The long-delayed approval of Virginia’s plan for using its Broadband Equity, Access and Deployment (BEAD) program funds could be a good sign for other states fighting onerous price controls.
The National Telecommunications and Information Administration (NTIA) announced July 26 that it had approved BEAD proposals for New Mexico and Virginia. All 50 states, the District of Columbia, and American territories must submit plans on how to spend their part of the money allocated to them through the $42.5 billion BEAD program. Funding amounts are based on the number of unserved and underserved residents within their borders. In particular, Virginia will receive nearly $1.5 billion.
Virginia was one of the first states to submit its proposal to NTIA. The proposal was sent to NTIA on September 26, 2023, with approval coming 305 days later.
As the Taxpayers Protection Alliance has reported, NTIA has been requiring states to include a provision that affordable plans be offered to low-income households by either explicitly stating a price point or determining a formula for how to determine a low-cost price. In other words, states had to implement restrictive price controls. Virginia did neither.
NTIA initially wrote to the Virginia Department of Housing and Community Development (DHCD), which runs the Virginia Telecommunications Initiative, after it submitted its second BEAD proposal that the state “must be able to determine the impact to a customer at the Initial Proposal stage — it isn’t enough to know as of the Final Proposal. Thus, the low-cost option must be established in the Initial Proposal as an exact price or formula.”
TPA co-signed a letter to Commerce Secretary Gina Raimondo in October calling on her agency to stop NTIA’s attempts at rate regulation. As the letter pointed out, Congress did not authorize the NTIA to adopt price controls in the Infrastructure, Investment, and Jobs Act that created BEAD. However, NTIA’s actions on the notice of funding opportunities have indicated otherwise. Virginia’s plight was noted in that letter, which pointed out that DHCD sought the flexibility not to rate regulate gigabit broadband plans but was told by NTIA it must do so.
Price controls will limit the number of providers willing to apply for BEAD grants, and would delay closing the digital divide.
NTIA Administrator Alan Davidson indicated at a House Energy and Commerce Committee hearing last December that he doesn’t believe his agency’s requirements meet the definition of rate regulation. Many on that panel disagreed. The final approval of the Virginia plan could mean the NTIA is softening its stance on the issue.
While Virginia’s plan doesn’t nix listing prices entirely, it offers a range for a low-cost service plan, making it the first state not to pick a specific price or list a formula that gave a specific price. The plan sets the range at between $30 and $75 monthly, noting those figures were determined by a survey of service providers and the current low-cost pricing plans they offer in state-funded broadband expansion award areas. The plan allows providers to establish an option below $30 monthly if they so choose.
The announcement came two days after a group of more than 30 trade associations suggested remedial steps to adjust the BEAD low-cost requirement, Broadband Breakfast reported.
“Without significant and immediate changes of approach toward its implementation, we are concerned the program will fail to advance our collective goal of connectivity for all in America,” read the letter, which was signed by such groups as the Fiber Broadband Association, the Rural Broadband Association, and USTelecom — the Broadband Association.
NTIA has generally pushed states to set the low-cost rate strictly at $30 monthly, which the letter says is “unmoored from the economic realities of deploying and operating networks in the highest cost, hardest-to-reach areas that BEAD funding is precisely designed to reach.”
“A low-cost option at the unrealistically low rates NTIA has been approving means most providers will not be able to sustain these networks over the long term and so will lack a business case to participate in the program,” the associations said in the letter. “This is made all the more evident by the fact that NTIA requires providers to lock in this low-cost service option rate for the ‘useful life’ of the network, which NTIA defines as 10 years post-deployment, and likely at least 15 years after providers actually submit their bids.”
The approval of the Virginia BEAD plan is a positive step, given that NTIA allowed the state to establish a reasonable range for low-cost plans. It is hoped the agency will continue to be more flexible in considering the proposals of other states.
Other states should follow Virginia’s lead and petition the NTIA to give states more flexibility in allowing companies to offer more realistic low-cost options for consumers. This will increase competition and get more people connected to high-speed internet.