CAGW Comments on Wyoming BEAD Volume II | Council For Citizens Against Government Waste

CAGW Comments on Wyoming BEAD Volume II

Letters to Officials

November 17, 2023

Elaina Zempel

Broadband Manager
Wyoming Business Council

214 West 15th St. 
Cheyenne, WY 82002

Dear Ms. Zempel,

On behalf of the 4,447 members and supporters of Citizens Against Government Waste (CAGW) in Wyoming, I urge you to advise the Wyoming Business Council to amend its Initial Proposal Volume II Initial Draft Overview for Wyoming’s Broadband Equity Access and Deployment (BEAD) funding application with the National Telecommunications and Information Administration (NTIA) to eliminate rate-regulation for low and middle-income plans, expand the type of technologies and vendors for which this funding would be made available, and reduce the speed benchmark considered “high-speed” for purposes of assessing affordability.

On October 18, 2023, the Wyoming Business Council’s Broadband Office submitted its funding proposal to the NTIA governing how the state will administer the $348 million it will receive from the $42 billion BEAD program created by the Infrastructure Investment and Jobs Act (IIJA) of 2021.  The draft proposal contains several provisions that would impede broadband investment, innovation, and competition in Wyoming, and make it more difficult to bridge the digital divide.  These provisions are likely to reduce connectivity for the residents of rural and mountainous expanses of Wyoming where fixed infrastructure options would be prohibitively costly to deploy.

An especially problematic provision of the draft proposal is the inclusion of rate-regulation provisions for middle-income plans that would make it more difficult for providers to continue subsidizing service for their low-income customers.  While the BEAD Notice of Funding Opportunity (NOFO) guidance, which we would remind the council is not legally binding, recommends inclusion of a middle-income rate limit, this requirement does not appear in the IIJA and is contrary to congressional intent.  It should be removed from the final proposal.

The draft initial proposal requires a price for a 1 Gbps download/1 Gbps upload (or 100 mbps/20mbps for non-priority projects) plan to be offered to all broadband serviceable locations (BSL) in a service area.  This benchmark implicitly preferences expensive, hard-wired fiber-optic infrastructure over less-costly alternatives that may be better suited for deployment in more rural areas of Wyoming like cable, fixed wireless that uses TV white space and other licensed and unlicensed spectrum, mobile broadband, and low earth orbit satellite broadband, many of which now are capable of delivering high-speed services of 100/20 Mbps, or perhaps even higher speeds.

BEAD funding is intended to prioritize connecting unserved communities across the country.  According to BroadbandNow, Wyoming is ranked 35th in internet coverage, speed, and availability.  Wired or fixed wireless providers cover approximately 83.5 percent of households in the state with plans of at least 25/3 Mbps speeds, and fiber-optic service is only available to 21.1 percent of the population.  This leaves many residents of the Cowboy State without any internet access.  The state should take a technology and vendor neutral approach to ensure that households that wish to be connected have internet access available and ready to serve them.

The draft initial proposal lays out a point-based, competitive grantmaking process that grades providers’ applications.  Following the NOFO’s nonbinding guidance to the letter, the draft proposal imposes a government-dictated price range for an affordable plan for low-income households and for a higher-speed plan, delivering 1 Gbps speeds for middle-income households.  Again, this requirement is not contained in the IIJA and has no legal authority.

Providers applying for a BEAD grant will be required to disclose the monthly rate they intend to charge households for each of these plans.  For subgrantee applications to receive full credit on the affordability criterion, providers may charge no more than $100 per month for the high-end 1 Gbps plan, or $60 per month for the “affordable” 100/20 Mbps plan.  Providers’ applications would be judged based on a point award system, which gives each applicant points for meeting the criteria laid out in the application, including those provisions of the guidance not expressly approved in statute.  This is a form of price control over internet service that will end up reducing the quantity and quality of service and leave many households without broadband.

The NOFO guidance suggested prioritizing fiber-to-the-premises offering 100/100 Mbps speeds and creating low-income and middle-income rate schedules.  On April 23, 2023, 11 of the 13 Republican members of the Senate Commerce, Science, and Transportation Committee sent a letter to NTIA asking the agency to “revise or issue a new NOFO for the BEAD program.”  They noted that the NOFO was, “inconsistent with NTIA’s statutory authority.”  The letter further stated that NTIA does not have the authority to conduct rate-regulation or to require speed or affordability conditions for a middle-class plan.  The boundaries of congressional authorization supersede NTIA’s guidance, and where they conflict, Wyoming’s proposal should follow congressional intent.

The senators wrote, “A ‘middle-class affordability plan’ is a new term that does not appear in the law.  Asking States to pursue various strategies for achieving this new objective, including by requiring ‘providers receiving [BEAD] funds to offer low-cost, high-speed plans to all middle-class households using the BEAD-funded network,’ is another indirect form of rate regulation.  Elsewhere, the NOFO requires States to review the affordability of a 1 Gbps symmetric service and 100/20 Mbps service as part of their prioritization for program scoring.  That requirement is also not part of the law.  Congress did not invite States to adopt rate regulations that the statute plainly prohibits, nor can NTIA go beyond the statutory affordability initiatives in the law.”

Secretary of Commerce Gina Raimondo reiterated in an October 24, 2023, Senate Commerce, Science, and Transportation Committee hearing that the IIJA does not permit NTIA’s guidance to require rules to engage in back-door rate regulation.  “I want to be clear.  We are not rate regulating,” she testified, “we are not price setting, and we are not requiring states to do that.”  The secretary’s comments confirm that the NOFO guidance does not legally bind the affordability provisions in the Wyoming Broadband Office draft proposal.

While we understand there could be fear that NTIA may reject a proposal if it does not include their unauthorized provisions, states like Wyoming should work with their congressional representatives to ensure that NTIA follows the letter of the law for BEAD funding so they can effectively and efficiently provide broadband access to unserved communities.  Provisions like those found in the Wyoming draft initial proposal would do little to help unserved communities and instead foster growth in areas where there are already service providers.

Rate-setting, like other forms of price controls, results in reduced investment, innovation, and competition, which will lead to slower speeds, less reliable service, and fewer products and services for consumers.  It could also raise energy rates for consumers in areas where broadband service would be provided by a public utility.  The industry invested a record $102.4 billion in private capital in 2022, bringing the total to $2.1 trillion since 1996.  The proposal for broadband service in Wyoming will stifle further investment.

For these reasons, I again urge you to request the Wyoming Business Council to amend its draft application to NTIA, and ensure that the new proposal does not include rate regulation for middle income households; broadens the types of services to include all broadband technologies and vendors; and does not limit funding opportunities to fiber-only symmetrical 1 Gigabit service, which would preclude other technologies capable of providing up to 100/20 Mbps service.

Thank you for your consideration.

Sincerely, 
Tom Schatz 
President, CAGW

 

Letter Type: 
Organization Letters

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