Twelve states – Delaware, Kansas, Louisiana, Montana, Nebraska, Ohio, Pennsylvania, Tennessee, Utah, Vermont, Virginia, and Wyoming – have released volume one of their BEAD initial proposals to the National Telecommunications and Information Administration.Five – Nebraska, Pennsylvania, Tennessee, Utah, and Wyoming – are still open for public comment.The NTIA requires states to submit their initial proposals in two volumes. Both volumes are due to the NTIA by December 27, 2023, 180 days after the formal allocation of BEAD funds on June 30.&nbsp;The first volume must include four pieces of information: existing broadband funding efforts, unserved and underserved locations, anchor institution definitions, and the state’s challenge process.The challenge process requirement calls for states to detail how they will accept and process challenges to location classifications and, crucially, data on broadband coverage. These state challenge processes are separate from the ongoing challenge process to the FCC’s broadband map and are mandatory for the disbursement of BEAD funds.States have access to the NTIA’s model challenge process to help them in this effort, and the agency encourages states to adopt the model process in full. All 12 states that have submitted volume one are heavily basing their challenge processes on the model.The model process outlines in detail a 90-day process with four phases. The NTIA allows this process to span up to 120 days, but states have not elected so far to take that extra time.<h3>Process begins with state broadband offices publishing a list of locations deemed eligible</h3>The process begins with state broadband offices publishing locations deemed eligible for BEAD funding by existing map data. These locations also have to be provided in volume one of the initial proposal.Challenge and rebuttal phases follow, in which challengers – limited to nonprofits, local and tribal governments, and service providers – submit challenges to the state on that eligibility, and service providers have a chance to rebut that challenge and prove their coverage is correctly recorded. In the final phase, broadband offices make final determinations on eligibility by sustaining or rejecting the challenges they’ve received.Acceptable challenge and rebuttal evidence include rigorous speed tests documenting low speeds or high latency and written documents from service providers informing customers that a specific service is not available in their area. The full scope of evidentiary standards for each challenge type can be found in the text of the model process, available for download&nbsp;<a href="https://www.internet4all.gov/bead-challenge-process-policy">here</a>.The model process outlines two optional provisions on how states can interpret FCC map data and make eligibility changes ahead of their challenge process.Most states are adopting at least one, electing to either consider locations the FCC marks as “served” – having broadband in excess of 100 Mbps upload and 20 Mbps download – as being “underserved” if the only technology available is DSL or to check coverage data against speed tests ahead of accepting official challenges.<h3>Vermont, Delaware and Ohio have added additional modifications to their proposals</h3>Only three are adding additional modifications: Vermont, Delaware and Ohio.&nbsp;All three states are modifying the model process to treat locations the FCC marks as served as being underserved if the only technology available in the area is fixed wireless cellular service. They cite the fact that cell speeds drop significantly with distance from a tower and can be throttled when networks are congested.Vermont is also adding a provision to treat served locations on the FCC map as “unserved” if there is evidence that providers in the area impose an “unreasonable capacity allowance (‘data cap’) on the consumer.” The state did not specify its threshold for determining unreasonableness.The model process also includes optional challenge types: MDU (multiple dwelling unit) and area challenges. These require providers to prove service for entire buildings or geographic areas if a certain number of challenges within that building or area are submitted.These modules are also popular with states who have released volume one, with all states except Montana and Utah explicitly adopting them.The existing broadband funding requirement calls for states to identify other existing broadband subsidy efforts within their borders. This includes both federal efforts like the Rural Digital Opportunity Fund and state-funded initiatives.Meeting the community anchor institutions requirement involves identifying anchor institutions currently receiving less than 1 Gbps upload and download service. It also asks states to classify which organizations will get anchor institution status. This typically includes schools, libraries, and healthcare centers, but states can add other entities if they provide justification in their proposals.Five-year action plans are due 270 after states received initial planning grants. When states received these grants varies, but the last allocation was made on December 23, 2022.

Delaware, Kansas, Louisiana, Montana, Nebraska, Ohio, Pennsylvania, Tennessee, Utah, Vermont, Virginia, and Wyoming have released their initial proposals.

12 States Have Filed Volume 1 of BEAD Initial Proposals 

12-states-have-filed-volume-1-of-bead-initial-proposals

Identifying sources of matching funds is a critical component of the Broadband Equity, Access and Deployment process. Over the past 12 months, the Fiber Broadband Association “Where’s The Funding?” series has been designed to equip applicants with the tools and information they need to satisfy BEAD’s matching contribution requirements under the signature National Telecommunications and Information Administration broadband funding program.BEAD matching – JanuaryReady CEO&nbsp;Jase Wilson and Chief Operating Officer&nbsp;Mike Faloon gave an introduction to the BEAD financing requirements. The program requires applicants to match 25% of their project costs, either with their own capital or outside loans or investments. Crucially, those have to be secured before an application is submitted.“It’s going to be the hardest part of your grant journey,” Wilson said.BEAD matching – FebruaryThe BEAD program requires 25% matching funds, but applicants that secure more will have better chances of winning grants, said&nbsp;Evan Feinman, director of the BEAD program at NTIA.Those matching funds can come from municipalities with remaining money from other federal programs like the American Rescue Plan Act and the Treasury Department’s Capital Projects Fund.Another source of matching funds the NTIA will accept are in-kind donations, he said. That can include rights of way, pole access, and labor, among other things.Sources of capital – MarchDavid Hartin, president of the telecom investor ITC Holding Company, highlighted mezzanine debt and issuing convertible notes as potential ways of securing match funding for broadband grant applicants.Mezzanine debt offers repayment plans tailored to the borrower’s revenue. Convertible notes are a type of bond that can function like both debt and equity, as they can be converted into stock in the issuing company or cash of equal value.More sources of capital – AprilNonprofits have more flexibility when providing funds than banks or government offices, said&nbsp;Brian Vo, Chief Investment Officer at Connect Humanity, a nonprofit that finances digital equity projects. He has worked with providers to finance projects with revenue-based repayment plans, for example, in which loan payments are linked purely to how much money the network brings in after being constructed.Impact-focused nonprofits like Connect Humanity can help smaller providers especially, but he noted that even nonprofits will want a partner to be familiar with their financial condition.Navigating the previous Letter of Credit requirement – MayUntil the NTIA issued a waiver for its 25% letter of credit requirement in November 2023, many in the broadband community were worried about this rule. Many of the individuals campaigning for a change to this requirement spoke about this in a special Ask Me Anything session on<a href="https://www.broadband.io/c/broadband-grant-events/ntia-letter-of-credit-discussion">&nbsp;November 9, 2023</a>. The updated guidance allows states to use performance bonds, which providers only pay out if the project fails, and milestone-based repayment plans to ensure the financial viability of a project.In May, WTF guest&nbsp;Elizabeth Bowles, president of Aristotle ISP, flagged the restrictive nature of the original rules. A 25% letter of credit would tie up too much cash up front for smaller companies to compete, she said.&nbsp;Getting matching funds – JuneChris Perlitz, managing director at Municipal Capital Markets Group, has been contemplating using grant anticipation notes from local banks to help finance BEAD projects. That’s short-term financing issued to borrowers expecting to receive a government grant.The funds can be placed in a trust account and used as collateral for letter of credit requirements, he said.Municipal bonds – JulyMunicipal bonds are debt issued by a city or town. Investors in such bonds are exempt from federal taxes and from most state taxes. They provide a low capital cost and can help grant-funded projects get off the ground, Perlitz said in his second WTF appearance.It will be important for providers to start building partnerships with municipalities early in the grant process, he said.Matching for rural electric co-ops – AugustLocal governments can assist BEAD applicants by putting up other federal money as matching funds, said&nbsp;Darren Farnan, CEO Missouri-based electric co-op United Fiber. County officials helped his co-op secure other state broadband grants by signing on to United Fiber’s applications and providing ARPA money toward the matching requirement.For co-ops specifically, the nonprofit model can allow networks in more densely populated areas to help subsidize the most remote places that for-profit companies won’t build to, he said.Challenges of matching funds – SeptemberConnect Humanity founder&nbsp;Jochai Ben-Avie discussed some of the challenges for rural providers looking to get matching funds. The high cost of serving rural areas is a significant barrier to getting that capital, he said, but small providers can work with electric co-ops to get pole access as an in-kind donation toward the 25% requirement.The NTIA also left open the possibility of waiving the match down to zero in high-cost areas, which a number of states are attempting to take the agency up on in theory initial proposals.Opportunities from securing matching grants – OctoberIn October,&nbsp;Jack Lawrence, chief financial officer of Amperage Infrastructure Corporation, spoke to the issue of how matching funds unlocks major broadband grants. Prior to Amperage, Jack was vice president at Priority Technology Holdings and oversaw the Priority Technology Ventures portfolio. Prior to joining Priority, he was CFO and CAO of Finxera, Inc., which was acquired by Priority.Tribal matching funds – NovemberTribal Ready CFO&nbsp;Joe Valandra and American Indian law practitioner&nbsp;Jennifer Weddle discussed some of the specific barriers and opportunities Tribal communities face in getting funding for BEAD projects.The BEAD matching requirement can be waived for Tribal projects, and Tribes need to be assertive about requesting those waivers from States, Weddle said.Tribes can also use any ARPA funds they have yet to spend if matches are necessary. &nbsp;

Highlights and takeaways from Fiber Broadband Association’s Where’s the Funding (WTF) series exploring sources of matching funds for NTIA's BEAD

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