New Street Research is certain the Trump Commerce Department will revise the guidelines for states for the implementation of the $42.5 billion BEAD program. Indeed, New Commerce Secretary Howard Lutnick recently announced the department is conducting a “rigorous review” of the BEAD program. This and several factors can impact when BEAD grant money flows.
Lutnick told lawmakers at a rural broadband hearing earlier this month he wants to take a tech-neutral approach, meaning no fiber preference. Commerce “is revamping the BEAD program to take a tech-neutral approach that is rigorously driven by outcomes, so states can provide internet access for the lowest cost,” Lutnick said.
“The Department is exploring ways to cut government red tape that slows down infrastructure construction,” he added. “We will work with states and territories to quickly get rid of the delays and the waste,” Lutnick emphasized, Inside Towers reported.
A former NTIA official said at the same hearing that changes to BEAD would delay when states can see the money. New Street Research (NSR) Policy Advisor Blair Levin agrees.
NSR believes removing the fiber preference “will have no material impact on publicly traded companies,” he writes in a recent client note. But other changes could, “including whether the federal government will impose a high-cost threshold on states that will shift funds from fiber to satellites and fixed wireless,” notes the former FCC Chief of Staff under Chairman Reed Hundt. Levin notes that Representative Richard Hudson’s (R-NC) bill, the Streamlining Program Efficiency and Expanding Deployment for BEAD Act, which would implement many of the changes Lutnick seeks, does not set a high-cost threshold.
Levin also cited a Wall Street Journal article that stated under BEAD’s original rules, Starlink was expected to receive up to just over $4 billion. With Lutnick’s overhaul, that number could rise to between $10-$20 billion.
Lutnick has said he wants states to choose the internet technology that would be at the lowest cost for taxpayers.
Following any program overhaul, “states might have to rewrite their plans for how to spend their funding from the program, which could delay the implementation,” writes Levin. If the changes made by Commerce and NTIA do require states to re-do their plans, and then NTIA re-runs its grants processes, “it will delay any shovels in the ground by a year or more,” Levin predicts.
“All evidence reinforces our high level of confidence that Lutnick or the Congressional Republicans will eliminate numerous requirements/preferences NTIA had previously put on states in their planning,” Levin writes. “While states have spent years planning for BEAD, including holding competitive bids for companies to build fiber networks, it is unclear whether the Commerce Department can force these states to restart their planning from scratch.”
NSR sees “limited risk” that the Republican reforms will shift a “material amount of funds from T, CHTR, and VZ/FBYR to Starlink or other satellite providers, though Lutnick’s comments suggest that the Administration may unilaterally decide to drive such a shift,” writes Levin. “In that event, we think T and VZ are still well positioned in that if the high-cost threshold limits their ability to bid to deploy a fiber network, they (along with TMUS) have an option to bid to deploy a fixed wireless network. But the game is now afoot and bears continued watching as the Republican rhetoric suggests there is a continuing risk to the T, CHTR and VZ/FBYR opportunities in obtaining BEAD support,” states the NSR advisor.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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