The $21 Billion Question: What To Do With Leftover BEAD Funds?
funding
BEAD
States are on track to spend only half of the $42 billion that is available for broadband expansion. Here are some ideas for wisely investing what’s left.
Key Takeaways
- The 49 states and 3 territories that have released BEAD Final Proposals as of today propose to use less than half of their total allocation for broadband deployment. At this rate, the BEAD program will end with more than $21B in leftover funding.
- Several factors could increase this amount, including if NTIA continues to force states to spend less by requiring additional rebidding.
- What should be done with these leftover funds? The ACLP recommends that NTIA and the Trump administration strategically invest them to ensure that the country’s broadband networks are universally available, sufficiently resilient, and robustly used.
Final Proposals Show $21B+ in Leftover Funding
Since June 6, when the Trump NTIA released its BEAD Restructuring Policy Notice (RPN), states have been racing to update their maps of eligible locations, conduct a new “Benefit of the Bargain” (BOTB) round, negotiate with prospective subgrantees, release Final Proposal (FP) drafts for 7 days of public comment, and submit FPs to NTIA by September 4. Many states met this ambitious deadline, but 16 required extensions.
The ACLP has been closely tracking state FPs and monitoring how much BEAD funding might be leftover once allocations are made in a tracker available here. In June, we projected how much BEAD funding might remain based on a variety of factors. Our estimates ranged from $3B on the low end to $33B on the high end.
As of this writing, 49 states and 3 territories have released some version of their Final Proposal. On average, these states have used 47.3% of their total allocation for broadband deployment. This has yielded $20.4B in BEAD “savings” to date. If the remaining 1 state (California) and 2 territories (Puerto Rico; U.S. Virgin Islands) allocate their funds in a similar way, then the amount of leftover BEAD funds would total $21.6B.
Data on allocated and leftover funds by state can be viewed by hovering over Figure 1, which is shaded by the percentage of funds left over.
Could There Be More?
Several factors could influence the final tally of BEAD “savings”:
NTIA required states to cut their allocations to reflect “price caps” for certain eligible locations. If proposed allocations for these locations exceeded the “price cap,” then NTIA required states to reduce the allocation to match the cap. Further reductions could yield additional leftover funds. (Further information on these caps is available here.)
Most states adjusted their BEAD allocations prior to submitting their final FP to NTIA, and many continue to change these allocations during the curing and rebidding process. These changes might reflect the “price caps” reductions noted above and/or other adjustments made by the state. For example, Colorado’s proposed BEAD allocations increased from $409M, as indicated in its draft FP, to $420M, as indicated in its submitted FP. Many other states made smaller adjustments up and down.
Some states, though, made dramatic cuts. Montana, for example, slashed its allocations by $95M prior to submitting their FP to NTIA. Similarly, Ohio decreased its allocations by $35M prior to submission. In Alabama, proposed allocations decreased from $530.7M to $479.7M.
The status of New York’s $664M BEAD allocation remains unclear. NTIA recently clarified that states cannot force subgrantees to offer broadband service at a mandated price. New York is the only state in the country with a broadband rate regulation law. Whether New York can or will attempt to exclude BEAD subgrantees from complying with it remains uncertain.
What Might Happen To These Funds?
In its RPN, the Trump NTIA punted on the issue of whether states will be able to use leftover BEAD funds for non-deployment uses. By all accounts, NTIA remains focused on realizing as much BEAD “savings” as possible and could simply attempt to return those funds to the Treasury.
Whether that will happen, though, is an open question. In the recent past, Commerce Secretary Lutnick has sought to generate revenue for the federal government in novel ways, like taking a stake in Intel, using tariff negotiations to extract investment pledges, and seeking to take a cut of universities’ patent revenues. There have been reports that he might seek to use those funds to build an “Investment Accelerator,” which would be used by the federal government to buy direct stakes in companies and otherwise attempt to generate consistent returns for the government. Secretary Lutnick could try to deposit all BEAD “savings” into this account.
On the flipside, there is a growing chorus of voices at the federal and state levels that are trying to convince Secretary Lutnick to let them use their leftover funds for other deployment or non-deployment purposes.
One of the first people to weigh in was Louisiana Governor Jeff Landry, who sent a letter to Secretary Lutnick in September suggesting that states be allowed to use leftover funds to advance “key national priorities,” including the White House’s AI Action Plan and “America First Policy Initiatives/Make America Great Again Policies” like education, training, and workforce development.
In his letter, Governor Landry subtly noted that the law that created BEAD makes clear that the funds appropriated by Congress for the program “shall” be made available to the states. This could signal that some states might try to sue the Commerce Department if NTIA tries to withhold some amount of their BEAD allocation (this dovetails with the larger issue of presidential impoundment, which is already being litigated).
The chorus has continued to grow since then. Senator Capito (R-WV) made clear that she expects that West Viriginia should receive its full share of BEAD funding, seeming to also indicate that states should be able to use these funds for both deployment and non-deployment purposes. Senator Wicker (R-MS) has also voiced support for letting states use leftover funds for non-deployment purposes. These pleas from prominent Republican Senators came on the heels of calls from Democrats in the House for NTIA to provide more clarity on its intentions for the remaining funds.
In addition, a growing number of third-party groups have called on NTIA to allow states to use remaining BEAD funds for non-deployment purposes. For example, the National Digital Inclusion Alliance (NDIA) recently issued guidance to its many members and affiliates for how to effectively advocate for these funds, which included templates for sign-on letters to NTIA and Congress.
What Should Happen To These Funds?
Putting aside what some think Secretary Lutnick or President Trump or the states might want to do with any remaining BEAD funds, it is useful to look to what Congress originally intended for those resources.
Congress seemed to foresee that some amount of BEAD funding might be used for non-deployment purposes. For example, in the “Use of Funds” section of the IIJA (47 U.S.C. 1702(f)), Congress wrote that states “may” use BEAD funds for deployment and non-deployment purposes (i.e., “broadband adoption”). It also stated that NTIA could add to the list of eligible uses but not subtract from it. Specifically, NTIA could detail additional uses of BEAD funds that “facilitate the goals of the program.”
The overarching goal of BEAD is to close the digital divide. For many years, there has been an understanding among stakeholders that the digital divide is comprised of two separate but related parts: supply-side issues and demand-side issues.
On the supply side, closing the digital divide means making broadband available to every person in the country. The U.S. is well on its way to achieving this goal: the ACLP previously reported that the digital divide has already narrowed by 65% over the last few years. In theory, available BEAD funding will ensure that every person in the country can access a broadband connection. However, as discussed in a companion piece, a sizeable number of locations, perhaps as many as one million, may remain unserved post-BEAD. To ensure that no location is left behind, the ACLP proposes setting aside some amount of the leftover funds – maybe as much as half – to seed a BEAD Reserve Fund that can be drawn from during a second BEAD round.
In addition to making sure every location has broadband service, it is also critical to determine whether broadband networks are sufficiently robust and resilient to reliably deliver service. With so much funding likely to be leftover, it is reasonable to ask whether some amount of those funds – maybe $5B – should be repurposed as a Trump Broadband Resiliency Fund that would underwrite projects to replace utility poles, modernize public safety and emergency responder networks, bolster cybersecurity, and harden systems in areas prone to outages? Many states – both in their original BEAD plans and in their ongoing efforts to streamline broadband deployment – have sought to address these issues. For example, Texas and North Carolina are among a handful of states that have launched pole replacement funds, which seek to help ISPs and utilities address these costs so that network deployment is not slowed or prevented by rising pole costs.
These are real needs that could benefit immensely from the strategic investment of leftover BEAD funds.
These funds should not be used, though, on projects that would yield duplicative network infrastructure. Government-subsidized overbuilding has been rampant in recent years. ARPA funds are being used to underwrite massive middle-mile network duplication in states like California and Texas, and last-mile overbuilding in states like New York. There have also been standalone initiatives that will result in overbuilding, like the NTIA Middle-Mile Program that was created by the IIJA. Overbuilding is wasteful and undermines competitive market dynamics. To the extent NTIA wishes to strategically invest leftover BEAD funds in additional supply-side initiatives, it should choose to enhance existing infrastructure rather than duplicate it.
Defining success on the demand side has always been more difficult. Is “success” 100% broadband adoption? That is unlikely to ever happen, even with 100% availability (even adoption of basic telephony never reached 100%), but there are proven methods to bolstering take-rates in under-adopting communities. Could some of the remaining BEAD funds – maybe $5B – be used for a Trump Make America Connected Fund? Grants could be awarded to known programs with track-records of demonstrated success in equipping users of all ages with core digital literacy skills. What about the coming age of AI? Could some funding be used to endow a Trump AI Preparedness Initiative so that consumers and workers are able to productively harness AI rather than be displaced or overwhelmed by it?
Addressing these demand-side issues is critical to assuring America’s long-term competitiveness in the global market. At bottom, ensuring that as many people as possible have the skills needed to harness the amazing array of tools enabled by robust broadband networks is good policy.