Debate intensifies over how to spend leftover BEAD money

Fifty states and territories have now had their plans approved for a major federal broadband funding program, but what happens to leftover money remains an open question.

National Telecommunications and Information Administration Administrator Arielle Roth announced this week that a further eight states — Mississippi, Puerto Rico, Vermont, Oregon, New Mexico, the U.S. Virgin Islands, Tennessee, and Pennsylvania — had received approval of their final plans under the $42 billion Broadband Equity, Access and Deployment program.

After the NTIA made policy changes to the program last year, the federal government said it may have as much as $21 billion left over, but there is little indication of how this money, known in some circles as non-deployment funds, might be spent.

During an on-stage interview at the State of the Net conference in Washington, D.C., Roth said it remains a “$21 billion question” and that there are a “lot of ideas out there” on how it can be spent. NTIA hosted a listening session on the topic today, while various competing pieces of legislation have been introduced to try and address the same issue.

Among those ideas are a reserve fund to use for a second round of bidding and to mitigate any provider defaults; cash to support network resilience; and another chunk to spend on digital literacy. Others want to see a renewed focus on connecting communities’ anchor institutions like schools, libraries and other facilities. Another unifying factor among the suggestions is to let states spend the leftover cash how they see fit to close the digital divide, in line with the letter of the law.

“States know best what their connectivity needs are, and it's different between New York and Nebraska and North Dakota, and that's part of the point,” Joseph Wender, executive director of the nonprofit Schools Health & Libraries Broadband Coalition, said during a panel discussion at State of the Net. “That's the whole intent behind these programs. What I really want to see is an emphasis on state decision making, local decision making, state discretion.”

Others, however,  want the federal government to have more say.

Rep. Richard Hudson, a North Carolina Republican who chairs the House Energy and Commerce Committee’s Subcommittee on Communications and Technology, said Congress needs “more say” in how the money is spent. That could include spending on Next-Generation 911, an internet-based system that would make the program more resilient and better able to transfer digital information along the network. Hudson said he does not trust some states to spend it wisely, a belief that has been rejected by state lawmakers.

“As a fiscal conservative, it bothers me that half the money is basically set aside to spend however the policymakers and the governors decide they want to spend it,” Hudson said at a policy summit in Washington, D.C. hosted by INCOMPAS, a trade group focused on competition and innovation. “Some governors will do a better job than others.”

Using the money to get devices in the hands of more people and help them get the skills they need to best use those devices appears popular, too. The Trump administration killed funding for grants under the Digital Equity Act last year, and affordability and adoption remain key concerns.

Rep. Greg Landsman, an Ohio Democrat, said the demise of the COVID-era Affordable Connectivity Program, despite its popularity, highlights the need to help alleviate cost concerns.

“It's really important to help people at this point pay for this stuff,” he said during the INCOMPAS summit. “It makes a big difference. There are a lot of families that need help paying for this, and I would love to see dollars be used to help folks pay for it.”

Nicol Turner Lee, a senior fellow in governance studies and director of the Center for Technology Innovation at The Brookings Institution, said during the State of the Net panel that building confidence in technology and getting people comfortable using it is crucial.

“I do not think that we've sufficiently addressed the non-deployment funds in a way that actually drives consumer adoption,” she said. “Especially in a time where we have given people the Affordable Connectivity Program and then we took it away, the confidence and trust in the networks that are being built will stand the test of time as to whether or not people are going to see them as an efficient supplement to their ability to be connected to something that's going to improve quality of life.”

And recent research suggests a lot of work may lie ahead in finally closing the digital divide. Using a combination of mapping data from the Federal Communications Commission, data from other agencies involved in broadband and collated data from states’ BEAD plans, researchers at the Advanced Communications Law and Policy Institute at New York Law School estimated that 1.1 million locations could remain unserved after BEAD is completed. Having a reserve fund could help deploy more.

“It's such a big moving target,” said Alex Karras, a senior fellow at ACLP.

Wender said policymakers need to stop treating the $21 billion as leftover money, as that would appear to suggest it was not anticipated by the federal government.

“There's a framing problem here,” he said during the State of the Net panel. “We've got to stop saying leftover money. It is not leftover money. It's additional money, or it's money that was appropriated by [the Department of] Commerce to states to close the digital divide. That's what it is.”