The Broadband Infrastructure Playbook 3.0 Update

Over the summer and through the fall this year, NTCA-The Rural Broadband Association and the Fiber Broadband Association (FBA) have released a series of updates to their joint “Broadband Infrastructure Playbook.” The Playbook was first released in 2022 to provide information states would need in working with and implementing the Broadband Equity, Access, and Deployment (BEAD) program. 

Policy experts from both associations realized that there would be an ongoing need to provide updated information as the National Telecommunications and Information Administration (NTIA) published its original BEAD Notice of Funding Opportunity (NOFO) and provided revised and more detailed recommendations and guidance to states over time, based upon public comment and feedback. The Playbook would be updated in modular fashion over time as NTIA released this information.

Topics covered in the latest “3.0” update and discussed through joint blog posts and webinar conducted by NTCA and FBA on October 11, 2023, include commentary, broadband coverage challenge process, the Extremely High-Cost Threshold, letter of credit requirements, NTIA Cybersecurity and Supply Chain requirements for the BEAD program, and permitting. 

At the time of the webinar, over 20 states had submitted to NTIA their initial BEAD Volume One proposals and a handful also supplied their more detailed Volume 2 implementation proposals. “Almost across the board, they’ve really well done,” said Tom Cohen, FBA’s head legal counsel. “They pose a lot of interesting questions they have to sort through and NTIA now is reviewing.” Many of the points discussed were “balancing issues,” tradeoffs between cost of construction and delivering coverage to as many unserved as possible while upgrading underserved locations. 

Definitions and Challenges

One of the balancing issues Cohen spoke about was defining unserved and underserved households in Volume 1 of the BEAD proposals, and how to fashion service areas for Volume 2. The definitions provide part of the framework for BEAD applicants to challenge the process of how states allocate funds.  

“For example, you can treat all DSL as underserved,” said Cohen. “We all know that DSL is a technology that is distance sensitive. The farther you get away from the central office, the more speeds go down. You can call for rigorous speed tests dealing with other locations. If you are dealing with technologies that are somewhat flawed in terms of their ability to constantly deliver performance, such as fixed wireless, why aren’t we putting fixed wireless in with DSL, and start placing them as underserved?”

Volume 2 of the BEAD proposals goes into how states define service areas for projects, requiring officials to trade off between using arbitrary political boundaries such as census blocks, counties, or other definitions for ease of use and the way operators will plan the most efficient way to build and operate a network. 

“This becomes an issue, because if you lose the [building] efficiency, you have less money for BEAD awards,” said Cohen. “If you lump in a few very or extremely high-cost locations into that political boundary, that changes the business case a lot. We urge states and NTIA to think about this, because if you deter bidding by the way you set up service areas, naturally the price goes up and service providers don’t match as much. If you are going to use arbitrary political boundaries, you make them as small as possible, say census blocks, but pull out the very highest cost [locations] and deal with them separately.”

Extremely High-Cost Threshold Math & Planning

Getting the Extremely High-Cost Threshold right will be a challenge that affects coverage. In the October FBA/NTCA webinar, Michael Dargue of Cartesian noted that the cost of deploying fiber steadily creeps up until the last percentages of locations rapidly become more expensive to provision. 

“We’ll see the classic hockey stick, where the cost rapidly increases as you edge towards 100% coverage,” said Dargue. “We’ve got this inflection point whereas you get further to the right, you get closer to hitting that steep gradient on costs. It’s really important that we get the optimum zone where we maximize the reach of fiber and we don’t miss locations which are viable, but we don’t stray into this too-high zone. The Threshold is serving two key points. It’s giving the state the decision about whether to prioritize fiber or not. This also signals to providers about what technology they should be building for certain locations.”

Set the Extremely High-Cost Threshold point too low and there’s a risk that locations which would have been affordable for fiber will miss out and will get an inferior technology that doesn’t have the ability and capacity to grow over time, requiring larger future investment to be upgraded. If the threshold is set too high, increasing the cost per location and the average cost to service an area, states may find providers are unwilling to provide the 25% minimum match amount and unwilling to provide a proposal for BEAD funds. 

A few Extremely High-Cost locations within a census block group or other type of project service area can significantly drive up the average cost of providing service to all locations, leading to state officials concluding that all the locations in that area are too expensive to serve with fiber. Intelligently identifying those more expensive locations and handling them separately enables the deployment of fiber in an appropriate and economical fashion. 

Low-Cost Option and Affordability

Creating physical access to high-speed broadband networks is only one part of puzzle in closing the digital divide. Households need to be able to pay for service plans. “Affordability is an important piece of the puzzle,” said Michael Romano, Executive Vice President, NTCA. “You’re not just building networks for the sake of building them. They’re for use by consumers of all kinds throughout these areas.” 

As a part of BEAD grant funding, service providers need to provide a low-cost option for consumers. “It’s geared towards low-income households, because NTIA keeps on talking about its connection to the [FCC] Affordable Connectivity Plan,” said Cohen. “Anybody who gets funding needs to provide a plan for consumers who are low income so that they can afford the service.”

Building an operational business model dependent upon the ACP is problematic, since funding for the program runs out next year. “Unless Congress appropriates [more] funds for it, it gets a little tricky to deal with the low-cost requirements,” said Cohen. “Providers and eligible entities are going to have to wrestle to come up with something that is reasonable, because this is the revenue side of the calculation. If the revenue side is depressed, it changes the business model. You can’t afford as much match or you need to have more money coming in.”

Cohen encouraged service providers and state officials to define low-income households and what kind of affordable plan they should be getting. Middle-class households and affordable plans for that income group can help contribute to service provider’s business case, but states need to “show their work” in calculating how they arrive at their figures, rather than simply throwing out a figure. 

Rural areas face additional challenges on service plans that will affect business plans, said Romano, because of the higher cost to provide service to less densely populated areas. “Service providers are still going to have operating expenses,” he stated. “It’s a two-hour truck roll both ways in some rural areas when you have an operational issue, whereas the apartment building behind me here in Arlington, Virginia, has a five-minute roll from the central office. It’s a very different operating structure.”

Cybersecurity and Supply Chain Provisions

With cyberattacks an unfortunate part of today’s broadband arena, the BEAD NOFO requires fund applications to attest to either having an operational cybersecurity and supply change risk management plan or one that can be implemented before receiving any grant. The plan must reflect the most recent version of the NIST Cybersecurity Framework and NIST guidance for supply chain risk management. 

“Do we have to comply with every single thing in the NIST cybersecurity framework?” said Tamber Ray Regulatory Counsel, NTCA, during the webinar. “For small companies especially, that’s an overwhelming concept for them to take on. The answer quite simply is ‘No.’”

However, the Draft 2.0 NIST Cybersecurity Framework has six functions that do need to be addressed in any BEAD cybersecurity risk management plan, including the newly added function of Govern. “That was a recognition that you must have the executive team on board. You must have the top of the company understanding and being an active part in cybersecurity at a company in order for it to be effective,” stated Ray. 

In writing up a supply chain management plan, BEAD applications should be aware of two specific points. “No company should be entering into any sort of contract with any companies on the FCC’s Covered List,” said Ray, referring to a list of foreign telecommunication services and equipment manufacturers that are banned from doing business in the United States. “Beyond that, simply having companies look outside of themselves, look at their vendors to make sure that they’re getting updates when software releases are available and that they’re in a position to make sure that their equipment is up to date as much as possible, so they’re doing proactive steps to protect against any sort of supply chain attacks that might be coming their way.”

Permitting Best Practices

The first Playbook 3.0 module released this summer, the “Permitting: Access to State and Local Rights-of-Way and Infrastructure” document discusses how to think about and implement best practices for working with the permitting process at the state and local levels. “Permitting is a really important piece of the puzzle,” said Romano. “You need to be ready to go and permitting can certainly be a long pole, especially in certain regions where you can’t build for a good portion of the year.”

States are supposed to provide information and details in the BEAD Volume One proposal on how they plan to reduce costs and barriers associated with permitting. “They need a roadmap, a strategy, a plan of attack to help address those issues within the state,” Romano stated. “One good practice, for example, is identifying those state permitting agencies that are likeliest to have a significant role and articulate the plan for coordination with those agencies.” 

Other best practices recommended in the Permitting module include creating a single point of contact within the state for permitting to act as an owner and advocate for permitting issues across state agencies, encouraging state agencies to be transparent in their fees, for permitting fees to be cost-based and close to the actual expense necessary for issuing them, and common permit application forms to the largest extent possible. 

“The higher those permitting fees, the more of a dent they make in the business case for potentially deploying service to more locations,” stated Romano.