Contents

Introduction and Summary. 1

The Department Is Right to Focus on BEAD’s Success. 2

The Success of BEAD and BABA Are Linked. 2

BEAD Already Faces a Gauntlet of Barriers. 2

The Department Should Provide Specificity Where Possible. 3

Conclusion. 3

Endnotes. 4

Introduction and Summary

The Information Technology and Innovation Foundation appreciates the opportunity to comment on the Department of Commerce’s proposal to issue only limited waivers of Build America Buy America Act (BABA) requirements for the Broadband Equity, Access, and Deployment (BEAD) program.[1] The proposed waivers would enhance BEAD funding recipients’ ability to provide rapid access to high-quality broadband to all Americans, and the Department should ensure the limitations of these waivers do not hamstring deployment any more than necessary.

The Department Is Right to Focus on BEAD’s Success

BEAD represents the United States’ only chance to make the onetime, upfront investment necessary to close the geographic digital divide. BEAD’s success is critical to ensuring that individuals get the benefits of broadband and that society as a whole realizes the benefits of universal connectivity. The Department is, therefore, right to focus on the success of the success of BEAD in its work to marry the aims of BEAD with those of BABA. The Department notes,

absent the proposed waiver, potential subrecipients that may wish to participate in the BEAD Program will be unable to source BABA-compliant electronics or BABA-compliant optical fiber and fiber optic cable in sufficient and reasonably available quantities or of a satisfactory quality. This would create a material, and avoidable, risk to the overall success of the BEAD Program.[2]

We agree with this finding and the Department’s continued focus on this objective is the right path. The waivers for several types of electronics and other networking equipment that are not—and have no reasonable prospect of being—mass-produced domestically within the timeframe necessary for BEAD’s success are an excellent start toward ensuring BEAD funds result in broadband reaching all unserved populations. The Department should maintain all these proposals in its final waivers and view them as a bare minimum baseline for making BEAD viable.

The Success of BEAD and BABA Are Linked

While Congress has allocated adequate funding to eliminate the geographic digital divide, successful implementation of that funding is far from certain. Limitations on access to broadband equipment are a significant challenge for states who are seeking to evaluate subgrantees’ ability to deliver on deployment promises. Over a dozen states so far have specifically cited BABA requirements as a potential barrier to the success of their BEAD implementation plans. This stumbling block is as much a problem for BABA as it is for BEAD. If onerous requirements scupper BEAD’s potential, BABA’s goals will also suffer. It does the American manufacturing base no good to spend decades in limbo as impractical BA mandates throttle broadband deployment. Moreover, a reduction in the speed or extent of BEAD deployments would dampen the flow of funds for portions of the cost of broadband deployment that are available at home. Indeed, over 90 percent of BEAD funds will stay within the United States even with more extensive waivers.[3] In short, fully realizing the policy objectives of BABA requires use of the statutorily permitted waivers to make BEAD successful.

BEAD Already Faces a Gauntlet of Barriers

Limited access to necessary materials is only one of many potential barriers that could undermine the goal of universal broadband availability, but others remain. Several states have informed NTIA that their plans are contingent on solving workforce problems, supply chain issues, inflation impacts, federal and local permitting barriers, and many other challenges. Therefore, the Department should not focus on only bare minimum waivers but consider its waivers in the context of overall program success. While the proposed waivers may be adequate if access to BABA-compliant equipment were the only risk to BEAD, but states face a slew of challenges of which BA mandates are only one. Even if the proposed BABA waivers would reduce the risk to BEAD from the unavailability of materials, that remaining risk is still multiplied along with all other factors such that even a relatively low risk from BA mandates creates a far more substantial risk in conjunction with other challenges facing states and subgrantees. Hawaii provides a representative example of the nested nature of risks to BEAD success: “[BABA] requirements may exacerbate supply chain issues, in particular when all states and territories work to build infrastructure in the same timeframe. Any material delays in project execution, whatever the reason, will increase the impacts of inflation on project costs.”[4]

This warning is echoed by over half of the nearly three dozen states and territories with 5-Year Action Plans already submitted to NTIA. Indiana warns that “Hindering the ability to import materials that the country is already quite reliant on, could result in a delay or halt to deployment…”[5] Kansas notes that “[BABA] provisions may further contribute to supply chain concerns.”[6] Pennsylvania observes “[BABA] can be a significant factor in reducing supply for fiber and electronic components required for a broadband build. Limited supply with increased demand nationwide will only further delay the delivery of materials.”[7] And Ohio cites BABA as an expected source of cost pressure on its limited funds.[8] Moreover, nearly every state cites supply chain issues or material availability more broadly as a potential barrier to successful deployment, problems that will be compounded by every state building out simultaneously. These representative samples demonstrate the importance of considering the risks occasioned by BABA within the larger context of challenges to state implementation of BEAD. Given these circumstances and the interlinked nature of both statutes, the Department should go beyond the baseline waivers in the Request for Comment (RFC) and seek to minimize the impact of limited domestic manufacturing on BEAD implementation.

The Department Should Provide Specificity Where Possible

As it finalizes its waivers, the Department should provide sufficient specificity for states and subgrantees to know whether and how they can comply with the rules. One representative example of potential confusion could be the RFC’s discussion of “enclosures,” which draws conclusions about a potentially very wide array of equipment with a definition only by a non-exhaustive list. Preventing overinclusive definitions of products receiving more limited waivers is essential to ensuring that subgrantees are not unexpectedly obligated to use unavailable equipment.

Specificity would also be helpful to states that do not yet have clarity about the impact of BABA and their role in enforcing it. Louisiana, for example, notes the critical question of “who will be ensuring that BABA requirements are met and what type of leniency will be given considering the overall supply chain challenges.”[9] Ensuring a smooth process to incorporate BABA requirements into state BEAD implementation will go a long way toward reducing the risk of delayed broadband deployment.

Conclusion

We wholeheartedly support the aims of both BEAD and BABA. That is why it is essential that the Department harmonize its rules so that one does not become a stumbling block to the other. Successfully closing the digital divide is too important to take such a risk.

Joe Kane

Director, Broadband and Spectrum Policy

Endnotes