States can spend leftover BEAD funds to connect missed locations, NTIA says

The National Telecommunications and Information Administration announced last week a second round of funding for its massive broadband program, to connect locations missed the first time around.

NTIA said states could apply for supplemental funding under its Broadband Equity, Access and Deployment program to connect additional locations that may not have been eligible for funding before. Now, states can apply to connect locations that have been defaulted on in other federal or state broadband programs; locations that were wrongly removed during the NTIA’s challenge process; and any locations that have come to light in newer versions of the Federal Communications Commission broadband map.

States have 30 days after receiving a new list of eligible locations from NTIA to review it and determine which locations they want to use supplemental funding for, with a shortened challenge process to follow. NTIA will then take final versions of those lists and use a formula to determine the most amount of money a state will receive to remedy those locations, then states must submit a full plan for approval.

“Congress designed the BEAD program to be the final federal broadband deployment program, ensuring universal broadband availability for America,” Assistant Secretary of Commerce for Communications and Information and NTIA Administrator Arielle Roth said in a statement. “Thanks to [Commerce] Secretary [Howard] Lutnick’s Benefit of the Bargain reforms, NTIA achieved $21 billion in savings, which we can now use to address newly identified locations that may lack service. Through this targeted use of funding, we are ensuring that we close the digital divide once and for all while also protecting taxpayer dollars.”

The fate of leftover BEAD dollars has been up in the air for some time and the subject of much speculation. This announcement from NTIA goes some way to explaining what will happen to the $21 billion the agency says it saved from the original $42 billion set aside for the program in the 2021 infrastructure law after its various changes. But there is more to come on that front. In announcing this next round of funding, NTIA said other "non-deployment" uses "will be addressed in subsequent guidance."

There have already been various suggestions on how to spend that money, including placing it in a reserve fund to help mitigate defaults or rising costs, or spending it in areas like digital literacy or network resiliency. Roth had said in March that NTIA was “taking additional time to review the comments and finalize our approach to ensure these funds are spent as efficiently and responsibly as possible.”

Some groups said this first effort to spend the leftover funds is a positive step forward after months of uncertainty, right on the heels of Illinois being the final state to have its plan approved by NTIA.

"Every unserved home and business deserves a broadband connection, and this notice gives states a new path to find the locations the first round of BEAD missed,” said Revati Prasad, executive director of the nonprofit Benton Institute for Broadband & Society, in a statement. “We support NTIA's effort to true up the FCC's maps and ensure funding follows the households and small businesses still waiting for service.”

But Prasad went on to note the importance of getting everyone connected, and that closing the digital divide is not just about infrastructure, but about ensuring people have the appropriate skills to take full advantage of the internet.

“Congress recognized that universal connectivity requires investment in both the physical and human infrastructure of broadband,” he continued. “We look forward to learning how states will be able to use BEAD funds to connect apartment buildings and other multifamily housing where low-income residents live, and to support adoption efforts that turn a new connection into one people actually use. After so much delay, we urge NTIA to get Digital Equity Act funding flowing, so states and trusted partners have the resources to help people make meaningful use of the internet.”

Others went further and said they opposed NTIA’s latest funding announcement. Jim Matheson, CEO of the National Rural Electric Cooperative Association, said the agency is “failing rural America” and said progress on buildout has been slowed by “delayed implementation, shifting guidance, cost constraints and unrealistic funding assumptions.”

“Directing further investment under the same misguided approach will not deliver universal connectivity to rural America,” Matheson continued in a statement. “NTIA must allow flexibility for cost increases created by program delays, align funding levels with the actual cost of deploying broadband infrastructure in America’s hardest-to-reach communities and remove fatally flawed pole attachment rules that clearly break from long-standing federal policy. Without correcting course, BEAD risks leaving rural America behind.”