It appears that the Commerce Department decision on how to move forward on the BEAD program has been delayed from mid-May to June or even July. That’s according to New Street Research (NSR) Policy Advisor Blair Levin in a recent client note.
States, companies and investors are waiting for the results of Commerce Secretary Howard Lutnick’s “rigorous review,” Inside Towers reported. New Street is “certain” that specific Biden rules will be eliminated, according to Levin.
“Key questions are whether the 42+ states that have either completed or are close to completing their bidding will have to rebid under new guidelines and whether Commerce will impose a new high-cost threshold that will shift funds from fiber to satellite broadband offerings,” says Levin. While some states continue to move forward, the review delay has forced others to pause their efforts.
There continues to be political pressure on Commerce to let the states proceed with their existing plans, minus certain Biden era requirements, he notes. For example, Senator Capito (R-WV) recently wrote Lutnick, saying “Many of the changes that should be made to the program can be made quickly, but as an example, reopening the subgrantee application process for ISPs could delay connecting rural Americans for another year,” Inside Towers reported. Levin says states like Missouri and Louisiana have pleaded with Lutnick to let the funding move forward.
Of several possible outcomes, NSR thinks two are most likely. One is to force states to rebid and impose a federal high-cost threshold that would shift funds from fiber to satellite. The second option might be to force states to eliminate certain requirements, “but otherwise allow the results of the bidding process to stand with only marginal adjustments, and to proceed to transfer funds to the states,” according to the policy expert.
Commerce clearly wants to do the first option, according to Levin. “If it wanted to do the second, it could do so immediately and stop the more than 100-day delay caused by the Trump Administration. But we think Commerce is developing an increased appreciation of the political, administrative and political risks of doing the first, [forcing states to rebid and impose a federal high-cost threshold that would shift funds from fiber to satellite] which experts predict would add at least 12-18 months of further delay to getting shovels in the ground,” he writes.
Whatever the ultimate outcome, the delay is not good for the large ISPs “that have been involved in bidding to date,” including Comcast (NASDAQ: CMCSA), Charter (NASDAQ: CHTR), T-Mobile (NASDAQ: TMUS), and Verizon/Frontier Communications Parent Inc (NYSE: VZ)/(NASDAQ: FYBR),” Levin notes.
“We think the cost to the Commerce Department of … forcing a rebid process and having a federal high-cost threshold, is rising and by June or July, the politics may have shifted for the Trump Administration such that further delays in broadband funding may carry an unacceptable political risk.”
By Leslie Stimson, Inside Towers Washington Bureau Chief
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