Key Takeaways From Commerce Department’s New Guidance for $42.5 Billion BEAD Program
On June 6, 2025, the Commerce Department released its long-awaited guidance for future implementation of the $42.5 billion Broadand, Equity, Access and Deployment (BEAD) program. Entitled a BEAD Restructuring Policy Notice (Guidance), the Guidance contemplates sweeping changes to nearly every aspect of the BEAD Program. Most notably:
- It asks states to opt-in to the changes contemplated in the Guidance. Or put another way, it effectively prompts states to request an amendment to their existing award agreements to incorporate the new provisions of the Guidance. The Guidance does not address the consequences, if any, for states that decline to request such an amendment. While it is too early to tell, the opt-in requirement may kick off a lobbying sprint in state capitols by those for and against the new Guidance.
- States requesting an amendment must rescind all provisional subgrantee selections and conduct a new selection process. New selection processes must be open to any provider (even those that have not previously participated), and treat all broadband technologies equally. As a general matter, states must prioritize the lowest cost project proposals. These changes are likely to benefit proposals for fixed wireless and Low Earth Orbit (LEO) satellite projects, as compared to the original requirements prioritizing fiber projects.
- The Guidance also eliminates all requirements not imposed by statute relating to affordability, labor and workforce, and climate resiliency, among other provisions. The Guidance states that eliminating these non-statutory requirements will promote participation in and competition in the new subgrantee selection processes.
- Prior approvals of all non-deployment activities by the states are rescinded; funding for allowable non-deployment uses is under review. The combination of these steps creates uncertainty about the future of such funding.
Other notable provisions include instructions that states submit Final Proposals compliant with the Guidance within 90 days (i.e., September 4, 2025), and a promise that NTIA will complete its review of each Final Proposal within 90 days of submission—a process that would take through the end of 2025 under a best case scenario. And while the Guidance also proscribes requirements for deployment subgrant agreements with Low Earth Orbit (LEO) providers, those requirements are generally consistent with program guidelines issues under the previous administration, although some exceptions do exist.
The Akin Telecom, Media & Technology team summarizes key provisions of the Guidance below and will follow up with additional updates as needed. In the meantime, please do not hesitate to reach out with any questions.
A Prompt to Opt-In and Amend Award Agreements (Section 8 & Appendix D)
The Guidance asks states to opt-in to the new provisions within 30 days. More specifically, it prompts states to request a correction to their Initial Proposal to incorporate the new provisions of the Guidance. Such a request would effectively constitute a request to amend the state’s existing BEAD award agreement (BEAD Award Agreement) with the Commerce Department.
The opt-in prompt reflects the BEAD program’s unique legal structure as a state pass-through grant program. Under the BEAD statute, participating states were required to develop and seek Commerce Department approval of an Initial Proposal. Initial Proposals include, most notably, each state’s procedures for a “challenge process” for identifying unserved/underserved areas and a “subgrantee selection process” for selecting providers to serve these areas. The Commerce Department approved all Initial Proposal on a rolling basis between 2023 and 2024.
Following approval of its Initial Proposal, each state signed a BEAD Award Agreement. The BEAD Award Agreement incorporates by reference substantive sections of each state’s approved Initial Proposal as well as the Notice of Funding Opportunity (NOFO). For example, Section 19 of the BEAD Award Agreement requires each state to implement its subgrantee selection as described in its approval Initial Proposal.
The Guidance seeks to avoid the question of whether the Commerce Department has the legal authority to unilaterally amend existing BEAD Award Agreements by prompting states to request the amendment. The form letter provided in Appendix D is a request from the state to the Commerce Department to correct the state’s Initial Proposal. Specifically, the letter requests incorporation of the “terms of the [Guidance]” into that Initial Proposal. By sending this letter, states thus effectively would be requesting an amendment to incorporate the provisions of the Guidance into their BEAD Award Agreements.
Notably, the Guidance does not address the consequences, if any, for states that decline to request an amendment to their existing award agreement. While it is too early to tell, the opt-in requirement may kick off a lobbying sprint in state capitols by those for and against the new Guidance.
New Subgrantee Selection Processes (Section 3)
The Guidance requires all states to implement new subgrantee selection processes. This requirement applies to all states, regardless of whether the state had already initiated or completed its subgrantee selection process. It also applies to states whose Final Proposals had been approved previously. New selection processes must be open to any provider (even those that have not previously participated), and treat all broadband technologies equally. As a general matter, states must prioritize the lowest cost project proposals.
On the whole, these changes are likely to benefit proposals for fixed wireless and LEO satellite projects, as compared to the original requirements prioritizing end-to-end fiber projects.
Technology Neutrality (Section 3.1). As a general matter, states must treat all broadband technologies equally in subgrantee selection processes. This approach is a significant departure from the NOFO, which prioritizes projects comprised of end-to-end fiber connections. While states may not categorically deprioritize any given technology in its subgrantee selection process, states may deprioritize individual projects if the proposed project could not meet the speed and performance requirements in a specific geographic area. However, NTIA also reserves the right to reverse a state’s denial in such circumstances if NTIA deems the denial unreasonable.
New Subgrantee Selection Processes (Section 3.3). Each state must conduct a new subgrantee selection process using the new technology neutral approach and a new scoring rubric. States that have provisionally selected subgrantees must rescind those selections, even including those states that already received approval of their Final Proposals. States have 90 days to conduct the new subgrantee selection process and submit the results of those processes as part of their Final Proposal. NTIA will complete its review of each Final Proposal within 90 days of submission.
Selection Processes Open to All Providers (Section 3.3). In light of the new subgrantee selection competitions, states must reopen prequalification processes to all interested providers. Applicants that have already prequalified do not need to reapply. Any applicant that failed an earlier prequalification process may seek prequalification again.
Per Location Costs (Sections 3.1 & 3.4). States are no longer required to establish a cost per location threshold (i.e., the Extremely High Cost Per Location Threshold). However, NTIA reserves the right to reject any proposed deployment project or specific location connection for which costs to deploy are excessive. NTIA will determine whether a costs to deploy is excessive “based on the cost characteristics of the area to be served.”
Subgrantee Selection Scoring Rubric (Section 3.4). The Guidance sets forth a new rubric for deciding among competing applications covering the same general project areas. As a general matter, states must select the combination of project proposals with the lowest overall cost to the BEAD program. However, if any application to serve the same general project area proposes a project cost within 15% of the lowest-cost proposal received for that same general project area, states must evaluate such applications based on three criteria:
- Speed to deployment: a prospective subgrantee’s binding commitment (subject to contractual penalties) to initiate service sooner than would otherwise be required under the statute (e., four years);
- Speed of network and other technical capabilities: the speed, latency, and other technical capabilities of the proposed technology(ies); and
- Preliminary/provisional subgrantees: Applications from entities to serve locations where the state previously had provisionally selected that same entity for a subgrant to service that same location.
The Guidance provides states discretion to determine the relative weighting of these three criteria.
Elimination of Non-Statutory Requirements (Section 2)
The Guidance eliminates all requirements not imposed by statute relating to affordability, labor and workforce, and climate resiliency, among other provisions. The Guidance states that eliminating these non-statutory requirements will promote participation in and competition in the new subgrantee selection processes. It also provides new interpretations for how states and subgrantees should satisfy the remaining statutory requirements.
Affordability Requirements & Subscriber Eligibility (Sections 2.6 & 2.7). Recognizing that the BEAD statute requires subgrantees to offer a low-cost broadband service option for eligible subscribers, the Guidance provides revised instructions for subgrantees to satisfy this requirement, as well as a new definition of “eligible subscriber.”
In a major departure from the past application of the low cost service option requirement, the Guidance prohibits states from establishing a rate that subgrantees must offer eligible subscribers. Up until this point, states largely had established rates as low as $30 that subgrantees must offer to satisfy the low-cost service option requirement. The Guidance provides that states can satisfy their statutory requirement in this area by requiring prospective subgrantees to propose a low-cost service option as part of their application.
With respect to the definition of eligible subscribers, the Guidance adopts a definition consistent with the eligibility criteria in the Federal Communications Commission’s Lifeline program. This definition is significantly narrower than the definition adopted in the NOFO, which had been based on the eligibility criteria in the Affordable Connectivity Program (ACP). Whereas participation in the Lifeline program is limited to households at or below 135 percent of the federal poverty guidelines or who qualify for entitlement programs like Medicaid and Federal Public Housing Assistance, the NOFO extends participation to households at or below 200 percent of the federal poverty guidelines and recipients of federal Pell Grants.
The Guidance also eliminates the NOFO requirement and related Initial Proposal provisions related to the Middle Class Affordability Plan.
Labor, Employment, and Workforce Development Requirements (Section 2.1). The Guidance eliminates the non-statutory program requirements imposed in the NOFO relating to fair labor practices, workforce development, compliance with civil rights and nondiscrimination law, and contracting with small and minority businesses, women’s business enterprises, and labor surplus area firms. States may satisfy the remaining statutory requirement—which requires states to give priority to projects based on a subgrantee’s demonstrated record of and plans to be in compliance with Federal labor and employment laws—by requiring subgrantees to certify compliance with such laws.
Climate Resiliency Requirements (Section 2.2). The Guidance eliminates the non-statutory program requirements associated with climate resilience described in the NOFO and in related provisions of each state’s Initial Proposal. To satisfy the statutory requirement—which requires subgrantees to incorporate best practices for ensuring the reliability and resiliency of broadband infrastructure—the Guidance instructs that subgrantees shall establish risk management plans that account for technology infrastructure reliability and resilience.
Open Access/Net Neutrality Requirements (Section 2.3). The Guidance eliminates the non-statutory program requirements related to open access and net neutrality imposed in the NOFO and related provisions of each state’s Initial Proposal. Subgrantees must still satisfy the statutory requirement, which requires subgrantees to include interspersed conduit access points at regular and short intervals for any project that involves laying giver optic cables or conduit underground or along a roadway.
Non-Traditional Broadband Providers (Section 2.5). The Guidance eliminates the non-statutory program requirements related to non-traditional broadband providers (such as municipalities and political subdivisions) imposed in the NOFO and related provisions of each state’s Initial Proposal. It reiterates, however, that states still must adhere to the statutory requirements that states not exclude such non-traditional broadband providers from eligibility for BEAD subgrants.
Local Coordination and Stakeholder Engagement Requirements (Section 2.4). The Guidance eliminates the non-statutory program requirements related to local coordination and stakeholder engagement imposed in the NOFO and related provisions of each state’s Initial Proposal. The Guidance further provides that states may satisfy the local coordination requirement in the statute by seeking comment on their Final Proposals and receiving plans from political subdivisions.
Optimizing BEAD Locations (Section 4 & Appendix A)
The Guidance does not require states to re-run their challenge processes. However, it does impose new requirements relating to locations eligible for BEAD subgrants.
Because unlicensed fixed wireless technology is now eligible for priority treatment under the new technology neutral approach, and because challenge processes had not previously accounted for the existence of such technologies, the Guidance requires states to account for locations with access to existing unlicensed fixed wireless service. States must exclude such locations from eligibility during subgrantee selection.
The Guidance also revokes the NOFO’s definition of Community Anchor Institutions (CAIs), which had allowed Eligible Entities to propose the types of entities that should qualify as CAI. It instructs states to revise their list of CAIs to ensure conformance with the statutory definition of CAI, and informs that NTIA will narrowly interpret the term “community support organized” as used in the statute. These changes will decrease the number of locations that qualify as CAIs in the program.
Non-Deployment Funding (Section 5)
The Guidance rescinds approval of all non-deployment activities approved in Initial Proposals, and asserts that NTIA will not reimburse states for any new costs associated with previously approved non-deployment activities incurred after the date of the Guidance. The Guidance also provides that funding for allowable non-deployment purposes is under review and that NTIA will issue updated Guidance on non-deployment funding in the future.
LEO Capacity Subgrants (Appendix B)
The Guidance also proscribes requirements for deployment subgrants relying on LEO satellites. While those requirements are generally consistent with program guidelines released under the previous administration, some differences exist. Among the differences, the Guidance eliminates the expectation that subgrant agreements with LEO providers will reflect the relative costs to provide service to a BEAD-subsidized location as compared to a non-subsidized location where states elect to reimburse the LEO provider based on locations, rather than subscribers. The Guidance adopts more specific requirements relating to subsidized consumer premises equipment (CPE) for BEAD-subsidized LEO service—directing that LEO providers must provide all necessary CPE at no cost for each new subscriber, but that the LEO subgrantee may generally charge customary fees for additional CPE if the same subscriber requests additional equipment.
