CAGW Reviews 50 States’ BEAD Proposals

The Infrastructure Investment and Jobs Act (IIJA) included $42.45 billion for broadband funding across the country.  Each state was guaranteed to receive at least $100 million.  The money was made available through the National Telecommunications and Information Administration’s (NTIA) Broadband Equity Access and Deployment (BEAD) program.

Citizens Against Government Waste (CAGW) sent comments on February 2, 2022, to the NTIA prior to the release of the agency’s guidance for the BEAD program.  The comments noted that the agency “must take a vendor and technology neutral approach to issuing grant funding,” and should avoid supporting government owned networks, among other recommendations.  But after these recommendations were not followed, CAGW has been critical of the guidance, noting that they encourage states to engage in rate setting by prioritizing funding for providers that meet prescribed rates for low and middle-income households at symmetrical 100/100 Mbps or higher speed thresholds.  This leads to the use of a particular technology rather than allowing states and localities to determine the technology best suited to their local conditions.  As states begin to receive funding and set up the process by which the money will be disbursed, CAGW is keeping track of how the states formulate and implement their proposals for BEAD funding, including by sending letters to several states outlining recommendations and objections, noting that guidance is not a statutory mandate.

EXECUTIVE SUMMARY

This list compiles each state’s response to the BEAD Notice of Funding Opportunity’s (NOFO) Requirement 20 on Middle-Class Affordability and Requirement 16 for a Low-Cost Broadband Service Option, found in Volume II of each state’s BEAD proposal.  Note that at the time of writing, only Kansas, Louisiana, Nevada, and West Virginia have had their BEAD proposal fully approved by NTIA.  All other states’ and territories’ proposals have received feedback from NTIA but remain subject to change.  This list also provides background information on the degree of participation in BEAD by municipal, tribal, and other government-owned networks (GONs) in each state.

CAGW has identified 13 states whose affordability strategies meet the NOFO requirements in a manner that should enhance private-sector participation and encourage the most rapid rollout of connectivity to unserved areas.  A significant element of most of their proposals is to not require specific monthly rates for each of the speed tiers.  Instead, the states propose to determine eligibility either by comparing providers’ applications to the “reasonable comparability benchmark” defined in the Federal Communications Commission (FCC)’s Urban Rate Survey, or by requiring providers to charge the same rates in areas of their state that qualify to receive BEAD subsidies as they charge in unsubsidized areas.

There are eight states – Kentucky, Louisiana, Minnesota, New Jersey, New Mexico, North Carolina, Texas, and Virginia – that will determine providers’ Middle-Class Affordability by reference to the benchmark rate for any given service area determined by the FCC’s Urban Rate Survey.

There are five States – Alabama, Delaware, Maryland, New Hampshire, and Oregon – that require providers to charge no more in BEAD-subsidized locations than they do in unsubsidized areas of their state or any other state. (Alabama, however, uses this geographic price-parity approach only for scoring Middle-Class Affordability, while requiring a specific rate for the Low-Cost Service Option.)  Alaska requires price parity between urban and rural areas for 100/20 Mbps service.

There are 11 states – Connecticut, Florida, Georgia, Hawaii, Iowa, New York, Ohio, Rhode Island, South Carolina, South Dakota, and Vermont, along with American Samoa – that have adopted an affordability strategy that scores providers’ proposed pricing relative to other providers that apply for BEAD funding, rather than against any objective standard of affordability.  Ohio takes the unique approach of scoring applicants against a statewide weighted average of all BEAD applicants’ proposed prices, which is tantamount to strict rate regulation.

The other 23 states and four territories (including the District of Columbia) surveyed, all dictate specific prices providers must charge to score well in the competitive application process.  North Dakota’s Middle-Class Affordability strategy was not accessible on the state’s website.  This requirement will stifle further investment in broadband infrastructure and make it more difficult to spend the BEAD funding effectively and reduce the digital divide.  Some of the states and territories award full points for affordability for meeting the stated reference price, while others award only partial points for meeting the reference price and full points for charging significantly less than this reference price.  Illinois, Wisconsin, and Wyoming, use an application scoring function that will not award full credit to any provider because they would require the provider to charge $0 per month.  Michigan applies different benchmark prices to different geographic regions of the state.  Ohio will score applicants by reference to a statewide benchmark price, but rather than set that price in its initial proposal, the state will calculate it as a weighted average of prices proposed by providers.

While most states use a costly one gigabit-per-second “symmetrical” (1/1 Gbps) speed benchmark, for both download and upload speeds, for purposes of assessing affordability, a few states and one territory stand out for using more rapidly-achievable speed thresholds, including Alaska, Louisiana, and Guam, which use a 100/20 Mbps speed benchmark; Nevada, which uses a 100/100 Mbps benchmark; and New Jersey, which uses an 800/800 Mbps benchmark for fiber projects and 100/20 Mbps for non-fiber projects.

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STATES

Alabama

Public Comment Concluded December 14, 2023

Alabama will receive $1.4 billion in BEAD funding with an average cost to taxpayers per unserved location of $4,230.  The Alabama Department of Economic and Community Affairs’ initial proposal describes, on pp. 35-36, 39, and 142-151, how providers may earn a total of 24 points out of 100, for meeting the Middle-Class Affordability and Low-Cost Broadband Service Option (LCBSO) requirements for both priority and non-priority projects (which the department scores separately).  Providers will earn 20 Affordability points toward Requirement 20 for meeting the Middle-Class Affordability Plan requirements and 4 points for providing a Low-Cost Broadband Service Option.  Middle-class plans must “not exceed the cost of the same service in any other location in Alabama or surrounding states in which the applicant offers service.  Full points will be awarded to applicants that make this commitment in clear and unambiguous terms, … This criteria [sic] will work in conjunction with the lower-cost residential service scoring criteria” which will award providers four points for committing for a period of five years to charge no more than $30 per month, with inflation adjustment, for low-income households.  Alabama is the only state that requires a specific price for the low-cost option while also utilizing the geographic price-parity approach for middle-class plans.  Alabama will award full credit on NOFO Requirement 16 to providers that offer a Low-Cost Broadband Service Option of $30 per month for five years and partial credit for charging up to $70 per month.  The state allows this LCBSO rate cap to rise with inflation in the Alabama Producer Price Index.

Alabama Code § 11-50B raises a number of restrictions against GONs including requiring a public referendum and prohibiting cross-subsidizing the revenues from broadband, with energy or other utilities.  Three municipalities operated publicly funded networks in the state as of 2021, the most recent year with data available.

Alaska

Public Comment Concluded December 20, 2023

Alaska will receive $1.02 billion in BEAD funding with an average cost to taxpayers per unserved location of $11,534, or $5,934 above the national median cost per location.  The initial proposal submitted by the Alaska ’s Broadband Office within the state’s Department of Commerce, Community, and Economic Development, describes, on pp. 10-14 how providers may earn up to 10 percent of all available points for meeting the Middle-Class Affordability requirement to deliver 1/1 Gbps service for fiber-to-the-premises (FTTP) projects and 100/20 Mbps service for other projects, scored separately, as well as an additional 10 percent for providing a qualifying Low-Cost Plan.  For purposes of affordability assessment, the office will only score providers based on their pricing of 100/20 Mbps service.  This eliminates the inherent bias toward FTTP projects that most states impose by scoring affordability with respect to 1/1 Gbps service.  The office also scores applications for High-Cost Areas of the state separately from those serving Non-High-Cost Areas, but the Affordability and Low-Cost Plan requirements provide the same point total in both areas.  The initial proposal does not specify a benchmark monthly rate.  On p.40, the proposal states that providers may charge “a rate no greater than the rate the is [sic] in market in the urban areas that has at least a 70% take rate.  If there is no service that has 70% of the take rate, the rate will be no greater than the service that has the highest take rate in the urban markets.”  Other states that use a geographic price-parity approach require parity between subsidized and unsubsidized areas, but these areas may not map neatly along the urban – rural divide.  Only Alaska requires price parity between urban and rural areas in a state.

According to Broadband Breakfast, “Alaska is looking to designate all locations falling outside its community map boundaries – charted areas of municipalities and unincorporated communities throughout the state – as ‘extremely high-cost.’ That means the state can, under BEAD rules, look to non-fiber technologies to get those locations broadband.”

Alaska law does not restrict GONs, and five municipalities and tribal governments operated publicly funded networks in the state as of 2021.

Arizona

Public Comment Concluded December 6, 2023

Arizona will receive $993.11 million in BEAD funding with an average cost to taxpayers per unserved location of $5,600.  Arizona’s Commerce Authority apportions 18 percent of a provider’s application score to its performance with respect to the two affordability metrics for both middle-class and low-cost plans as described on pp. 40-41, 45-46, and 108-110 of its initial proposal.  The metrics require providers to serve 1/1 Gbps symmetrical speeds for no more than $64.99 per month, for full credit, along with a low-cost service option of 100/20 Mbps for $44.99 per month, for full credit.  Providers would receive zero points on the affordability criterion by exceeding $75 per month for 1/1 Gbps service or $55 per month for 100/20 Mbps service.  Arizona scores providers’ middle class and low-cost proposals separately, but in both cases their respective affordability provisions make up 18 percent of total points awardable.  Arizona will index its $30 per month LCBSO to a yet-to-be-determined measure of inflation in the event that Congress does not renew the FCC’s Affordable Connectivity Program (ACP) or a successor program.  Should Congress do so, however, that monthly rate cap for low-income plans may not rise over time with inflation.

Arizona law does not restrict GONs, but the only governments to construct publicly owned networks as of 2021 were seven of the state’s 20 Native American tribal governments.

Arkansas

Public Comment Concluded December 14, 2023

Arkansas will receive $1.02 billion in BEAD funding with an average cost to taxpayers per unserved location of $4,750.  The Arkansas State Broadband Office’s initial proposal, on pp. 37 and 107, describe how providers may earn up to 25 points “based on how high or low their Commitments are relative to the below reference prices for five tiers of service:”  These tiers are 1/1 Gbps for $85 per month, 500/300 Mbps for $70 per month, 400/200 Mbps for $60 per month, 300/100 Mbps for $50 per month, and 200/50 Mbps for $40 per month.  “If an applicant plans to support a plan between two of the tiers, their price will be assessed against a linear interpolation of the download speed between the two nearest reference prices.  For example, if an applicant plans to support a 750/500 Mbps plan, their price would be assessed against a reference price of $77.50 per month.  Scores will be based on a linear scale, with applicants committing to plans that are, on average, 50% higher than the reference price receiving zero points and applicants committing to plans 50% lower than the reference price receiving 25 points.  For example, an applicant that commits to plans exactly at the recommended reference price would receive 12.5 points, while an applicant who commits to plans priced at 120% of the reference price would receive 10 points.”

The outcome of this pricing means that with a reference price of $85 for 1/1 Gbps service, providers can earn the full 25 points by charging no more than half the reference price, or $42.50 per month.  Providers would earn zero points for charging more than $127.50 per month for this service.  However, if providers opt to apply for an affordability assessment based on a 200/50 Mbps plan rather than a 1/1 Gbps plan, then they would earn full points for charging no more than $20 per month and zero points for charging more than $60 per month.  Regardless of what service tier providers choose for their Middle-Class Affordability assessment, they must also provide a 100/20 Mbps Low-Cost Service Option.

Arkansas ties its LCBSO rate cap to a measure of household income in the state determined annually by the U.S. Census Bureau’s American Community Survey (CASC).  Specifically, monthly rates may not exceed one-twelfth of two percent of the annual income of households in the 20th percentile of households in Arkansas by income.  For 2024, this cap comes out to $36.83 per month.  Tying the cap to CASC rather than the Consumer Price Index (CPI) or Producer Price Index (PPI) means broadband rates will rise in proportion to annual wage growth for low-income households rather than price inflation.

Arkansas law does not restrict GONs, and three municipalities operated publicly funded networks in the state as of 2021.

California

Public Comment Concluded November 27, 2023

California will receive $1.86 billion in BEAD funding with an average cost to taxpayers per unserved location of $6,073, or $473 above the national median cost per location.  The California Public Utilities Commission’s (PUC) initial proposal, on pp. 31 and 189-199, describes how providers may earn up to 40 points out of 100 for providing 1/1 Gbps service to priority locations for no more than $50 per month and 40 out of 100 points for providing 100/20 Mbps service to non-priority locations for no more than $30 per month.  In both cases, “For every additional $1 per month that the applicant proposes to price its … service, 1 point will be deducted from the 40-point maximum.” Thus, providers will earn zero points for charging more than $90 per month for 1/1 Gbps service or more than $70 per month for 100/20 Mbps service.

California will allow its $30 per month LCBSO rate cap to rise with inflation in the California Producer Price Index for the “life of the infrastructure.”  Providers may, however, apply for a waiver from the California Public Utilities Commission for permission to charge a higher rate, for a time period specified by the provider, if the application includes “an explanation of why it would be infeasible for the prospective subgrantee to meet the lowcost service.”  The state will maintain an LCBSO income eligibility threshold of 200 percent of the Federal Poverty Limit (FPL) in the event that “ACP funding is expended and no successor program guaranteeing an equivalent subsidized price of service for eligible customers is established.”

California law does not restrict GONs, and 31 tribes and municipalities had already built publicly funded networks in the state by 2021.

Colorado

Public Comment Concluded November 27, 2023

Colorado will receive $826.52 million in BEAD funding with an average cost to taxpayers per unserved location of $5,604.  In Colorado’s initial proposal, on pp. 42, 44, and 57, set out the requirements for providers to receive full credit under the Colorado Broadband Office’s affordability criteria.  The broadband office, which is part of the governor’s Office of Information Technology, will apportion 200 out of 500 total points to the fulfillment of the following affordability requirements:  Providers may charge no more than $50 per month for the low-cost 100/20 Mbps option, and may charge no more than $85 per month for a 1/1 Gbps plan to qualify for BEAD funding.  To receive full credit for meeting the affordability benchmark, however, providers cannot exceed $35 per month for 1/1 Gbps symmetrical service.  Stated another way, exceeding $85 per month earns providers 0 points out of 200 for affordability, while charging $35 per month earns providers full credit of 200 points.  These affordability criteria are weighted to make up 40 percent of the total points a provider’s application may earn.

This $35 benchmark rate coupled with an $85 hard cap together represent one of the greatest barriers to BEAD participation raised by any state CAGW has reviewed.  One might think policymakers in the Mile High State would want to encourage rapid and efficient broadband rollout, but these unrealistic conditions placed on BEAD participation show they have little interest in doing so.

Colorado proposes an $85 LCBSO rate cap for households on federally-recognized tribal lands, up from the $75 rate suggested in the BEAD NOFO, and $30 for all other income-qualifying households.  These monthly rates may not rise to reflect inflation, but providers may apply to the Colorado Broadband Office (CBO) for a waiver to raise that rate cap to $50.  “CBO retains the authority,” however, “to decline any waiver that does not clearly demonstrate the necessity of increasing the service cost from $30 to $50.

Colorado law formerly required cities to hold a referendum to approve the creation of a government-owned broadband network until Governor Jared Polis (D) signed SB 183 into law on May 1, 2023, which eliminated that requirement.

Connecticut

Public Comment Concluded December 8, 2023

Connecticut will receive $144.18 million in BEAD funding with an average cost to taxpayers per unserved location of $12,330, the fifth highest of any state and $6,730 above the national median cost per location.  The Connecticut Department of Energy and Environmental Protection’s initial proposal awards 15 out of 100 possible points to providers who fulfill the affordability criteria described on pp. 31, 34, and 127-28 for both 1/1 Gbps and 100/20 Mbps plans.  To score affordability, the department will rank providers’ proposals from the lowest to the highest price for given service, within a given area, and grant full credit on the affordability criterion only to the provider proposing the lowest price.  Therefore, only one provider may receive full credit for a given service in a given area.  This method, though not strict rate regulation, fails to provide the predictive clarity that nurtures investment.

Connecticut allows providers to raise the state’s $30 LCBSO monthly rate cap according to changes in the Connecticut Producer Price Index.  The state also defines eligibility for LCBSO more narrowly than ACP by setting the qualifying income threshold at 130 percent of the FPL regardless of whether ACP is renewed, reformed, or replaced.

State law does not constrain cities’ ability to divert taxpayer resources to build their own government-owned networks, and the state’s first GON is currently under construction in East Hartford.

Delaware

Public Comment Concluded November 13, 2023

Delaware will receive $107.7 million in BEAD funding with an average cost to taxpayers per unserved location of a $52,508, which is the largest allocation per unserved location of any state, and nearly 10 times greater than national $5,600 median cost per unserved location.  The Department of Technology and Information (DTI) “contracted with the Biden School of Public Policy and Administration at the University of Delaware” to identify the list of community anchor institutions (CAIs) that qualify for special funding to achieve 1/1 Gbps speeds.

DTI’s BEAD funding proposal, on pp. 77-79, 88-90, describes how providers may earn up to 15 points out of 100 for meeting the geographic price-parity commitment for 1/1 Gbps plans and a relative price ranking score for 100/20 Mbps plans.  The proposal reads, “Applications will be scored based on Applicants’ commitments to offer a symmetrical 1 Gbps service to BEAD-funded locations that will never exceed the cost of the same service in metropolitan areas of Delaware. Full points will be awarded to applications that make this commitment in clear and unambiguous terms.”  For the lower speed tier, however, “Applicants should submit their pricing level for 100/20 MBPS service and will be scored on lower pricing levels relative to other Applicants.”  While DTI does not impose a specific price for purposes of assessing providers’ Middle-Class Affordability, even for 100/20 Mbps non-priority, non-FTTP plans, it does require providers to deliver a 100/20 Mbps plan for no more than $30 per month to meet the Low Cost Broadband Service Option requirement derived from Requirement 16 of NTIA’s BEAD NOFO.  Providers’ ability to meet this requirement, however, has no bearing on the points awarded for “affordability.”

DTI will also score providers on whether they provide a plan offering symmetrical 1/1 Gbps speeds for download and upload.  Imposing this high-speed threshold inherently preferences expensive fiber-optic technology over more affordable alternative technologies that providers could use to quickly bridge the digital divide for the state’s remaining unserved households.  Indeed, while most states implicitly preference FTTP to the exclusion of cable, wireless, satellite and other technologies, Delaware prohibits any non-fiber projects from receiving BEAD funding.  DTI’s proposal states on page nine, “BEAD funds will likely be sufficient to fund fiber-to-the-premises to the vast majority of, if not all, unserved and underserved locations in Delaware. … Given … the State of Delaware’s absolute preference for fiber-to-the-premises as the optimal communications infrastructure, DTI intends to limit its initial round of its BEAD grant funding process to fiber.”  If Delaware policymakers are serious about closing the digital divide, they should be open to keeping all options on the table.

Delaware allows providers to raise the state’s $30 LCBSO monthly rate cap according to changes in the Delaware Producer Price Index.  The state also defines eligibility for LCBSO more narrowly than ACP by setting the qualifying income threshold at 130 percent of the FPL regardless of whether ACP is renewed, reformed, or replaced.

Delaware law does not restrict GONs.  There were, however, no GONs operating in Delaware as of 2021.

Florida

Public Comment Concluded December 22, 2023

Florida will receive $1.17 billion in BEAD funding with an average cost to taxpayers per unserved location of $4,286.  The Florida Department of Commerce’s Office of Broadband’s initial proposal, on pp.  21-23 and 74-77, how providers may earn up to 60 points out of 400, or 15 percent of an applicant’s total available points for meeting the affordability criteria.  Of those 60 points, 30 go to providers that meet the pricing requirements for 1/1 Gbps service, 15 points for providing “discounted rates for low income, small business, and community anchor institutions,” and another 15 points for participating in the FCC’s Affordable Connectivity Program.  For the middle-class service option, “Maximum points will be awarded to the application with the lowest total monthly price for 1Gb symmetrical service, inclusive of all taxes, fees, and charges.  For other applications, 1 point will be deducted for every $1 above the lowest price offering for that designated project area, to a maximum of a 30-point deduction.”  Providers will therefore earn zero points for pricing service to a given location at $30 more than the lowest price charged by a competing provider.  As in Connecticut, Georgia, New York, and South Dakota, this affordability policy avoids the disincentive of outright rate regulation but still makes it difficult for providers to plan a long-term investment strategy in the state.

Florida’s proposal, on p. 74, says that the state’s broadband “Office will not set a price for the low-cost service option across the state.  Prospective subgrantees may submit their proposed pricing structure with their application.  However, the Office will require subgrantees to maintain the price-point for their current low-cost option through the duration of the BEAD Program.”

Florida Statutes §350.81 levies some barriers against GONs, yet 21 municipalities operated publicly funded networks in the state as of 2021.

Georgia

Public Comment Concluded December 1, 2023

Georgia will receive $1.31 billion in BEAD funding with an average cost to taxpayers per unserved location of $4,139.  The Georgia Technology Authority (GTA), in conjunction with the Governor’s Office of Planning and Budget, will award 15 out of 100 points to providers for fulfilling the affordability criteria described on pp. 37 and 41 of Georgia’s initial proposal, which score providers based on their proposed pricing for both 1/1 Gbps symmetrical and 100/20 Mbps plans.  The GTA will award full points only to the provider that proposes the lowest-price plan for each speed tier in a given unserved or underserved area.  Georgia does not restrict the building of GONS, leading to 31 such networks completed as of 2021.

Hawaii

Public Comment Concluded December 10, 2023

Hawaii will receive $149.48 million in BEAD funding with an average cost to taxpayers per unserved location of $12,808, the fourth-highest cost per location in the nation and $7,208 above the national median cost per location.  The Connect Kakou initial proposal, on pp. 19-20, allots 15 out of 125 points to providers who deliver both low-cost 100/20 Mbps plans and 1/1 Gbps middle-class plans for less than any other provider.  “The potential subgrantee proposing the least expensive rate will receive full points.”  The proposal, however, makes an exception to the 1/1 Gbps speed threshold for areas where FTTP proves unrealistically costly. The “[s]coring will be based on the required speed level of 1Gbps down by 1Gbps up delivered on an end to end fiber connection.  In the event that no provider can provide such a service to the locations offered, scoring will be based on a 100Mbps down by 20 Mbps up, delivered on any technology that can provide such a service to the end location.”

Competing providers who propose to charge more than the lowest price bid will earn points according to the following formula:  Lowest-bidder’s price multiplied by 20, divided by the higher-bidder’s price.  If the lowest-bidder proposes to charge $100 per month, for example, then a competing bid to charge $200 per month would earn 10 points.  All providers will earn affordability points provided they charge no more than 20 times the lowest bid.

Hawaii’s proposal permits no inflation adjustments to its $30 LCBSO rate cap and describes no process for providers to apply for a waiver to exceed that cap.

Hawaii law does not restrict GONs, but none operated in the state as of 2021.

Idaho

Public Comment Concluded November 10, 2023

Idaho will receive $853.26 million in BEAD funding with an average cost to taxpayers per unserved location of $6,789, or $1,189 more than the $5,600 national median cost per location.  The Link Up Idaho proposal, on pp. 22-24, 30-32, and 78-81, allows providers earn up to 15 points out of 100 for charging no more than $69.99 for 1/1 Gbps service or $29.99 for 100/20 Mbps service and zero points for exceeding $110 per month for 1/1 Gbps or $80 for 100/20 Mbps.  Idaho permits no inflation adjustments to its $30 LCBSO rate cap which providers are subject to for the “useful life of the BEAD funded network assets,” according to the state’s proposal, on p. 80.  However, “applicants wanting to increase the low-cost amount to $50 per month will need to apply for a waiver to the IOB.  The IOB will evaluate each waiver received on a case-by-case basis and reserves the right to decline an applicant’s waiver should it not clearly demonstrate the need for an increase in the service cost from $30 to $50.”

State law does not prevent government-owned networks from using taxpayer resources to compete against investor-owned providers, nor does it prohibit the state’s broadband office from preferencing applications submitted by government-owned networks (GONs) or utility cooperatives.  Local governments in Idaho had constructed 14 GONs by 2021, including 2 on tribal lands.

Indiana

Public Comment Concluded December 3, 2023

Indiana will receive $868.11 million in BEAD funding with an average cost to taxpayers per unserved location of $4,297.  The Indiana Broadband Office will award up to 20 points, out of a total of 100, to providers who fulfill the affordability requirements described on pp. 19-20 of its initial proposal, which require providers to provide both a 100/20 Mbps low-cost plan and a 1/1 Gbps plan for no more than $100 per month.  The proposal states, “For every 5 percent higher than a total cost of $100 a month, an applicant will lose 1 point. For example, if an applicant submits a project area with a total price for gigabit symmetrical service of $150, the applicant will receive a score of 10 for affordability.”  Thus, providers charging $200 a month or more will receive a score of zero for affordability and providers charging $195 or less will receive a score of one.

Indiana ties its LCBSO rate cap to a measure of household income in the state determined annually by the U.S. Census Bureau’s American Community Survey (CASC).  Specifically, monthly rates may not exceed one-twelfth of two percent of the annual income of households in the 20th percentile of households in Indiana by income.  For 2024, this cap comes out to $48.60 per month.  Tying the cap to CASC rather than CPI or PPI means broadband rates will rise in proportion to annual wage growth for low-income households rather than price inflation.

There are no restrictions against building GONs, and eight had been built in the state by 2021.

Illinois

Public Comment Concluded October 31, 2023

Illinois will receive $1.04 billion in BEAD funding with an average cost to taxpayers per unserved location of $4,340.  In its September 2023 proposal, the Office of Broadband within the Illinois Department of Commerce copied NTIA guidance to the letter by setting a $30 reference price for 100/20 Mbps service.  The proposal, on pp. 32, 35-37, 98-99, and 108-109, breaks down service plans into several additional speed tiers of 1/1 Gbps, 500/100 Mbps, and 100/100 Mbps, with price caps of $100, $80, and $50 respectively.  Providers may earn up to 30 points for making a five-year commitment to meet the affordability criteria for each of the following speed tiers – 1/1 Gbps, 500/100 Mbps, 100/100 Mbps, and 100/20 Mbps.  These four speed tiers are not optional paths by which to meet the state’s affordability test.  Providers will receive an affordability score with respect to each speed tier.  For each tier, providers will “be awarded points based on the difference between their price and the reference price.

The score for each speed tier will be calculated as follows: Any application that includes a five-year commitment to offer the listed speed or above for the monthly reference price, with no installation, equipment rental fees, or other charges to the end-user, shall receive a baseline score of 10.  Any application that includes a five-year commitment to offer the listed speed or above for less than the monthly reference price will receive an upward adjustment to the baseline score of 10 as follows: Score = 10 + 10 * [(reference price – commitment price) / reference price], up to a maximum of 30 total points. In other words, additional points will be awarded based on the percentage of the commitment price below the reference price.  Any application that includes a five-year commitment to offer the listed speed or above for more than the monthly reference price will receive a downward adjustment to the baseline score of 10 as follows: Score = 10 – 10 * [(commitment price – reference price) / reference price], down to a minimum of 0 points. In other words, points will be subtracted based on the percentage of the commitment price above the reference price. By this calculation, if the commitment price is 200% above the reference price, the application will receive no points for this speed tier.”

Based on this formula, providers will receive zero points for charging $200 or more for 1/1 Gbps service, $160 or more for 500/100 Mbps, $100 or more for 100/100 Mbps, and $60 or more for 100/20 Mbps service.  On the other hand, only by charging zero percent of the reference price, or $0, can a provider earn full credit.  Many states have made the task of attaining full credit on a BEAD application considerably difficult for broadband providers, but only two states, Wyoming, Wisconsin, and Illinois, make it literally impossible by requiring providers to deliver high-speed internet free of charge.

Illinois’ proposal permits no inflation adjustments to its $30 LCBSO rate cap and describes no process for providers to apply for a waiver to exceed that cap.

Illinois state law also lacks any substantive protections against GONs, and 16 had been built in the state by 2021.

Iowa

Public Comment Concluded December 15, 2023

Iowa will receive $415.33 million in BEAD funding with an average cost to taxpayers per unserved location of $4,973.  The initial proposal submitted by the Division of Information Technology in the Iowa Department of Management describes, on pp. 88-91, 131-132, and 135, how providers may earn up to 25 out of 100 points for meeting the affordability criteria.  “DOM-DOIT intends to determine a ‘cost per megabit to the consumer’ measure.  The lower the measure, the more affordable the broadband service Facilitated as a result of the proposed Project.  The price per megabit for service for all Applicants will be compared against each other to calculate the Affordability score for each individual Applicant.”

Although it will not affect their Affordability score, providers must also deliver a 100/20 Mbps Low-Cost Service Option for “$40 per month or less, inclusive of all taxes, fees, and charges with no additional non-recurring costs or fees to the consumer; This price will apply for the first three years after network deployment, and then may be adjusted annually based on the Consumer Price Index.”

Iowa Code § 388.10 requires “that all new public utilities must be approved by voter referendum of 51%. If the referendum fails, the municipality cannot hold another referendum vote on the same proposal or a similar proposal for at least four years. If a municipality wishes to use bonds to finance a public broadband network, the measure needs to obtain 60% approval in a referendum. Municipalities are also prevented from using general fund moneys to support a broadband network, and must complete a detailed annual audit, subject to open meeting requirements.”  Despite these requirements, there were 26 municipalities operating publicly funded networks in the state as of 2021.

Kansas

Volume II Final Approval Received April 24, 2024

Kansas will receive $451.73 million in BEAD funding with an average cost to taxpayers per unserved location of $5,163.  Kansas’s initial proposal, on pp. 20-22, describes how the state’s Office of Broadband Development will apportion 15 out of 100 points to providers’ funding proposals based on their conformity with affordability requirements.  To receive full credit, providers may charge no more than $89.99 per month for 1 Gbps symmetrical service to “priority” recipients and no more than $60 per month for 100/20 Mbps service for non-priority locations.  Zero points are earned for charging $120 or more for 1/1 Gbps or $90 or more for 100/20 Mbps.  The proposal also states, “Applications that propose to construct end-to-end fiber-optic facilities … will be defined as a ‘Priority Broadband Project.’”

Kansas will allow providers to update their $30 LCBSO rate cap with price inflation for urban consumers in the Midwest Regional CPI-U each year for the five years that the state will require providers to offer an LCBSO.

Kansas has no statewide GON preemption statute and at least five tribal and municipal-owned networks operate in the state.

Kentucky

Public Comment Concluded December 3, 2023

Kentucky will receive $1.09 billion in BEAD funding with an average cost to taxpayers per unserved location of $4,189.  Kentucky’s Office of Broadband Development, like its neighbor Virginia, has chosen to prioritize rapid, efficient broadband rollout to the unserved regions of the Bluegrass State.  Kentucky’s initial proposal, on pp. 50-51, applies the FCC’s Reasonable Comparability Benchmark, which is determined using the annual Urban Rate Survey, to define affordability for the purposes of scoring broadband providers’ funding applications to provide 1/1 Gbps service.

Kentucky will also use the Reasonable Comparability Benchmark to determine the LCBSO rate cap and will allow providers to update their LCBSO rates in line with price inflation in the CPI each year for the eight years that the state will require providers to offer an LCBSO.  However, the state limits the maximum year-over-year increase to that rate at four percent in the event that CPI inflation exceeds that amount.

Kentucky law does not restrict GONs and 17 operated in the state as of 2021.

Louisiana

Volume II Final Approval Received December 15, 2023

Louisiana will receive $1.36 billion in BEAD funding with an average cost to taxpayers per unserved location of more than $4,567.  One of only two states that has refrained from prescribing a one-size-fits-all rate for either speed tier, the Louisiana Office of Broadband Development and Connectivity has opted instead to adopt rates determined by a “reasonable comparability benchmark” for residential rates established by the FCC’s Urban Rate Survey.  Louisiana’s proposal, on pp. 32-35 and 111-115, requires a reasonable speed threshold of 100/20 Mbps for both income tiers, which providers, with the help of BEAD funding, can rapidly achieve throughout the state’s unserved areas.  Louisiana will award full credit for Requirement 16 to providers that offer an LCBSO for no more than $30 per month and partial credit to those that offer one for no more than $65 per month.

Louisiana law limits the participation of GONs in the BEAD funded broadband rollout.  The state’s preemption law levels the playing field between private and government-owned providers by explicitly prohibiting the state’s broadband office from preferencing GONs for contracts or charging them lower pole attachment fees than private providers pay.  Louisiana law prohibits GONs from using eminent domain, subjects them to antitrust liability, and prohibits them from subsidizing broadband rates with taxpayer resources or subsidized loans from other government.  The state also prohibits public utilities from cross subsidizing their broadband rates using energy revenues. These preemption rules force the state’s four GONs to face the same market constraints of profit and loss as private providers.

Maine

Public Comment Concluded December 9, 2023

Maine will receive $271.98 million in BEAD funding with an average cost to taxpayers per unserved location of $6,435, or $835 above the national median cost per location.  The Maine Connectivity Authority proposes, on pp. 15 and 46-57, to award 30 total points, out of 100, to providers who offer symmetrical Gbps service for no more than $100 per month and symmetrical 100/100 Mbps service for no more than $49 per month, as well as 100/20 Mbps for up to $30 per month.  Under the 30 points for all affordability provisions, providers get 15 points for meeting the $49 price point for 100 Mbps symmetrical service, six points for meeting the $30 price point for 100/20 Mbps, and three points for agreeing to abstain from charging any extra fees to cover construction costs for a period of 12 months, and three points for providing symmetrical 1/1 Gbps service for no more than $100 per month.  Providers will earn zero points for exceeding $70 per month for 100/100 Mbps service.

Maine will require providers to offer an LCBSO for no more than $30 for five years and will not allow this rate cap to rise with inflation.  The state’s proposal does not describe any process for waivers to exempt a provider facing high costs from that cap.  The state sets its LCBSO eligibility at 200 percent of the FPL regardless of ACP’s continuation, amendment, or replacement.

Maine law supports GONs with taxpayer funds through a state grant program created by 2022 LD 1894, signed into law by Governor Janet Mills (D) on April 15, 2022.  There were six municipalities operating publicly funded networks in the state as of 2021.

Maryland

Public Comment Concluded December 2, 2023

Maryland will receive $267.74 million in BEAD funding with an average cost to taxpayers per unserved location of $6,028, or $428 above the national median cost per location.  The Maryland Department of Housing and Community Development’s Connect Maryland initial proposal, on pp. 32-33, 35, and 114-120, describes how providers may earn up to 20 points out of 100 for meeting the affordability requirement for 1/1 Gbps service to priority locations and 100/20 Mbps to non-priority locations, scored separately.  Of those 20 points, 15 accrue to a provider that meets the “price commitment” described below and five points go to a provider that demonstrates “plans to ensure the affordability of broadband products and services for low-income Maryland households.”  The Connect Maryland proposal opts for the same affordability strategy pursued by Oregon and New Hampshire, in which “applications will be scored based on applicants’ commitments to offer … service to BEAD-funded locations that does not exceed the cost of the same service in any other location in Maryland or surrounding states in which the applicant offers service. … Applications that do not make a clear commitment will receive zero points.”  Maryland will allow its $30 per month LCBSO rate cap to rise with inflation in the Maryland PPI.  The state sets its LCBSO eligibility at 200 percent of the FPL regardless of ACP’s continuation, amendment, or replacement.

Maryland law does not restrict GONs, and 10 had been built across the state as of 2021, although only one of those, Westminster Fiber, had begun delivering service.

Massachusetts

Public Comment Concluded December 15, 2023

Massachusetts will receive $147.42 million in BEAD funding with an average cost to taxpayers per unserved location of $11,773, the nation’s sixth highest and $6,173 above the national median cost per location.  The Massachusetts Broadband Institute’s initial proposal, on pp. 40 and 79-82, describes how providers will earn full credit for charging less than $80 per month for 1/1 Gbps service to priority locations and less than $50 for 100/20 Mbps for non-priority locations.  “A sliding scale will be used to score applications that provide 1Gbps/1Gbps symmetrical services from $81 or more per month, … $100 per month, the maximum price point allowable for a Middle-Class Broadband Service Option for 1Gbps/1Gbps, will be the top of the sliding scale.  Priority Broadband Project applicants who commit to a Middle-Class Broadband Service Option at the maximum allowable price of $100 per month will receive half of the available points for affordability.”

Similarly, for non-priority Middle-Class projects delivering 100/20 Mbps, providers will receive points along a sliding scale from the reference price of $51 to the “maximum allowable price” of $75.  Massachusetts will also require providers to offer an LCBSO for no more than $30 per month for the “life of the BEAD funded network” and will not allow this rate to rise with inflation.  The state does, however, peg its $50 per month rate cap for the 100/20 Mbps Middle-Class plan to inflation in the national CPI.

Senate Commerce. Science, and Transportation Committee Ranking Member Ted Cruz’s (R-Texas) September 2023 report highlighted some of the nation’s most egregious cases of “unserved location” designations.  The report stated, “NTIA ignores the reality that alternative technologies like fixed wireless and satellite may be better suited to different consumers and geographies.  Take, for example, Tuckernuck Island, a small private island off the coast of Massachusetts … [that] has no wired service, but it does have access to satellite service with speeds that exceed the thresholds set by Congress for BEAD, according to the FCC’s map.  However, because the Biden administration’s BEAD rules summarily exclude certain technologies—namely unlicensed fixed wireless and satellite—from being considered ‘reliable broadband service,’ the entire island is considered unserved for the purposes of BEAD …This summary exclusion is not only at odds with the IIJA but real-world cases where non-fiber technologies have served as reliable and innovative alternatives.”  The whole island, occupied by only 35 homes and lacking any paved roads or public utilities, already receives 100/20 Mbps satellite and wireless service.

Massachusetts law does not restrict GONs, and 57 municipalities operated publicly funded networks in the state as of 2021.

Michigan

Public Comment Concluded December 1, 2023

Michigan will receive $1.559 billion in BEAD funding at a cost of more than $4,232 per unserved location.  In Volume II of its initial proposal, on pp. 18-19 and 68-71, the Michigan High-Speed Internet Office grants 30 points out of 100 to providers who fulfill affordability requirements that limit monthly rates for 1/1 Gbps symmetrical service to less than $65 for recipients located in “economic prosperity region” 1 and less than $73 for recipients located in “economic prosperity region” 2.

No other state has adopted this geographic stratification scheme.  Michigan’s Low-Cost Service Option requires providers to deliver 100/20 Mbps to low-income households that qualify for participation in ACP for $0 net to the consumer.  This means the provider must charge no more than the combined monthly benefit the eligible household receives from ACP and any other state or federal broadband voucher or benefit program.  Providers may charge Michigan LCBSO recipients a monthly rate equal to or less than the total subsidy the household receives from ACP and must provider service at this rate for the “life of the BEAD funded network.”

Volume I of Michigan’s proposal also deserves a special dishonorable mention for the overbroad definition of Community Anchor Institutions (CAIs), which qualify for support to achieve one Gbps symmetrical speeds.  The NOFO guidance describes the types of institutions that should qualify as CAIs, including schools, hospitals, government buildings, senior centers, job training centers, etc.  The proposal submitted by the Michigan High-Speed Internet Office (MIHI), however, expands eligibility well beyond the letter or intent of BEAD guidance by permitting 118 entities categorized as stadiums, zoos, aquariums, wildlife centers, and convention centers, including many privately owned, for-profit businesses, to qualify as CAIs. The MIHI states that it included these entities merely because the Michigan State Police lists them as part of its Critical Incident Management System. The list originally included 75 stadiums and sporting facilities, 33 convention centers, and 10 zoos and wildlife centers, including at least one zoo with reports of animal abuse.

Minnesota   

Public Comment Concluded December 12, 2023

Minnesota will receive $651.84 million in BEAD funding with an average cost to taxpayers per unserved location of $4,793.  The Minnesota Office of Broadband Development’s initial proposal offers up to 15 points, out of 100, to providers who meet the price affordability requirements for 1/1 Gbps priority service.  The office set a priority affordability criterion that requires providers to select rates “consistent with the broadband pricing … available in unsubsidized areas within Minnesota for that service; or is at or below the residential rates provided in the FCC Urban Rate Survey’s reasonable comparability benchmark.”  Similarly, rather than prescribe a specific LCBSO rate cap, Minnesota will require providers to deliver their lowest-priced plan for the same rate to households in the state that receive BEAD support and those that do not need BEAD support to get online.

Minnesota Statutes section 237.19 indirectly limits GONs by requiring a local referendum to allow municipalities to offer public phone service.  Tribes and municipalities had constructed 40 government-owned networks throughout the state by 2021, primarily in the Minneapolis metro area.

Mississippi

Public Comment Concluded December 1, 2023

Mississippi will receive $1.2 billion in BEAD funding with an average cost to taxpayers per unserved location of $4,484.  The Broadband Expansion and Accessibility of Mississippi  (BEAM) initial proposal, on pp. 10 and 46-48, describes how providers may earn up to 30 points out of 100 for providing 1/1 Gbps service to priority locations for less than $70 per month and zero points for more than $140 per month, as well as 30 points out of 100 for providing 100/20 Mbps service to non-priority projects, scored separately, for less than $30 per month, and zero points for more than $80 per month.  Mississippi law does not restrict GONs, but none were in operation in the state as of 2021.  In 2022, Senate Bill 2604 was enacted that expands the ability of municipalities to provide publicly-funded broadband service.  The effect this law will have on the expansion of GONs remains to be seen.

Missouri

Public Comment Concluded December 15, 2023

Missouri will receive $1.74 billion in BEAD funding with an average cost to taxpayers per unserved location of $5,144.  The Missouri Department of Economic Development’s initial proposal, on pp. 28-29 and 33, describes affordability criteria requiring providers to deliver two tiers of service, 1/1 Gbps and 100/20 Mbps (scored separately), for $100 per month or less to receive the full 100 points of credit.  For every dollar above $100 per month charged, one point is deducted from the applicant’s score.  Providers will thus earn zero points for charging $200 per month or more.

Although Mo. Rev. Stat. § 392.410(7) places some restrictions on GONs, seven municipalities operated publicly funded networks in the state as of 2021.

Montana

Public Comment Concluded November 23, 2023

Montana will receive $628.97 million in BEAD funding with an average cost to taxpayers per unserved location of $6,016, or $416 more than the $5,600 national median cost per location.  The Montana Broadband Office’s proposal, on pp. 21-22 and 80-83, engages in rate setting by imposing price caps of $65 for 100/20 Mbps service and a $159.99 for 1/1 Gbps service for providers to receive any credit on their affordability score.  To earn full points on that score, providers may charge no more than $69.99 for 1/1 Gbps service and $45 for 100/20 Mbps service.  Though less restrictive than some other states, these price caps for providers to receive credit on the affordability criterion of their application will still deter increased investment in Montana’s infrastructure than if the state had chosen to avoid rate regulation altogether and instead require providers to price their plans according to the reasonable comparability benchmark determined by FCC’s Urban Rate Survey.  Montana will allows providers to increase the state’s $65 LCBSO rate cap with inflation.

The state’s GON preemption statutes prohibit government-owned utilities or other taxpayer-funded broadband providers from competing against market providers in the same geographic area.  Though state law historically blocked GONs from operating in areas already served by existing providers, in May 2023, Montana Senate Bill 531 watered down the prohibition in Section 90-1-605 of the Montana Code to allow GONs to provide broadband service in those areas “in partnership” with private providers.  Despite this change, only two GONs operated in the state as of 2021.

Nebraska

Public Comment Concluded December 13, 2023

Nebraska will receive $405.28 million in BEAD funding with an average cost to taxpayers per unserved location of $