All across the country, state governments are scrambling to beef up their broadband offices and stand up new grant programs in anticipation of millions in funding from the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program. As officials wait for the money to start flowing – likely next year – one former federal official offered some friendly advice on what and what not to do in order to make their broadband grant programs a success.
Chad Rupe is the former administrator of the U.S. Department of Agriculture’s Rural Utilities Service, having served from 2019 to 2021. In that role, he helped stand up the multi-billion ReConnect broadband grant program and implemented its first two funding rounds (ReConnect just closed applications for Round 4 on Wednesday). He subsequently served as manager for the state of Montana’s Broadband Program before becoming General Manager of California-based operator Ponderosa, which is working to invest $100 million in expansion of its fiber-to-the-premises network over the next five to 10 years.
Rupe acknowledged that building a new grant program isn’t an easy task, especially for states which may not have done so either at all or at scale before.
“You look across the nation and there’s a lot of state offices that are getting stood up and they lack the personnel, they lack the expertise, they lack the track record and so do the state legislatures and different governor administrations. There’s just not a lot of depth of knowledge and expertise in these arenas,” he explained. “And so what you get is you get a whole bunch of cooks in the kitchen who don’t really know how to cook and they all want to put their own recipe into the mix. So, it’s really a challenge.”
According to Rupe, there are a few lessons states can take from the success of the ReConnect program as they navigate the path ahead. Among other things, he urged states to prioritize future-proof solutions despite potential sticker shock, allow for a robust challenge process of eligible locations early in the award process and carefully weigh issues operators might face in terms of construction timelines and financing requirements.
The National Telecommunications and Information Administration (NTIA), which is responsible for allocating BEAD money to the states, has already expressed a preference for fiber broadband but indicated states will have leeway to meet their individual needs. Rupe acknowledged fiber won’t be right for every situation but cautioned states against defaulting to technologies that comes with cheaper upfront costs.
“I would caution people to be cognizant of the cost on an overall lifetime basis versus the initial sticker shock if you will of the build,” he said.
Rupe added an early challenge mechanism is key for broadband programs looking to implement a fair process. Allowing operators to challenge locations deemed eligible for funding can help avoid overbuilding and wasteful spending, he said. And running this process before awards are made avoids confusion after the fact. Beyond the maps, he noted careful upfront vetting of grant applicants is crucial to prevent a situation like the one the Rural Digital Opportunity Fund has run into, with winning bidders being denied more than $2 billion in support nearly two years after they were awarded the funding.
In terms of timelines, Rupe said more generous allowances can provide operators with leeway to navigate supply chain issues which have been plaguing the industry. He added states should also be aware of that letters of credit and other financing requirements can be tough for smaller operators to field. That’s in part because the smaller banks present in rural areas where these companies operate have a harder time understanding the framework and risks involved with subsidized builds.
“Nothing is perfect and it won’t be perfect when we’re done. We just have to make sure we’re avoiding known pitfalls and we have a history of knowing what those pitfalls are and we have a path for success. ReConnect after several rounds now has a pretty viable path,” he concluded. “So, use that as a model for developing your state program.”