New York Doubles Down on Broadband Overbuilding
Key Takeaways
- An ACLP analysis of data from Round 2 of New York’s Municipal Infrastructure Program (MIP) found that only 10% of locations to be passed by funded projects were unserved or underserved when applications were submitted. This means that the state has chosen to bring duplicative broadband infrastructure to the other 90% of locations to be passed by these projects.
- Combined with our analysis of Round 1 awards, MIP Rounds 1 and 2 will result in overbuilding to 89% of locations to be passed.
- Such overbuilding diverts funds from supporting broadband projects that will reach unserved and underserved locations, of which about 61,000 remain in New York.
A Recap of the MIP & Lessons Learned from its First Round
New York’s Municipal Infrastructure Program (MIP) launched in 2022 to subsidize municipal broadband projects across the state. To assure adequate accountability and transparency of this high-profile program, the ACLP requested public records from Empire State Development (ESD), which houses ConnectALL, the entity administering MIP, BEAD, and several other grant programs. All records received to date are available here.
Previously, the ACLP published an analysis of awards made by ConnectALL in Round 1 of the MIP using public records from ESD. In Round 1, ConnectALL awarded more than $70M to six projects.
Of the more than 26,000 locations that will be passed by networks built with MIP Round 1 funds, only 14%, or some 3,700 locations, were unserved (i.e., without any broadband options) or underserved (i.e., without any options that can deliver 100/20 Mbps service). This means that the projects being built with MIP Round 1 funds will bring duplicative broadband infrastructure to nearly 23,000 locations. This is textbook “overbuilding,” which is a wasteful use of scarce public funding, especially at a time when about 61,000 locations across New York remain without any broadband options.
Analysis of NY MIP Round 2 Awards
MIP Round 2 awards were announced on November 13, 2024.1
In Round 2, ConnectALL awarded $140.3M to 6 projects. These projects will bring broadband service to 59,002 locations across the state. However, only 5,902 of these locations were unserved or underserved when project applications were submitted in mid-2024. In other words, projects funded in Round 2 will result in overbuilding to 90% of the locations to be passed by these MIP-funded networks.
The following table provides a summary MIP Round 2 awards:
| Project | MIP Award | Locations to Be Passed | Locations Already Served | Unserved & Underserved Locations |
|---|---|---|---|---|
| Orleans County (Finger Lakes) | $11,562,698 | 11,213 | 10,114 (90%) | 1,099 (10%) |
| Schoharie County (Mohawk Valley) | $30,000,000 | 4,005 | 3,358 (84%) | 647 (16%) |
| Central NY Regional Planning and Development Board (Central NY) | $26,181,288 | 6,671 | 5,880 (88%) | 791 (12%) |
| Franklin County (North Country) | $13,131,088 | 1,567 | 708 (45%) | 859 (55%) |
| Sullivan County (Mid-Hudson) | $29,846,168 | 19,000 | 17,296 (91%) | 1,704 (9%) |
| City of Jamestown / EntryPoint Networks Inc. (Western New York) | $29,626,816 | 14,447 | 14,318 (99%) | 129 (1%) |
| TOTAL | $140,348,058 | 56,903 | 53,100 (90%) | 5,902 (10%) |
Combined, MIP Rounds 1 and 2 will result in overbuilding to 89% of locations to be passed by these municipal networks. ConnectALL awarded over $210M across these rounds to 13 projects whose networks will pass 85,755 locations. Of those, only 9,664, or 11%, are unserved or underserved by broadband.
Another way to think about this is to calculate how much it will cost to reach unserved and underserved locations with MIP funds. Dividing the $210M allocated across Rounds 1 and 2 by the 9,664 un/underserved locations to be served by these new networks yields $21,730 per un/underserved location. That figure is very high and is typically only seen in very remote areas. Indeed, by way of comparison to grants being awarded via the BEAD program, the overall national average cost to serve unserved and underserved locations is about $5,100. In New York, that figure is $7,100. This means that New York’s MIP projects are 3x more expensive than what it is proposing to spend on its BEAD projects and 4x more expensive than the national average for BEAD projects.
Projecting MIP Round 3 Overbuilding
Since the announcement of the Round 2 results, ConnectALL awarded additional MIP grants in the program’s third and final round. The ACLP submitted data requests to ESD for these awards in August 2025l as of this writing, it is awaiting a response.2
Even so, it is possible to estimate how much overbuilding might be occurring in the Round 3 awards.
As an overview, MIP awards made in Round 3 included:
- $26,000,000 to Oswego County to bring broadband to 10,792 locations.
- $1,363,264 to support the expansion of the Southern Tier Network to bring broadband to 207 locations.
- $9,928,784 to Madison County to bring broadband to 2,647 locations.
- $15,682,943 to Wyoming County to bring broadband to 2,000 locations.
- $5,088,381 to ErieNet, Erie County’s middle-mile initiative, to connect 82 community anchor institutions (CAI).
- $10,034,234 to Allegany County to bring broadband to 300+ unserved locations.
Together, ConnectALL awarded $63M across 5 projects to bring broadband to 15,946 locations (this excludes the award to ErieNet, which passes only CAI, not homes).
Concomitant with administering the MIP, ConnectALL has also been leading the state’s efforts to award BEAD grants. As part of that program, ConnectALL has had to continuously update its broadband availability maps to remove locations that already have broadband service or that will soon receive it via a program like MIP. During one of its last comprehensive updates, the ACLP observed that the state removed an additional 5,335 locations from its BEAD map because they will soon receive broadband service from a CPF-funded program. MIP is the state’s largest CPF-funded program.
(ConnectALL is also administering a CPF-funded grant program to bring broadband to affordable housing across New York. Per publicly available data, the Affordable Housing Connectivity Program (AHCP) will bring broadband service to at least 2,631 locations.)
Assuming all 5,335 locations removed from the BEAD map stem from MIP Round 3, about two-thirds of the locations to be passed by these networks already have a broadband connection available to them. The overbuilding rate in Round 3 could be even higher if a substantial amount of the locations to be served via the AHCP are currently unserved or underserved.
Why This Matters (Redux)
Overbuilding broadband networks with public funding is wasteful because it diverts resources from the roughly 61,000 locations across New York that still lack broadband options. In theory, the state’s BEAD program will allocate fund projects to serve most, if not, all these locations. However, it is unclear if the state will receive its BEAD allocation from the federal government. NTIA has made clear on multiple occasions that it will not release funds to states where BEAD-funded projects will have their rates regulated. New York is the only state in the country with a broadband rate regulation law. It is possible that NTIA will withhold New York’s BEAD funds until the state repeals the law. If the state does not, then NTIA might withhold its allocation indefinitely.
This is not a hypothetical. Lawmakers in California were close to approving a similar rate regulation law but pulled it back due to concerns that enacting it would imperil the state’s BEAD funds.
If New York loses its BEAD funds, or if those funds are delayed in reaching the state, allocating more than $220M in federal funding via MIP Rounds 1 and 2 to build duplicative broadband networks to over 76,000 locations across the state will seem particularly shortsighted.
But even if BEAD progresses seamlessly in New York, the state has set a worrying precedent by prioritizing the use of so much public money to subsidize broadband competition in served markets. In other words, New York State has put a thumb on the scale in support of the municipal broadband projects that it is backing with MIP funds. The history of municipal broadband is generally not kind to public networks that seek to compete with experienced private ISPs.
With so much invested in these networks, it is reasonable to wonder just how far the state will go to assure their success. Will the state bail out MIP awardees if they struggle to sustain themselves financially? Will the state adopt additional laws and regulations that target larger private ISPs and exempt smaller ones, as its rate regulation law does? The state’s rate regulation law exempts ISPs with fewer than 20,000 customers from having to offer broadband to qualifying low-income households at $15/month. At least one muni broadband project that has received MIP funding, Dryden Fiber, has sought an exemption from the law because complying with it would create an “undue economic hardship.”
Whether intended or not, by using its MIP to overbuild private networks and by adopting a broadband rate regulation law, New York has sent a negative signal to the private sector that the state will not hesitate to intervene in competitive markets. Indeed, one could reasonably interpret these actions as the state making clear to private firms that it will consider passing laws and levying regulations to manufacture the results it thinks consumers want, even if it means undermining the very forces that are pushing firms to compete vigorously with one another. At least one ISP has already left the state in response to the rate regulation law. Knock-on effects from MIP’s subsidization of municipal broadband overbuilding are likely to manifest when these public networks are operational. Additional negative outcomes could result if the state continues down this path.
Footnotes
That same day, the ACLP submitted formal data requests to ESD for each of the announced projects. ESD provided the ACLP with Round 1 data within two months of submission. ESD took 11 months to respond to the ACLP’s request for Round 2 data.↩︎
It is notable and relevant to this discussion that NY Governor Kathy Hochul recently vetoed legislation that would have streamlined the processes governing public records requests and responses. Government watchdog groups have long observed that New York State has a very poor track record of timely responses to public records requests, causing some to levy complaints that the state is insufficiently transparent.↩︎