April 13, 2023
A new report from BroadbandNow is calling attention to how ongoing roadblocks to municipal broadband across the US may result in delays to states receiving funds from the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program.
Language within the NTIA's notice of funding opportunity (NOFO) for BEAD suggests the government may withhold funding if municipalities are restricted from bidding on state broadband grants.
As per the NTIA, state BEAD final proposals must include:
A description of efforts undertaken by the Eligible Entity to ensure the participation of non-traditional broadband providers (such as municipalities or political subdivisions, cooperatives, non-profits, Tribal Governments, and utilities), including an explanation for awards to traditional broadband providers when one or more non-traditional providers submitted competing proposals to serve an area...
According to BroadbandNow's research, there are currently 17 states with laws either banning or otherwise hindering municipalities from offering broadband, and a handful more with "other forms of roadblocks in place that make operating municipal networks more difficult," writes BroadbandNow's Editor in Chief Tyler Cooper.
As such, BroadbandNow warns that states may face a situation where municipalities petition NTIA directly if they're left out of the BEAD granting process. Cooper writes that "there is technically nothing stopping the NTIA from denying state plans if they refuse to allow municipal providers to participate," which could delay BEAD funds by "months – or even years."
Figure 1: (Source: Juan Roballo/Alamy Stock Photo)
Below is a condensed summary of states with municipal broadband restrictions and their estimated BEAD allocations based on existing data:
Explanation of Ban or Restrictions
Estimated BEAD $
Allowed but can't use local funds for initial build, can't expand beyond jurisdiction, limits on bundles
Banned unless municipalities hold public referendum (allowed if no private ISP present)
Allows muni broadband but imposes 'ad valorem' taxes
New public utilities require 51% voter referendum (60% if using bonds for broadband)
Allows muni broadband but imposes barriers, requires public referendum
Requires municipality to solicit RFPs from private companies first
Allowed with 65% 'supermajority' vote on referendum
Allows muni broadband but not TV, phone; bars leasing to other providers
Allows muni broadband if no private providers present
Bans any public entity from providing broadband
Banned for municipalities with over 25K population, counties with over 50K
Roadblocks include restrictions on financing, requirement to bake in extra costs, etc.
Allowed if private ISPs are first given 14 months to respond to request for service
Roadblocks include proposal-stage barriers, phantom cost requirements, additional taxes
Electric utilities may operate broadband but not beyond service area
Bars munis from offering telecom services; some exceptions when no private ISP present
Allowed but with 'many procedural and accounting requirements'; restricts municipal bonds
Allowed but must match incumbent rates, meet additional requirements, add costs
Allowed but must match incumbent rates, hold public hearings, conduct feasibility studies
Munis push back
To be sure, some communities have launched municipal broadband networks despite the roadblocks and bans presented by the aforementioned state laws. The most well-known example is Chattanooga, Tennessee, which delivers gigabit fiber via the city's Electric Power Board (EPB).
In Utah, the open access municipal network Utopia Fiber is now providing fiber to 20 Utah cities and last year built out more than 2,969,784 feet of fiber infrastructure across Utah, Idaho and Montana, according to a recent announcement.
Moreover, a few states are attempting to pass more favorable laws in light of the BEAD program.
In 2022, for example, both New York and Maine passed legislation to further support municipal broadband efforts.
And currently, the Colorado legislature is considering a bill that would overturn a state law restricting municipal broadband. That law allowed for individual municipalities to opt out via public referendum, and 140 have done so since its passage – leading to municipal network launches such as Loveland's Pulse. The new legislation, if passed: "Eliminates the requirement that a local government hold an election before providing or before operating a facility to provide cable television, telecommunications, or broadband internet services to subscribers," according to the bill text.
What comes next?
How states resolve these roadblocks in terms of BEAD remains to be seen. But there's still a bit of time to sort it out.
At present, the NTIA plans to release BEAD allocations on June 30 (providing that date doesn't get delayed). That starts a 180-day window where states are required to submit their initial proposals for how they'll structure their BEAD programs.
NTIA has said it will review proposals "as expeditiously as possible." Upon approval of initial proposals, states will receive 20% of their funding and – from there – will have a year to "conduct additional local coordination, complete the selection process" and submit final proposals to receive their remaining funds, according to NTIA's BEAD NOFO.
It's at that point that funds could conceivably be held up if states haven't taken adequate steps to include "non-traditional broadband providers" in the process.
BroadbandNow's Cooper told Light Reading that he thinks NTIA's stance, as written in the BEAD NOFO, was "intentional" with regard to addressing municipal broadband bans.
"They seem to want to give states the option to take the 'easy' way out and waive their muni restrictions. If they don't, they want to force the state to defend their decision to the public," he said. "As for what happens when we reach that point, it's currently anyone's guess."
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