NTIA Faces Scrutiny Over Alleged BEAD Price Caps
With NTIA in the 90-day curing stage for states that submitted their revised final BEAD proposals by the Sept. 4 deadline, some broadband access advocates are claiming that the agency is requiring states to conduct another "Best and Final Offer" round based on price caps. They said a spreadsheet obtained by BroadbandMarketer's Doug Adams containing excessive cost thresholds suggests that NTIA will require states to reengage with subgrantees with overly high project costs.
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While there has been no official notice from the agency, Christopher Mitchell, director of the Institute for Local Self-Reliance's community broadband networks initiative, raised the concern last week. He blogged that NTIA will rely on "arbitrary price caps" that are based on models from CostQuest, which maintains the FCC's national broadband map. "If a project exceeds the secret cost cap, the state has 3 days to work with the ISP bidder to reduce costs still further," he wrote. "If the bidder cannot meet that secret cost cap, then the state must reopen negotiations with all the applicants."
NTIA disputed Mitchell's claim that the agency was imposing "arbitrary price caps," saying in a rebuttal Thursday that it's instead "using tailored, state-by-state data to identify outlier, unreasonably expensive projects." If a project is flagged, NTIA said, it will be "requesting additional information from the states and considering extenuating circumstances" where applicable (see 2509110079). The agency didn't comment further.
The term "arbitrary" is "doing a lot of the work here," Adams wrote in a Broadband.io post. According to the NTIA spreadsheet obtained by Adams, projects under 65% of a threshold are likely to be approved with little to no pushback, while those costing between 65% and 85% will be asked to renegotiate a "best and final offer" with the preliminary subgrantee. Projects costing more than 85% of the threshold won't be approved. If a vendor declines to reengage, the state must go to the next bidder. Adams noted that projects in West Virginia and Rhode Island exceed the 85% threshold.
Although NTIA's BEAD restructuring policy notice released in June (see 2506060052) declined to adopt a national cost threshold, the agency clarified that it "reserves the right to reject any proposed deployment project" or specific broadband serviceable location connection "for which costs to deploy are excessive, as determined by NTIA based on the cost characteristics of the area to be served."
However, Mitchell noted that CostQuest modeled its costs of building fiber for a telephone company. "We believe those numbers are the basis of the caps," he told us. It's "contrary to what Congress intended and replicates the bad policy we have seen for years coming out of the federal government to ignore more local expertise and impose worse technology on people living in rural areas."
"Congress told NTIA to prioritize high-quality deployments that would meet local needs for decades and to do it within a given budget," Mitchell added. NTIA is "cloaking itself in high-minded talk about being a responsible steward of public funds while saddling rural America with higher-cost, lower-quality connections that future governments will find it more costly to fix."
Requiring states to run an additional round to "drive costs down even further and create more openings" for low earth orbit satellites "puts BEAD's accountability at risk," wrote Scott Woods, president of public-private relationships for Ready.net. Woods warned that shifting funds from "proven connections to vague measures ... undermines the very data-centric and proof-based framework BEAD was built on."