Origin of “tech neutral” shift for BEAD subsidies lies in 2021 infrastructure bill

This week’s policy shift on the advanced telecommunications infrastructure subsidy component of the Infrastructure Investment and Jobs Act (IIJA) to make it “tech neutral” and give less preference to fiber to the premises (FTTP) has its origins in 2021 as the IIJA was being enacted. The change -- which emphasizes rapid deployment -- is expected afford greater consideration to subsidizing providers of fixed terrestrial wireless and low earth orbit (LEO) satellite Internet.

The original bill sponsored by the Biden administration would have appropriated $100 billion for fiber infrastructure to be primarily deployed by local governments, nonprofits and consumer cooperatives. The administration noted supporting these entities would allow subsidy dollars to go further since they operate without the need to generate profits for investor-owned entities.

Opposition from legacy telephone and cable companies watered down the bill to cut the funding to $43.45 billion for delivery infrastructure. Instead of FTTP, the bill employed a throughput versus infrastructure-based standard for the subsidies.

Accordingly, the funding program was chartered as Broadband Equity Access and Deployment (BEAD). Funding was restricted to premises not able to obtain bandwidth of 25Mbs down and 3Mbps up. “Broadband” was defined as 100Mbps down and 20Mbps up with latency of 100 milliseconds or less.

At that point, the legislation – nominally dedicated to improving various categories of essential infrastructure – deemphasized infrastructure and instead the level of “broadband” service available at a given address. It retained a market-based policy despite widespread market failure the bill was intended to mitigate. This favored incumbent telephone and cable companies looking to incrementally edge out their existing infrastructures and providing a substantial degree of protection from publicly owned and utility cooperative operators.

The administration however sought to maintain an FTTP infrastructure focus in its rules for the BEAD program, describing it as less prone to obsolescence and thus able to deliver the best long-term value.

This week’s policy shift and the designation of throughput – broadband – in the IIJA now puts fixed wireless and satellite providers on a strong footing for subsidization. They could plausibly argue that any technology that can deliver “broadband” as specified in the IIJA should be eligible.