Minnesota ISPs Say They May Not Participate In BEAD, Citing Restrictions

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States are poised to receive $42.5 billion in new Broadband, Equity, Access, And Deployment (BEAD) subsidies in the new year thanks to the 2021 infrastructure bill. But a growing number of ISPs in states like Minnesota say they may not participate in this latest round of federal grants, citing bureaucracy and burdensome restrictions.

While American Rescue Plan Act (ARPA) grants came with significant leeway as to how grant money could be spent, BEAD grants, overseen by the National Telecommunications And Information Administration (NTIA), come with numerous requirements related to lien mandates, low-cost service obligations, and deployment technology.

Those restrictions serve a purpose in the wake of the boondoggle that was the FCC’s Rural Digital Opportunity Fund, which resulted in a massive number of defaulting bids and unfinished projects because companies bidding on projects lacked the competency or financing to finish their awarded projects. It’s a major reason the NTIA was put in charge of BEAD.

But many Minnesota ISPs are still bristling at BEAD’s requirements, according to Brent Christensen, president and CEO of the Minnesota Telecom Alliance, an organization that represents 70 ISPs across the North Star State.

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“My members are telling me they’re not going to participate,” Christensen recently told MinnPost when asked about the $42.45 billion broadband program. “The way that BEAD is structured. I don’t know how anybody’s going to participate.”

Of particular concern to some providers is the requirement that property or equipment improved with the funds will have to be held in trust by the NTIA, meaning the providers record liens on what they install. Some ISPs are also bristling at requirements that they have to provide affordable access to low-income residents.

“That’s OK when you’ve got a lot of businesses and you’ve got a lot of customers that you can spread that out over,” Christensen said. “But when you’re a small company in rural Minnesota, you don’t have that customer base to spread it out on so you can’t do that.”

Providers are also complaining about Minnesota’s new prevailing wage law, which was passed last year as a way to provide a wage hike to underpaid workers. The new requirements apply to state economic development grant awards of $200,000 or more, and will inevitably drive up the costs of broadband deployment labor for providers.

Companies can apply for waivers for some restrictions via the NTIA, but the very risk of not getting those waivers is creating a chilling effect on provider willingness to even bother with the program as a whole.

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“The state’s kind of in a bind,” Christensen said. “Who in their right mind would spend tens of thousands of dollars to engineer a project in the hope that you may or may not get a waiver? It just doesn’t make sense.”

At the same time, one company Christensen’s organization represents, Centurylink, has historically opposed nearly all oversight of broadband deployment, and have been caught up in several scandals where they took federal taxpayer money, then misrepresented their footprints and failed to deploy the promised broadband networks.

On the one hand, ISPs have legitimate concerns about BEAD restrictions that could imperil the program’s efficacy. On the other hand, many of these restrictions are well intentioned efforts to protect labor, ensure affordability, and avoid the federal sins of past programs. It will be a messy few years as the feds, states, and ISPs all attempt to bridge the difference.

Inline image of cost accounting courtesy of FreePix.uk, Creative Commons Attribution-ShareAlike 3.0 Unported
 

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