On April 22nd, the National Telecommunications and Information Administration (NTIA) pressed pause on the Broadband Equity, Access, and Deployment (BEAD) program while it unwinds certain priorities and preferences baked into the program’s rules. BEAD, which began in 2021 as part of the Infrastructure Investment and Jobs Act, appropriated $42 billion in federal funding to help states connect all Americans to the internet once and for all. Closing this “digital divide” is essential for every consumer to participate fully in today’s modern economy. But in 4 years, very little progress has been made, and no funds have been distributed. In their recent announcement, the NTIA gave states 90 days to revise their action plans to align with BEAD’s adjusted rules.
While BEAD has been frustratingly slow, this delay may be a blessing in disguise. Before April 22nd, the program was heavily focused on building infrastructure to connect the last remaining Americans in unserved and underserved areas. However, according to an NTIA survey investigating the underlying causes for the digital divide, 55 percent of offline Americans do not see any value in getting connected, 18.6 percent cannot afford service or an adequate computer, and only 2.8 percent of offline Americans live in areas where internet access is simply unavailable. Since these results indicate that most consumers affected by the digital divide are already within reach of existing infrastructure, a far larger share of America’s offline population could be aided through affordability and demand-side adoption programs. Unfortunately, early guidance instructed states to prioritize infrastructure development and construction over adoption. If states were to take their current plans and finally begin the implementation phase, they risk overspending $42 billion in taxpayer dollars to reach only about 3 percent of offline Americans.
Another flagrant issue with the BEAD program’s priorities is its bias for fiber optic connections. While fiber is the current gold standard in high-speed internet, it can be costly. During a policy summit in March, Federal Communications Commission (FCC) Chair Brendan Carr explained that even with BEAD’s historically large budget, several states would be unable to build out enough fiber to hit their goals before running out of money. Indeed, states like Alabama, California, and Colorado each estimate fiber costs would exceed their share of BEAD funding. While it may make sense to use fiber to connect some areas, expecting a fiber preference in all areas is simply unrealistic.
Thankfully, the recent 90-day pause gives states a second chance. As the NTIA works to streamline BEAD rules, it should drop its infrastructure and fiber biases. If BEAD is meant to close the digital divide, further guidance should focus on closing it quickly and efficiently. That means prioritizing the larger issue of poor internet adoption rates first. This is the largest cause behind the digital divide, and refocusing efforts there will make the biggest difference.
From there, states can move on to connecting hard-to-reach rural areas without needlessly inflating development costs. With the flexibility of a tech-neutral approach, states can be thrifty with their taxpayer-funded BEAD allotments, and the NTIA can facilitate a faster, more cost-effective rollout to finally connect all Americans to the internet.
The economic benefits of a steady internet connection are clear. A report from McKinsey found that “the Internet drives business transformation and economic modernization,” where even the smallest of businesses can operate and compete on a global scale. Additional studies specific to rural consumers found that improved broadband adoption was associated with lower unemployment rates and improved income growth. The data consistently shows that consumers are better off when they have reliable access to the internet.
BEAD has already been a slow-moving program, but a 90-day pause just might be what it needs. To continue without any course correction risks spending the $42 billion sum without addressing the largest, most pressing cause behind the digital divide. By strategically focusing BEAD funds on adoption and training methods first, states can help more Americans get connected sooner, empowering them to fully participate in the modern economy. If it means better growth and opportunity for more American consumers, then a little forbearance now is better than rushing into a boondoggle.
Nate Karren is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.