Consistent with its implementation obligations under the 2021 Infrastructure Investment and Jobs Act (IIJA), the National Telecommunications and Information Administration (NTIA), an agency within the Department of Commerce on May 13, 2022 released a Notice of Funding Opportunity (NOFO) for its $42 billion Broadband Equity, Access, and Deployment (BEAD) Program, along with two NOFOs for related smaller broadband programs, one for “middle mile” infrastructure and the other to bolster digital equity efforts. Under the BEAD Program, each State is eligible to receive a minimum allocation of $100,000,000 for broadband planning, deployment, mapping, equity and adoption activities, with U.S. Territories eligible to receive a minimum of $25,000,000 for these activities. The District of Columbia and Puerto Rico are treated as States for the BEAD Program. Funds beyond these minimum allocations are to be distributed to States and Territories as the primary grantees based on each State’s relative number of “unserved” locations.
To access BEAD grant funding, the NOFO directs individual States and Territories to file letters of intent to participate in the Program with NTIA by July 18, 2022. States also have the option to request up to $5,000,000 in Initial Planning Funds by applying through NTIA’s application portal. Submitting Territories may seek and receive up to $1,250,000 in Initial Planning Funds. NTIA may require supplemental information from the States about their anticipated planning processes as part of its evaluation process. All Initial Planning Funding requests must be submitted by no later than August 15, 2022. States and Territories that receive Initial Planning Funds must submit a five-year action plan recapping the results of their planning activities to NTIA within 270 days of receipt of their planning funds. The NOFO details the topics to be covered in any State action plan as well as with any Initial Planning process.
The critical question of what geographic areas in each State are considered to be “unserved” by reliable broadband options can only be answered by mapping existing service locations and providers at a very granular level and identifying serviceable location service gaps. These determinations will directly affect allocation of BEAD Program funds however, these decisions await the input of the Federal Communications Commission (FCC), which is slated to complete its broadband data collection and mapping process by collect detailed serviceable location data through early fall. Once that information is available, the FCC is to open a challenge process for eligible parties to question and correct inaccurate service information. Only after these processes conclude can NTIA determine how it will apply a formula to allocate remaining funding to States and Territories. Given the uncertainty as to when these mapping and challenge processes will conclude, NTIA did not establish a date for States to submit Initial Proposals to use available grant funding. Rather, NTIA specified that it would issue a Notice of Available Amounts announcing the total funding that can be awarded to each State once mapping data on unserved/underserved locations is determined to be conclusive.
Initial Proposals: Starting from the Notice of Available Amounts issuance date, States would have up to 180 days to file their Initial Proposals with NTIA. This document is described in the NOFO as a “first draft” for how the State or Territory intends to ensure all residents have access to broadband utilizing all funding available and not just BEAD funding. Nothing precludes a State or Territory from filing Initial Proposals earlier if their submission is ready. NTIA expects to provide States with technical assistance as they prepare their Initial Proposals. NTIA will evaluate State submissions on a rolling basis as received. Among other things, a State’s Initial Proposal must describe the competitive process by which the State will select subgrantees to build and operate broadband projects. States are required to seek public comment on their Initial Proposals prior to submission to NTIA and to incorporate this feedback into their NTIA submission.
After a State files its Initial Proposal, and before it allocates any BEAD Program funding to subgrantees, States will be required to conduct their own challenge processes whereby local governments, broadband service providers and nonprofit organizations can challenge a State’s initial determination of whether particular locations in a State are accurately deemed to be unserved or underserved. States must review and submit to NTIA any successful challenges. Once NTIA approves a State’s Initial Proposal, it will release 20% of the total grant funds allocated to the State. At that point, States may begin their competitive subgrantee selection process and will have a year to do all that is needed to submit a Final Proposal that identifies projects selected among other things. The NOFO contains a list of specific information expected to be contained in any Final Proposal. Similar to the Initial Proposal, public comment must be solicited by the State on its Final Proposal. After review and approval, NTIA will award the remaining funds allocated to the State.
NTIA expects to engage with States ensure that all State submissions reflect the goals, priorities and requirements of the BEAD Program. To the extent that a State submission is incomplete or inconsistent with Program requirements, NTIA intends to work with the State to rectify these issues. The NOFO states that there may be several iterations of some State submissions while a State may be working through issues with NTIA in the review process. In the unlikely event that a State elects not to file to participate in the Program or elects to participate but then fails to address fundamental issues with its submissions, NTIA retains the ability to issue a public notice and award the State’s funding to groups of counties and local governments in a State willing to assume the full range of the State’s responsibilities. Even once grants are made, NTIA will continue to monitor progress and audit compliance with the Program by States and by all subgrantees.
The BEAD Program will first fund any areas in a State that are considered serviceable but unserved. An “unserved location” means any broadband serviceable location that the FCC’s maps show as having no access to broadband service or lacking access to service of speeds not less than 25 Mbps for downloads and 3 Mbps for uploads. Notably, the NOFO states that broadband service that is available in any location exclusively by means of satellite transmission or entirely by use of unlicensed spectrum will be considered an “unserved” location as opposed to “underserved.” An “underserved” location means a serviceable location that is not unserved, but that FCC maps show as lacking access to service of speeds not less than 100 Mbps for downloads and 20 Mbps for uploads.
High-Cost Areas and Allocations: It is expected that some unserved areas may have “high cost” characteristics, such that the cost of building out broadband service there will be higher or much higher than average (due to population density, topography, high rate of poverty or other factors). While NTIA has not yet identified these locations, the Program will allocate high-cost funding to each State using a formula based on its relative number of high-cost unserved locations.
Remaining Funding: After subtracting the total minimum initial allocations and total high-cost allocations from the billons designated by Congress for the Program, NTIA will allocate remaining funding by dividing the number of unserved locations in a State by the total number nationwide and apply that ratio to the remaining funds. This will represent each State or Territory’s total BEAD Program funding.
Requirements on States for Subgrantee Selection: For purposes of selecting subgrantees for projects, a State may designate a project to be as small as a single unserved or underserved location. Unless NTIA grants a waiver, States cannot treat locations already subject to enforceable Federal, State or local commitments to deploy qualifying broadband as unserved or underserved even if they are not yet built and operating. While States are free to seek proposals to serve unserved, underserved and Community Anchor Institutions (CAIs) either collectively or separately, States must certify that they have covered all unserved locations with funding prior to awarding subgrants covering underserved areas or to connect CAIs. States are also prevented from excluding cooperatives, non-profits, private-public partnerships, utilities or local governments from consideration as potential project awardees.
States can choose to solicit proposals at the geographic level of their choosing, including inviting interested parties to propose their own project areas. If that method is used, then the State must have a mechanism to modify project scopes to de-conflict overlapping proposals, with the goal of ensuring that the State’s overall plan will serve all unserved locations. Subgrantees will have to state how much funding they seek to serve each of their designated locations in any proposed project. If a State winds up with unserved or underserved locations that are not covered by any prospective subgrantee, the State can engage with existing providers as well as prospective subgrantees to determine their willingness to expand, and the State may create further inducements, such as use of state funding, towards meeting the match requirement for contributions discussed below.
While States are free to establish their competitive selection processes, subject to NTIA review, the NOFO specifies priorities that must be reflected in any State’s determinations. Specifically, all unserved areas are to be awarded funding to ensure broadband deployment — only if there are sufficient funds is that same approach taken with underserved areas. NTIA urges States to then allocate remaining funds to eligible CAIs before they are designated for other acceptable uses.
25% Match Contribution Requirement: In addition to having to establish open, competitive processes for selecting subgrantees, States are directed in the NOFO to leverage the grant funding by seeking to have subgrantees offer to shoulder a greater portion of the statutorily required 25% match contribution so that Program funding can go further.
Selection Priorities for Subgrants: The NOFO states that “priority broadband projects” are those that use end-to-end fiber optic architecture. Assuming that there are competing priority broadband project proposals for the same locations, States are to provide the greatest selection ranking weight for: minimum BEAD Program outlays, affordability of a 1 Gbps/1 Gbps service offering, and demonstration of fair labor practices. Speed to deployment is an allowable secondary award criteria. A State can identify and include local priorities as long as the initial set of criteria are given the greatest weigh in competitive scoring of proposed projects. The NOFO encourages States to incorporate workforce development, as well as the provision of open access wholesale options for the life of the subsidized network to all potential retail providers. Support from and local Tribal coordination is another potential selection criterion endorsed by NTIA.
If a State does not receive priority broadband project proposals and must decide among other last mile deployment proposals, the same first level weighting criteria for competitive selection will apply, except that affordability will be measured against the total price for 100/20 Mbps service. Secondary criteria are speed to deployment and speed of network and other technical capabilities, as are the same open access and workforce development factors.
State Accountability and Oversight of Subgrantees: In addition to detailing robust requirements for outreach and upfront coordination with political subdivisions, Tribal Governments, local and community-based organizations and others, the NOFO incorporates a range of pre- and post-award requirements on States and subgrantees. Some of the more notable obligations on broadband deployment subgrantees include incorporation of specific network capabilities and quality of service standards including network speed — not less than 100 Mbps download/20 Mbps upload, with 95% of latency measurements during testing falling within or below 100 milliseconds round trip time. In limited circumstances NTIA may allow for different latency thresholds if the State requests them. If the network being funded is connecting a CAI, then the delivered speeds should be 1 Gbps/1 Gbps and such connections must also be capable of providing business data services. Finally, there are outside limits on acceptable network outage time.
The NOFO specifies that States are to ensure that all subgrantees build out their funded networks and make broadband services available to the public in the project no more than four years after the subgrant is made. States are to establish interim buildout milestones that are enforceable conditions of the subgrant. NTIA may allow a one-year extension of this deployment deadline if there are demonstrated extenuating circumstances and the subgrantee has a specific plan and capability to complete the build-out.
Key Takeaways from the BEAD Notice of Funding Opportunity
There is much more in the NOFO that interested parties will be examining for some time. However, given the IIJA’s incorporation of a technology neutrality standard, it is surprising that NTIA chose to confer an outright advantage on subgrantee proposals for funding that are end-to-end 1 Gbps/1 Gbps fiber optic cable deployments. Based on statements in the NOFO and from NTIA staffers, it appears the favoritism was shown to fiber due to the view that it would be the best means to “future-proof” the unprecedented national investment in broadband. Other permissible selection criteria include preferences for “open access” networks and for those subgrantees willing to fund more of the project costs, offer workforce training and enhanced fair labor standards as part of their projects. FCC Commissioner Carr issued a statement registering his concern that the NOFO in his view adopted rules that were wholly unsupported by the bipartisan law and selection criteria that could be seen as encouraging rate regulation of funded broadband offerings.
Based on processes outlined in the NOFO, States need to be carefully reviewing the long list of required elements in anticipation for the filings they must make with NTIA to participate in the BEAD Program. While States can expect in many (if not all) cases to benefit from more than the minimum $100,000,000 per State allocation, they also must undertake extensive outreach and engagement with local governments, potential subgrantees and community digital equity stakeholders. Complex planning and needs mapping work will have to be undertaken without knowing what funding will ultimately be received. Depending upon their readiness, States most certainly will be considering the need for initial planning funding and further strategizing to achieve the best mix of projects to realize the goal of affordable broadband available to all their citizens.