Industry Update: BEAD Funding

The world wide web has become a critical tool for business, education, government and more. Americans who lack access to the internet are at a serious disadvantage, and that gap will only widen as the world continues to digitize.

According to the latest update from the Federal Communications Commission (FCC), over 7.2 million U.S. locations still lack access to reliable high-speed internet service. That's approximately one in five households — and this shocking statistic is the reason behind the federal Broadband Equity, Access and Deployment (BEAD) Program.

The BEAD Program aims to close the digital divide within the next decade by expanding internet infrastructure nationwide and making connection more affordable. It's launching into full swing now.

What Is the BEAD Program?

The BEAD Program is a $42.45 billion federal grant program passed as part of the 2021 Infrastructure Investment and Jobs Act. Its goal is to expand high-speed internet access to unserved and underserved locations in all 50 states and U.S. territories. 

For context, the National Telecommunications and Information Administration (NTIA) has defined an unserved location as one where citizens lack access to at least 25/3 megabits per second (Mbps) — the FCC's minimum fixed broadband speed. While this speed is usually enough to support most internet applications for one user, the required speed increases as more people in a household log on.

That's why the NTIA is also dedicating BEAD funding to underserved locations, which are areas without access to a minimum of 100/20 Mbps service. Expanding access to higher broadband speeds will help people in these areas by opening up new opportunities for online learning and employment, as well as access to more information.

Some of the ways the BEAD Program intends to accomplish its goal include:

• Building and deploying new broadband infrastructure in locations where access is limited or nonexistent.
• Making internet service more affordable for lower-income households through government subsidies.
• Improving existing connections in community anchor institutions, such as public libraries and schools.
• Creating training and digital literacy programs for citizens of all ages and skill levels to set them up for success.
• Establishing new, high-paying jobs in unserved and underserved areas.

What Are BEAD Funds For?

Eligible entities may use BEAD funding for activities that will add new broadband connections, improve existing ones, implement digital literacy programs or facilitate necessary services.

Some examples of eligible uses for BEAD funding include but are not limited to:

• Planning activities: Entities may use BEAD dollars to fund research, outreach, training and data collection activities in preparation for high-speed internet deployment.
• Deployment: BEAD funding can be used to either deploy new connections in unserved locations or improve existing service in underserved locations.
• Adoption: Funding digital equity programs through public institutions to increase adoption of the program among citizens can help ensure long-term BEAD Program success.
• Service improvements: Community anchor institutions, such as hospitals and schools, can improve their existing connections using program funding.
• Installations: Municipal governments can fund internet and Wi-Fi installations in multi-unit residential buildings, such as apartments and condominiums.
• Telehealth: Healthcare organizations may use BEAD funding to begin offering telehealth services to their patients.
• Workforce development: Training the workforce to use internet technology is essential for maximizing the impact of BEAD funding.

The type of broadband connection also matters in BEAD eligibility. Specifically, the NTIA has stated that BEAD funding should prioritize end-to-end fiber optic infrastructure over other methods, like satellite or 5G, unless it is not the most cost-effective solution in an area. 

How Is BEAD Funding Allocated?

All allocations are based on the latest version of the FCC's National Broadband Map, which was released on November 17, 2023. The minimum allocations for each entity include:

• States, D.C. and Puerto Rico: $100 million
• Territories: $25 million

The states with the highest allocations include Texas, Missouri, Michigan and North Carolina. 

Allocating Funds for High-Cost Areas

High-cost areas are a special consideration for all entities because the cost of building infrastructure there is greater than that of similar structures in other unserved areas. Many different factors play into this designation, including:

• Low population density.
• Geographic remoteness.
• High poverty rates.
• Challenging topography.

States and territories have the authority to set the minimum threshold for extremely high-cost areas within their jurisdiction, which is the point at which fiber deployment is no longer cost-effective. Areas that exceed this threshold can opt for lower-cost alternatives, such as fixed wireless.

Finally, the NTIA will allocate all remaining funds based on each entity's ability to provide comprehensive broadband access to unserved areas within their jurisdiction.

Who Gets BEAD Funding?

To ensure eligible entities are able to achieve the goals of the BEAD Program, it's important to define who and what qualifies for BEAD funds.

The basic requirements to receive BEAD funding include:

1. Connection requirements: Entities must deliver an unlimited broadband connection of at least 100/20 Mbps, with latency low enough to support real-time applications without lagging.
2. Network outage limits: Except in the case of natural disaster, the combined average of outages an entity's broadband networks experience must remain under 48 hours annually.
3. Service deadline: Broadband service must be available to end users within four years of receiving BEAD funding. The entity must also ensure adoption of the program through public awareness campaigns and outreach to remote customers.
4. Risk management: The entity must develop comprehensive cybersecurity and risk management plans to protect critical infrastructure from cyber threats.
5. Program participation: All BEAD-eligible entities must participate in the FCC's Affordable Connectivity Program, which applies a $30 discount on service to all eligible households and requires entities to offer at least one low-cost broadband service option.

What Is the Implementation Process and Timeline?

The timeline involves 10 steps spread out over approximately 10 years. Eligible entities must participate in all of the following phases to receive BEAD funding:

1. Letter of Intent

The Letter of Intent (LOI) was the first stage in the BEAD process. Each eligible entity had to submit an LOI that included the following information:

• An outline of how the entity would participate in the BEAD program.
• The agency or office responsible for accepting and using the funding.

All eligible entities met the November 18, 2022, submission deadline for this phase and received the proper approval.

2. Request for Planning Funds

As part of the LOI, each eligible entity could include a request for advance funding of up to $5 million for states and $1.25 million for territories.

These planning funds could be used for a variety of pre-deployment purposes, such as:

• Technical assistance to potential subgrantees.
• Outreach support.
• Training programs for employees of subgrantees.
• Data collection.
• Other project planning activities.

Any entity that requested this funding was then required to submit a five-year action plan.

3. Five-Year Action Plan

Within 270 days of receiving the requested planning funds, eligible entities had to create and submit a five-year action plan that summarized their existing efforts to connect citizens and proposed a high-level plan to address service gaps. Ultimately, the five-year plan served several purposes:

• A summary of the entity's current state of broadband.
• A list of existing internet-related initiatives and funding sources.
• An assessment of needs and service gaps.
• An evaluation of obstacles or barriers to success.
• An implementation plan outlining how the entity would overcome these challenges
• A list of estimated costs and timelines.
• A description of strategies for stakeholder engagement.
• A list of technical support resources needed for implementation success.

The document also had to include a detailed plan for how the entity would use BEAD funding in conjunction with funding from similar programs, such as the Digital Equity Act, to achieve its overarching vision for digital equity.

All eligible entities met this requirement and submitted their plans by the deadline. 

4. Funding Allocations and Notice of Available Amounts

Once all eligible entities submitted their action plans, the NTIA evaluated these documents and determined the appropriate allocation amounts.

It's important to note that while BEAD funding will take the country a long way toward improving internet access, states and territories will still need to plan for how they will cover ongoing costs, such as:

• Network monitoring and maintenance.
• Affordability subsidies.
• Digital skills training programs.

Many states are already in the process of scaling up their existing infrastructure and adjusting state laws in preparation for these future needs. For example, Colorado recently overturned SB05-152, a law that restricted municipalities' ability to deliver broadband service without first holding an election. Similar laws in other states, including Alabama, Iowa and Nebraska, are also under consideration due to their potential impact on BEAD funding.

5. Initial Proposal

The Initial Proposal stage was where eligible entities drafted a concrete plan to expand internet access to all residents. Important components in the Proposal included:

• The total number of unserved and underserved areas in the entity's jurisdiction.
• The number of qualified community anchor organizations.
• A plan for how the entity would gather feedback on the new FCC broadband maps.
• An outline of the competitive subgrantee award process.
• Details about how local and regional planning occurs within the entity's jurisdiction.

This document was also split into two phases:

• Volume 1: Each entity must explain and conduct a challenge process, which verifies the locations within their jurisdiction that are eligible for BEAD funding. To accomplish this process, the Initial Proposals must be available for public comment.
• Volume 2: This phase addresses any remaining components of the entity's BEAD implementation plan.

All eligible entities submitted their initial proposals by the December 27, 2023 deadline. Upon approval of the proposal, each entity will be able to receive at least 20% of its total allocations.

As of January 2024, Louisiana is the only entity to get both phases approved. To track other entities' progress toward approval, citizens can consult the NTIA's Initial Proposal Progress Dashboard.

6. Challenge Process

During this phase, entities can submit challenges to availability data for specific locations. Challenging this information helps provide a more accurate picture of broadband access at a granular level, which improves entities' ability to strategize effectively.

The existing data comes from a network that includes broadband service providers and standardized mobile broadband availability data. Some examples of potential challenges include but are not limited to:

• Correcting which services a provider offers.
• Noting that an area's provider denied service requests.
• Documenting that the provider charged abnormally high prices for connection.
• Adjusting an institution's eligibility for grant funds.
• Changing a particular location's unserved or underserved classification.

If the entity receives any challenges, it must submit them to the NTIA for review and approval before moving on to the next phase.

7. Subgrantee Selection Process

As part of the Initial Proposal, eligible entities had to create a competitive process by which they would determine which subgrantees would receive BEAD funding.

Subgrantee activities eligible for funding according to the federal government vary depending on contractual obligation and purpose. Some examples of approved activities include:

• Infrastructure construction and improvement.
• Network updates.
• Workforce development and user training.
• Cybersecurity training.
• Long-term leases.
• Multilingual outreach.
• Remote learning.

The eligible entity then had to outline its approach to soliciting and reviewing applications for funding as well as important subgrantee selection milestones. The selection process also had to include de-conflicting measures that prevented subgrantees from accidentally performing duplicate work.

Creating a competitive process ensures that BEAD funds go to only the strongest subgrantees, who have clear goals for helping the eligible entity receive 100% connectivity within a reasonable period of time.

If the entity does not receive any proposals during the application period for a specific area, the eligible entity is allowed to reach out to existing providers and prospecting subgrantees with requests to expand their service areas.

8. 20% Funding Release

Upon full approval of the Initial Proposal, each eligible entity may receive up to 20% of their awarded BEAD funding. They may then use these funds to continue preparing for implementation by scaling up infrastructure, training staff, finalizing spending plans or completing any other pre-deployment action. However, entities may not receive full funding until the completion of the final proposal.

9. Final Proposal and Release of Remaining Funds

Entities must submit their final proposals 365 days after receiving full approval for the initial proposal. For most eligible entities, this deadline will occur sometime in either late 2024 or 2025.

Important details necessary for the final proposal include:

• Subgrantee selection process final results.
• Implementation timelines for both the whole process and individual projects.
• A plan for how the entity will allocate funds between subgrantees.
• Certifications from all subgrantees confirming their dedication to the project.
• A comprehensive process for ongoing oversight and accountability.

The NTIA will release remaining funds after approving this proposal, after which entities may begin fully implementing their action plans.

10. Ongoing Reporting and Performance Management

As entities launch their implementation plans, they will need to provide the NTIA with detailed progress reports within 90 days of receiving funding as well as within one year of depleting that funding. Reports must include important information such as:

• Summary of fund uses.
• Comparisons of planned vs. actual funding spend.
• Explanation of actual subgrantee process.
• List of locations served using grant funds.
• List of locations yet to use grant funds.

Additionally, the NTIA encourages eligible entities to maintain communication throughout proposal development to ensure continued alignment with national goals.

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