NTIA Revamps Federally Funded $42.5 Billion Broadband Deployment Subsidy Program

On Friday, June 6, the National Telecommunications and Information Administration (NTIA) released its long-anticipated policy changes to the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program. The NTIA's BEAD Restructuring Policy Notice (Notice) formally modifies and replaces aspects of the agency's original Notice of Funding Opportunity (NOFO), which was issued in 2022 and which states were required to comply with in crafting their own BEAD programs. In addition to rescinding all Final Proposal approvals granted prior to the Notice's issuance, the Notice instructs states to take a technology-neutral approach in selecting funding applicants and determining funding-eligible locations and removes many of the NOFO's burdensome compliance and reporting requirements.

States will be on tight deadlines to implement the changes identified in the Notice, and interested providers will be on even tighter deadlines to react. Specifically, states must provide a letter confirming and detailing the mandated updates to their Initial Proposals within 30 days, by July 6. States must then implement the policy changes in the Notice by revising their lists of BEAD-eligible locations, rescinding all provisional funding awards, holding a new application round, selecting winning providers, and submitting their Final Proposals within 90 days, or by September 4. NTIA will then complete its review of each state's Final Proposal within 90 days of submission, or by early December.

Key Takeaways

• Technology-Neutral and Cost-Focused Selection. The Notice eliminates the NOFO's preference for fiber-focused deployments and adopts a technology-neutral approach that treats all qualifying technologies equally (provided they are capable of providing 100/20 Mbps broadband service with latency of no more than 100 milliseconds). States cannot categorically exclude any technology without statutory justification and must prioritize cost-efficiency, deployment speed, and technical capabilities when scoring applicants.
• Fundamental Changes To Eligible Locations/Funding Applications. Given the Notice's new technology-neutral approach, locations that can currently be served by any qualifying technology at qualifying speeds and performance criteria must be removed from a state's list of BEAD-eligible locations. Additionally, all states must implement a new, additional funding application round pursuant to which any provisional funding awards must be rescinded so that all classes of providers (including fiber, fixed wireless, and satellite) are afforded the same opportunity to bid on a state's BEAD-eligible locations.
• Regulatory Rollbacks. Numerous compliance and reporting requirements that were previously mandated have been eliminated—including the NOFO's affordability, labor and DEI, climate resilience, open access and net neutrality, and local/tribal coordination requirements, as well as mandated rate plans for low-income services.
• Speedier Deployment Through Efficient Permitting. States must use NTIA's Environmental Screening and Permitting Tracking Tool to expedite National Environmental Policy Act (NEPA) approvals and track permitting milestones, which should increase the speed with which deployments can be accomplished.

New Technology-Neutral Approach

Priority Broadband Projects. The Notice eliminates the NOFO's original preference for fiber-based deployments and replaces it with a technology-neutral definition of what will be deemed "priority broadband projects"—i.e., projects that can provide service at speeds of no less than 100/20 Mbps, with a latency of ≤100 milliseconds and that "can easily scale speeds over time to meet the evolving connectivity needs of households and business and support the deployment of 5G, successor wireless technologies, and other advanced services." In line with this technology-neutral approach, the Notice also eliminates the NOFO's technology priority structure, prohibits states from categorically excluding any given technology from funding consideration, and emphasizes NTIA's right to reverse a state's determination of a project's "priority" qualification if in NTIA's mind the state's determination is "unreasonable."

New Mandated Application Round. Recognizing that some states have already selected or are in the process of selecting BEAD-funding recipients pursuant to the outdated NOFO guidance, and to ensure all providers (including fixed wireless and satellite providers) have the opportunity to apply for funding under the Notice's new technology-neutral approach, the Notice requires states to implement at least one additional application round for every BEAD-eligible location. Implementing this "Benefit of the Bargain Round" will require each state to rescind any provisional awards issued to date under the NOFO and notify providers that a further round of applications will be accepted and considered before final awards are made. Providers that already submitted may choose to submit a new application that: (1) eliminates the costs of the regulatory burdens rescinded by the Notice (discussed below) and/or (2) excludes select broadband serviceable locations (BSLs) that the provider determines are excessively high-cost locations. States will have a total of 90 days to comply with these requirements and submit a new Final Proposal that reflects the results of its Benefit of the Bargain Round.

Application Scoring. The Notice also requires states to modify their application scoring rubric to place a premium on project proposals that minimize the costs of deployment and to eliminate from consideration most of the secondary criteria identified in the NOFO—including scoring criteria related to the NOFO's affordability, labor and DEI, climate resilience, open access and net neutrality, and local/tribal coordination requirements. The Notice dictates that when deciding among competing applicants covering the same general project areas, states must choose the option with the lowest cost based on "minimal BEAD Program outlay"—i.e., the proposal with the lowest overall cost to the program. Further, if a proposal to serve the "same general project area" has a total cost that is within 15% of the lowest-cost proposal for that same area on a per-BSL basis, the Notice directs the state to also take into consideration certain secondary scoring criteria, including speed to deployment and the proposed network's speed and other technical capabilities. Further, for locations where states have already provisionally selected a winning provider, the state is permitted to give that provider's application additional weight/preference over a new provider-applicant.

BEAD-Eligible Locations

Fortunately, the Notice does not require states to re-run their challenge process. However, the Notice does require states to take several actions to ensure its list of eligible locations is "accurate and to prevent overbuilding of privately funded networks and Federal, state, or locally funded locations," including the following steps:

Retain Final Proposal's Reason Code Process. First, states must investigate and account for locations that do not require funding using the reason code process detailed in NTIA's pre-existing Final Proposal Guidance. Specifically, states will be required to remove locations that either: (1) have been removed from the latest version of the FCC's National Broadband Serviceable Location Fabric Map (BSL Fabric Map); (2) are already served by an enforceable funding commitment; or (3) are already served by non-subsidized service.

Update Eligible Location List To Include Location Defaults/Changes in Service. Second, states must identify those locations that are no longer being served due to a default or change in service area on a federal enforceable commitment. To facilitate this, NTIA will send each state a list of defaulted or newly BEAD-eligible locations by June 20, after which states must determine if the identified locations are being served by some other means and then update the list as necessary.

Scrub Eligible Location List for Areas Served by Fixed Wireless. Third, states must remove from eligibility those locations with access to existing fixed wireless service at qualifying speeds and performance criteria. States will be required to review the FCC's BSL Fabric Map to determine if any fixed wireless providers offer service to any existing eligible locations. If such providers exist, the state must reach out to the provider to inquire whether the provider: (1) intends to submit evidence establishing that it serves the identified locations; and (2) will be able to deliver qualifying service to the locations for at least four years following the state's Final Proposal submission. If the provider then submits such evidence and makes such a certification within seven days, the locations must be removed from the state's eligibility list.

Permitting

In conjunction with NTIA's goal of issuing NEPA approvals within two weeks, the Notice requires all states to use the Environmental Screening and Permitting Tracking Tool (ESAPTT) within the NTIA Grants Portal. Mandated use of ESAPTT will help states serve as joint lead agencies for NEPA reviews by identifying categorical exclusions and enabling paperless transmission of environmental documents and draft/final NEPA documents.

Rescission of Non-Deployment Funding

The Notice rescinds funding for all non-deployment activities in states' Initial Proposals that was previously approved by NTIA. According to the Notice, NTIA will not reimburse any new costs for non-deployment activities incurred after June 6, and updated guidance on permissible non-deployment costs will be issued at a later date.

Elimination of Certain NOFO Requirements

While the focal point of the Notice will surely be the new requirements being imposed on states' BEAD programs and their impact on providers interested in applying for funding, the Notice also eliminates and prohibits states from including in their programs many of the NOFO's burdensome compliance and reporting requirements.

A list of the requirements being removed, as well as the practical implications of their removal on providers interested in applying for BEAD funding, is provided below.

Labor, Employment, and Workforce Development Requirements. While the Notice expressly confirms that states will still be required to satisfy the statutory requirement to "give priority to projects based on … [a] demonstrated record of and plans to be in compliance with Federal labor and employment laws," the Notice otherwise eliminates the NOFO's requirements related to labor, employment, and workforce development and related DEI obligations. Providers will no longer be required to consent to state oversight and review of their records of compliance with federal labor and employment laws, nor will they be required to implement a labor and employment law compliance plan or DEI hiring/procurement policies. Instead, providers will only be required to include with their applications a certification that they will comply with all federal labor and employment laws. It also does not appear likely that states will be able to impose more burdensome labor and employment obligations through mandated adherence to state labor laws, as the Notice requires states to seek a waiver from NTIA "[t]o the extent state laws impose additional labor and employment obligations."

Climate Change Resilience. The Notice removes the NOFO's climate change reporting and compliance obligations, which would have required providers to identify in their funding applications weather hazards potentially impacting proposed deployment projects and detail how those hazards could be mitigated. In lieu of meeting these requirements, providers now will only have to incorporate in their proposals best practices for ensuring reliable and resilient broadband infrastructure.

Open Access/Net Neutrality. The Notice removes the NOFO's open access and net neutrality requirements, meaning providers that receive funding will no longer be prohibited from imposing data caps or other network management-related provisions in their service plans. Providers also will not be required to provide wholesale access to networks constructed using BEAD funds or interconnect with other providers' networks. However, providers still must satisfy statutory requirements to include interspersed conduit access points for any fiber networks or conduit deployed underground or along a roadway.

Local Coordination and Stakeholder Engagement. The Notice removes requirements related to local coordination and stakeholder engagement, thereby eliminating the timely and complex process of requiring providers to coordinate with political subdivisions, Tribal governments, local and community-based organizations, and unions.

Non-Traditional Broadband Providers. The Notice removes the NOFO's directive requiring states to justify awards to traditional providers when a "non-traditional provider" (e.g., a municipality, electric cooperative, Tribal entity, etc.) applies for the same or a similar project area. Thus, all applying providers will now be on a level playing field during the applicant selection process, removing what many viewed as preferential treatment for government-owned networks.

Middle-Class Affordability Plan. The Notice removes the NOFO's requirements related to developing, implementing, and providing updates on a provider's middle-class affordability plans. Providers will no longer be required to include in their applications or implement a middle-class service plan, thereby giving providers full discretion to create broadband plans they determine are the best/most competitive options for customers that receive service through funded networks.

Low-Cost Service Option. While providers will still be required to comply with the statutory requirement to "offer not less than 1 low-cost broadband service option for eligible subscribers," the Notice removes the NOFO's requirement to provide households that qualify under the NOFO as "eligible subscribers" with a low-cost broadband service option at a rate set by the state. Thus, providers will be permitted to set the rate for their low-cost plan at their discretion. The scope of households to whom providers must offer the low-cost rate also will also be substantially narrower than before, as NTIA has limited the definition of "eligible subscribers" to include only those households that qualify for the FCC's Lifeline Program. Given the long history of and providers' experience with the Lifeline Program, this latter change should simplify subgrantees' implementation of the low-cost plan requirement.

Conclusion

The Notice makes substantial changes to the BEAD Program by changing funding requirements and relieving providers of a number of regulatory burdens. We will follow up as the states update their Initial Proposals and as they roll out their revised eligible location lists and new funding application windows this summer and fall. Please reach out to the authors or your DWT attorney with any questions.