States' Desires for BEAD Non-Deployment Money Faces Big Hurdles

Commerce said in its 2022 notice of funding opportunity that money not used for deployment programs could be devoted to such activities as direct subsidies of broadband service, cybersecurity or privacy training, remote learning or telehealth services or facilities or digital literacy training. The Benefit of the Bargain (BOB) version of BEAD, rolled out in June (see 2506060052), included Commerce saying that funding for allowable non-deployment purposes "is under review," with updated guidance ahead. It also rescinded approval of non-deployment activities in states' initial proposals it signed off on previously.

Consultant Carol Mattey emailed us that Commerce, on various occasions, highlighted how the BOB version of BEAD "has created 'savings' for the American taxpayer, which suggests a mindset that unused monies will go back to the US Treasury." Mattey said she's assuming the administration won't let states use the unawarded funds for non-deployment activities like digital adoption, "but there's still an avenue for states to reframe at least some of their intended uses as furthering deployment of broadband networks." However, states need to be able to articulate how their proposed uses of the funds will build infrastructure for broadband networks "even if that precise use does not meet the technical definition of an 'unserved' or 'underserved' area," Mattey said. That might mean using the money for backhaul/middle mile, improving cell coverage or keeping some funding in reserve to pay for new projects or new awardees if BEAD awardees or awardees in other broadband funding programs fail to perform.

Even under such a reframing, states probably won't be able to keep all their respective allotments, Mattey said. For that to happen would require "a critical mass of Republican governors and Republican members of Congress" pressuring the administration, she said. "Commerce isn't going to do this unless it's pushed to do it."

Evan Feinman, who headed BEAD in the Biden administration, said the biggest reason to think Commerce will let states use non-deployment funds "is because that is what the law requires." The Infrastructure Investment and Jobs Act spells out the legal requirement that money not used for deployment activities can be spent for eligible non-deployment activities. However, Feinman said, "States and others are wise to be concerned about the availability of these funds." Commerce in the Trump administration "is less positively inclined toward those ... activities than they are toward physical infrastructure," he added. Commerce likely will try to claw back some BEAD funds, which is why it's particularly focused on reducing expenses associated with deployment.

For Feinman, a clawback of non-deployment funds would be as shortsighted as the focus on cutting deployment spending. He said the NTIA administrator has broad say on how non-deployment funds will be used. "There are significant needs for telecom workforce training, additional mapping, and programs to support the challenges related to infrastructure intersecting with other infrastructure (the need to attach to poles; the need to cross highways, railways, etc)," Feinman emailed. "Those uses would directly benefit the actual infrastructure deployment." Moreover, Feinman said, there also are many opportunities "that will be missed if these funds aren't used." For example, "the nation needs dramatic investment in additional data center capacity as well as more transport and resilience within the networks," he said. "These funds could support those uses, if only NTIA permits it."

Benton's Garner told us in an interview that the heavy BOB focus on driving down costs seems to point to Commerce not distributing non-deployment funding. However, the Infrastructure Investment and Jobs Act designed BEAD to cover additional activities beyond deployment, such as funding internet adoption programs or connectivity for anchor institutions, he said. "We have the law on our side," Garner said.

Garner said there's bipartisan interest among Congressional lawmakers in states having access to non-deployment funding.

State broadband officers speaking last week at the Schools, Health & Libraries Broadband Coalition's annual conference (see 2510300028) listed an array of non-deployment fund uses they had teed up, from digital economy workforce development and creation of an internet exchange point in Vermont to driving broadband adoption, particularly affordability issues, and middle-mile infrastructure improvements in Massachusetts.

Asked about the timing of NTIA guidance on non-deployment funds, an NTIA spokesperson emailed the organization "remains laser-focused on the core mission Congress set for the BEAD program -- closing broadband deployment gaps across the country. Our immediate priority is meeting our 90-day target for reviewing states’ final proposals, to ensure that unserved communities gain access to broadband as quickly as possible. We are proud of the significant savings achieved through the Benefit of the Bargain reforms and look forward to providing guidance on how those savings can further advance BEAD’s goals.”

A former Commerce official told us that while the agency perhaps can't claw BEAD money back, since it has been allocated to states, it could easily sit on the non-deployment funds for a while. Commerce could claim a win on deployment spending, focusing on how the program has connected unserved locations for far less than it was going to cost under the Biden-era plan, and then, at some point in the future, it could unveil a rebranded program using the BEAD non-deployment funds, the former official said. Sitting on the money also would leave time for NTIA to figure out a legal strategy for not making the non-deployment money available to states or for Congress to adjust the terms of BEAD, we were told.

Benton said Thursday that Sen. Joni Ernst, R-Iowa, has drafted legislation that would amend the IIJA so that remaining BEAD funds would go for deficit reduction.

Connected Nation emailed that states "have a variety of needs for [non-deployment] funds to help close the Digital Divide through things like critical infrastructure, workforce and economic development, and permitting streamlining." It continued, "We are in a new era of AI that requires all of us to have a stronger, faster, more reliable connection." In addition, "America simply cannot win the race to lead AI globally without ubiquitous broadband access, adoption, and use in all communities, and to make that possible, states must be empowered to fill the gaps as they arise."

In an email, consultant and former Indiana Broadband Director Scott Rudd said, "The finish line for the maximum ROI from broadband is full utilization of the technology, not simply deploying it." In the end, "We can install it but until the public uses it there is virtually no return.”