One of the big glaring weaknesses of BEAD was that the enabling legislation and the NTIA rules made it impossible to consider affordability as a criterion of selecting BEAD grant winners. A few states tried to stress affordability during the BEAD process, but were largely shut down by the NTIA. After the Benefit of the Bargain rules, consideration of affordability went out the door, along with all factors other than the construction cost per passing.
In a speech made to the Hudson Institute, NTIA Assistant Secretary Aerielle Roth was quoted as saying, “This administration does not want BEAD to become just another well-intentioned broadband program that falls short. Its mission is nothing less than to close the “digital divide” once and for all.”
Unfortunately, the BEAD infrastruct…
One of the big glaring weaknesses of BEAD was that the enabling legislation and the NTIA rules made it impossible to consider affordability as a criterion of selecting BEAD grant winners. A few states tried to stress affordability during the BEAD process, but were largely shut down by the NTIA. After the Benefit of the Bargain rules, consideration of affordability went out the door, along with all factors other than the construction cost per passing.
In a speech made to the Hudson Institute, NTIA Assistant Secretary Aerielle Roth was quoted as saying, “This administration does not want BEAD to become just another well-intentioned broadband program that falls short. Its mission is nothing less than to close the “digital divide” once and for all.”
Unfortunately, the BEAD infrastructure grants alone were never going to close the digital divide. When we talk about solving the rural digital divide, we’re really talking about several different issues. A primary element of solving the digital divide is broadband availability, which is what infrastructure grants tackle. BEAD focused on making sure that BEAD-eligible locations got at least one broadband option with a speed of at least 100/20 Mbps.
Solving the digital divide means two more things. First, it means making sure that people have computers and devices and know how to use them effectively. Finally, solving the digital divide means having broadband that people can afford.
Congress intended to tackle all these elements of the digital divide solution. The Digital Equity Act was intended to provide the funding needed to make sure that folks had devices and knew how to use them. That effort was going to be bolstered by BEAD non-deployment funds that didn’t get used for infrastructure. Unfortunately, NTIA and the Administration have refused to distribute the funding from the Digital Equity Act, and it appears likely that most or all of the non-deployment funds won’t be made available to States.
At the time that the BEAD legislation was approved, the ACP program was underway to provide low-income homes with a monthly $30 discount off broadband. The BEAD legislation mandated that BEAD winners enroll and use the ACP program. Unfortunately, Congress let that program lapse.
There were State Broadband Offices that tried to tackle the affordability issue through the scoring of grants. These States tried to assign a lot of grant points to ISPs that offered lower rates. For example, the proposed grant scoring in some states would have given an edge to a cooperative with $65 rates over satellite broadband priced at $120 or another ISP with $100 rates.
The BEAD legislation said that States couldn’t use BEAD rules to ‘set rates’, and there were a few States that tried to do that in their grant scoring and tried to force rates as low as $30 or $40. NTIA nixed State attempts to force lower rates even before this year’s Benefit of the Bargain rules.
It’s a shame that overall rates couldn’t be considered in BEAD, because household incomes are lower in rural areas than in non-urban areas, meaning that affordability is more of an issue in rural areas. This is not true for all BEAD areas, but many of the areas covered by BEAD are both rural and poor. According to statistics published by the Federal Housing Finance Agency at the end of 2024, 18% of rural homes have household incomes under $25,000 per year, compared to 15% in non-rural areas. There is also a significantly higher percentage of rural homes with household incomes between $25,000 and $50,000 (21% vs. 17%).
To me, the bottom line is that BEAD is not going to solve the rural digital divide since it focuses only on infrastructure. NTIA has to shoulder the blame for nixing the grant funding that would have provided devices and digital skills training. Congress has to take the blame for ignoring profitability when it required ACP participation as a component of BEAD, and then let ACP lapse without a replacement.
- Posted by in Regulation - What is it Good For?, The Industry
- Tagged: ACP, BEAD, Digital Equity Act, NTIA