House Hearing Blasts NTIA's Davidson on BEAD 'Rate Regulation'

The Infrastructure Investment and Jobs Act says NTIA can't regulate rates, yet states complain that it's encouraging rate-regulated options, which violates the law's intent, said House Commerce Chair Cathy McMorris Rodgers, R-Wash.

House Commerce members John Joyce, R-Pa., and Morgan Griffith, R-Va., pointed to feedback Virginia received from NTIA on its pending BEAD volume 2 application indicating NTIA is setting rates for low-cost options. NTIA is seemingly encouraging a $30 price cap, Griffith said. Rate regulation opponents have cited NTIA's rejection of Virginia's volume 2 as being driven by NTIA demands for rate regulation (see 2403070065).

When challenged, Davidson repeatedly responded that NTIA is acting within IIJA guidelines, which require that NTIA ensures there is a low-cost service option. "That's exactly what we are doing," he said. NTIA is giving states wide leeway in how they define it, he said. He said some states are taking a price range approach rather than a fixed amount. Providers aren't required to participate in BEAD, he said, and denied there is a $30 price cap.

Joyce said he "want[ed] assurance there is no [NTIA] arm bending" to make states adopt specific dollar amounts. Davidson replied that as long as states meet the affordable requirement of the low-cost option, their BEAD plans will be approved. "But [states] have to show that to us," he added.

NTIA must prioritize affordability as it reviews state plans, ensuring ISPs have a reliable customer base as they deploy in unserved and underserved areas, House Communications ranking member Doris Matsui, D-Calif., said. That affordable focus is even more crucial with ACP running out of money, she added.

House Commerce ranking member Frank Pallone, D-N.J., said putting money toward broadband infrastructure isn't sufficient, which is why the law has an affordability provision. He said GOP critics are "misreading the statute" when they characterize NTIA as letting states set the low-cost amount as rate regulation.

Multiple lawmakers took the hearing as an opportunity to speak about ACP. Rep. Yvette Clarke, D-N.Y., called it "shameful [and] nonsensical" for ACP to expire on the verge of there being universal access nationwide. She said GOP leadership needs "to get off the sidelines."

"There seems to be a lot of finger-pointing," Rodgers said, adding that the Democratic-controlled Senate hasn't contacted House Republicans about a solution. She said as the funding cliff approaches, numerous operators are crafting low-cost services that are often significantly cheaper than the $30/month that ACP covers. House Communications Subcommittee Chair Bob Latta, R-Ohio, said House Republicans haven't been asked to work on ACP changes that would lead to their support for funding.

Lawmakers questioned Davidson about a litany of items, from reform to precision agriculture. Pointing to a Commerce Office of the Inspector General management alert raising BEAD implementation red flags, Rep. Gus Bilirakis, R-Fla., asked what NTIA is doing to address issues about BEAD's overreliance on fiber and to ensure overbuilding is limited. Davidson said NTIA has "careful strictures" that safeguard against funding overbuilding. He said states "absolutely will" have a wide variety of tech at their disposal, including fixed wireless access and low earth orbit satellites.

Rick Allen, R-Ga., pressed Davidson to commit to approving right-to-work states' BEAD plans that lack labor mandates. Subcommittee Vice Chair Randy Weber, R-Texas, questioned Davidson about the risk of Chinese government influence over bodies like the O-RAN Alliance. Tim Walberg, R-Mich., urged that conversations between NTIA and states regarding states' BEAD applications be more publicly open.

Mariannette Miller-Meeks, R-Iowa, pushed for a date when BEAD-funded connectivity service would be available to Iowans. Davidson said going forward there will likely be "a cadence" of states and territories getting their BEAD plans approved weekly. But, he said, “We did not build the highway system overnight,” and BEAD construction projects will take years. He said the first projects should begin in 2025 or 2026. Miller-Meeks said that’s too slow given the speed of technological evolution.

Rodgers criticized NTIA for taking months to respond to questions it received during a December oversight hearing. While the questions were lengthy, Davidson conceded, "We should do better." Rodgers also indicated NTIA is too slow when issuing grants from its Public Wireless Supply Chain Innovation Fund. The $420 million in forthcoming grants through the fund's Phase 2 is aimed at helping create a more-diverse market for open radio access network equipment, Davidson said. He said the equipment market so far has been fairly concentrated with a few major suppliers, two of them Chinese. He said the $420 million should be turned around quickly, going out before year's end.

Asked about how NTIA will handle BEAD funding for areas that were to receive Rural Digital Opportunity Fund support, but whose support fell through because providers did not meet commitments, Davidson said NTIA doesn't want to fund efforts other federal programs have promised to fund. That gets complicated when providers don't follow through, he said. Agencies that have committed to funding a deployment should continue to seek ways of funding it, he said.