As the name would imply, the Citizens Against Government Waste (CAGW), has a perspective and I think it’s helpful to share a spectrum of all perspectives of broadband because all perspectives will come up in public forums. CAGW recently looked at States’ BEAD Proposals that outline how taxpayer money will be spent on expanding broadband to everyone, specifically they were interested in how each state planned to address the affordability requirement. Here is their perspective…

Citizens Against Government Waste (CAGW) sent comments on February 2, 2022, to the NTIA prior to the release of the agency’s guidance for the BEAD program.  The comments noted that the agency “must take a vendor and technology neutral approach to issuing grant funding,” and should avoid supporting government owned networks, among other recommendations.  But after these recommendations were not followed, CAGW has been critical of the guidance, noting that they encourage states to engage in rate setting by prioritizing funding for providers that meet prescribed rates for low and middle-income households at symmetrical 100/100 Mbps or higher speed thresholds.

Their executive summary…

This list compiles each state’s response to the BEAD Notice of Funding Opportunity’s (NOFO) Requirement 20 on Middle-Class Affordability and Requirement 16 for a Low-Cost Broadband Service Option.  This list also provides background information on the degree of participation in BEAD by municipal, tribal, and other government-owned networks (GONs) in each state.

CAGW has identified 13 states whose affordability strategies meet the NOFO requirements in a manner that should enhance private-sector participation and encourage the most rapid rollout of connectivity to unserved areas.  A significant element of most of their proposals is to not require specific monthly rates for each of the speed tiers.  Instead, the states propose to determine eligibility either by comparing providers’ applications to the “reasonable comparability benchmark” defined in the Federal Communications Commission (FCC)’s Urban Rate Survey, or by requiring providers to charge the same rates in areas of their state that qualify to receive BEAD subsidies as they charge in unsubsidized areas.

There are eight states – Kentucky, Louisiana, Minnesota, New Jersey, New Mexico, North Carolina, Texas, and Virginia – that will determine providers’ affordability by reference to the benchmark rate for any given service area determined by the FCC’s Urban Rate Survey.

There are five States – Alabama, Delaware, Maryland, New Hampshire, and Oregon – that require providers to charge no more in BEAD-subsidized locations than they do in unsubsidized areas of their state or any other state. (Alabama, however, uses this geographic price-parity approach only for scoring Middle-Class Affordability, while requiring a specific rate for the Low-Cost Service Option.)

There are 11 states – Connecticut, Florida, Georgia, Hawaii, Iowa, New York, Ohio, Rhode Island, South Carolina, South Dakota, and Vermont, along with American Samoa – that have adopted an affordability strategy that scores providers’ proposed pricing relative to other providers that apply for BEAD funding, rather than against any objective standard of affordability.  Ohio takes the unique approach of scoring applicants against a statewide weighted average of all BEAD applicants’ proposed prices, which is tantamount to strict rate regulation.

The other 24 states* and four territories (including the District of Columbia) surveyed, all dictate specific prices providers must charge to score well in the competitive application process.  This requirement will stifle further investment in broadband infrastructure and make it more difficult to spend the BEAD funding effectively and reduce the digital divide.  Some of the states and territories award full points for affordability for meeting the stated reference price, while others award only partial points for meeting the reference price and full points for charging significantly less than this reference price.  Illinois, Wisconsin, and Wyoming, use an application scoring function that will not award full credit to any provider because they would require the provider to charge $0 per month.  Michigan applies different benchmark prices to different geographic regions of the state.  Ohio will score applicants by reference to a statewide benchmark price, but rather than set that price in its initial proposal, the state will calculate it as a weighted average of prices proposed by providers.

And here’s their synopsis on Minnesota…

Minnesota   

Public Comment Concluded December 12, 2023

Minnesota will receive $651.84 million in BEAD funding with an average cost to taxpayers per unserved location of $4,793.  The Minnesota Office of Broadband Development’s initial proposal offers up to 15 points, out of 100, to providers who meet the price affordability requirements for 1/1 Gbps priority service.  The office set a priority affordability criterion that requires providers to select rates “consistent with the broadband pricing … available in unsubsidized areas within Minnesota for that service; or is at or below the residential rates provided in the FCC Urban Rate Survey’s reasonable comparability benchmark.”

Minnesota Statutes section 237.19 indirectly limits GONs by requiring a local referendum to allow municipalities to offer public phone service.  Tribes and municipalities had constructed 40 government-owned networks throughout the state by 2021, primarily in the Minneapolis metro area.