In a research note benignly titled “BEAD Update,” Washington insider Blair Levin offers numerous reasons why diverting more Broadband Equity, Access, and Deployment (BEAD) funding to satellite is a bad idea. He has also kept his ear to the ground, gathering a wide range of information about how states are responding to changes made to the BEAD program in June.
“From a state perspective, it is not clear what the states providing funds to satellite will actually gain, as their residents already have access to satellite broadband,” wrote Levin, policy advisor to New Street Research.
BEAD grants to satellite providers will include a capacity reservation aimed at ensuring that funded locations will be served. But, according to Levin, satellite providers have suggested to some states that they will achieve this by raising rates to levels that limit the number of users.
Although BEAD grants will require satellite providers to offer equipment for free, BEAD rules don’t limit what the providers can charge for service, Levin noted.
“The combination of no rate regulation and being the monopoly providers means that as a practical matter, ‘free’ will result in higher prices,” he added. “With no requirements for lower pricing, why would anyone who is not currently buying satellite service choose to buy it in the future just because the government subsidized Starlink and/or Kuiper?”
Another concern, he said, is that “grants going to satellite do not result in place-based networks, raising concern about the long-term commitment to the rural locations.”
As a result of all these concerns, “we have heard that some states are considering returning all the money to the federal treasury on the grounds that, in their view, spending money on satellites does not buy anything real for their residents and they cannot in good conscience spend the money where there will be no benefit.”
None of this is stopping satellite providers from being more aggressive in bidding for BEAD funding under the new rules, though.
Levin noted that both Starlink and Kuiper are bidding for more locations and bidding lower amounts than they previously did (when some states accepted applications under the initial rules). The initial rules allowed for satellite funding only for locations that would be too costly to serve using fiber or other terrestrial technologies.
The new rules essentially call for funding to go to the lowest bidder, as long as the bidder uses one of several specific technologies, which may include satellite.
What States Are Planning
The new BEAD rules may give states a means of limiting how much funding goes to satellite, however. The rules require any funded technology to be “easily scalable” and “capable of supporting 5G.”
Levin sees each state choosing one of three paths in addressing this issue:
- Aggressively driving down BEAD costs by awarding funding primarily to the lowest bidder, which is likely to be a satellite provider
- Skewing funding toward fiber to the maximum extent that the state believes BEAD administrator National Telecommunications and Information Administration (NTIA) will allow
- Attempting to balance the tradeoffs for the most cost-effective approach and using satellite where necessary — preserving some fiber funding, but using fixed wireless more
States are required to submit their recommended awardees to NTIA by September 4. NTIA may reject some states’ recommendations. But, as of now, no one knows how extensively this will occur. It’s an area Telecompetitor will be watching closely over the coming weeks and months.
