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States submitting to NTIA’s price control overreach risk less participation in BEAD

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Telecom leaders say that overly onerous state regulations could curb their participation in the federal Broadband Equity, Access and Deployment (BEAD) program. That lack of participation could mean that fewer people who lack broadband access will be able to be connected. 

BEAD, the $42.5 billion taxpayer-funded program designed to close the digital divide, could find fewer providers seeking grants in some states due to the red tape that regulators there have chosen to put up as they determine where grants will be doled out.

Charter Communications Chief Financial Officer Jessica Fischer said recently at the J.P. Morgan conference in Boston that some state BEAD rules would not be conducive to her company’s investment, Broadband Breakfast reported.  

“And so there could be some limitation to the total amount we invest that’s related to our lack of willingness to bid in states where we won’t be able to get the returns because the rules aren’t conducive to it,” she said.

Fisher’s comments mimic those of Charter CEO Christopher Winfrey in 2023, who said that, “I want to reiterate and be very clear that where state BEAD rules are not conducive to private investment, we will not participate in those states.”

Chris Sambar, head of network at AT&T, said at the company’s innovation summit in May that while BEAD is a “great program,” the state-by-state patchworked implementation can be convoluted and frustrating for providers. 

“It’s 31 flavors out there, it’s different in every city, everyone is doing things differently,” Sambar said.

“There has to be a predictable, structured framework around that program. We’re seeing a lot of different variations of how it’s being managed,” Sambar added.

He noted, too, that experience levels vary greatly in state broadband offices, with one official telling AT&T representatives that they had never even heard of broadband before being appointed to the office. 

“That’s a little scary, and they’re coming up with odd things like, ‘We want you to price fix for the next five years.’” Sambar said.

It clearly doesn’t help that the Biden administration’s National Telecommunications and Information Administration (NTIA) has come up with its own rules for BEAD that seem to run counter to what Congress intended with the Infrastructure Investment and Jobs Act that created the program. This includes requiring states to set rates (i.e. price controls) for broadband created under BEAD.  

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Virginia has been butting heads with NTIA, arguing it’s unlawful for the agency to set a price for how much a provider should charge low-income households under BEAD. NTIA still has not approved Volume II of Virginia’s BEAD plan because of the state’s stance. 

Because of NTIA’s heavy-handed attitude, some states have pushed the rate-regulation envelope to receive money through BEAD.  For example, the Taxpayers Protection Alliance (TPA) urged the Montana Department of Administration last year to scrap plans for specific speeds and prices, arguing that the state’s goals for affordability were too broad and arbitrary, and that the plan was “so overly prescriptive that it threatens to reduce the number of providers that would participate in the state’s grant program.” In all, TPA sent letters to about 30 states urging them not to engage in setting specific rates.

Less private provider participation would not be good for Americans’ pocketbooks as it would lead to the creation of more government-owned networks (GONs) funded by taxpayers. TPA has written extensively about the failure of GONs in such reports as “GON with the Wind: The Failed Promise of Government Owned Networks Across the Country.”

While the Biden administration has gamed the system to push for more GONs in the U.S., if more states would push back as Virginia did perhaps the NTIA would soften its stance. States taking the opposite approach by kowtowing to the agency’s overreach risk lowering the number of providers willing to participate in the BEAD program.

Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance

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