States have broadband money. Now they just have to figure out how to spend it.

An intense sprint started two weeks ago when states learned how much they are each getting from the nearly $42.5 billion investment in broadband under the bipartisan infrastructure act. In less than six months, each state has to tell the federal government how they plan to spend their allotment.

That’s not an easy task when talking about hundreds of millions of dollars, or in the case of 20 states more than a billion dollars. Finding out his state will be getting $551.5 million “triggers a lot of other things,” said Jim Stritzinger, director of the South Carolina Broadband Office. “It's going to be a very complicated set of steps between now and the end of the year. Very detailed, and a heavy lift.”

First up in the arduous process that the National Telecommunications and Information Administration, or NTIA, set up in a 98-page document in May of last year is for states to begin answering a wide range of questions in a five-year action plan. The questions ask how states will prioritize what to do with the money, how they’ll find enough workers to get the infrastructure built, how they’ll go about awarding contracts for the work, what they will be doing to make sure it gets done and how they will keep the broadband affordable for low-income people.

States will also have to figure out how they will do all this without hurting the environment. If the NTIA isn’t satisfied with state plans, it can send them back and hold up the money until they’re changed.

The NTIA has posted on its website nine draft or final state plans.

“I'm feeling pretty good,” said Eric Frederick, chief connectivity officer at the Michigan High-Speed Internet Office, about the next few months. “But it's definitely going to be fast and furious.”

“Every state right now is drinking from a firehose trying to get their plans in order and effectively distributing these funds within all the rules,” said Robert Fish, deputy director of Vermont’s broadband office. He joked, “We’re always looking for volunteers.”

After the first major hurdle of developing and submitting a plan, states will have to dig deeper into the details of the initial plan and essentially surmount two more obstacles before they can spend the first tranche of money.

One challenge is that local governments, nonprofits and broadband companies must have a chance to review broadband maps and contest any inaccuracies in where service exists.

Being able to collect, analyze and “ingest all the data from communities and organizations that challenge the map,” said Michigan’s Frederick, “is a huge lift for states.”

The other is that the first fifth of the funding is supposed to go to disadvantaged areas with high numbers of unserved people. But identifying where those locations are and than matching them to the map is difficult.

Finally, before states get the rest of their allocation, they must file a final plan with NTIA by the end of next year that shows how contracts with companies are being written to make sure projects get done.

How to Define Affordable?

States have some of the biggest work in front of them, however. Answering NTIA’s questions over the next six months means creating solutions to some tough challenges, not least of which is how to make sure broadband is affordable to low-income people. 

“It's not enough to have access,” President Joe Biden said as announced the allocations to states in a speech at the White House on June 26. “You need affordability in addition to access.”

The Infrastructure Investment and Jobs Act requires states to mandate that internet companies offer an “affordable option” to low-income people. NTIA in its notice of funding opportunity said states could take a number of approaches. They could, for example, require that providers offer a $30 price plan so that when combined with the federal $30 subsidy being offered under the American Connectivity Program, the internet would be free for lower-income people.

But as reported by Route Fifty last year, NCTA — The Internet & Television Association, which lobbies for cable companies that provide broadband services, has said that states should not be able to “dictate” what companies charge.  

“There’s a difference between setting a price cap on what companies can charge and saying that if they want the federal dollars they cannot charge more than a certain price,” argued Anne Neville-Bonilla, a partner at McKinsey & Company, a global consulting firm that has been working with some state broadband offices to create their plans. Neville-Bonilla was the former head of the NTIA’s state broadband initiative.

South Carolina’s Stritzinger agreed. “Of course, as a state agency, you can't dictate a price,” he said. “But without dictating a price there's different knobs and dials that you can turn.” 

When it awarded $150 million in broadband contracts with funds from the American Rescue Plan Act, for instance, South Carolina opted to give more points to bidders that were willing to charge less, not only for lower-income people, but for all customers.

Ohio is taking a slightly different approach than South Carolina. In its five-year plan, the state said it is planning to require companies to offer a low-cost plan.

But defining what is affordable can be hard.

Ohio’s broadband office said it has not decided on a definition for a low-cost plan. It noted that the National Governors Association considers broadband affordable if it costs no more than 2% of a family’s monthly income. At the same time, though, that might still be “out of reach for many Ohioans,” the state’s five-year plan said. Even a $30 monthly bill would be more than 2% of the incomes for 13% of state households.

North Carolina in its five-year plan said it is aiming to have low-income people pay less than $60-a-month by promoting the Affordable Connectivity Program.

Should Broadband Be a Public Utility?

One way to make broadband affordable would be to make it a utility service like water or electricity. 

To the Biden administration, the idea of broadband as a public utility means companies would be forced to lower their prices to compete, and cities would also be able to offer broadband in rural areas where companies don’t believe they can make money to provide internet access.

NTIA has said that states “may not exclude” municipalities or public utilities from being able to bid to get broadband funding.  But 16 states have laws on the books discouraging or outright barring local governments from providing broadband.

BroadbandNow, an organization that analyzes broadband capacity, noted in a report that the requirement sets up a conflict with states that bar or put up obstacles to municipal broadband. That could lead to an impasse in getting NTIA to release the money to them.

States “without restrictions could begin receiving funds quickly,” the report said. “While those that want a fight could end up being delayed by months—or even years.”

North Carolina in its five-year plan mentioned the issue as a “legislative barrier” to expanding broadband in the state, noting that no local government has been able to provide broadband service since the passage of the state’s law.

“The result is a limit on the number of options available for broadband service, particularly in areas where the private sector is not providing adequate, affordable service,” the broadband office said.

But while some state broadband offices might be in favor of repealing the laws, the decision is ultimately up to state legislatures. 

Building the Workforce

Possibly as difficult as addressing the affordability issue is figuring out who’s going to build the broadband infrastructure.

“That's going to take work,” said Mark Vasconi, director of the Washington State Broadband Office. “[Without action], we're going to see shortages in the labor necessary to be able to install this stuff.”

Vasconi says that Washington state is talking to employment development councils and unions about creating apprenticeship programs. Community colleges, he added, could also develop more training programs.

North Carolina said in its five-year plan that it will work with consultants and labor experts. In addition to examining data, the consultants will hold focus groups with employers and unions to figure out how much the workforce will need to be expanded. 

Ohio, as part of its own separate effort to expand broadband, created a workforce plan that called for creating internships and training so that more high school students will see working in the industry as an option.  

When asked which of the issues he'll be dealing with will be the most likely to keep him up at night, Vasconi said, “That's a good question. I'd be hard-pressed to say exactly what's the most difficult. Because whether it's workforce or affordability, they all have their own unique set of challenges.”