As states and territories define high-cost thresholds for their Broadband Equity, Access and Deployment (BEAD) proposals, the industry finds itself divided on the best approach.
Under the Infrastructure Investment and Jobs Act — which created the BEAD program — Congress established a preference for "priority broadband projects" that meet high performance standards, can scale with needs over time and will enable the deployment of 5G. The National Telecommunications and Information Administration (NTIA) has since determined that "end-to-end fiber optic facilities" are the platform most likely to satisfy those requirements.
Subsequently, the NTIA directed each state and territory to set an “extremely high cost per location threshold” (EHCT), which defines the point at which a preference for fiber deployment is no longer cost-effective. In areas where fiber deployment would exceed the EHCT, they can opt for technologies that are typically more inexpensive to deploy, like fixed wireless.
The Fiber Broadband Association (FBA) and NTCA – The Rural Broadband Association have said the importance of states setting the threshold properly “cannot be overstated.”
“We’ve all lived through broadband funding programs that have made the mistake of ‘incrementalism’— funding lower-performing networks that are outdated soon after or even before they are finished (and well before the funding stops flowing),” said a recent blog from NTCA CEO Shirley Bloomfield and FBA CEO Gary Bolton.
In their Broadband Infrastructure Playbook 3.0, the FBA and NTCA said broadband offices should not “settle” too low in setting the threshold, “as this will deprive consumers of reliable and scalable technology that will best leverage BEAD’s historic investment and stand the test of time.”
On the flip side, the NTCA and FBA warn there are also risks in setting the threshold too high, as BEAD funding could be depleted before every unserved location is connected. Their playbook examines the “trade-offs” and factors that states should consider in setting the threshold as they work on their initial proposals for the NTIA, which if approved will allow them to access at least 20% of their BEAD money.
Setting BEAD boundaries
States won’t recommend an exact dollar amount for the thresholds in their BEAD proposals, said NTCA EVP Mike Romano. Essentially, they will propose a general “equation” to calculate specific thresholds location-by-location.
Determining the appropriate funding threshold will depend on the size of the geographic areas that states aim to cover, Romano told Fierce Telecom. Setting smaller, manageable units could make it easier for them to set the threshold at a level that will “maximize getting fiber to as many people as possible while recognizing there will be places that you need to consider alternative technologies,” he said.
Some states may opt for larger geographical divisions, which could pose challenges. For instance, Romano noted using county-level units for bidding (especially in rural areas) could result in larger areas to cover. This might make it more difficult for smaller providers to bid for comprehensive coverage. It also might affect cost assessments for projects, making them seem more expensive than they actually could be with fiber deployment.
“We're seeing everything's all over the map in terms of state proposals, and that's why they're putting them out for comment now,” said Romano. “We're hoping some of them will consider smaller units to allow for more flexibility for smaller providers.”
Wireless weighs in
As noted by the FBA and NCTA blog, Romano said the high-cost threshold does not necessarily exclude wireless players from participating in BEAD.
“We're trying to get the best possible broadband to as many customers as possible. There's absolutely a place for wireless in there. Absolutely. There's no question,” said Romano. “There will be places where wireless is the best technology. But this is not a participation trophy game where everybody has to win.”
However, the NTCA and FBA in their guidance acknowledge “in the interest of full disclosure,” that their organizations are “unabashedly pro-fiber.”
Wireless players have continued to push back against the BEAD program’s preference for fiber.
The Wireless Internet Service Providers Association (WISPA) Director of Communications Mike Wendy said a lower threshold will bring in more providers, including unlicensed fixed wireless providers.
“More solutions, not fewer, will come about, making the state’s dollars go further in connecting all unserved to the internet,” Wendy told Fierce. “By focusing on the tech-neutral framework in the IIJA, and realizing that funding is limited, states should be free to do what it takes, and use the right tool for the job to get all online.”
Wendy suggested one alteration to the EHCT rule could be allowing the market to set the threshold for areas where applications were not received initially. The idea is that if no applicant believes certain locations can be funded through a priority broadband project, those locations would automatically be considered extremely high cost.
While WISPA supports fiber, many (“but not all”) of the association's members look at programs like BEAD with a “skeptical eye,” Wendy said, because of the programs’ strong preference for fiber.
Regarding the concept of “future proofing” with a given technology, Wendy said: “no funding program can avoid change.”
“Advances in technology will continue (even for so-called ‘future proof’ fiber), and consumers will get what they need to live better lives,” he added.