What States Need to Know About Federal BEAD Funding for High-Speed Internet Expansion

Editor’s note: This brief was updated on Feb. 8, 2023, to correct the official name of the BEAD Program.

Overview

In November 2021, President Joe Biden (D) signed the Infrastructure Investment and Jobs Act into law. Among many other provisions, the law established the Broadband Equity, Access, and Deployment (BEAD) Program, the federal government’s most ambitious investment in high-speed, affordable internet to date. BEAD dedicates more than $42 billion to construct broadband networks, establish subsidies to offset the cost of internet service for lower-income households, and create programs to provide end users with the devices and training they need to use the new and upgraded networks. The BEAD Program also marks the first time the federal government is providing grants to states specifically for these purposes.

In addition, BEAD includes requirements—such as ongoing engagement with local stakeholders and marginalized communities, higher speed and reliability standards, and data collection to assess usage and impact of program funds—that are designed to correct some shortcomings of prior federal policy and establish consistency across states.

This brief breaks down the phases of the BEAD Program and outlines the requirements that states, territories, and federal agencies need to meet to access the funds.

What are the funds for?

Congress established the BEAD Program to address the persistent digital divide in the United States and outlined three associated priorities for use of the funds: building infrastructure, developing broadband action plans, and supporting programs to promote user adoption of new networks. The National Telecommunications and Information Administration (NTIA)—the agency within the U.S. Department of Commerce  that administers the program—clarified in its June 2022 Notice of Funding Opportunity that BEAD spending should prioritize:

• “[F]iber connectivity directly to the end user.”
• “Unserved” locations—those without access to 25-megabit-per-second (Mbps) download service and 3-Mbps uploads, commonly expressed as 25/3-Mbps service.
• “[P]roposals that improve affordability to ensure that networks built using taxpayer dollars are accessible to all Americans.

Although delivering affordable fiber connections to unserved areas takes precedence, states may thereafter also apply funds to connecting underserved areas, which are those without access to 100/20-Mbps service; providing 1-gigabit-per-second symmetrical—meaning for both upload and download—connections to community anchor institutions such as libraries, schools, and hospitals; supporting digital skills training, workforce development, and provision of telehealth services; and promoting other broadband-related uses.

The NTIA is responsible for overseeing the distribution of funding to “eligible entities,” which are the 50 U.S. states and all U.S. territories, and it has established five minimum requirements for all BEAD-funded projects. They must:

• Deliver internet service that is not subject to data caps and has reliable speeds of at least 100/20 Mbps and low enough latency—the time it takes for data to travel to its destination and back along the network and which consumers experience as a delay, such as choppiness and buffering—to support real-time applications such as videoconferencing.
• Build and operate networks with average combined outages that do not exceed 48 hours a year (with exceptions for natural disasters).
• Provide broadband service to end users within four years of receipt of funds, carry out public awareness campaigns, and make connections available to any customer within the service area covered by the funding award.
• Develop cybersecurity and supply chain risk management plans to ensure that critical infrastructure is protected from threats such as hacking.
• Participate in the Federal Communications Commission’s (FCC’s) Affordable Connectivity Program, which provides a $30-a-month discount to eligible households ($75 a month for households on Tribal lands), and offer at least one low-cost broadband service option.

Congress and the NTIA also outlined requirements for states and territories, including use of competitive award processes to select funded projects and submission of a series of documents addressing how eligible entities’ intended uses of BEAD funds would achieve the goals set forth in the Infrastructure Investment and Jobs Act.

How is funding allocated?

Congress split BEAD funding into three formula-based allocations: minimum, high-cost, and remaining funds. (See Figure 1.) The minimum allocation to states, Washington, D.C., and Puerto Rico will be $100 million each; other U.S. territories will receive minimum allocations of $25 million. The NTIA will allocate the remaining funds based on the ability of individual states and territories to provide broadband to unserved areas that meets the minimum project criteria outlined earlier.

High-cost allocations will target specific unserved areas—those where the cost of building broadband infrastructure is higher than the average cost of comparable construction in other unserved areas of the country. The NTIA will make these determinations based on factors such as geographic remoteness, low population density, challenging topography, and high poverty. Eligible entities’ total high-cost allocations are likely to differ significantly, reflecting the wide variation in these factors across states and territories.

All funding allocations will be based on the FCC’s new broadband maps. An initial version of the maps, designed in accordance with updated federal requirements, came out Nov. 18, 2022. Eligible entities and the public will have an opportunity to challenge the information presented in the maps, a crucial accountability measure for ensuring appropriate distribution of funding.

NTIA Administrator Alan Davidson announced in September 2022 that the high-cost allocation formula would be set after eligible entities have had at least one opportunity to review and comment on the new FCC maps. Once the formula is announced, expected to be in early 2023, states and territories can submit their initial proposals for release of a portion of their allocated funds.

How will BEAD be implemented?

The BEAD Program has four phases: letter of intent and planning, funding allocation, initial proposal, and final proposal and implementation. Each phase is time-bound and includes requirements that states, territories, or the NTIA must complete or address before moving to the next phase. (See Figure 2.) This structure reflects research from The Pew Charitable Trusts and others which found that extensive coordination, planning, and data collection are needed to effectively use these funds—as well as the many other significant state and federal investments in broadband and digital equity during the pandemic—to achieve universal access goals.

Letter of intent and planning

The first step in the BEAD process was for each eligible entity to submit to the NTIA a letter of intent (LOI) outlining a plan to participate in the program and identifying the office or agency that would receive and deploy the funds.

Each state and territory also could include in their LOI a request for an advance on their minimum allocations—up to $5 million for states, $1.25 million for territories—to be used as initial planning funds. Eligible entities that request planning funds must write a five-year action plan, due within 270 days of receipt of the funds, detailing their broadband goals and priorities. These plans also serve as comprehensive needs assessments that will inform later stages of implementation. States and territories may use planning funds for a range of pre-deployment activities, such as data collection, technical assistance to potential subgrantees, outreach support, and employee training, as well as project planning.

All eligible entities submitted their LOIs and planning fund requests by the July 18, 2022, deadline.

Initial proposal

Initial proposals explain how each state and territory intends to bring a reliable, affordable broadband connection to all their residents. These proposals draw closely from the five-year action plans to detail how the eligible entity will award funds to achieve its broadband priorities. Proposals must specify:

• The total number of unserved and underserved locations in the eligible entity’s jurisdiction.
• The number of qualified community anchor institutions.
• How the state or territory will solicit and collect stakeholder feedback on the FCC’s new maps.
• How the eligible entity will support and coordinate local and regional planning processes.
• The competitive award process for selecting subgrantees.
• Other ongoing broadband deployment efforts within the state or territory that use federal and state funding, such as the Capital Projects Fund.
  
  The NTIA’s assistant secretary will review the initial proposals as they are submitted and will approve those that comply with statute, are in the public interest, and advance the goals of the Infrastructure Investment and Jobs Act. Once its proposal is approved, the state or territory will receive at least 20% of its total allocations.

Final proposal and implementation

To receive their remaining funds, states and territories must—no later than 365 days after approval of their initial proposal—submit a final proposal that explains:

• The results of the eligible entity’s subgrantee selection process.
• A plan for the allocation of funds to subgrantees.
• A timeline for the implementation of the plan and each project that will be funded.
• A certification from subgrantees that they will provide broadband to all unserved and underserved locations.
• A description of the state’s or territory’s efforts to include nontraditional internet service providers (ISPs) in the selection process.
• The oversight and accountability process.

Once the NTIA approves their final proposals, states and territories can begin implementing their program plans.

Additional requirements and recommendations

BEAD requires that states and territories:

• Make their initial proposals available for public comment; incorporate feedback from the public comment process; and clarify how they conducted engagement with local stakeholders, such as ISPs, civil rights groups, labor unions, and workforce development groups.
• Develop a challenge process to allow governments, nonprofits, or broadband service providers to contest the eligible entity’s determinations regarding whether a targeted location has broadband service.
• Require subgrantees to provide, on their own or in concert with the state or territory, matching funds of at least 25% of project costs.
• Provide an assessment of climate-related threats to broadband infrastructure within the eligible entity and proposed strategies to reduce those risks.
• Report on program activities at defined intervals: within 90 days of receiving any grant funds, no later than one year after receiving grant funds, and no later than one year after all funds are expended. These reports must cover the planned and actual use of funds, the planned and actual subgrantee process, the service provided with grant funds, and the locations served or that will be served using grant funds.

Additionally, BEAD encourages, but does not require, that eligible entities:

• Create quality, high-paying jobs.
• Encourage broad participation in the subgrantee application process, including by minority-owned or other socially or economically disadvantaged individual-owned businesses.
• Consult hazard mitigation plans approved by the Federal Emergency Management Agency to identify key risks and hazards and ensure the climate resilience of new infrastructure and other grant-funded projects.
• Maintain a dialogue with the NTIA throughout the development of their proposals to receive feedback and ensure alignment with federal priorities.

Considerations

States and territories will make a series of decisions over the next several years that will significantly affect their ability to achieve the funding requirements and goals outlined in BEAD. Early, active, and ongoing engagement with lawmakers, local communities, the private sector, researchers, and others will be critical to success, and eligible entities and their partners should consider that:

• Although the NTIA’s requirements may appear to offer little flexibility, states and territories still have significant authority to build programs that reflect their priorities, such as through identifying areas that are eligible for funding, defining affordability, and designing stakeholder engagement strategies.
• As large as it is, the amount of money in the BEAD Program is not enough to support long-term network maintenance, affordability subsidies, and digital skills training. State and territorial lawmakers should begin planning for these long-term costs now and work with their broadband offices to help build a meaningful foundation that can support these needs after the federal funds are spent.
• Although the readiness of eligible entities will play a substantial role in their ability to effectively deploy BEAD funding and meet NTIA requirements, the success of the program also will depend on local and Tribal governments’ capacity to participate in the implementation. To support local engagement, some state and territorial broadband offices are already working with philanthropic organizations and other partners to help educate local leaders on how to quantify their broadband needs and apply for funds.

Conclusion

Over the next four or more years, eligible entities will deploy roughly $41 billion in funds to bring high-speed, affordable internet to millions of unserved households throughout the country. This investment will touch nearly every aspect of the broadband space and will bring broadband access to more unserved and underserved communities than any previous effort, while also providing much-needed support for broadband adoption programs and community anchor institutions.

To meet the requirements of the BEAD Program, states and territories are already scaling up their broadband programs to ensure proper data collection, planning, stakeholder engagement, and funding decisions. And although this investment still will likely not be enough to achieve universal access, combined with other federal broadband funding, it will bring the nation closer to closing the digital divide than ever before.