How Much BEAD Funding Will Remain After “Benefit of the Bargain”? Potentially Billions.
Key Takeaways
- In previous analyses, the ACLP observed that the number of BEAD-eligible locations has decreased significantly since funding was allocated, and the recent allowance of unlicensed fixed wireless to be figured into the BEAD calculus will further decrease their number.
- Given this substantial decrease, it will likely be easier for most states to achieve their deployment goals by using fewer funds than originally anticipated. Coupled with BEAD’s new focus on cost - i.e., “lowest bid wins” in most cases - there will almost certainly be significant BEAD funds leftover.
- In this post, the ACLP attempts to estimate how much funding will remain after BEAD deployment grants are made. These estimates, which are not meant to be exact and are for illustrative purposes only, make clear that, in most scenarios, significant sums in unspent funds will remain.
- With potentially billions left over, the question then becomes what should be done with those resources.
Fewer Eligible Locations…
As the ACLP highlighted in two previous analyses, the current total of BEAD-eligible locations is far lower than when NTIA first calculated BEAD funding allocations back in June 2023. Per prior ACLP analyses:
- BEAD Challenge Process results from all 50 states and DC show that, thanks to new deployments, enforceable commitments to deploy, and other corrections to BEAD maps, eligible locations decreased by 59% nationwide since the time of the original BEAD funding allocations.
- On top of this, the recently announced allowance of unlicensed fixed wireless (ULFW) as eligible for inclusion in BEAD maps and for pursuing grants could further reduce remaining unserved locations by up to 15%. Even when adding new BEAD-eligible locations arising from RDOF defaults, this decrease could still be as much as 13%. (This assumes that all existing ULFW connections meet the technical criteria set forth by NTIA in its recent notice and that states reclassify locations served by those connections as served – and therefore ineligible for BEAD.)
- Taken together, these data mean that the total number of BEAD-eligible locations in the U.S. will have decreased by upwards of 65% since June 2023 (again, this assumes that all ULFW connections are deemed sufficient and the locations they served are classified as ineligible for BEAD).
While exact eligible locations lists are still subject to change as state broadband offices scramble to incorporate the “benefit of the bargain round” and account for potential service by ULFW, the number of eligible locations is lower – and in many cases, significantly so – than when BEAD funds were divvied up (as discussed in a previous post, initial results from NE and SC indicate that ACLP estimates are conservative vis-à-vis the impact of including ULFW in new BEAD maps).
…Will Probably Mean More Leftover Funds
This dramatic decrease in eligible locations will likely manifest in leftover deployment funds. Indeed, states will have the same amount of BEAD funding available to them but fewer locations that need to be served. With overall BEAD-eligible locations plummeting by at least 59% and perhaps as much as 65% nationally (these figures are even higher in some states), states could now theoretically have an average of more than twice as much funding per remaining BEAD-eligible location. Some states could have considerably more.
In practice, a reduction in eligible locations does not mean a state will spend a correspondingly lesser amount to achieve 100% broadband availability. Indeed, the remaining BEAD-eligible locations will be among the most expensive to serve. Moreover, broadband deployment costs continue to tick up due to inflation in labor and other inputs. And with a BEAD eligibility map that will probably be much less cohesive than before due to the inclusion of ULFW, some incumbent ISPs might not be able to leverage their economies of scale to drive down project costs in some areas.
But How Much?
The ACLP offers two different ways of estimating how much BEAD funding might remain in this new world of significantly fewer eligible locations.
Using Original Per-Location Averages
The first way of illustrating the potential magnitude of leftover BEAD funds involves a straightforward calculation. Utilizing our estimate of eligible locations following state challenges, ULFW inclusion, and RDOF defaults, a figure that yielded an overall 65% reduction in eligible locations, we conducted two calculations:
First, we calculated how much BEAD funding will remain if states spend double the amount of money they had for each of the (many more) locations when BEAD funding was allocated back in 2023.
For example, in Alabama, we use $6,550 as our average per location deployment cost for this calculation. This is double the $3,275 that was available on average per location when BEAD funding was allocated. We then multiply this by the 116,542 locations we estimate are still eligible to arrive at a total spend on deployment of $763,364,402, which would leave $637,857,500 unspent.
Second, we calculated how much BEAD funding will remain if states spend on average exactly the amount of money per location compared to the original average per location funding available at the time funding was allocated.
Using Alabama again as an example, the calculation here is the same as above, expect we use $3,275 per location, which is approximately how much Alabama had per location when BEAD funding was allocated.
In aggregate, these calculations yield estimates of leftover BEAD funding ranging from $11 billion to $25 billion.
| Original Avg. Per-Location | 200% Original Avg. Per-Location |
|---|---|
| $25,097,532,882 | $11,069,030,269 |
Results for each state, available here, vary widely and generally correlate with how drastically the number of BEAD-eligible locations have decreased. Logically, states with a large decrease in eligible locations are more likely to spend less of their total allocation.
Based on Fixed Per-Location Averages
In addition to the above calculations, we also estimated leftover funding using fixed per-location averages of $1,500, $3,000, $6,000, $9,000 and $12,000.
The $1,500 figure reflects lower-end proposals by some to set a very low maximum threshold for per-location BEAD spends. The upshot of such a dramatic, if not unrealistic, cap on BEAD projects was that it would theoretically facilitate greater participation by LEO satellite.
The $9,000 per-location average cost stems from an analysis by Cartesian that found this figure would result in fiber being deployed to 90% of remaining BEAD locations under the original BEAD rules set by the Biden NTIA. The $12,000 per-location average represents a top-end average cost that would imply that remaining locations include a large proportion of very high cost-to-serve locations. Notably, at this level, at least 29 states would utilize all of their deployment funds.
Both the $3,000 and $6,000 per-location figures were picked to provide additional insight into the differences in outcomes from BEAD allocations between the upper and lower limits noted above. These also generally reflect BEAD bids from LEO providers in some states, an important consideration given the new BEAD scoring rubric, which prioritizes cost per location above all else.
As above, we multiplied these per-location averages by the estimated number of eligible locations to compute a total BEAD spend for a given state. The difference between that spend, and total funding allocated to the state, is what could be left unspent.
Like the above, this yields unspent funds estimates ranging from $3 billion to $34 billion nationwide, depending on which per-location cost is used.
| $1,500 | $3,000 | $6,000 | $9,000 | $12,000 |
|---|---|---|---|---|
| $33,528,265,867 | $27,303,243,367 | $14,994,806,794 | $6,829,104,297 | $3,248,529,300 |
Caveats
These calculations are inexact and meant only for illustrative purposes. Actual outcomes across the states will vary widely. The results of this analysis are included in a table below and are also available in spreadsheet form. Of note, like our prior analysis of ULFW and RDOF defaults, West Virginia is excluded because the state has not responded to requests for accessing its post-challenge location list.
Takeaways
Should unspent funds of this magnitude remain after deployment goals are met, the question then becomes what will be done with them. It remains to be seen whether NTIA will attempt to claw back those funds and try to return some or all of it to the Treasury. (This implicates a larger debate about whether a president can choose not to spend Congressionally authorized funds. The Trump administration has already attempted to cancel digital equity grants and appears eager to test the limits of its authority to withhold appropriated funds.)
States have spent years planning for how to deploy leftover BEAD funds for non-deployment purposes, which the IIJA explicitly permits. If it chooses to adhere to the statutory text, NTIA could narrow the list of permissible non-deployment uses of these funds (in its Notice, the Trump NTIA indicated that it was still evaluating this issue).
Regardless of how these funds are used, the overarching issue is that, even before the “benefit of the bargain” round required by the Trump NTIA, most states were likely on track to have BEAD funds remaining after meeting their deployment goals. Now, in a world where “lowest bid wins” in most cases, and where there are even fewer locations to serve, states will probably have even more money left over.