WISPA White Paper: NTIA's Technological Bias Could Raise Cost of BEAD by Tens of Billions of Dollars

The NTIA’s BEAD NOFO will fall short of connecting all Americans online because it is?not?based on sound economic and other policy principles, concludes Dr. Bill Lehr in a white paper released today.?By designating fiber as a “priority broadband project” for NOFO deployments and excluding from the definition of “reliable broadband service” other viable technologies, NTIA’s total increased cost of opting for fiber could raise the costs of addressing U.S. broadband needs by tens of billions of dollars – potentially by as much as $60 billion – while also imposing significant delay in reaching truly unserved areas, foregoing billions more in lost consumer surplus and opportunity costs.

“Prioritizing fiber projects over other broadband technologies represents a significant departure from the sound regulatory principle of technological neutrality,” states Lehr.?This unreasonable bias “could increase costs by upwards of $30 to $60 billion depending on the distribution of fiber deployment costs for the unserved locations.”

The paper was commissioned by WISPA to help NTIA and State policymakers realize the greatest success in bridging the digital divide through the Infrastructure Investment and Jobs Act (IIJA) and the NTIA’s BEAD NOFO.?The NOFO provides the States approximately $42 billion to deploy broadband where it is not.?In framing the IIJA, Congress chose a tech-neutral path to roll-out needed services to all locations.?NTIA, however, has eschewed that time-tested approach.?The NOFO almost exclusively favors fiber deployments over other viable alternatives.?Further, the NTIA has inexplicably removed unlicensed fixed wireless access (FWA) from the palette of “reliable broadband” solutions available to the States for BEAD projects.?Technologies like FWA using only unlicensed spectrum, which the FCC has determined can be used by universal support program recipients to meet their performance obligations, can be deployed in a matter of months, not years, and at a fraction of the cost of fiber.

According to Lehr, “Excluding broadband providers that use unlicensed spectrum to deliver broadband services…signals a threat to universal service policy goals and the healthy evolution of the Internet ecosystem.”?Using recent FCC data, Lehr calculates that walling off otherwise recognized broadband alternatives “unambiguously adds” at least 1.9 million new locations calling for government-funded overbuilding with BEAD funds.?As a result, “the public funding challenge of promoting universal service to broadband in the U.S. may be elevated by a third, or by more than $10 billion,” states Lehr.

By ignoring Congress’ tech-neutral intent, the NOFO’s fiber preference, which takes considerably more time (and in many cases years) to deploy, will certainly bring about expensive delay to communities that currently lack 25/3 Mbps and 100/20 Mbps broadband.?“The increased costs and reduced options enabled for addressing unserved citizens will further delay the ability of those citizens to participate in the digital economy and contribute to the benefits that realization of universal service goals will deliver to all citizens.”?Delaying the availability of broadband, if even for two years, could result in foregoing upwards of $30 to $60 billion in total surplus. Those “substantial opportunity costs cannot be overlooked,” in Lehr’s view.

These infirmities might be mitigated if States could flexibly use the tools they deemed fit for their NOFO projects.?But the latitude to employ anything other than fiber has been all but foreclosed by the NTIA.?In fact, the agency doubles-down on its fiber bet by urging States to reach the highest possible costs when calculating an exception to its preference – e.g., the NOFO’s Extremely High-Cost Per Location Threshold – essentially mooting that guidance, which would have allowed States to choose FWA, or other less-costly technologies, where the expense to wire via fiber was deemed exorbitant.

The ”mistaken excessive prioritization of [fiber]…imposes unreasonable constraints on State Broadband Offices seeking to promote digital infrastructure goals efficiently,” concludes Lehr.?To rectify this, he suggests States “actively engage with the FCC and NTIA to push for more sensible rules. Those efforts will be aided if the States have better and more granular data about the costs and available technical options for deploying broadband infrastructure in the State.?That means better information regarding the costs of providing [fiber] to every location in the State, as well as the costs of using alternative technologies.”

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