With the BEAD program’s Benefit of the Bargain round well underway, trends have started to emerge that illustrate how states plan to navigate the new rules implemented by the Trump Administration.
Impact: Though the round hasn’t ended yet, not everyone is happy with how states have decided to navigate the revamped process, with SpaceX particularly upset over the bidding results in Louisiana and Virginia. Though initial results appear somewhat mixed among wireline and satellite, wireline providers haven’t bid on as many BEAD-eligible locations while low-Earth orbit satellite operators have won more locations and more funding than in the previous bidding round under the Biden Administration when the fiber preference remained firmly in place. Even so, it appears some states still would prefer to use their BEAD funding on fiber deployments despite the rule changes that appeared to favor satellite broadband. Proof of that can be found the funding decisions made by Louisiana and Virginia , to which both dedicate the bulk of their funding, though they do give LEOs a more significant chunk of the pie. Data from Louisiana shows that state broadband officials selected fiber providers to cover 80% of the state’s nearly 128,000 BEAD locations. Virginia’s funding round played out similarly, with 81% of 130,000 passings going to fiber providers. LEO operators got no more than 10% of the pie in either state, which didn’t sit well with SpaceX, particularly because both states are currently run by Republican governors who would seemingly be more apt to direct additional funding to satellite.
Needless to say, SpaceX executives have made their unhappiness known, which raises the possibility that new National Telecommunications and Information Administration head Arielle Roth or U.S. Secretary of Commerce Howard Lutnick may decide to weigh in on states’ final proposals if they come out too heavily stacked toward fiber. It’s also possible SpaceX could appeal to the governors of either state, other administration officials, or even move to file suit against one or more states for rejecting significant portions of its bids. According to Telecompetitor, SpaceX sent a letter of objection to Virginia’s Department of Housing and Community Development alleging that the state’s Commonwealth Connect office did not shift its focus on fiber between the Biden and Trump administrations. SpaceX claims these state officials ignored its less expensive proposal in favor fiber in most areas, which it called a “massive waste of federal taxpayer money,” after the state opted to spend $613.3 million over four years to cover 133,472 BEAD-eligible passings rather than accept a $60 million bid from SpaceX that would immediately cover nearly every BEAD location in the state. But LightReading reported that Virginia determined SpaceX could not meet all the requirements laid out in the BEAD Priority Broadband Project designation. As it stands now, SpaceX will receive $3.26 million in BEAD funding to serve 5,579 locations in Virginia, while Amazon’s Project Kuiper won $4.46 million for 6,957 locations, per Ars Technica. SpaceX sent a similar letter to the Louisiana state broadband office stating that “Louisiana must revise its final proposal to appropriately consider the applications received.”
New Street Research policy analyst Blair Levin seems to think SpaceX will continue to challenge states’ funding decisions if it doesn’t like the bidding results in an effort to force states to revise their proposals. But he said SpaceX’s prospects for successful litigation on the issue would be low. As former FCC nominee Gigi Sohn noted, it’s more likely that SpaceX wants to scare other states away from allocating too much of their BEAD funding to fiber and other wireline providers and noted that Project Kuiper hasn’t lodged any complaints about the funding being awarded thus far, though there’s no guarantee it won’t do so. But making states go back and redo or revise their proposals for a third time would only delay BEAD deployments further and could cause states to sue SpaceX or the federal government for interfering with their determinations. A new analysis from the Vernonburg Group, which describes itself as a consulting firm dedicated to closing the digital divide, found that LEO providers can really only serve around 26% of BEAD-eligible locations nationwide, leaving plenty of room for fiber providers that better meet the Priority Broadband definition to step in and snag BEAD funds around the country, exactly what SpaceX appears to want to prevent so it can collect a larger portion of the BEAD total.
