACLP testified before the New York State legislature regarding the state’s Municipal Infrastructure Program (MIP). Our testimony is available here.

The MIP is a $228 million program that will support municipal broadband projects across the state. It is being funded via the federal Capital Projects Fund, which was created by the American Rescue Plan Act and is being administered by the U.S. Department of Treasury.

New York’s ConnectALL office (CAO) is overseeing the MIP, along with the state’s BEAD program and several other broadband-related initiatives. CAO recently released a Request for Applications (RFA) for the MIP.

In its testimony before the legislature, the ACLP observed that, for a variety of reasons, the MIP will likely squander once-in-a-lifetime grant funding on municipal broadband overbuilding. At the same time, CAO has indicated that it is not confident that available BEAD funds will be inadequate to reach every remaining unserved and underserved location in the state. This raises the likelihood that the MIP will subsidize duplicative network infrastructure in served areas while some parts of the state remain unserved because BEAD funds proved insufficient. The ACLP recommended that the legislature require the CAO to allocate MIP funds for projects that target only unserved areas to ensure that the state is finally able to close its digital divide.

During a webinar convened by the CAO on February 1 regarding the MIP, the office noted that it was open to receiving questions about the MIP. In response, the ACLP submitted the following questions in an effort for the public to benefit from additional information about the MIP. When answers are supplied by the CAO, we will update this post accordingly.

1. Page 3 of the RFA states that the CAO “may provide other forms of non-monetary assistance to improve a MIP project.” In keeping with the spirit, if not the letter, of relevant state laws focused on promoting the “equitable” deployment of broadband services, will CAO make this assistance available to non-MIP recipients? For example, if a private ISP wishes to avail itself of make-ready assistance being provided by CAO to an MIP grantee, will the CAO extend those benefits to the private ISP?

2. Will proposals only focused on the middle-mile infrastructure receive funding? Or is there a requirement/preference for last-mile infrastructure?

3. Is there a match requirement for MIP grantees?

4. Has CAO set targets for using MIP funding to address unserved and underserved areas? CAO has already stated that it does not believe that available BEAD funding will be sufficient to address 100% of the state’s remaining unserved and underserved areas, leaving MIP funding as a powerful tool for helping the state achieve its goal of 100% access.

5. Similarly, has CAO estimated the amount of overbuilding that will result from the MIP? ESD Commissioner Hope Knight is on record with the Legislature stating that overbuilding will occur via the MIP (per her remarks at the Joint Legislative Budget Hearing convened by the Senate Finance Committee and Assembly Ways & Means Committee on January 30, 2024).

6. Does CAO have a preferred balance of the service mix of MIP-funded projects – i.e., the percentage of unserved and underserved locations addressed vs. the percentage of served locations that will be passed with a duplicate network?

7. Will CAO award MIP grants to applicants wishing to build networks in areas that are mostly served?

8. Does CAO plan to provide educational resources to municipalities regarding the myriad aspects of pursuing, building, and operating a broadband network? Will CAO make resources available regarding the pros and cons, successes and failures, etc. of the array of municipal broadband models?

9. Will grant recipients be required to publicly release data regarding the financial and operational performance of MIP-funded networks? Will they be required to release customer counts and other data necessary for the public to gauge the actual performance of the network in relation to the projections included in their MIP application?

10. Regarding Affordable Pricing requirements – will MIP grantees be permitted to offer service at below-cost prices? Are measures in place to prevent predatory pricing?

11. Will CAO allow MIP grantees to engage in cross-subsidization?

12. Has CAO developed protocols to address MIP-funded projects that struggle to self-sustain? Will CAO seek additional resources from ESD or the state to subsidize struggling projects?

13. Under what circumstances will the state seek to claw back funds from MIP grantees?

14. To what extent will information about MIP applications be made public? Will full applications be made publicly available? Summaries?

15. Will applicants be required to submit detailed pro forma and other financial information regarding their proposed projects?

16. Will MIP-funded open access networks be permitted to provide partner ISPs with a term of exclusivity? Will these networks be required to offer more than one ISP choice to customers? Or will only one ISP suffice?

17. How will CAO account for MIP-funded projects during its BEAD challenge process?

18. Will MIP grantees be required to offer free or low-cost broadband service in the event the ACP is not renewed?

Michael Santorelli is the Director of the ACLP.

SLFRF & Public Reporting

In March 2021, President Biden signed the American Rescue Plan Act (ARPA) into effect. Among its $1.9 trillion in allocations was $350 billion to the State and Local Fiscal Recovery Fund (SLFRF). The SLFRF provided funding to states, counties, and municipalities for a variety of eligible uses, including broadband infrastructure.

The U.S. Department of the Treasury has been providing quarterly public reporting data, summarizing how recipients have allocated their SLFRF funding. Unfortunately, different types of recipients, categorized by population and award amounts, have different reporting frequencies (in general, quarterly for larger recipients, yearly for smaller ones).

ACLP’s Aggregated Dataset

To simplify use of the public reporting data, the ACLP has created an Excel workbook aggregating the latest data available for SLFRF allocations. The workbook pulls from two data vintages to yield a comprehensive look at obligated and remaining SLFRF funding:

1. The first dataset is for “Tier 1” and “Tier 2” recipients, reflecting data as of September 30, 2023. In those tiers are recipients with a population over 250,000 or exceeding certain funding award thresholds (depending on the type of recipient).

2. The second is data for “Tier 5” recipients (those smaller/below the Tier 1 and 2 thresholds) as of March 31, 2023. This data is reported annually instead of quarterly (Tiers 3 and 4 encompass Tribal Governments and are not covered in either dataset).

Since the data are current as of either March or September, they do not include any ARPA allocations and expenditures that may have occurred since then.

Dataset Guide

The first sheet of the Excel workbook Funding Summary provides a summary of key metrics for all recipients. On this page, there are four columns of interest:

• Allocation indicating how much SLFRF funds the recipient has received.

• Cumulative Obligations indicating the amount of SLFRF funds the recipient has already committed (but not necessarily spent) on projects.

• Broadband Obligations indicating what amount of SLFRF funds the recipient has already committed, but not necessarily spent, to broadband projects (this is a part of the total in “Cumulative Obligations,” and is not a separate amount).

• Remaining Funds which is how much SLFRF funding remains unallocated (and could thus be allocated to a project, including but not limited to broadband).

To further narrow down the scope of interest, such as specific states or localities, the Excel sheet can easily be filtered using the drop-down menus at the top.

The four additional sheets (gray tabs) contain the data from which the figures in “Funding Summary” are computed. These are as follows:

• Recipients (Hybrid) which contains full information for all recipients, as provided by Treasury.

• Projects (Hybrid) which contains full information for all recipient projects, as provided by Treasury.

• Two Definitions sheets, which contain Treasury’s explanation of the columns in the Recipients and Projects sheets.

The Recipients and Projects sheets include an additional column beyond those provided by Treasury: Source, which indicates from which vintage of Treasury’s data a given row is from. The Funding Summary tab also contains this column, though it is hidden, along with several others, to conserve screen space (these can be unhidden as desired).

Alex Karras is a Senior Fellow at the ACLP. Phoebe Kamber is a 4th year at University of St Andrews where she is studying Economics and Social Anthropology, and a Research Fellow at the ACLP.

The ACLP at New York Law School has filed comments in the FCC’s Open Internet docket regarding net nuetrality (WC Docket No 23-320).

Overview

The ACLP’s comments chide the FCC for citing the pandemic as the primary impetus for its proposal. The Commission argues that, because broadband became even more essential during the pandemic, regulation is needed now more than ever. In response, the ACLP’s comments argue that, rather than being convincing, the use of the pandemic in this manner is grotesque and self-aggrandizing. Moreover, leveraging the pandemic actually weakens the Commission’s arguments in support of reclassification in two ways.

First, the ACLP observes that broadband thrived during the pandemic because the prevailing light-touch regulatory framework allowed ISPs to be nimble in adjusting their offerings in response to rapid changes in consumer demand. A variety of studies support this view, noting:

• Broadband has become even more important to economic growth, employment, health, etc. thanks in large part to the prevailing regulatory framework.

• When compared to the performance of networks regulated in a more onerous manner (e.g., networks in Europe), the performance of U.S. broadband is even more impressive.

Second, Congressional action during the pandemic made clear that Congress supports the current Title I classification of broadband. The Major Questions Doctrine, the application of which will almost certainly be triggered when the FCC’s reclassification order is reviewed on appeal, hinges on the extent to which Congress has intended for an agency to engage in an action of economic and political significance. Congress was unusually active during the pandemic. It passed a number of significant spending/stimulus bills, most of which included broadband-related components. There is no evidence that Congress debated or explored the possibility of reclassifying broadband when it considered and passed these bills. Combined with the numerous pro-net neutrality bills that have been introduced but failed to proceed in Congress over the years, it is reasonable to argue that Congress’s intent for broadband is to maintain the current regulatory framework.

The Comments close with a section that explores how reclassification is inconsistent with and will undermine the implementation of BEAD. It is well documented that Title II regulation negatively impacts broadband investment. This could discourage ISPs from participating in BEAD, reduce the amount of matching funds proposed by applicants, increase the number of match waivers sought, etc. In addition, Title II raises compliance costs, which could discourage small ISPs and new entrants from participating in BEAD. These kinds of impacts are inconsistent with the IIJA and NTIA’s rules for the BEAD program, which prioritize minimal BEAD outlays and the elimination of barriers impeding the participation of ISPs of all ilk.

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.

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The ACLP recently filed comments regarding Tennessee’s BEAD Initial Proposal Volume 2. The full comments are available here.

The ACLP’s comments focused on the following aspects of Tennessee’s Volume 2:

• Affordability Scoring & Pricing. Tennessee’s proposed scoring for the affordability of gig services provided over BEAD-funded networks is confusing, with points spread across 4 sub-categories, only two of which relate to the cost of broadband service. The ACLP proposed that the state adopt a more straightforward sliding-scale approach that leverages the FCC Urban Rate benchmark as its reference price (as currently structured, the state’s proposed scoring for gig service would award max points to any applicant that prices a gig for less than $250/month, an amount that suggests the state might have made an error in its scoring formula). The ACLP also noted that, regardless of the approach that the state ultimately takes, any attempt by TN to set a price for broadband could be considered a form of rate regulation and might be vulnerable to legal challenge.

• Low-Cost Option. Tennessee has a strong track-record of generally taking a hands-off approach to broadband. As noted by the ACLP in a profile of broadband in the state (attached to the comments), Tennessee has typically opted to not meddle unnecessarily in the broadband market and has instead focused its attention on removing barriers to broadband deployment. As such, the ACLP observed that it is curious that the state has proposed a specific price for the low-cost broadband option. Most states have embraced the NTIA model plan, which sets the price for the low-cost option at $30. Some states, however, will allow applicants to propose their own price for the low-cost option. This approach, which the ACLP recommended Tennessee embrace, is more in alignment with the state’s historical approach to broadband and avoids the potential for the setting of a price for the low-cost option triggering litigation (even though the IIJA requires the low-cost option and permits the states and NTIA to set the parameters of the option, the statute is silent vis-à-vis the ability of states to require a specific price).

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.

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The ACLP at New York Law School recently filed comments regarding New York’s BEAD Initial Proposal Volume 2. The comments are available here.

The ACLP’s comments focused on the following aspects of NY’s Volume 2:

• Project Areas. New York has proposed creating bespoke project areas (PAs) that may be as large as counties. As noted in a recent ACLP analysis of the issue, PAs that are too big could discourage ISPs from pursuing projects in those areas because the costs of serving every location in the PA may be prohibitive. The ACLP’s PA analysis underscored the benefits of establishing PAs that are as small as possible.

• Open Access Scoring. New York has proposed assigning 14% of available points in its BEAD scoring rubric to applications that include open access commitments. This is by far the most points that any state will award to open access (the national average is 4%). In addition to noting the uneven track-record of open access networks across the U.S., the ACLP argued that such generous scoring for this specific business model created significant advantages for open access firms, tilting the field in their favor vis-à-vis established ISPs. Accordingly, the ACLP recommended that the state reduce the number of points for open access by at least half.

• Affordability Pricing and Scoring. New York has proposed an all-or-nothing affordability scoring approach that commits subgrantees to pricing gig service in BEAD-funded areas at no more than what they charge in non-BEAD areas. The ACLP noted that this approach does not reflect the realities of offering broadband service in rural areas and could leave BEAD-funded networks vulnerable to operating revenue shortfalls if ISPs are unable to charge reasonable prices. To address this issue, the ACLP recommended that the state consider a sliding scale approach that uses the FCC Urban Rate benchmark as a reference price. The ACLP’s comments also notes that, regardless of the approach taken, any effort by the state to set a price for broadband could be considered rate regulation and might be vulnerable to legal challenge.

• Subgrantee Eligibility. The state appears to have structured its scoring to entice new entrants, some of which might lack any track-record in the broadband space. However, the state has not offered a more stringent set of vetting criteria for new/untested firms; instead, it has proposed adopting the minimum set of eligibility criteria detailed in NTIA guidance. The ACLP highlighted this dynamic in its comments and urged the state to adopt more rigorous vetting requirements for new/untested subgrantees. In addition, the ACLP recommended repurposing some open access points for use in rewarding applicants with an established track-record in the broadband space, an approach taken by many other states.

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.

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The ACLP at New York Law School has released an analysis of states’ proposals for setting the Project Areas that they will use as part of the BEAD grant process.

The Project Area (PA) issue is of central importance to the successful deployment of state grant programs. Project areas that are too big (e.g., those set at the County-level) could disincentivize participation by ISPs by making it exceedingly difficult – and expensive – to serve every eligible location in the PA. Smaller PAs, on the other hand, like those set at the individual location or Census Block level, appear better positioned to assure robust participation by established ISPs. In addition, for ISPs considering participation in BEAD programs in multiple states, a lack of consistency in defining PAs could greatly increase compliance costs and discourage applications in some instances.

Overview

The ACLP’s analysis:

• Summarizes the myriad of approaches to designing PAs that are evident across the country. To date, of the 48 states that have released a Volume 2 and thus indicated how they will design their PAs:

  • 6 states will permit applicants to propose their own PAs

  • 19 states will use established geographic units (e.g., county or muni boundaries; Census Block Groups) to set their PAs

  • 17 states will use an alternative approach (e.g., school district boundaries; a custom design)

  • 6 states are still deciding and will rely on public comments to inform their decision

• Identifies the often-conflicting factors that influence a state’s approach to setting PAs. These factors include a desire to achieve universal service; balancing a need for achieving some measure granularity in setting PAs to assure consistency in density and geographic characteristics with practical concerns about efficiently administering the BEAD program; and achieving a level of meaningfulness in the establishment of PAs (rather than just dividing a state into a grid of equally sized squares).

• Surveys the array of “off-the-shelf” geographic units devised by the Census Bureau that are being used in many states across the country. This section provides graphics to depict the impact of choosing, say, PAs defined by Census Blocks versus County borders on the number and density of eligible locations to be served.

• Concludes that the best approach to designing PAs that will encourage robust ISP participation and assure some measure of consistency across the country is to focus on smaller project areas.

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.

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SLFRF & Public Reporting

In March 2021, President Biden signed the American Rescue Plan Act (ARPA) into effect. Among its $1.9 trillion in allocations was $350 billion to the State and Local Fiscal Recovery Fund (SLFRF). The SLFRF provided funding to states, counties, and municipalities for a variety of eligible uses, including broadband infrastructure.

The U.S. Department of the Treasury has been providing quarterly public reporting data, summarizing how recipients have allocated their SLFRF funding. Unfortunately, different types of recipients, categorized by population and award amounts, have different reporting frequencies (in general, quarterly for larger recipients, yearly for smaller ones).

ACLP’s Aggregated Dataset

To simplify use of the public reporting data, the ACLP has created an Excel workbook aggregating the latest data available for SLFRF allocations. The workbook pulls from two data vintages to yield a comprehensive look at obligated and remaining SLFRF funding:

1. The first dataset is for “Tier 1” and “Tier 2” recipients, reflecting data as of June 30, 2023. In those tiers are recipients with a population over 250,000 or exceeding certain funding award thresholds (depending on the type of recipient).

2. The second is data for “Tier 5” recipients (those smaller/below the Tier 1 and 2 thresholds) as of March 31, 2023. This data is reported annually instead of quarterly (Tiers 3 and 4 encompass Tribal Governments and are not covered in either dataset).

Since the data are current as of either March or June, they do not include any ARPA allocations and expenditures that may have occurred since then.

Dataset Guide

The first sheet of the Excel workbook Funding Summary provides a summary of key metrics for all recipients. On this page, there are four columns of interest:

• Allocation indicating how much SLFRF funds the recipient has received.

• Cumulative Obligations indicating the amount of SLFRF funds the recipient has already committed (but not necessarily spent) on projects.

• Broadband Obligations indicating what amount of SLFRF funds the recipient has already committed, but not necessarily spent, to broadband projects (this is a part of the total in “Cumulative Obligations,” and is not a separate amount).

• Remaining Funds which is how much SLFRF funding remains unallocated (and could thus be allocated to a project, including but not limited to broadband).

To further narrow down the scope of interest, such as specific states or localities, the Excel sheet can easily be filtered using the drop-down menus at the top.

The four additional sheets (gray tabs) contain the data from which the figures in “Funding Summary” are computed. These are as follows:

• Recipients (Hybrid) which contains full information for all recipients, as provided by Treasury.

• Projects (Hybrid) which contains full information for all recipient projects, as provided by Treasury.

• Two Definitions sheets, which contain Treasury’s explanation of the columns in the Recipients and Projects sheets.

The Recipients and Projects sheets include an additional column beyond those provided by Treasury: Source, which indicates from which vintage of Treasury’s data a given row is from. The Funding Summary tab also contains this column, though it is hidden, along with several others, to conserve screen space (these can be unhidden as desired).

Alex Karras is a Senior Fellow at the ACLP. Phoebe Kamber is a 4th year at University of St Andrews where she is studying Economics and Social Anthropology, and a Research Fellow at the ACLP.

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NTIA has posted notice “of a conditional programmatic waiver of the letter of credit requirements set forth in…the BEAD Program Notice of Funding Opportunity.” The waiver provides several conditional exceptions to the NOFO’s requirements for letters of credit (LOC).

• The waiver permits applicants for BEAD funding to use a credit union in lieu of a bank if the credit union “is insured by the National Credit Union Administration” and “as a credit union safety rating issued by Weiss of B− or better.”

• The waiver also allows applicants the option to use performance bonds in lieu of a letter a credit. During the application process, applicants must submit a letter from an authorized entity “committing to issue a performance bond.” Before accepting any funding awards, recipients must obtain such a bond, “in a value of no less than 100 percent of the subaward amount.”

• In the case of both letters of credit and performance bonds, NTIA has also waived the requirement that letters of credit must have a value at least 25% of the grant award amount, or the bond at least 100%. This waiver is conditional on applicants setting “specific deployment milestones,” each of which would require “a new a letter of credit in a reduced amount.”

• NTIA will also allow applicants to come in under the 25%/100% thresholds for LOC/bonds so long as funding is provided “on a reimbursable basis…for periods of no more than six months” and that the recipient “commits to maintain a letter of credit or performance bond in the amount of 10% of the subaward until it has demonstrated…that it has completed the buildout of 100 percent of locations to be served by the project or until the period of performance of the subaward has ended.”

Alex Karras is a Senior Fellow at the ACLP.

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The ACLP at New York Law School has released a Profile of broadband connectivity in New York.

Overview

The profile:

• Evaluates the evolution of the state’s legal and regulatory approach to broadband. The Profile notes that, in general, the state has gotten a lot right vis-à-vis broadband policy, largely because the state has avoided unnecessary overreach.

• Highlights the state’s robust record of efficiently administering previous grant programs. The success of these programs stemmed largely from the state’s focus on leveraging expert ISPs and encouraging the using of public-private partnerships to effectively deploy available resources.

• Evaluates the limited role that non-traditional ISPs, including municipalities, have played in bringing broadband to almost every New Yorker. The track-record of municipal broadband in New York is sparse given New York’s long-time focus on supporting private provision of internet services. The Profile examines a number of recent and ongoing municipal broadband attempts.

• Offers a data-driven assessment of broadband availability and adoption in the state. Broadband connectivity is generally robust in New York, but discrete challenges on both the supply-side and demand-side remain.

Recommendations

To address remaining connectivity challenges, the Profile offers the following recommendations:

• Prioritize grant funding for last-mile deployments in unserved areas;

• Avoid subsidizing the overbuilding of middle-mile networks;

• Deploy a robust and inclusive BEAD challenge process;

• Use the BEAD process to address remaining policy impediments to the efficient deployment of broadband networks;

• Engage in much-needed reforms to the state’s pole attachment regime;

• Strictly define the parameters of the state’s forthcoming assistance program for municipal broadband projects;

• Assure robust, inclusive, and comprehensive digital equity planning;

• Promote the availability of subsidies to offset the cost of a broadband subscription and device;

• Leverage available digital equity funds to scale proven adoption and training programs;

• Assure the long-term sustainability of grant-funded digital equity programs; and

• Implement robust safeguards to reduce waste, fraud, and abuse in the administration of digital equity grants.

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.

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The ACLP has published a piece in Forbes urging states not to engage in broadband rate regulation as part of the BEAD process.

NTIA suggested in a guidance document that states consider engaging in rate regulation as part of their middle-class affordability planning. Even though NTIA has attempted to walk back this suggestion, states have already begun to use the middle-class affordability portion of their Volume 2 proposal to detail rate regulation-like requirements. If allowed by NTIA, these could greatly blunt the reach of BEAD funds by discouraging participation in the program by ISPs.

The piece underscores that rate regulation of any kind is prohibited, both by the IIJA and by the prevailing regulatory framework for broadband. If NTIA approves state plans with provisions that border on rate regulation, then that would contravene the prohibition in the IIJA. States also lack an independent grant of authority to engage in broadband rate regulation.

The piece recommends that states avoid any action that could be interpreted as rate regulation and focus instead on encouraging BEAD recipients to offer customers a range of service options. Offering choices to customers empowers them to decide for themselves which option is most affordable.

Michael Santorelli is the Director of the ACLP.

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A recent report published by the US Government Accountability Office (GAO) shows that states and localities have reported obligating approximately 60% (states) and 54% (localities) of their respective ARPA State and Local Fiscal Recovery Funds (SLFRF). The report (dated October 11, 2023) can be found here.

• The analysis is based on US Treasury’s reporting data, which reflects obligations and spending by states and localities as of March 31, 2023. The March 31 data is the most recent publicly available data.

• As an estimate, this leaves over $100B in SLFRF funds – roughly 40% – unallocated.

• Based on ACLP’s analysis of Treasury’s data, approximately $7.6 billion in ARPA SLFRF funds have already been obligated for broadband projects. This represents about 3% of total obligations so far.

• Should that proportion of broadband spending continue across the still-unobligated SLFRF funding, or should it increase, this would yield several billion dollars in additional broadband spending.

Phoebe Kamber is a 4th year at University of St Andrews where she is studying Economics and Social Anthropology, and a Research Fellow at the ACLP.

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The ACLP at New York Law School has released a Profile of broadband connectivity in Tennessee.

Overview

The profile:

• Evaluates the evolution of the state’s legal and regulatory approach to broadband. The Profile notes that the state’s proactive approach to adjusting policy has supported continued private investment in broadband networks.

• Examines the role that the Tennessee Valley Authority (TVA) plays in facilitating the entrance of municipal electric utilities into the Tennessee broadband market. The profile also analyzes TVA’s outsized role in governing how these utilities administer access to their poles for broadband deployment purposes – its approach has resulted in higher-than-average pole fees, which, if left unaddressed, could undermine expansion efforts into unserved areas.

• Assesses the role and impact that broadband networks deployed by municipal electric utilities have had on consumers in the state. Among other findings, the Profile observes that the electric rates charged by municipal utilities that have deployed broadband networks have increased more rapidly than those utilities that have not deployed broadband networks. This finding highlights the need for greater scrutiny by the state Comptroller and the TVA of the performance of these utility-owned networks to ensure that utilities are not engaged in illegal cross- subsidization and that they are not harming captive ratepayers.

• Offers a data-driven assessment of broadband availability and adoption in the state. Broadband connectivity is generally robust in Tennessee, but discrete challenges on both the supply-side and demand-side remain.

Recommendations

• To address remaining connectivity challenges, the Profile offers the following recommendations:

• Prioritize grant funding for last-mile deployments in unserved areas;

• Deploy a robust and inclusive BEAD challenge process;

• Use the BEAD process to address critical pole attachment issues;

• Revisit and strengthen policies relating to the broadband efforts of non-traditional ISPs (e.g., municipal electric utilities);

• Assure robust, inclusive, and comprehensive digital equity planning;

• Promote the availability of subsidies to offset the cost of a broadband subscription and device; and

• Leverage available digital equity funds to scale proven adoption and training programs.

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.