Federal funding freeze creates 'considerable uncertainty' for BEAD – analystFederal funding freeze creates 'considerable uncertainty' for BEAD – analyst

The Trump administration's pause on federal grants and loans is expected to halt the $42.5 billion Broadband Equity Access and Deployment (BEAD) program and other funds relevant to telecom, but the overall impact is still unknown.

Nicole Ferraro, Editor, host of 'The Divide' podcast

January 28, 2025

5 Min Read
The White House
(Source: incamerastock/Alamy Stock Photo)

The Trump White House Office of Management and Budget (OMB) on Monday night issued a memo pausing all federal loans and grants in a move that has created confusion about both the legality of such an order and how federal agencies are to proceed. But one top telecom analyst, Blair Levin, expects the pause to affect the $42.5 billion Broadband Equity Access and Deployment (BEAD) program.

"We expect a pause in BEAD funding, and perhaps [Universal Service Fund] funding as well, but further expect that, because the funding largely assists Republican areas, the pause will be relatively short. Still, we acknowledge considerable uncertainty about the timing and constraints on future BEAD spending," wrote Levin in a note for New Street Research.

The OMB memo impacts far more than the programs designed to help close the digital divide. The memo itself cites "more than $3 trillion" in federal spending that may be impacted.

Like other perplexing and alarming orders flowing from the federal government in the last week, the OMB memo uses Trumpian language to explain its reasoning for the funding halt: 

"The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve," according to the memo issued by OMB Acting Director Matthew Vaeth, who also referenced "ending 'wokeness'" as a stated goal of the directive.

Related:2025 preview: To BEAD or not to BEAD?

Legal questions

Democratic lawmakers were quick to respond to Monday night's OMB memo to remind the Trump administration that the funding in question was already approved by Congress and can't just be halted.

"Congress approved these investments and they are not optional, they are the law. These grants help communities in red states and blue states and support families, help parents raise kids, and lead to stronger communities," wrote Senate Minority Leader Chuck Schumer (D-NY) in a post on X, formerly Twitter.

And in a fact sheet released by Senate Appropriations Committee Vice Chair Patty Murray (D-WA), the senator stated that "Trump's directives are a brazen attempt to ignore federal law and block communities across America from receiving critical investments Congress has made to rebuild roads and bridges, connect families to high-speed internet, create new good-paying jobs, and more."

Sen. Murray, along with Congresswoman Rosa DeLauro (D-CT), added in a letter to the OMB's Vaeth that the "scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country. We write today to urge you in the strongest possible terms to uphold the law and the Constitution and ensure all federal resources are delivered in accordance with the law."

But Levin's note for New Street Research states that these legal questions "will not affect the pause ordered by the memo." Moreover, he added, the "operative question for investors is what happens after February 10th."

Now what?

The OMB's memo requires federal agencies to pause grant and loan funding by 5 p.m. ET today (Tuesday, January 28) through February 10, 2025.

"Each agency must pause: (i) issuance of new awards; (ii) disbursement of Federal funds under all open awards; and (iii) other relevant agency actions that may be implicated by the executive orders, to the extent permissible by law, until OMB has reviewed and provided guidance to your agency with respect to the information submitted," states the order.

In the interim, and by no later than February 10, federal agencies must "submit to OMB detailed information on any programs, projects or activities subject to this pause."

In addition to BEAD, the freeze is likely to impact several other programs relevant to telecom and the digital divide, including Digital Equity Act awards which were preliminary announced by the Biden administration's NTIA.

The expected BEAD pause comes as three states (Louisiana, Nevada and Delaware) have selected their BEAD grant winners, and as Louisiana was set to begin BEAD construction in the coming weeks.

But as Levin wrote in his New Street Research note, the pause as it pertains to BEAD may just "accelerate" an inevitable debate about how to proceed with the program under Trump's NTIA versus Biden's: "we expect changes in the program in line with a letter sent by Senator Cruz to NTIA noting his view of problems with the current program design. The problems noted include: 1) NTIA's technology bias in defining 'priority broadband projects' and 'reliable broadband service'; 2) imposition rate regulation; 3) unionized workforce and DEI labor requirements; 4) climate change assessments; and 5) excessive per-location costs," stated Levin.

A change to that last point could see BEAD funds funneled to satellite providers, like Elon Musk's Starlink, and fixed wireless access companies, over fiber.

[Update; 1/29/25, 1:30 p.m. ET: Following a full day of chaos, the Trump White House OMB officially rescinded its order on freezing grants and loans. A memo issued on Wednesday afternoon (January 29), received by independent journalist Marisa Kabas, authored by OMB Acting Director Matthew Vaeth, simply states: "OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President's Executive Orders, please contact your agency General Counsel.]

About the Author

Nicole Ferraro

Editor, host of 'The Divide' podcast, Light Reading

Nicole covers broadband's impact on society, with a focus on policy and the digital divide. She hosts The Divide on the Light Reading Podcast and tracks broadband builds in The Buildout column.

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