Twenty-five years ago, when I headed up the National Telecommunications and Information Administration (NTIA), my colleagues and I identified what has come to be known as the digital divide while researching the growing gap between the haves and have-nots of internet access. Back then, we never dreamed that the U.S. Government would one day commit $42 billion dollars to close the divide we uncovered. Today, 30 years after the advent of the Internet age, the Biden administration and Congress have provided the focus and the funds we need to get every American online. However, we are at risk of squandering this once-in-a-generation opportunity.
“We’ve been working to bring reliable internet to our community so all children can share the opportunities of their peers and all businesses have the connectivity they need to succeed. When we heard about this program, we thought it was the answer we’d been looking for. But the more we learn, the more we see the program’s rules will keep us from taking part,” says Dr. Ambrosio Hernandez, the mayor of Pharr, a small city on the South Texas border which, when the pandemic hit, was one of the least connected places in the U.S. The town is in Hidalgo County, a persistent poverty region that’s over 90% Latino and where almost half of families lack a home internet subscription. It’s exactly the kind of community the Biden Administration’s signature broadband investment was made to serve.
Without a course correction to NTIA’s Broadband Equity Access and Deployment (BEAD) program, this record investment could be an opportunity wasted.
The requirements for a BEAD grant include something called a letter of credit. The current rules say any provider applying for a grant to connect underserved communities must deposit 25% of the award amount with a bank. That deposit will remain untouchable until well after the build is complete. This is in addition to a separate minimum 25% match requirement.
Together, these two rules mean grantees will have to front millions of dollars before they receive a dime from Uncle Sam.
Analysis from Connect Humanity conservatively estimates that a provider seeking $7.5 million to complete a $10 million network build would have to front $4.6 million–or 61 cents for every BEAD dollar they receive.
Large companies and populous communities are capable of bearing these costs. But you know who can’t? The thousands of smaller operators, local providers, and city-owned networks who know their communities and how best to serve their residents.
It’s an axiom of good governance that difficult problems are almost always best solved by the people closest to the problem. But instead of letting local providers innovate, these rules will exclude many of the providers most capable of assisting in the effort to close the digital divide, slowing broadband expansion and keeping America’s most marginalized communities out of the digital revolution for another generation.
While the NTIA hopes that the letter of credit will protect taxpayer dollars, it’s the wrong tool for the job. That’s why, to my knowledge, neither the NTIA, nor any other government agency, has used it in this way before.
Don’t take my word for it. 300 broadband experts, internet service providers, local leaders, nonprofits, elected officials, funding bodies, rural communities, and libraries have written to NTIA head Alan Davidson and Secretary of Commerce Gina Raimondo, urging them to consider alternatives.
Their suggestions are sensible: Tried-and-tested tools like performance bonds and delayed reimbursements can provide accountability while ensuring states are free to invest their BEAD dollars in the providers best able to connect their residents.
In the 1930s, the Rural Electrification Act extended power to rural America by putting funding directly into communities. President Biden has committed to do for connectivity what President Roosevelt did for electricity. The government can do this–but only if the administration has the vision to fund the broad spectrum of providers that can actually get the job done.
There’s nothing quite as brutal as hopes dashed. But like the 300 leaders who signed the letter, I still have hope that the administration will course correct and make this once-in-a-generation program deliver for people like Mayor Hernandez and the residents living in communities across the country like Pharr. Thousands of communities have waited almost three decades to be connected. Let’s not force them to wait longer because of an unnecessary bureaucratic burden.
Larry Irving was the Assistant Secretary of Commerce for Communications and Information (NTIA) during the Clinton Administration. He is president of the Irving Group and is the outgoing Board Chair at Connect Humanity.
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