Municipalities can apply for BEAD. Will it matter?

• Despite roadblocks thrown up against public broadband, municipalities will still be allowed to apply for BEAD grants

• Whether or not they'll win any money is up in the air

• Established municipal networks told Fierce they are unsure about pursuing BEAD dollars

In spite of all the public broadband haters, municipalities will be allowed to vie for money from the Broadband Equity, Access and Deployment (BEAD) program. Whether they'll win BEAD grants or even bother trying, however, is still anyone's guess.

Municipal networks are popping up all over the country, with over 400 now up and running. In Colorado there are networks in Longmont (NextLight), Fort Collins (Connexion), Loveland (Pulse) and Estes Park (Trailblazer). One of the nation’s first municipal providers, EPB in Chattanooga, Tennessee, estimates that it created a nearly $2.7 billion community benefit during just the first 10 years after its launch. Another municipal service in Utah, UTOPIA, built 448.5 miles of fiber in the state last year.

But all this municipal broadband expansion hasn’t been without growing pains.

Public networks have seen opposition from incumbent providers and political adversaries. According to Broadband Now, 16 states have legislation that either restricts municipal broadband or bars it entirely.

While the BEAD program requires states to allow local governments and utilities to apply for grants, that doesn’t mean they will actually win any BEAD money, AAPB Executive Director Gigi Sohn told Fierce Telecom.

States say apply anyway

Each state has different levels of restrictions, some of which can be worked around, and some of which amount to “flat out prohibitions,” Sohn told Fierce.

Nevada, for instance, limits municipalities with a population of more than 25,000 from providing internet service, and the state’s BEAD proposal indicates it will not make program funding available to cities. In North Carolina, Broadband Now said state laws make it “exceedingly difficult” for public entities to deploy broadband services to residents.

Fierce reached out to all the states listed as having municipal broadband restrictions. The offices that responded to us said state laws won’t get in the way of municipalities applying for the program in their states: Alabama, Michigan, Missouri, Pennsylvania, Utah, Virginia and Wisconsin.

Here are a few of the responses we received:

• The Michigan High-Speed Internet Office's Chief Connectivity Officer, Eric Frederick, said the state’s BEAD proposal was able to establish municipal eligibility through “many, many conversations" with the state’s Public Service Commission, which administer several laws limiting publicly run telecom services. Those laws differentiate between broadband and telecommunications services and do not restrict local units of government from participating in BEAD, he said.
   
• Missouri’s Director Office of Broadband Development, BJ Tanksley, said that Missouri law does not “explicitly ban municipal broadband networks,” and the state has a handful of cities that have networks: Springfield, Marshal and Houston. “There is a law that is sometime sited as banning municipal networks,” Tanksley continued, “but in reality that is not the way it has been interpreted. We don’t anticipate this being an issue for the [BEAD] program.”
   
• Alabama law includes certain requirements for how municipalities can deploy broadband and operate as service providers, which are designed to “ensure nondiscriminatory network access and avoid unlawful cross-subsidization with state/local funds,” said Mike Presley of the Alabama Department of Economic and Community Affairs. Yet Presley said those requirements don’t restrict municipal broadband providers’ ability to apply for or use BEAD funds.

Despite these seemingly positive comments from state officials, restrictions could still get in the way. Sohn said even though municipalities may be welcome to apply, there likely won’t be a lot winning BEAD grants. That's in part because many public networks are in in suburbs or small cities that are already considered served with internet, and the BEAD program is targeted at underserved and unserved locations.

Does public broadband even want BEAD money?

Coupled with the restrictions, there are “a bunch” of public networks in rural, underserved areas, that will not get the opportunity to build through BEAD, Sohn added.

Some networks, like EPB in Chattanooga, are so ahead of the game that BEAD money isn’t really relevant to them.

BEAD funding is intended to be used for early-stage broadband deployment and adoption, and as a utility owned company, EPB’s network is already fully built across its entire service area. That means the only way to “maximize its initial investment” is by upgrading electronics and equipment that runs on the network without replacing or adding fiber, an EPB representative told Fierce.

These investments fall outside of the scope of BEAD funding, the rep added.

For its part, UTOPIA in Utah hasn't been shy about expanding its footprint, but CMO Kim McKinley said that doesn’t necessarily mean the company wants to go after BEAD dollars.

Utah does have public broadband restrictions, but that’s not what is influencing UTOPIA’s decision — the business case to go into underserved and unserved locations, and only build to a few houses doesn't make sense.

“We don't know yet, we're evaluating all of the opportunities that are out there,” McKinley said. “This would be more of a business decision than any kind of political decision of why we would or would not apply for BEAD.”

Since municipalities haven’t often been awarded from grant programs of the past, there’s skepticism that they’ll find a different fate with BEAD. McKinley noted that for many municipalities, it isn’t only about legislative restrictions. “There are concerns across the board,” she said, including whether municipalities have the time and resources to apply for BEAD, a process that has been lamented as cumbersome, with “steep barriers to entry.”

With BEAD money, “it's the first time we're seeing a lot of we're seeing municipalities who are very interested in it,” said McKinley. She'd still encourage those interested to apply, because "it never hurts to throw your hat in that game.”

If BEAD doesn’t work out, municipalities will have to fund networks by themselves. “Maybe they won't get the BEAD money, maybe they won't qualify. So if anything, it’s more about helping cities make more creative financial movements if they want to see their city get built out,” McKinley concluded.

This story was updated on March 20, 2024, at 4:44 pm EDT with a clarification from the Michigan High-Speed Internet Office.