'Buy America' rules have broadband industry on edge

Many in the industry have been raising concerns about the federal government's 'Buy America' rules for subsidized broadband builds. But some also see an opportunity.

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

August 8, 2022

8 Min Read
'Buy America' rules have broadband industry on edge

The US federal government is on the cusp of investing tens of billions of dollars into broadband networks over the next several years. But a "Buy America" mandate on manufacturing in the infrastructure law has many in the industry concerned.

"That's given our members a lot of heartburn," said Gary Bolton, CEO of the Fiber Broadband Association, referring to "Buy America" requirements in a recent conversation with Light Reading.

As the National Telecommunications and Information Administration (NTIA) spells out in its notices of funding opportunity for the $42.45 billion Broadband, Equity, Access and Deployment program (BEAD) and other broadband grants subsidized through the Biden administration's $2 trillion infrastructure law, "The 'Build America, Buy America Act' requires that all of the iron, steel, manufactured products (including but not limited to fiber-optic communications facilities), and construction materials used in the project or other eligible activities are produced in the United States unless a waiver is granted."

Figure 1: The Biden administration has made boosting US manufacturing and labor a central tenet of its infrastructure law. (Source: Geopix/Alamy Stock Photo) The Biden administration has made boosting US manufacturing and labor a central tenet of its infrastructure law.
(Source: Geopix/Alamy Stock Photo)

Trade groups representing ISPs have been pushing back on the "Buy America" mandate for months, amid pandemic-era supply chain constraints.

Back in January, for example, a coalition including Competitive Carriers Association (CCA), Cellular Telecommunications Industry Association (CTIA), NCTA – The Internet & Television Association, NTCA – The Rural Broadband Association, TechNet Telecommunications Industry Association (TIA) and USTelecom – The Broadband Association, sent a letter to Commerce Secretary Gina Raimondo urging NTIA to issue a waiver on "Buy America" for information and communication technology (ICT).

"We appreciate the need for more production in the United States, and we are willing partners to work toward that goal. But in the time frame for deploying broadband under the IIJA, we are concerned about the negative impacts on companies already employing thousands of American workers if a waiver is not granted," said the groups.

Another letter was sent by the Schools, Health & Libraries Broadband (SHLB) Coalition, arguing that "the 'Build America' requirements would significantly delay the IIJA's broadband infrastructure projects." It further urged the Department of Commerce to "issue a targeted public interest waiver of general applicability for broadband network equipment and consumer devices until such time as companies can set up their manufacturing processes in the U.S."

Similar requests were sent to NTIA by networking equipment vendors like Nokia, which wrote in its comments earlier this year that "Buy American requirements that require sourcing network components in the U.S. would fail to recognize global supply chain realities, exacerbated by the current component shortages." The company therefore recommended that "NTIA and other federal agencies grant broad waivers of Buy American provisions of the BIL, at least in the near term, so as to not delay deployment of broadband to unserved and underserved communities."

Cisco, too, submitted comments to NTIA in February saying: "Expeditious deployment of broadband as envisioned in the IIJA could be severely and significantly impacted if the 'Build America, Buy America' requirements in the law are applied to the broadband deployment programs to be administered by NTIA."

But in mid-May, when NTIA issued its funding rules for BEAD and Middle Mile grants, it spelled out a more limited view of waivers, noting their permissibility only when: 1. Applying the rule would be "inconsistent with the public interest," 2. The necessary materials are "not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality," or 3. The inclusion of such products would increase project costs by over 25%.

Related: NTIA chief defends broadband rules in Senate hearing

NTIA added in its rules that "the Secretary will seek to minimize waivers, and any waivers will be limited in duration and scope."

Rural concerns

Some in the industry are especially concerned about what these stipulations will mean for smaller providers competing for grants in the rural areas that stand to gain the most from fiber infrastructure builds.

In a letter last week, Shirley Bloomfield, CEO of NTCA–The Rural Broadband Association, went back to the original source of the Buy America rules – Congress – appealing to senators on the Commerce Committee to encourage federal agencies to take a looser interpretation of the mandate, and to enact policies to strengthen the supply chain.

Pointing to a 2021 survey of NTCA's membership – which primarily comprises small, rural broadband providers – Bloomfield said that 80% of members "reported an inability or delay in procuring supplies needed for network deployment" and that those problems have "grown worse" since then.

"Importantly, these disruptions could have particularly significant and disproportionate adverse impacts on smaller providers, as NTCA members report of concerns that supplies are being diverted to larger projects and providers," said Bloomfield.

About the Author(s)

Nicole Ferraro

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

Nicole covers broadband, policy and the digital divide. She hosts The Divide on the Light Reading Podcast and tracks broadband builds in The Buildout column. Some* call her the Broadband Broad (*nobody).

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