Bloomberg Law
Free Newsletter Sign Up
Bloomberg Law
Welcome
Go
Free Newsletter Sign Up

White House, States Get Say Over Broadband Funds in Senate Bill

Aug. 16, 2021, 9:00 AM

A Senate push as part of its infrastructure bill to provide $42.5 billion in new broadband subsidies envisions handing control over the funds to the Commerce Department and the states, rather than the independent Federal Communications Commission.

Under the measure, the Commerce Department’s National Telecommunications and Information Administration would distribute the funds through grants to eligible states. Local authorities would then competitively award that money to broadband service and infrastructure providers.

That strategy is a departure from past efforts to help fund broadband access, in which the independent FCC played the leading role.

“For the first time, Congress has said that to solve the problem of establishing networks in high-cost areas, we’re going to rely on the states and not on the FCC,” former Democratic official Blair Levin said. “Congress used to rely on the FCC as the primary expert to do that and now it’s the states working in collaboration with Commerce.”

Other federal agencies have pursued broadband programs in the past, including the NTIA, which in 2009 administered the Broadband Technology Opportunities Program, worth $4 billion. Such efforts, industry analysts and former FCC officials said, have not been as significant as the role the FCC has played in bridging the digital divide. Until now.

“The way telecom policy historically has worked is if the White House had strong opinions, then the NTIA, representing the White House’s views, would file comments at the FCC and the FCC would take that into consideration in its decision-making,” Boston College Law Professor Daniel Lyons said.

The fate of the provisions in the House—where Speaker Nancy Pelosi (D-Calif.) has said she will not bring up the infrastructure bill until the Senate finishes its budget package—is unclear. But if the provisions are enacted, the success of the bipartisan effort to bolster broadband access will depend on how the NTIA and the states handle the task.

An NTIA spokesperson declined to comment on pending legislation. An FCC spokesperson did not immediately respond to a request for comment.

The NTIA state grant provisions in the infrastructure package are drawn from S. 2071, a bill introduced in June by Sens. Michael Bennet (D-Colo.), Angus King (I-Maine), and Rob Portman (R-Ohio).

Under the Senate bill, the NTIA would have to establish the Broadband Equity, Access, and Deployment Program no later than 180 days after the bill becomes law. It would have to award grants to states targeting “unserved” locations, or areas that broadband data maps — created by the FCC — show lack service. The NTIA, in consultation with the FCC, will be required to help states develop their grant applications and provide any other technical support determined by the NTIA.

The FCC in recent years has deployed broadband via “reverse auctions.” In that process, the FCC asks broadband providers the minimum amount of money they would need to service a specific area. The lowest bidder wins the subsidy.

Critics say the Senate approach could lead to a less competitive system.

The FCC’s auctions ensure “government money is being well spent,” while the state grant process is “a lot less market oriented,” Information Technology and Innovation Foundation Broadband Director Doug Brake said, contending it’s “unfortunate that we turned away from the auction mechanism as strongly as Congress has.”

There would be trade-offs under the new plan, Levin said. While “there are some benefits to having local leaders decide where the needs and opportunities are,” the FCC’s auction mechanism probably enhances competition, he added.

Despite the re-balancing, the FCC is expected to continue playing a significant role. Congress last year passed the Broadband Deployment Accuracy and Technological Availability Act, setting standards for the FCC to adhere to when collecting mobile data and creating maps. The commission on August 6 released its first updated map, showing where the country’s largest carriers were providing broadband as of May 15.

The FCC and NTIA will have to communicate to ensure two companies are not being subsidized to compete in the same space because NTIA selected one and the FCC selected another, Lyons said.

One tool that could help avoid such a scenario is an interagency agreement signed in June by the NTIA, FCC, and Agriculture Department. That agreement requires the three agencies to coordinate the distribution of funds for broadband deployment, including by sharing information and using standardized data.

“I am not going to get hung up on who gets the money and what agency is chosen to administer,” former Democratic FCC acting chair Mignon Clyburn said. “What I do care about is the execution.”

To contact the reporter on this story: Maria Curi at mcuri@bloombergindustry.com

To contact the editors responsible for this story: Keith Perine at kperine@bloomberglaw.com, Melissa B. Robinson at mrobinson@bloomberglaw.com