Part 1 of the Keller and Heckman Infrastructure Act Blog Series

Among the $65 billion allocated to broadband in the Infrastructure Investment and Jobs Act (“the Act”), $42.45 billion will be used to fund a last-mile broadband development grant program administered by the National Telecommunications and Information Administration (“NTIA”). As noted in our introduction to our blog series, the scale of this investment is unlike anything seen before in US history.

This blog entry begins with a quick review of the basics of the BEAD Program. We then turn to a few discrete topics that may be of particular interest at this early stage, including (1) the central role of the States, (2) the matching requirement, (3) the challenge process, and (4) the broadband DATA map.

1. The Basics

The following is a non-exhaustive, high-level overview of the BEAD Program’s scope and requirements. A more detailed review may be found in our previous blog post on this subject and from a variety of other sources. Note also that NTIA will flesh out the statutory requirements as it develops program rules.

• $42.45 billion will be available for grants from the federal government (administered by NTIA) to the various States (and the District of Columbia, Puerto Rico, and Territories) — at least $100 million to each. Subgrants may be distributed by States consistent with the Act, and in accordance with a five-year action plan to be developed by the States and approved by NTIA.

• State subgrants may be used to fund infrastructure:

  • Unserved service projects (80% of locations in the proposal area lack access to reliable 25Mbps/3Mbps)

  • Underserved service projects (80% of locations in the proposal area lack access to reliable 100Mbps/20Mbps service)

  • Community anchor institutions (“CAIs”), such as schools, libraries, and hospitals, lacking access to 1Gbps service

• Infrastructure funding prioritization: A State “must award funding in a manner that prioritizes unserved service projects.” After certifying to NTIA that it “will ensure coverage” to “all unserved locations” in the State, the State must prioritize underserved service projects. After “prioritizing underserved service projects,” the State may fund eligible CAIs.

• Projects must provide at least 100Mbps/20Mbps service to be eligible for funding.

• State subgrant programs cannot exclude “cooperatives, nonprofit organizations, public-private partnerships, private companies, public or private utilities, public utility districts, or local governments.”

• Entities that have received other federal, state, or local government broadband funding (RDOF, etc.) may receive subgrants under BEAD.

• In addition to broadband infrastructure, States may use BEAD grants for data collection, broadband mapping, installing Internet infrastructure or providing reduced-cost broadband within a qualifying low-income multifamily residential building, broadband adoption (including provision of devices), and additional uses determined necessary by NTIA.

• Timing: NTIA has 180 days from the enactment of the Act to issue a Notice of Funding Opportunity (“NOFO”) directed to the States. Assuming President Biden signs the legislation on November 15 as expected, this means the NOFO will likely be published in the May 2022 timeframe. Several layers of State submissions and NTIA processing will follow before funding will be made available to subgrantees, including submission and evaluation of State five-year plans. The process is also dependent on broadband DATA maps being published (as discussed further below). While the Biden Administration may hope to expedite the process for purposes of the 2022 mid-terms, we expect funding will not be awarded to subgrantees and begin flowing until sometime in 2023.

With that general backdrop, we shift focus to several topics that may be of particular interest in the formative stages of the program.

2. Focus on the States

The BEAD Program places the States at the center of the entire program. While NTIA will set the rules and administer the issuance of federal funds to the States, each State will generate a five-year plan, will identify its particular statewide needs, and will ultimately decide where and to whom the funds are directed.

Some States will be better positioned to perform these tasks than others. According to the Fiber Broadband Association, only 26 states currently have formal broadband offices. Others have multi-agency task forces. About 40 have broadband programs of some sort. While we have little doubt that each State will ultimately have the administrative means to participate in the program, the depth, capabilities, and priorities of each State could vary widely.

In any event, the main point of reference over the next year or so for prospective applicants/subgrantees will be upon the policy decisions and rules established by their particular State, rather than the federal government. Under the Act, a State is required to solicit input from eligible entities – including local governments, cooperatives, utilities, partnerships, etc. – as it develops its five-year plan and subgrant program. States must also provide to NTIA a “description of coordination with local governments, along with local and regional broadband planning processes.”

This planning exercise is no small feat, and time is (relatively) short if a State intends to respond promptly to the NTIA NOFO and subsequent filing requirements.

So, for those desiring a voice in how their State uses its portion of the $42 billion in broadband development funds, opportunities should emerge in the very near future. As a preliminary matter, BEAD Program participants should become acquainted with their State broadband coordination office.

3. The Matching Requirement

The BEAD Program requires a 25 percent match (a “non-Federal contribution”) for awarded projects, which may be provided by the State or the subgrantee. (Note, though, that the matching requirement does not apply to projects in high-cost areas, which may encompass a significant proportion of BEAD-funded initiatives.) The match may come from a unit of local government, a utility company, a cooperative, a nonprofit organization, a for-profit company, regional planning or governmental organization, a Federal regional commission or authority, or any combination thereof. This matching requirement is interesting in several respects.

First, like most other federal grant programs (including previous broadband grant programs), the BEAD program generally prohibits the use of federal funds – such as grant funds from other sources – as a component of the match. However, the BEAD program specifically permits the use of federal matching funds if they were provided to a State or subgrantee under any of the several recent COVID-19 relief statutes (including the CARES Act, the Consolidated Appropriations Act of 2021, and the American Rescue Plan Act of 2021 (“ARPA”)). There is no restriction on the type of entity that may provide the match.

Meanwhile, many local and state governments have significant unused funds issued under those Acts, particularly State and Local Fiscal Recovery Funds provided under ARPA. Subject to statutory requirements that funds must be spent by a certain date, a forward-thinking local or State government should consider whether it makes sense to hold some of those funds to put toward a potential match as part of a BEAD Program application. More broadly, the provision of matching funds by a local government could prove to be an important component of a public-private partnership, or of a consortium application.

In addition, it is also worth noting that the Act specifically permits the match to be in the form of an in-kind contribution, for which local governments and utilities of all types could be well-suited to contribute access to rights of way and/or infrastructures such as poles, ducts, and conduits.

4. The Challenge Process

Recent broadband support programs at the federal and state levels have generally included a method by which an incumbent service provider (or others) can object to a particular application on the ground that effective service already exists in the area. From the policymaker perspective, the general idea is that government funds should be directed to where they are needed most and, rightly or wrongly, that federal funds should not support the development of competitive broadband service.

The BEAD Program is no different, except that it leaves the process and the decision entirely up to the States, with only vague guidance as to the method or criteria. The Act provides only that a State “shall ensure a transparent, evidence-based, and expeditious challenge process” under which a challenge can object to the State’s determination that a particular location is eligible for grant funds, “including whether a particular location is served or unserved.”

In short, the BEAD Program challenge process apparently will not occur in response to a particular subgrantee application. Challenges will happen at the State level, and the statute requires that they be resolved before the State allocates funds to subgrantees. (One caveat: the Act enables NTIA to modify the challenge process “as necessary.”)

This process emphasizes the importance of the new national broadband mapping effort. Ideally, the new mapping information will be sufficiently detailed and reliable so that such challenges are uncommon, and for those that do arise, easily resolved.

5. Broadband DATA Maps

Among the various statutory requirements that must be met before NTIA is permitted to approve distribution of BEAD Program funds is the publication of “broadband DATA maps.” This refers to the improved federal broadband mapping initiative commenced under the 2020 Broadband DATA Act, under which the Federal Communications Commission “is required to establish the Broadband Serviceable Location Fabric (a dataset of geocoded information for all broadband service locations, atop which broadband maps are overlaid) as the vehicle for reporting broadband service availability data.”^[1]

The implementation of this next-generation broadband map has been challenging so far, as indicated in this September 2021 report from the GAO, and the timing of publication is unclear.

FOOTNOTES

^[1] Congress.gov, Summary of S.1822 – 116^th Congress (2019-2020)