Providing fast, reliable broadband service in 2023 is every bit as important as providing electricity was in 1933 in rural America. Without high-quality broadband, rural areas (many of which already face economic challenges) will struggle to attract jobs, bring in investment, and retain young workers. 

The White House and Department of Commerce recognize that broadband access is inherent to equity and are working to address those vital needs through the Broadband Equity Access and Deployment (BEAD) program. BEAD is a $42.45 billion grant program created in the Bipartisan Infrastructure Investment and Jobs Act (IIJA) and administered by the Department of Commerce (DOC) through the National Telecommunications and Information Administration (NTIA). The program provides funding for every state and territory in the U.S., plus the District of Columbia, to pay for high-speed internet infrastructure deployment. Broadband availability, in turn, opens the door for economic development by providing lowercost land, resources and labor to attract foreign-based businesses seeking to open manufacturing plants and offices in the U.S.

The Basics of BEAD

BEAD prioritizes deploying broadband internet to locations lacking access to broadband of at least 25 megabits per second (Mbps) downstream/3 Mbps upstream. 

Once that target has been met, the next priority is addressing underserved areas—locations lacking access to broadband of at least 100 Mbps downstream/20 Mbps upstream. NTIA has provided guidelines for the states to use to prioritize projects designed to provide fiber connectivity to the extent feasible directly to the end user, and it will emphasize affordability. 

States and territories could begin submitting their BEAD program funding proposals on July 1, 2023, and will have up to 180 days  to complete their submissions. States and territories will then seek grant applications for the funding from third parties committed to building out the broadband infrastructure in these rural areas. 

Significantly, 19 states were allocated over $1 billion in funding. Four of these states: North Carolina, Virginia, Tennessee and Georgia were ranked in the top 5 states to do business according to a recently released CNBC report which bodes well for future economic development opportunities and further underscores the importance of broadband access. The breakdown of funding by state is as follows:

The Importance of Broadband Access for Rural Communities

So who lacks access to broadband service? According to a 2021 Brookings Institution report, as many as 42 million Americans may not have access to high-speed internet. 

Rural areas are disproportionately impacted, with 19 percent of rural Americans lacking access to broadband versus 14 percent of urban residents. Also, urban residents typically lack broadband access due to economic barriers, not a lack of broadband infrastructure. Low-income, the elderly and people of color also are disproportionately more likely to not have broadband access.

In addition to enhancing economic development, bringing in broadband can have significant positive impacts on communities with regards to quality of life.

The COVID-19 pandemic accelerated the remote working trend. Many jobs now can be done from anywhere, and rural communities are well-positioned to take advantage of these trends—if residents have access to the broadband technology needed to work remotely. 

Such areas already can offer a lower cost of living, access to nature, larger living spaces and other quality-of-life issues associated with rural communities. A certain number of professionals prefer the country life—if they are able to keep their jobs. Some communities already are proactive about recruiting remote workers. The Northwest Arkansas Council, for example, offered remote tech workers $10,000 plus a mountain bike if they would come to the area. They received more than 66,000 applicants for 100 grants. 

The Ascend West Virginia program offers similar grants to remote workers willing to relocate to the Appalachians. In addition to a financial bonus, the program provides additional support, including access to co-working space, outdoor recreation opportunities, social programming aimed at attracting young professionals.

Also, having reliable broadband gives rural residents access to online education, expanded healthcare via telemedicine, greater shopping opportunities, and more entertainment options. A December 2020 report by the Federal Bank of Richmond found that that having the ability to shop online saves a family an average of $1,850 per year. On the flip side, broadband allows small businesses in rural communities to reach a much wider customer base.

When Purdue University researchers examined the costs versus benefits of rural broadband expansion in Indiana, they found significant public benefit to support broadband expansion. “The state of Indiana would receive about $12 billion in net benefits if the broadband investment were made statewide,” the Purdue report concluded.

Broadband and Economic Development

No doubt, we remain in a highly competitive market for talent. The U.S. job market cooled a little in June 2023, but employment remains at historically strong levels—the current unemployment rate is 3.6 percent, and the nation has recorded positive job creation numbers for 30 consecutive months. 

This has led to fierce competition between states—and even counties and municipalities within states—for economic development projects. Any competitive advantage—or disadvantage—can lead to communities winning and losing large projects. The BEAD funding will help to lower the disadvantage of having limited broadband access. 

While still in the early stages, some states have gotten a head start in planning how they want to spend their allocated money and have already released preliminary initial proposals for public commentary. After the initial proposal is approved by the NTIA, it will release 20% of the funding to the state. The remaining 80% of the funding will be released after the NTIA approves the final proposal. These plans can help us predict how states will leverage this funding to achieve the BEAD program’s goal of universal access to high-speed Internet. For example, North Carolina’s proposal includes allocating the funding to identify unserved and underserved locations, build critical infrastructure, and integrate and leverage their existing grant programs. 

Establishing critical infrastructure will likely have a long-term economic development impact in both a national and state-wide scale. States with pre-existing broadband infrastructure reduce costs for private entities looking to expand or relocate into a state’s site. Ultimately, the more ubiquitous broadband infrastructure becomes, the less that having that infrastructure will be a competitive advantage for site selection purposes. It also eliminates current barriers for attracting projects to more rural communities. This is because states can leverage their existing workforce training programs and provide increased access to virtual training opportunities for the communities that are further removed from the existing in-person training facilities. Additionally, increased access to broadband will likely lead to an increased willingness from the workforce to relocate into rural communities.

Specific grant funding will present an economic development opportunity for entities operating in the broadband industry, leading to reduced out-of-pocket expenses. However, given the length of the approvals process and gaining access to the funding, states do not anticipate actual funding distribution to projects until 2025. 

After distributing the funding, the process of building out the infrastructure can then begin. Ultimately, these communities that will benefit from the resulting lowered economic development barriers can anticipate attracting new projects around 2026-2032. These projects will help bolster these communities’ economy through capital investment and job creation.

A 2021 Deloitte report “found a strong correlation between broadband availability and jobs and GDP growth.” Researchers estimate that a 10-percentage-point increase in broadband access in 2014 would have resulted in 875,000+ new jobs and $186 billion more in economic output over a five-year span. For those states located in the southeast where a shift in population is occurring post pandemic, the increase in broadband deployment and new businesses locating there translates into further economic growth and new revenue streams for these states.

The BEAD program certainly provides a welcome, much-needed boost to rural broadband infrastructure development. It also presents tremendous opportunities for private businesses in this sector to help build out this infrastructure. But the clock is ticking—companies that wish to take advantage of these grant moneys need to start now on their proposals to state decision-makers. The amount of BEAD funding allocated by the federal government is significant, but so is the list of prospective bidders that may want to take advantage of it.