BEAD Has Not Connected a Single Home for Broadband Interenet Access, After 3 Years

As an observer of the follies of government ineffectiveness, we note that the U.S. Broadband Equity, Access, and Deployment (BEAD) Program was enacted in November 2021 and allocated $42.45 billion to the National Telecommunications and Information Administration (NTIA) to work on the “digital divide” by facilitating access to affordable, reliable, high-speed internet throughout the United States, with a particular focus on communities of color, lower-income areas, and rural areas.

As of November 2024 not a single dollar has been spent in support of the program, for a variety of perhaps simple bureaucratic reasons. 

The program's implementation has been slowed by a complex approval process. States were required to submit Initial Proposals outlining their broadband deployment objectives. 

As of June 2024, only 15 states and territories had received approval. States have 365 days after approval to select projects and submit a final list to the National Telecommunications and Information Administration (NTIA) for review.

As you might imagine, all that has caused delays. 

Also, the NTIA had to wait for the FCC to release an updated national broadband map before allocating funds to states.

There have been other issues as well. The Virginia proposal has been delayed over affordability requirements and rate-setting. The program also has provisions related to accessibility, union participation, and climate impact, which have not helped speed things up. 

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High interest rates and tight financing conditions have made it more difficult for broadband providers to secure funding for projects, even when approved. 

The result is that funding isn't expected to start reaching projects until 2025 at the earliest. .

Some might argue the program’s design was not optimal for rapid funds disbursal.

Some might argue it would have been far simpler to route money directly to Internet Service Providers (ISPs) based on their proven ability to deploy networks quickly in underserved areas. 

Competitive bidding could have been used. The program could have specified uniform national standards for broadband deployment to replace the current patchwork of state-specific and local requirements. 

The program could have been “technology neutral” instead of mandating use of some platforms over others, and might have used a simpler application and reporting system, in place of the cumbersome existing framework. 

The larger point is that the law arguably was poorly designed, in terms of its implementation framework. The fastest way to create infrastructure might have been to give buying power to potential customers, as did the Affordable Connectivity Program, or make direct grants to ISPs in position to build almost immediately. 

And since rural connectivity was deemed important, it might have been wise not to exclude satellite access platforms. 

It was a good impulse to “want to help solve this problem.” But intentions also must be matched by policy frameworks that are efficient and effective, getting facilities depl;oyed to those who need them fast. BEAD has not done so. 

High-Cost Home Broadband Subsidies Work

Very few major social problems have clear and uncomplicated causal relationships, which makes virtually impossible the task of determining whether public policies actually work, or not. 

For complex social problems like poverty, housing, crime, education, carbon reduction or traffic, it remains quite difficult to prove causal links between policies and outcomes. Basically, policies are tried without any real way of knowing whether they work. 

Contrast that with a few instances where the primary causation mechanisms are relatively clear. The causal link between smoking tobacco and various health issues like lung cancer, heart disease, and respiratory problems is well-established.

There is a direct causal relationship between alcohol consumption and impaired driving leading to accidents and fatalities.

Conditions such as scurvy (vitamin C deficiency) or rickets (vitamin D deficiency) have clear causation mechanisms related to lack of specific nutrients in the diet. Likewise, the danger of lead exposure, especially in children, is clear.

The overuse and misuse of antibiotics in healthcare and agriculture has a direct causal relationship with the development of antibiotic-resistant bacteria.

Home broadband supply now is likely one problem for which we know at least one causal relationship, namely that financial subsidies work. Since the cost of home broadband infrastructure is directly related to population density, financial subsidies are required in low-density rural areas. 

Urban households tend to have access to better home broadband than households in rural areas, rural residents might note, policymakers might agree and OpenSignal says. 

And though there are correlations between income, education and age in any market, “income levels are less predictive of reliability than density,” OpenSignal notes.

It might be noteworthy that although sharing of network infrastructure often is touted as a way of reducing the cost of home broadband infrastructure, OpenSignal studies find there is no correlation between network infrastructure sharing and either high reliability or a narrow digital divide. “Countries with limited infrastructure sharing but targeted subsidies for private rural investment mostly perform better than those relying on widespread infrastructure sharing,” OpenSignal notes.

Topography and density are key factors in the size of the divide between urban and rural home broadband experience. 

Markets with highly-concentrated populations in urban areas show small gaps between urban and rural reliability, and spread-out middle-income countries with difficult terrain show big gaps. “But a few countries with lots of medium-density areas, like the U.S., and Spain, have relatively small digital divides,” the firm says. 

In fact, the U.S. market might better be characterized as having huge low-density areas. population density has a huge impact on the cost of building new networks, mobile or fixed, but especially fixed networks.  

U.S. population density is quite thin across most of its geography, which directly affects the cost of building broadband networks, as hefty subsidies are required to reach the last one percent or two percent of remote locations. 

And the United States has a huge percentage of its land mass that is thinly settled, if at all settled. In Canada, 14 percent of the people live in areas of density between five and 50 people per square kilometer. In Australia, 18 percent of people live in such rural areas.

In the United States, 37 percent of the population lives in rural areas with less than 50 people per square kilometer.

Put another way, less than two percent of Canadians and four percent of Australians live in such rural areas. In the United States, fully 48 percent of people live in such areas.

Put another way, about six percent of the U.S. land mass is “developed” and relatively highly populated. Those are the areas where it is easiest to build networks. But about 94 percent of the U.S. land surface  is unsettled or lightly populated, including mountains, rangeland, cropland and forests. And that is where networks are hardest to build and sustain.

So it should not at all be surprising that broadband reliability is, on average, 23 percent higher in urban areas than in rural areas across all markets we analyzed,” say analysts at OpenSignal. The firm uses a 100 to 1000 point scale to measure broadband experience in a typical household where multiple devices are used simultaneously. 

The metric is based on ability to connect (uptime); ability to complete tasks and speed, latency, jitter performance. 

source: OpenSignal 

Financial subsidies for service providers in rural areas are one way governments try to close digital divides, and arguably are the most effective ways to do so. Whether in the form of subsidies for anchor institutions or per-passing or per-connection support is the clearest way to reduce the cost of rural infrastructure for suppliers. 

Beyond that, policymakers often try to encourage competition and promote deployment of alternative platforms (satellite, fixed wireless, mobile access). 

Governments can help communities create cooperatives; reduce permitting and other regulatory costs or train people to use broadband. But perhaps nothing works so well as simple subsidies, for the simple reason that population density and network cost are inversely related. 

High population density leads to lower costs; low density leads to higher costs. So subsidies for home broadband in rural areas are a relatively clear example of cause-and-effect relationships. 

Home Broadband Speeds Reaching Multi-Gigabit Levels

Home broadband speeds have climbed for more than two decades and virtually nobody expects that trend to stop. Consider the growing number of internet service providers offering gigabit and multi-gigabit home broadband services.  

A 2022 Omdia survey of 760 home broadband service providers across 178 geographies found that 60 percent of service providers offered service plans operating at 1 Gbps or higher. In North America, 13 percent of service providers already had begun offering multi-gigabit speeds, Omdia says. 

Region	# of service providers surveyed	% SPs offering 1Gbps or faster
Asia & Oceania	144	51%
EMEA	392	57%
Latin America & Caribbean	71	20%
North America	160	88%

source: Omdia 

The other observation is that some form of “digital divide” seems likely to persist, as rural networks tend not to match the performance of urban networks. Networks in developed countries tend to outpace networks in developing regions. 

And beyond availability (potential customers can buy), consumers make their own decisions about what to buy, and why. As a rule, customers tend not to buy the most-pricey, highest-performance tiers of service. Instead, they tend to buy service somewhere in the middle. 

In 2022, for example, North American home broadband customers mostly were buying services operating between 100 Mbps and 500 Mbps, according to Omdia. That was neither the slowest nor the fastest tiers of service available.

source: Omdia 

Over time, that “typical” service level will shift upwards and to the right. But most customers will still be buying service somewhere in the middle.

Rural Home Broadband Might Not Always--or Even Often--be an Example of Digital Divide

Rural areas always face challenges when it comes to home broadband, for simple reasons: the cost of fixed networks in areas of low population and housing density is challenging. But the latest survey data from NTCA suggests matters have improved dramatically. 

The NTCA’s latest poll of its members indicates 61 percent of residents can buy service with downstream speeds of at least 1 Gbps, up from 55 percent in 2021,  45 percent in 2020, and 25 percent in 2019. 

source: NTCA 

Customers unable to buy service at speeds up to 25 Mbps have dropped to about nine percent. 

The 2021 report indicated as much as 76 percent of customers are able to buy services running from 100 Mbps to multi-gigabit speeds. About 55 percent of customers were  in the “1 Gbps or faster” category.

source: NTCA 

There are issues, to be sure. One might argue that non-reporting firms probably support lower speeds than the 38 percent of rural ISPs that responded to the survey request. Keep in mind that the respondents report an average of 4,287 residential and 648 business fixed broadband connections in service. 

It is likely that most of the non-responders are even smaller entities. In other words, as in most markets, it is likely that a small subset of ISPs in the U.S. rural ISP market represent most of the total potential customers. 

The important takeaway is that rural home broadband is improving fast and already is on a par with urban service levels in many cases. That is not the impression a casual observer might get if reading, seeing or hearing about the digital divide in news reports. 

As often is the case, reality can be distorted unless “both sides of the story” are told.

Why Metaverse Seems Likely to Emerge

Many are skeptical of the idea that "metaverse" will really develop as a three-dimensional, persistent and immersive experience widely used by people, businesses and organizations. It might not be inevitable, but it is probable.

Perhaps it is a form of technological determinism to assume that because a technology exists, it must be inevitable; must succeed in shaping economies, culture and social relationships. It is not a new idea, having gained notoriety in the late 1960s in Marshall McLuhan’s book Understanding Media. 

In the book, a seminal chapter, called The Medium is the Message, makes the argument that new technology reflects human culture and also shapes it. That might seem an unremarkable assertion. 

But, like all assertions that there is one root cause of human social relations, institutions and culture, it can be challenged as being reductionist: explaining wildly-complex outcomes as a result of just one driver. 

McLuhan argued that technology, not content--how we communicate, not what we say--is determinant of impact. In other words, the actual content of media is irrelevant. Only the media form matters. 

source: Alan Hook, Slideshare 

We are never very far from accepting this sort of thinking. 

Consider the way policymakers, regulators, analysts and much of the general public likely agrees that “broadband is a necessity” because it causes economic development, education and social inclusion. Policymakes and advocates often argue that faster broadband likewise drives higher economic growth. 

Correlation, though, is not causation. Virtually all government programs to close the digital divide are touted as important because--it is argued--broadband leads to economic growth. In fact, careful reports only use the word correlation, not “causation” when discussing broadband and economic growth. 

Of course, lots of things also correlate with economic growth. The rule of law, population density, educational attainment, household income, household wealth, transportation networks, proximity to the oceans, or other sources of comparative advantage are known to correlate with economic growth. 

The same sort of thinking might arguably be advanced for 5G, personal computing devices, some applications, blockchain, web3 or the metaverse. 

The phrase “X changes everything” is an example of such thinking. In place of “humans use tools” we get “Tools shape humans.” Again, most people would perceive a grain of truth; perhaps many grains. 

One might argue that air conditioning was responsible for the current economic resilience and growth of the U.S. South, for example. 

The point is that it is never inevitable that any technology “must or will succeed,” simply because it can be brought into existence. Any new successful technology succeeds because it solves real problems. 

Computing devices and 5G succeed because they solve real problems: the need to access the internet and communicate in the former case; the ability to support quality experiences in the latter case. 

It is said that the novel Upgrade contains a conversation between two people, discussing two-dimensional media: “I can’t watch the flats. Hurts my eyes.” “Me too. It’s unnatural.”

The novel is a warning about the dangers of the metaverse, to be sure. But the element of realism--whether something seems natural or lifelike or not--is among the reasons some of us might believe the metaverse ultimately will develop. 

Simply, the history of all electronic media is an evolution towards more realism. Realism might be defined as the experience that “you are there,” realism approaches “real life” experiences: three dimensional, interactive, using multiple senses. 

Think about the experience of participating in a sport, watching others play a sport live in a stadium, watching it on television or listening on radio, viewing a photo of the game or hearing somebody talk about a great play during that game, reading a story about that game or viewing an artist’s rendition of a key moment in a game. 

The point is that there are degrees of immersion and realism, and that the degree of realism has tended to improve in the eras of electronic media. Consider augmented reality and virtual reality as part of that movement towards full metaverse. 

Though not perhaps inevitable, the history of electronic media suggests it is likely, simply because humans prefer greater realism in electronic media. That is why television displaced radio; why sound replaced “silent” movies; why color prevailed; why stereo and surround sound are popular; why HDTV replaced NTSC; why experiments with 3D experiences continue.

60% of Home Broadband Non-Buyers Don't Want It

The latest data from the U.S. National Telecommunications and Information Administration continues to show why the “digital divide,” measured as use of broadband internet access, has not closed faster. 

Nationally, 81 percent of respondents report using the internet. About 71 percent say they use the internet on their smartphones. About 49 percent say they connect their laptops, while 28 percent report connecting desktop computers. 

About 76 percent say they use the internet at home. As recently as 1998, 76 percent of respondents said they did not use the internet at home. About four percent claim the internet is not available where they live. 

Most users report using both mobile and fixed networks. Some 74 percent of respondents have a mobile data plan and 71 say they buy fixed network broadband. 

“When respondents were asked why they don’t use the Internet at home, nearly 60 percent said the main reason is that they don't need it or not interested,” says George Ford, Phoenix Center for Advanced Legal and Economic Public Policy Studies chief economist. 

That finding has been consistent since at least 2015, NTIA data shows. At the same time, “cost” has declined as a reason for not buying broadband access services. Some 18 percent of “non-using” respondents said using the internet was “too expensive.” 

source: Phoenix Center 

The Digital Divide Will Not Always be a Problem

Scarcity--both real and imagined--drives the prices and perceived value of nearly all products and services. “Lack of” also drives the political agendas of virtually all organizations and entities who promote an agenda. 

Those organizations require resources to operate, and resources mean jobs, prestige and power. So what happens when a “problem” is essentially solved? Do organizations disband, or do they find some other “new problem” to work on, thus inviting continued support of the entity?

Almost always, the latter is chosen over the former. So we can virtually predict that, eventually, policy proponents are going to stop talking about the “digital divide” and move on to some other problem related somehow to “inability to buy broadband internet access.”

Already, many point to “digital literacy,” which is a demand issue, not a supply issue, as a substantial remaining problem. In other words, it is not the quality of the available broadband access that limits use, it is the skills of potential users. Faster broadband does not fix that impediment. 

But to the extent that generational differences exist, that problem eventually fixes itself. Younger generations are more comfortable with all new technologies than older generations, and as each generation passes, the “lag” evaporates. 

There will likely always be “differences” in available speed, latency, reliability or price between remote areas and urban areas, to be sure. Summer fruits and vegetables cost more, and are less fresh, in the winter. 

Still, at some point, internet access is going to be good enough that bottlenecks to experience and value will shift elsewhere in the ecosystem and value chain. 

Where servers are located; what customer premises gear is needed; how pricing and packaging models are crafted; which indoor transmission platforms are operating and processing speed and power could well determine whether internet apps, services and devices work at all or work properly. 

Most are now too young to have encountered it, but back in the 1980s global communications policymakers actually were concerned about how to create “voice access” platforms for most people, as “half the people have never made a phone call.” That might have been true in the 1980s or even 1990s. It no longer is true. 

We have “solved” the problem of humans having access to voice communications. We likewise will solve the “digital divide” in a meaningful sense: not defined as absolute parity of speeds, latency or cost per bit, but in the sense of “access” no longer being a barrier to usage. 

And that will lead a whole bunch of people and organizations to find some other new problem to solve.

Demand is a 5G Issue, Not Simply Supply

A foundational claim about any sort of digital divide is that supply is the problem. Networks do not reach everyone; or quality networks do not reach everyone or prices are too high. Those all are supply-side ills.

What often gets confused or forgotten is that there are demand-side drivers as well. Consumers might prefer to buy based on their own perceived needs. Most often, consumers buy home broadband services that are in the middle of what is available, in terms of price and perceived value.

The same thing might apply to mobile services as well.

Where it comes to supply and demand, pundits often assume that slower 5G uptake is to be blamed on supply, not demand. That is not necessarily the case. Subscriber levels for 4G in a few European countries have always been below what we might expect, and availability cannot, at this point, be the main culprit. 

Some might point to lagging 5G uptake and suspect that supply issues are at work. 

source: Ookla 

Customer demand also shapes uptake. Nearly half of all German mobile subscriptions appear to use 3G, instead of 4G. nearly a decade after 4G was introduced, according to a study by Opensignal. 

Governments and policymakers always are quick to quantify supply-based gaps in uptake, quality or availability of communications services, which is among the reasons stories about any form of digital divide are evergreen. 

Most often, studies about service gaps rely on supply or demand indices, including network availability, typical speeds and cost. 

Demand side choices by consumers tend to be overlooked. In other words, some “gaps” might reflect consumer choices, not failures of supply. And that matters for 5G, as much as it did for 4G.

We often are surprised at the resilience of legacy services, as those use of legacy services is always a case of supply failure. Not always. Sometimes demand choices are at work. In other words, a huge percentage of German mobile users seem to be opting to remain on 3G networks even when 4G networks now are in good supply, with good performance metrics. 

How Big a Problem is the "Digital Divide?"

One always-present issue when looking at any particular social or economic problem is that we always face multiple problems at the same time. Drug overdoses, malnutrition, carbon and methane emissions, traffic, inflation, joblessness, homelessness, lack of medical care, uneven or inadequate educational opportunities, domestic violence, fair treatment of ehtnic, racial, religious or other minorities, corruption, crime and many other problems have to be tackled simultaneously. 

And it never is possible to rank order all of those problems in terms of allocating resources to solve the problems, in a holistic way, in real time, even assuming we have our means-ends causality chains correctly understood. 

In that vein, the “digital divide” is a bigger problem some places, compared to others, even if it can be seen as a problem no matter where we find it. 

That clearly is the case for people in many lower-income or middle-income countries, where internet access in lower-income countries exceeds four percent of monthly gross domestic product, for example. 

In most middle-income countries greater progress has been made, with costs below the International Telecommunications Union target of two percent of monthly GDP. 

In developed countries, the problems are mostly confined to rural areas or high-cost areas, as monthly recurring costs are below one percent of GDP. There still are issues to be solved, but they are relatively trivial compared to other problems we also face. 

source: ITU

Are Broadband Cost and Benefit Out of Alignment?

"Better broadband" is no less a "desirable thing" than better roads, bridges, elecrical grids and resource management programs that actually could work. So with decarbonization, elimination of disease, clean drinking water and sanitation, social equity or quality education. We always have multiple problems to solve.

But opportunity costs always exist. More of one thing means less of the others. Occasionally, it might be helpful to evaluate our priorities. We desire many positive outcomes, but our resources lag our ambitions. So cost and beneift always are legitimate questions.

Virtually all government programs to close the digital divide are touted as important because--it is is argued--broadband leads to economic growth. In fact, careful reports only use the word correlation, not “causation” when discussing broadband and economic growth. 

Often, even correlation cannot be shown, as is the case with much “foreign aid.” Still, correlation often does exist, and for obvious reasons. Some regions and industries are fast growing. It should come as no surprise that areas such as Silicon Valley show both high growth and high broadband availability. 

But it never is clear which holds: high growth leads to wealth; and wealth leads to excess spending power; which leads to demand for quality broadband, good restaurants and other outcomes associated with areas of high income. 

To use a phrase, perhaps high economic growth, high wealth, high educational levels, some industries and lots of younger people lead to quality broadband demand and supply, rather than broadband causing those outcomes. 

Will quality broadband really boost economic growth in sparsely settled rural areas far from urban centers, already losing residents and already suffering from low economic growth? 

To be sure, there is virtual agreement that universal broadband is a good thing, as universal telephone service, universal mobile service, electricity, education or medical care are  considered good things. 

But there still is no actual evidence--possible correlation, but not causal proof--that broadband access--or better quality broadband access--actually does “cause” economic development. 

Nor, for that matter, are many government reports actually clear about the differences between supply and demand issues; consumer choices and supplier business choices; or the ways people actually use the internet as it relates to potential economic benefit.

Reports often confuse “people who choose not to buy a product” with “inability to buy.” The former is a matter of consumer choice; the latter a supply chain issue. It is one thing to say “few people buy gigabit internet access.”

But that does not mean they “cannot buy.” They may choose to buy a different product, such as access at 200 Mbps. 

And while the internet can be used to conduct homework or conduct work,  it mostly gets used to “watch TV,” or engage in social media. 

Few--if any--really believe watching TV or engaging with non-business social media has a positive impact on economic growth in a direct sense, important though it is as a driver of income for influencers, advertisers, writers, directors, actors, studios, streaming services and TV networks. 

Beyond all that, improving broadband involves opportunity costs: other uses for that capital that are not undertaken because we spend the money on broadband. In a broad sense, all public policy choices involve such trade offs: things we cannot do because we chose to do something else.

Quality broadband is a good thing, don’t get me wrong. But it might not have nearly the economic upside people often wish to believe.