Federal broadband delays mean states face uphill challenge

(The Center Square) — A slow rollout of federal money to connect more homes to broadband internet leaves states dealing with higher overall costs.

The effects of inflation — and drifting away from a focus on getting more broadband built — mean that problems are brewing.

Not everything falls on the backs of state officials, though. Much of the problem comes from choices made by federal leaders in how they’ve created the Broadband Equity Access and Deployment program.

“They’re gonna have that dilemma: they’re not gonna have enough money to build fiber everywhere — but they’re gonna build a heck of a lot of it,” said Doug Dawson, president of the telecommunications firm CCG Consulting. “BEAD came out at the beginning of the pandemic and, since then, we’ve had multiple years of big inflation — they set aside $42 billion, that sounds like a lot of money, but costs have gone up 20%-30% since then to build stuff. That alone ate up the money before you built one inch of it.”

While some states, including Pennsylvania, have sent out state grants and made funds available to build more broadband (as have counties and other federal agencies), the BEAD program still hasn’t seen money go out the door. The delay means that the program will falter.

“If you would’ve given the money to states in 2020 and said, ‘you just go get it built,’ they would’ve gotten twice as much done with the money than they will because of all this nonsense,” Dawson said.

Another black mark for the BEAD program comes from the overwhelming amount of paperwork and bureaucracy involved. In summer 2023, Tamarah Holmes, director of Virginia’s Office of Broadband, warned other state officials that BEAD will be “the most burdensome federal program that I probably will administer in my career” — and she previously worked in the U.S. Department of Housing and Urban Development.

BEAD is a program run by the National Telecommunications and Information Administration, which may explain why it’s so burdensome.

“The BEAD grants are highly complicated — the most complicated grants we’ve ever seen,” Dawson said. “The NTIA is incredibly cautious. They managed a bunch of grants in 2009 with Obama’s stimulus package and they were accused of building a lot of wasted networks.”

The specter of “networks that go nowhere” had some truth to it, Dawson said, but in time they got used; yet the administration doesn’t want to look like they’re throwing money away. Hence, the greater weight of oversight for BEAD.

The problem now is that strict rules favor large corporations.

“They’ve set a set of criteria so strict that little companies can’t even qualify for these (grants),” Dawson said. “You have to have a long history of providing broadband, real strong financials, a banking relationship that’s solid and guarantees you with money — and it just doesn’t work like that for small companies. The money’s gonna go to medium and larger companies, that’s the only people who can meet the criteria.”

Dawson expects states like Virginia and Texas to do well, but called California and Texas “disasters.” If a state had a broadband office before BEAD, he expects that knowledge and expertise to carry over. But states that are new to this face a monumental challenge.

Pennsylvania has one of the newer state broadband offices, established in 2021. It could also face difficulties due to its size.

“The big states are actually gonna do a worse job,” Dawson said, pointing to California, Texas, and Illinois. But New York is doing better, so the commonwealth may not be doomed to fail.

Success may come down to avoiding the pitfalls of using the BEAD program to make policy via its grant rules. Seeing federal money as a jobs program instead of a broadband problem, too, may be an issue.

The federal push to make broadband-for-all a reality is running up against decades of inattention to rural America.

“Three miles from me (in North Carolina), there’s a country road here. Being in the telecom industry for 50 years, when I drive around, I look at the poles,” Dawson said. “The poles on that road — they must’ve been built in the ‘30s or ‘40s. Since then, no one has ever trimmed the trees, they’re 15 feet inside the treeline. Nobody’s gonna get fiber on those poles. The real life of rural America is rough because this stuff has been neglected for 50 years.”