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Under the BEAD Restructuring Policy Notice issued by NTIA on June 6 (“Policy Notice”),[1] state and territory broadband offices must rescind all preliminary and provisional BEAD awards made under the prior rules and must, in very short order, run a single competitive round with a strong preference for providers that promise to provide 100Mbps / 20 Mbps service for the least amount of BEAD funding support.

Crucially, the Policy Notice puts LEO satellite and unlicensed fixed wireless (ULFW) on the same footing as end-to-end fiber projects. Under the prior rules, only end-to-end fiber projects qualified as “Priority Broadband Projects,” meaning fiber projects would receive support to serve a given area even if another “Reliable Broadband Service” technology (such as cable modem or licensed fixed wireless) might do so less expensively. Under the prior rules, LEO and ULFW service was not even considered “Reliable Broadband Service,” and BEAD funding for such “Alternative Technologies” was only available if the cost to deploy Reliable Broadband Service to a given location exceeded a certain threshold.[2]

The new Policy Notice turned that approach upside down. Now, all technologies that can provide 100/20 Mbps service with sub-100ms latency and that are ostensibly capable of scaling to meet future needs are considered “Priority Broadband Service” – including LEO and ULFW.

At the same time, the Policy Notice requires state broadband offices to “choose the option with the lowest cost based on minimal BEAD program outlay.” Only if an applicant submits a proposal within 15% of the lowest-cost proposal may a state broadband office consider the speed of the network and other factors (i.e., that a futureproof FTTP network that will provide 1Gbps+ with sub-20ms latency is a better long-term infrastructure investment than a ~100/20 Mbps LEO service with ~100ms latency).

To put it mildly, these changes put prior BEAD applicants in a defensive position, especially those that proposed end-to-end fiber projects. Fiber providers that already submitted BEAD applications must now compete against LEO and ULFW service solely on cost. It is essentially a one-round reverse auction, with unequal technologies being treated the same.

The expansion of funding for ULFW also means that locations designated as “served” by ULFW in the FCC National Broadband Map may be removed from eligibility for BEAD funding, but it is not automatic. Under the process outlined in the Policy Notice, an ULFW provider may protect its existing service territory from BEAD funding by submitting evidence that its current service meets the technical requirements of “Priority Broadband Service.” [3] (Or, the ULFW provider could opt not to submit such evidence, and instead compete to obtain BEAD support to upgrade its network.) The Policy Notice does not specifically provide for third-party comment or intervention in this process, and it is not clear that state broadband offices would have enough time to entertain contrary evidence. Most broadband offices have yet to issue substantive guidance following the Policy Notice, and we simply do not know at this point — some might allow it, while others might not.

The Policy Notice is conspicuously silent on the issue of locations currently able to be served by LEO service that qualifies as “Priority Broadband Service,” if any. Logically, any such locations should be removed from BEAD eligibility, but the Policy Notice does not address it. At the same time, it is important to note that any LEO Capacity Subgrant does not require qualifying service immediately: a LEO recipient is only obligated to commence provision of qualifying broadband service within four years from the date of the subgrant.

Prior BEAD applicants (and ULFW and LEO providers) are not the only stakeholders under the new BEAD rules. Any entity that has continued to deploy infrastructure and services while the BEAD process has dragged on should be mindful of the potential for new BEAD-supported competition. Many months have elapsed since the close of state challenge processes, and many providers have continued deploying fiber optic networks and other Priority Broadband Projects in the meantime. If maps of BEAD-eligible locations are not updated before funding decisions are made, BEAD funding will end up supporting significant overbuilding of existing networks.

So, the new BEAD rules will require many to play defense, including: (1) prior BEAD applicants that wish to resubmit, (2) prior BEAD applicants that do not plan to resubmit, but that wish to protect expansion areas from BEAD-supported overbuilds, and (3) non-BEAD applicants whose expanded networks are not accurately reflected in funding maps.

To summarize:

  1. Prior BEAD Applicants That Wish to Resubmit:
  • The provider may need to aggressively adjust its BEAD proposal budget.
  • The provider may or may not end up competing against a LEO or ULFW application. For ULFW, check the National Broadband Map for ULFW code 70. For insight on LEO bids, see the recent post from the Benton Institute for Broadband & Society, “What Do We Know About LEO BEAD Bids.”
  • If the provider is planning to deploy fiber in the area anyway, and can commit to do so, it may be especially feasible to compete against ULFW or LEO service. As an extreme example, a $1 “bid” would presumably win the area and protect it from BEAD-supported overbuilding (but would also obligate the provider to comply with various BEAD program rules going forward).
  • If the National Broadband Map shows that there is ULFW coverage (code 70) in the proposal footprint:
    • The provider may wish to explore whether it can rebut any ULFW claim that the ULFW’s provider’s current service meets the Appendix A technical qualifications (see above).
    • If the ULFW service does not submit a claim and supporting evidence to the state broadband office (under the process outlined in note 1), it is fair to assume the ULFW provider will seek BEAD funding. In that case, a competing applicant might either (1) compete aggressively on BEAD cost, or (2) seek to partner with the ULFW provider somehow, or (3) propose its own ULFW solution.
  1. Prior BEAD (Fiber) Applicants That Do Not Plan to Resubmit:
  • Assuming BEAD support was sought for expansion of current service area, consider the implications of BEAD-supported competition in adjacent territory.
  • Can the provider partner with an ULFW provider to obtain targeted BEAD support in the near term, and potentially migrate to fiber?
  • Can the provider support a “planned service” challenge to BEAD location eligibility, and more importantly, will the state broadband office entertain it (unlikely, absent a new challenge round)?
  • If the provider intends to serve the area in the near future anyway, and can commit to doing so, it may be worth considering whether to submit an application for nominal support.
  1. Providers That Have Significantly Expanded Networks Over the Past 18 Months:
  • Post-challenge BEAD funding maps may not accurately reflect the current state of BEAD-eligible locations.
  • It is unclear whether state broadband offices will have the time or inclination to enable a new “true-up” process to avoid BEAD-funded overbuilds.
  • Providers should closely watch announcements from their state broadband office in the coming days, and may wish to reach out to the office directly to advocate for an update to BEAD funding maps.

As a final comment, please note that additional clarity may emerge with respect to some of above issues as state broadband offices begin issuing substantive guidance reflecting the dictates of the Policy Notice. Note also that there is a reasonable likelihood of litigation challenging certain aspects of the Policy Notice, with unknown consequences.

[1] For a general overview of the Policy Notice, please refer to our earlier blog post, “Commerce Department’s New BEAD Reform Notice Upends Structure of Program,” June 16, 2025.

[2] NTIA Policy Notice, June 26, 2024.

[3] The Policy Notice requires state broadband offices to undertake a process to “ensure that locations already served by an ULFW service that meets the technical specifications within Appendix A [of the Policy Notice]” are not eligible for BEAD funding. First, the state broadband office must review the National Broadband Map to determine whether any ULFW-served locations overlap with any previous BEAD-eligible locations. If so, the broadband office must notify the ULFW provider that it has seven days to respond that it intends to claim that BEAD funding is not required. After doing so, the ULFW provider has seven additional days to submit evidence substantiating the claim. For example, the Ohio broadband office (“BroadbandOhio”) recently published a notification stating that ULFW providers have until June 20 to submit a claim that their service area meets technical specifications for BEAD performance (as documented in the Policy Notice) and that BEAD funding is not required for the locations. After doing so, ULFW providers have only 7 days – until June 27 – to submit evidence supporting the claim.

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This is the first of several planned blogs on the recently released NTIA BEAD Restructuring Policy Notice (“Notice”).

In early March, Department of Commerce Secretary Howard Lutnick paused all funding under the $42.5 billion BEAD program pending a “rigorous review” by the new administration. At that time, the Secretary announced his intention to “rip out” many of the Biden Administration’s requirements and “revamp” the BEAD program to take a “tech-neutral approach.”

Now, three months later, true to his word, Secretary Lutnick has released NTIA’s Restructuring Notice, revamping the underlying structure of the prior program toward a new “tech-neutral” approach that gives primacy to low-cost solutions rather than long-term value or infrastructure investment. It is widely anticipated that the restructured program will, in many instances, favor low-earth orbit (“LEO”) satellite as the lowest-cost solution. The Notice also removes several Biden-era grant compliance requirements.

The Notice requires all states and territories to rescind preliminary awards (including those in states already approved under the Biden administration, including Delaware, Louisiana, and Nevada) and conduct a new selection round prioritizing sub-recipients who submit lowest-cost bids in accordance with the NTIA’s new “Benefit of the Bargain” scoring rubric. States and territories will have 90 days to complete this process and submit a Final Proposal that reflects the results of the “Benefit of the Bargain” round. The Notice states that NTIA will complete its review of each Final Proposal within 90 days of submission. According to Secretary Lutnick, the “goal” is to get BEAD funding flowing by the end of the year.

Benefit of the Bargain Round Scoring

The Notice redefines the definition of a “Priority Broadband Project” to remove NTIA’s prior preference for end-to-end fiber solutions. It will now include any technology, including LEO and unlicensed fixed wireless broadband (“ULFW”), that meets the minimum speed and latency requirements – 100 Mbps down and 20 Mbps up; 100ms latency; and scalability. In other words, all broadband projects are now “Priority Broadband Projects,” except those that cannot meet the speed and latency requirement or satisfy the vague scalability standards outlined in the Notice.

The Notice adopts new scoring criteria that heavily prioritizes proposals with the lowest overall cost to the program. This may enable selection of a proposal that is not necessarily the lowest-cost option for an individual broadband service location but is part of the combination of selected locations with the lowest overall cost to the program. When comparing competing proposals, the Notice directs states and territories to assess the total BEAD funding that will be required to complete the project (i.e., the total project cost minus the applicant’s proposed match) and the cost to the program per location (i.e., the total BEAD funding that will be required to complete the project divided by the number of locations the project will serve).

If competing applications to serve the same general project area propose a project cost within 15% of the lowest-cost proposal, the state or territory must evaluate such competing applications based on: (1) speed to deployment; (2) speed of network and performance capabilities; and (3) whether the entities were previously provisionally selected by the state or territory in an earlier selection round.

Challenge Process

The Notice does not explicitly require states and territories to re-run their location eligibility challenge process. States and territories are, however, required to implement the following measures:

  • Investigate and account for locations that are not eligible for BEAD funding because: (1) the locations are shown as served under the latest version of the FCC Broadband Data Collection map; (2) the locations will be served by an enforceable commitment; and (3) the locations are already served by a privately funded network.
  • Modify BEAD-eligible location lists to include locations no longer served due to a default or change in service area on a federal enforceable commitment.
  • Investigate and modify BEAD-eligible location lists that are found to be served by ULFW.

NTIA’s downplaying of the challenge process notwithstanding, the overlay of existing ULFW service, coupled with ongoing fiber deployment that has occurred over the past 18 months or so (and continues), strongly suggests that maps and data relied upon by the states and territories to create their lists of eligible locations do not reflect the current reality, let alone the reality that will exist at the time the BEAD funding is actually awarded. A significant “true-up” would seemingly be needed to reconcile the data.

Elimination of Prior Compliance Requirements

The Notice eliminates several non-statutory compliance requirements instituted by the Biden-era NTIA, including those relating to:

  • Labor and workforce development
  • Climate change
  • Open access/network neutrality
  • Local coordination and stakeholder engagement
  • Preference for non-traditional providers
  • Regulation of low-cost plans

While the Notice eliminates these requirements, applicants are still subject to applicable federal laws related to all the above but may demonstrate its compliance through a certification.

Similarly, while subrecipients still must offer at least one low-cost broadband service option (a requirement under the BEAD statute), the Notice removes NTIA’s previous requirement that states and territories define the parameters of such plans.

Up next in the BEAD Notice series. “Playing Defense Under the New BEAD.”

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Even before taking office, incoming members of the Trump Administration and some Republican members of Congress criticized various regulatory requirements in the  $42.5 billion BEAD program as being unnecessarily burdensome and contributing to a perceived slow rollout of BEAD funding. The Commerce Department and Congress have now begun efforts to streamline and reform the BEAD program. The changes raise a number of questions, and if implemented as expected, will significantly impact and may delay the program.

Commerce Department Reviewing BEAD Program Rules

Last week, newly appointed Commerce Secretary Howard Lutnick announced that he has directed NTIA to launch a “rigorous review” of the BEAD program. According to Secretary Lutnick, NTIA “is ripping out the Biden Administration’s pointless requirements” and “revamping the BEAD program to take a tech-neutral approach,” which is clearly intended to eliminate the current funding preference for end-to-end fiber optic projects and pave the way for much more of the BEAD funding going to low-earth orbit (LEO) satellite or unlicensed fixed wireless broadband. NTIA is expected to release details of such rule changes in the coming days.

House Introduces “SPEED for BEAD Act”

Also last week, Congressman Richard Hudson (R-NC), Chairman of the House Communications and Technology Subcommittee, introduced legislation to revise and expedite the deployment of the BEAD program to get “shovels into the ground as soon as possible.”[1] H.R. 1870, The Streamlining Program Efficiency and Expanding Deployment (“SPEED”) for BEAD Act would eliminate certain BEAD requirements that are viewed by the bill’s supporters as being politically driven, overly bureaucratic, and not tied to the underlying goals of deploying broadband infrastructure.

  1. Certain BEAD Requirements Removed

Among other things, the SPEED for BEAD Act would prohibit NTIA and eligible entities (e.g., states) from conditioning or scoring BEAD subrecipient awards based on:

  • Prevailing wage laws;
  • Labor agreements;
  • Local hiring;
  • Climate change;
  • Regulation of network management practices, including data caps;
  • Open access; and
  • Diversity, equity, and inclusion.
  1. Amend Definition of Reliable Broadband Service

Under the BEAD statute, funding will be made available for projects serving “unserved locations” and “underserved locations”[2] lacking access to “reliable broadband service.” The legislation would amend and broaden the definition of “reliable broadband service” to include “any broadband service that meets the applicable performance criteria without regard to the type of technology by which service is provided.” This would reverse the current NTIA requirements, which exclude locations “served exclusively by satellite, services using entirely unlicensed spectrum, or a technology not specified by the Commission for purposes of the Broadband DATA Maps.”[3] This will enable LEO and unlicensed fixed wireless providers to participate more broadly in the BEAD program as providers of “reliable broadband service,” if they meet certain performance requirements to be set by NTIA. It may also exclude from BEAD eligibility locations already served by such services.

  1. Prohibition on Rate Regulation

The legislation would prohibit the imposition of rate regulation of broadband services provided over BEAD-funded network facilities. This includes prohibiting NTIA or any state or territory from regulating, setting, capping, or otherwise mandating the rates charged for broadband service by BEAD subrecipients, or the use of rates as part of an application scoring process. The Act does not remove the low-cost service option requirement from the BEAD statute, but instead prohibits eligibility entities from imposing specific low-cost service requirements.

  1. Ability to Remove High Cost Locations From a Project Area

The legislation would provide a mechanism for subrecipients to remove locations from a project area that the subrecipient “determines would unreasonably increase costs or is otherwise necessary to remove.” The provision raises several questions as to how and when such determinations can be made by the subrecipient. States and territories would apparently award a separate subgrant to address such removed locations, presumably creating additional opportunities for BEAD-funded LEO service.

  1. Elimination of LOC Requirement

The legislation would also eliminate the requirement for a BEAD subrecipient to provide a letter of credit (“LOC”) if the provider has commercially deployed a similar network using similar technologies and is either: (a) seeking funding that is less than 25% of the provider’s annual gross revenues; or (b) seeking to serve a number of locations that is less than 25% of the provider’s total number of existing service locations. These revisions would tend to benefit larger service providers, and would likely be of less benefit to new entrants or smaller providers, for whom LOC requirements often present a greater challenge.

Questions Raised by Impact of Reform Effort     

While some stakeholders have already embraced a streamlining of the BEAD program rules, it must be noted that the proposed reforms are coming at a time when funding is about to be disbursed. NTIA has already approved Initial Proposal for all states and territories, and most of them have either already selected subrecipients, or are in the later stages of doing so. While the reform efforts at Commerce and in Congress are aimed at getting “shovels in the ground” as soon as possible, the reform initiatives – and resulting policy and legal questions – may well impose additional delay.

Introducing sweeping changes to BEAD at this stage raises thorny questions on whether some of the new rules can and should be applied mid-way through the award selection process, and after the application windows have closed. It should also be noted that despite concerns that the existing rules would result in low participation, many states are reporting strong bidder participation. Applicants around the country spent millions of dollars developing business plans, forging partnerships, locking down inventory, mapping out participation strategies, and developing detailed applications, all in reliance on the existing rules. Many other entities elected not to participate in BEAD based on the existing rules. Will they have any recourse to participate based on the new rules?

Finally, the broadband ecosystem is in a constant state of flux, with new privately funded networks coming online all of the time. Many state broadband offices, at the direction of NTIA, have been hesitant to revise their BEAD maps to remove locations after the “challenge” period. If there are now going to be additional delays in BEAD awards, what will be the impact on the existing maps? Will NTIA allow states to revise eligible locations to account for new deployments based on new updated data reported in the next Broadband Data Collection?

While targeted reforms aimed at enabling BEAD to better meet its underlying goal of providing all Americans with robust broadband connectivity make sense, care must be taken to ensure that such reforms do not themselves cause undue delays or undermine state processes that are working reasonably well.

[1] Chairman Hudson’s Opening Statement at Subcommittee on Communications and Technology Hearing on Rural Broadband

[2] Defined respectively as, a location lacking access to “reliable broadband service” of 25/3Mbps, with latency of less than 100ms, and a location lacking access to reliable broadband service of 100/20 Mbps, with latency of less than 100ms.

[3] NTIA BEAD Notice of Funding Opportunity

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In March 2022, we published a blog post explaining that broadband grants are apparently subject to federal income taxation. Three years later, and with $42.5 billion in BEAD grants on the verge of disbursement, nothing has changed.

As discussed in 2022, the taxability of broadband grants seems to be an unplanned quirk of the 2017 Tax Cuts and Jobs Act. Prior to that, broadband grants were generally exempt from taxation based on a favorable IRS interpretation of Section 118 of the tax code. But the Tax Cuts and Jobs Act amended Section 118 to the effect that “contributions to capital” (including grants) made from governmental or civic groups to a corporation are taxable as gross income.

Recent recipients of state and federal broadband grants are already struggling with this. Crucially, the tax bill applies to grants used to cover front-end costs relating to construction of a broadband network, with taxes likely due on the grant before revenues ramp up. If a company receives $50 million in grant funds in 2024 to construct a rural broadband network, the company would need to pay $10 million in taxes on the grant (give or take) in 2025. The very substantial tax bill would come due while the network developer is still building up operations, and may in fact threaten the operational feasibility of the entire project.

Bipartisan legislation has been repeatedly introduced over the past several years to address this issue, to no avail. But on February 24, a bipartisan group of Senators announced the re-introduction of the Broadband Grant Tax Treatment Act, with such varied supporters as Sen. Tim Kaine (D-VA) and Sen. Tommy Tuberville (R-AL). (Notably, the Act would apply to amounts received in taxable years ending after March 11, 2021.)

Broadband providers have reason to be optimistic that the Broadband Grant Tax Treatment Act will finally be enacted this session. But until that occurs, it would be prudent to set aside funds to cover the tax bill associated with broadband grants.

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On January 16, 2025, the FCC closed out Jessica Rosenworcel’s term as Chairwoman by releasing a Notice of Proposed Rulemaking (“NPRM”) seeking to expand the use of the 896-901/935-940 MHz (“900 MHz”) band for broadband use. The NPRM builds on the Commission’s 2019 rulemaking, which created a 3/3 MHz broadband allocation at 897.5-900.5/936.5-939.5 MHz and established a process for clearing narrowband incumbents from the band.

The NPRM was released in response to a Petition for Rulemaking filed by ten entities, including Anterix, Inc., which holds the majority of 900 MHz band spectrum in the U.S., and the FCC is now proposing to expand the ability to license broadband not just in the 3/3 MHz segment, but across the entire 5/5 MHz of the 900 MHz band. Eligibility to obtain a 5/5 MHz broadband license would be similar to the eligibility required to obtain a broadband license in the 3/3 MHz segment. Applicants would need to hold more than 50% of the total amount of licensed 900 MHz band spectrum in the county, hold or be eligible to hold the 3/3 MHz broadband license, and clear or protect from interference all covered incumbents from the narrowband segment (896–897.5/935–936.5 MHz and 900.5–901/939.5–940 MHz).

Unlike in the 3/3 MHz broadband segment, the FCC proposes that incumbent relocations from the narrowband segment would be accomplished through a voluntary negotiation process. In the 3/3 MHz segment, the FCC allows a broadband applicant to trigger mandatory negotiations once relocation agreements are reached or interference protection is demonstrated to 90% of covered incumbents (“complex systems” are exempted). The FCC does not propose to establish a narrowband segment mandatory relocation process for applicants seeking a 5/5 MHz license. This is noteworthy because Anterix, as the “presumptive broadband licensee,” has already relocated a number of incumbents from the broadband segment of the band to the narrowband segment, and many incumbents are now concerned about being forced from the spectrum they just relocated to (or are in the process of relocating to). However, the FCC does ask whether it should consider some process to deal with holdouts and also asks whether to modify the complex system exemption.

Also of note, the Commission asks whether to lift or modify the ongoing narrowband licensing freeze for the 900 MHz band. Currently, no applications for new or expanded 900 MHz narrowband operations will be accepted unless the applications pertain to broadband license-related incumbent relocations. The FCC notes that in many areas of the country, there still are no broadband licensees. On the other hand, in other areas with broadband licensees, have relocations concluded such that narrowband licensing can resume? Should the freeze be lifted only with respect to current license holders? Or should any applicant be able to obtain a new license in the 900 MHz band?

Comments and Reply Comments will be due 60 and 90 days, respectively, from the date of the NPRM’s publication in the Federal Register, which has not yet occurred.

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Earlier this month, in the waning days of Jessica Rosenworcel’s tenure as Chair of the Democrat-led FCC, the FCC released a Declaratory Ruling concluding that Section 105 of the Communications Assistance for Law Enforcement Act (CALEA) requires telecommunications carriers to secure their networks from unlawful access and interception of communications. Effectively, the FCC determined that CALEA can serve as a hook for additional rules addressing emergent cybersecurity issues.

The Commission also adopted a Notice of Proposed Rulemaking (NPRM) that would apply cybersecurity and supply chain risk management obligations to a broader set of providers.

Commissioners Carr and Simington dissented from the Declaratory Ruling and NPRM. While Chairman Carr frequently references cybersecurity threats, particularly those stemming from state-sponsored actors in the People’s Republic of China (PRC), it is unclear whether the new GOP-led FCC will allow the Declaratory Ruling and NPRM to stand or will pursue another course of action.

Background.  Enacted in 1994, CALEA requires telecommunications carriers and manufacturers of telecommunications equipment to ensure that law enforcement agencies have necessary surveillance capabilities of telecommunications equipment, facilities, and services. Notably, under the “substantial replacement” provision of CALEA, the FCC has interpreted the term “telecommunications carrier” for purposes of CALEA to include facilities-based broadband Internet access service (BIAS) and interconnected VoIP providers. [1]

Declaratory Ruling.  Previously, the FCC found that Section 105 of CALEA requires telecommunications carriers to avoid the risk that suppliers of untrusted equipment will illegally intercept or surveil a carrier’s switching premises without its knowledge.[2] In the Declaratory Ruling, the Commission imposed an affirmative duty on “telecommunications carriers” (again, including BIAS and iVoIP providers) to secure their networks, and clarified that telecommunications carriers’ responsibilities under CALEA extend to their equipment as well as network management practices.

The FCC concluded that carriers are obligated to prevent interception of communications or access to call-identifying information by any means other than pursuant to a lawful authorization with the affirmative intervention of an officer of the carrier acting in accordance with FCC rules. In adopting the Declaratory Ruling, the Commission puts carriers on notice that all incidents of unauthorized interception of communications and access to call-identifying information amount to a violation of the carrier’s obligations under CALEA.

Within this context, the FCC concluded that Congress has authorized the Commission to adopt rules requiring telecommunications carriers to take steps to secure their networks.

Notice of Proposed Rulemaking.  In its NPRM, the FCC proposes to apply cybersecurity requirements to a broad set of service providers, including facilities-based fixed and mobile BIAS providers, cable systems, wireline video systems, wireline communications providers, satellite communications providers, commercial mobile radio providers, covered 911 and 988 service providers, and international section 214 authorization holders, among others (Covered Providers).

The Commission proposes that Covered Providers would be obligated to create and implement cybersecurity and supply chain risk management plans. The plans would identify the cyber risks the carrier faces, as well as how the carrier plans to mitigate such risks. Covered Providers would also need to describe their organization’s resources and processes to ensure confidentiality, integrity, and availability of its systems and services. The plans would require annual certification and be submitted in the Network Outage Reporting System (NORS).

[1] Telecommunications carrier includes:

A person or entity engaged in the transmission or switching of wire or electronic communications as a common carrier for hire; A person or entity engaged in providing commercial mobile service . . . ; A person or entity that the Commission has found is engaged in providing wire or electronic communication switching or transmission service such that the service is a replacement for a substantial portion of the local telephone exchange service and that it is in the public interest to deem such a person or entity to be a telecommunications carrier for purposes of CALEA.

47 CFR § 1.20002(e).

[2] Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs; Huawei Designation; ZTE Designation, WC Docket No. 18-89; PS Docket Nos. 19-351 and 19-352, Report and Order, Further Notice of Proposed Rulemaking, and Order, 34 FCC Rcd 11423, 11436-37, para. 35 (2019).

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On October 18, 2024, the FCC adopted an Eighth Report and Order in its 4.9 GHz band proceeding. The new rules will permit a yet-to-be-selected Band Manager to be eligible for a nationwide license in the band, overlaying the licenses of incumbent public safety licensees. The Band Manager will be authorized to enter sharing agreements with the First Responder Network Authority (FirstNet), which can integrate unused 4.9 GHz band spectrum into its nationwide public safety broadband network (NPSBN). Additionally, the Band Manager’s primary responsibilities will include providing frequency coordination for incumbent public safety operators and integrating new technologies.

The FCC hopes the Eighth Report and Order will cap a decade-plus-long effort to promote greater use of the 4.9 GHz band, which the FCC views as underutilized in certain areas of the U.S. However, the proposed rules were strongly opposed by several groups. Critical infrastructure entities considered themselves as natural sharing partners with public safety incumbents and sought co-primary access to the band. Verizon and T-Mobile viewed integration of the band into the NPSBN as a de facto grant of free spectrum to AT&T, which has a contract with FirstNet for NPSBN management. Given the amount of spectrum at issue, up to 50 MHz in some areas, there are various predictions that the issue will eventually be appealed to the court system. We will see what the future holds.

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Over the summer, the FCC adopted the first nationwide Next Generation 911 (“NG911”) transition rules to define the responsibilities and set deadlines for originating service providers (“OSPs”) to implement NG911 capabilities and deliver 911 calls to NG911 systems. The final rules were published in the Federal Register on September 24, 2024.

Triggering the Transition.  The FCC adopted a two-phased NG911 transition scheme in which a valid request from a 911 Authority starts the transition process for each phase. A 911 Authority is considered to have submitted a valid Phase 1 request if it certifies that it has all the necessary infrastructure installed and operational to receive 911 traffic in an IP-based Session Initiation Protocol (“SIP”) format. A valid request to initiate Phase 2 requires the 911 Authority to certify that its reception of 911 traffic in SIP format complies with NG911 commonly accepted standards and that it can transmit such traffic to the Public Safety Answering Points (“PSAPs”) connected to it. In Phase 2, a 911 Authority must also certify that its Emergency Services IP Network (“ESInet”) is connected to a functioning Next Generation 911 Core Services (“NGCS”) network that can access a Location Validation Function (“LVF”) and interface with the Location Information Server (“LIS”) or its functional equivalent. As part of the transition, the 911 Authority must designate the NG911 Delivery Point locations to which the 911 Authority wants the OSPs to deliver 911 traffic. A valid request does not require all PSAPs connected to the ESInet to be NG911-ready.

Phase 1.  After receiving a valid Phase 1 request, OSPs are required to (i) deliver 911 traffic bound for PSAPs in the IP-based SIP format requested, (ii) obtain and deliver 911 traffic to enable the ESInet and other NG911 network facilities to transmit 911 traffic to the PSAP, (iii) deliver 911 traffic to in-state NG911 Delivery Points designated by the 911 Authority, and (iv) complete connectivity testing to confirm that the 911 Authority receives 911 traffic in the format requested.

Phase 2.  The completion of Phase 1 is a prerequisite to initiate the Phase 2 transition. Phase 2 requires OSPs to deliver 911 traffic to designated delivery points in an IP-based SIP format in accordance with NG911 commonly accepted standards, including embedding location information in the call signaling using Presence Information Data Format – Location Object (“PIDF-LO”), or its functional equivalent. OSPs must also be able to use a LIS or its functional equivalent to verify customer location information and records or acquire services that can be used to do so.

Federal Register Publication.  The Final Rule establishes that, “[f]or all OSPs, the initial compliance date will be extended based on the effective date of the rules—i.e., no OSP must comply with a 911 Authority Phase 1 request sooner than one year after the effective date of these rules, regardless of the timing of the 911 Authority’s request.” The effective date of the rules is November 25, 2024; however, the FCC is not requiring compliance with the rules establishing what constitutes a valid request from a 911 Authority and the rules establishing how the NG911 requirements may be modified by mutual agreement of the 911 Authority and OSPs until a separate compliance date for those provisions has been established.

Cost Allocation.  The FCC adopted default rules that require OSPs to bear the financial responsibility for transmitting and delivering 911 traffic to NG911 Delivery Points, including costs associated with completing any needed 911 traffic translation to IP-based format and the costs of delivering associated routing and location information. The default rules do not preclude alternative arrangements between 911 Authorities and OSPs at the state or local level.

Impact of Loper.  Earlier this year, the Supreme Court in a 6-3 vote overturned the landmark decision in Chevron v. Natural Resources Defense Council. The case overturning this precedent is captioned Loper Bright Enterprises v. Raimondo. The deference a federal agency, like the FCC, received when a Court was reviewing a challenge to an agency’s rules took a major hit on the heels of the Loper decision. This decision could sharply limit the authority of federal agencies to implement rules that are not clearly set forth by an Act of Congress. In this instance, the FCC relied on a patchwork of statutory authority to argue that the agency had authority to adopt these rules. It will be interesting to see whether a court has a chance to weigh in on these rules and, if so, whether the rules can survive an appellate challenge.

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Last month, the FCC issued a Notice of Proposed Rulemaking (“NPRM”) that could revise the agency’s Citizens Broadband Radio Service (“CBRS”) rules in the 3.5 GHz band. The objective of the proposed changes is to better protect incumbent federal users and improve the rules for both Priority Access License (“PAL”) holders and General Authorized Access (“GAA”) users. Initial Comments are due October 7th and Reply Comments must be filed by November 5th.

Background.  The Commission created a three-tiered sharing framework in the 3.5 GHz band in 2015. Priority access to – and sharing within – the band is managed by Spectrum Access System (“SAS”) administrators, which are automated frequency coordinators that coordinate operations between and among the three different tiers of users in the 3.5 GHz band. To assist in coordination, Environmental Sensing Capability (“ESC”) operators detect information about federal frequency use in and adjacent to the 3.5 GHz band and report that information to the SAS.

The highest tier of the CBRS 3.5 GHz band consists of incumbent federal and non-federal users, which receive protection from all other users. The second tier is comprised of the PAL holders, which purchased this spectrum at auction from the FCC (which we covered in this blog about five years ago!). The third tier represents users who are “licensed by rule” and must accept interference from other CBRS users, including other GAA users.

The FCC’s proposed changes to the CBRS framework include the following:

Federal Protection and Coordination.  The FCC seeks comment on whether it should expand the use of a coordination portal to protect federal operations, modify its ESC procedures to address potential effects on competition and the marketplace, and/or permit CBRS operations in offshore areas.

Citizens Broadband Radio Service Devices (“CBSD”) Information.  PAL holders and GAA users are required to register all CBSDs with a SAS administrator prior to operation. Commission rules require CBSDs to provide received signal strength and other measured parameters to the SAS administrators upon request, and disclosure of this information to the public is restricted. The FCC seeks comment on whether to update the breadth and scope of CBSD information provided to SASs, as well as the availability of CBSD information.

SAS Connectivity and/or Outages.  CBSDs are required to maintain SAS connectivity so the SAS is updated of any change in status and so that the CBSD can comply with SAS instructions within seconds of a triggering event. The FCC seeks comment on specific circumstances that may warrant less restrictive application of the SAS connectivity requirements.

Other Issues.  The FCC seeks comment on the efficacy of the current professional installation regime and whether any rule changes are needed to ensure that CBSDs are installed and maintained correctly. The NPRM also requests comment on whether the Commission can take steps to facilitate additional use of the 3.5 GHz band for low power indoor operations, including private networks. Finally, the Commission seeks comment on whether there are new rules, or clarifications of current rules, that could foster coexistence and preempt disputes among GAA users in a manner that will also advance GAA spectrum use and continued deployment of the CBRS.

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The Supreme Court in a 6-3 vote overturned the landmark decision in Chevron v. Natural Resources Defense Council, sharply limiting the authority of federal administrative agencies, including the FCC.[1] After the decision in Loper Bright Enterprises v. Raimondo,[2] it will be easier to challenge and overturn agency decisions, and federal agencies will be more hesitant to adopt new regulations absent clear Congressional direction. At the same time, the need for clear Congressional direction means that new legislation will need to spell out the agency’s role in greater detail.

While the Loper Bright decision involved a statute governing fisheries,[3] the decision will have far-reaching and significant effects across scores of federal agencies, impacting core policy matters on everything from banking to healthcare to energy and the environment, and of particular relevance to this analysis, telecommunications.

The overturning of the Chevron doctrine promises to impact ongoing telecommunications and broadband policy debates, including the regulatory classification of broadband Internet services and the scope of the FCC’s Title II authority. It may also reopen prior regulatory debates on everything from spectrum allocation matters to pole attachment and rights-of-way management decisions.

I. OVERVIEW OF THE DECISION

A. What is Chevron Deference?

The Chevron doctrine of judicial deference to agency interpretation arose forty years ago in a case examining whether an Environmental Protection Agency (EPA) regulation was consistent with the provisions of the Clean Air Act. (Interestingly, the EPA Administrator at the time was none other than Justice Gorsuch’s mother.) To answer the question, the Chevron court adopted a two-step approach for reviewing agency actions, essentially requiring courts to defer to the agency’s interpretation if the underlying statute is ambiguous or silent as to the activity in question.

Chevron deference was in large part based on the presumed expertise and institutional knowledge of the agency. Since its adoption, Chevron deference has allowed agencies, including the FCC, to address changing and evolving technologies and policies that may not have been anticipated at the time of the statute’s enactment.

B. The Loper Bright Decision

The Loper Bright decision represents a long-standing and concerted effort, particularly among conservatives, to overturn or reign in the deference afforded to administrative agencies under Chevron. In reversing Chevron, the Loper Bright Court concluded that 1) Chevron deference is inconsistent with the requirements of the Administrative Procedures Act (“APA”), and 2) Chevron deference violates the U.S. Constitution.

First, the Court noted that, under the APA, the role of “the reviewing court” – not the agency whose action it reviews – is to “decide all relevant questions of law” and “interpret … statutory provisions.”[4] The Court further found that the APA “requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the statute.”[5] The Court, therefore, concluded that Chevron deference is fundamentally inconsistent with the APA and must be overturned.

Second, the Court held that Chevron deference runs counter to the Article III of the U.S. Constitution, which assigns to the federal judiciary the responsibility and power to adjudicate “Cases” and “Controversies.” The Court reasoned that this Constitutional requirement necessarily requires that courts, and not independent agencies, determine the meaning of laws.

In reaching these conclusions, the Court specifically rejected the presumption that agency interpretations should be given deference because of the subject matter expertise of the agencies.  The Court held that Chevron’s presumption is “misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.”[6]

The Court also criticized the fact that Chevron deference required courts to accept and uphold a reasonable agency interpretation of a statute even if that interpretation was not the most reasonable interpretation. As Justice Gorsuch noted in his concurring opinion, this can result in a game of regulatory ping pong, with successive administrations adopting contradictory interpretations of the same law being upheld under Chevron. To illustrate his point, Justice Gorsuch focused on the FCC’s multiple conflicting interpretations of the regulatory classification of broadband Internet service under the federal Communications Act over the past twenty years:

Under Chevron, executive officials can replace one “reasonable” interpretation with another at any time, all without any change in the law itself. The result: Affected individuals “can never be sure of their legal rights and duties.” How bad is the problem? Take just one example. Brand X concerned a law regulating broadband internet services. There, the Court upheld an agency rule adopted by the administration of President George W. Bush because it was premised on a “reasonable” interpretation of the statute. Later, President Barack Obama’s administration rescinded the rule and replaced it with another. Later still, during President Donald J. Trump’s administration, officials replaced that rule with a different one, all before President Joseph R. Biden, Jr.’s administration declared its intention to reverse course for yet a fourth time. See, Safeguarding and Securing the Open Internet, 88 Fed. Reg. 76048 (2023); Brand X, 545 U. S., at 981–982. Each time, the government claimed its new rule was just as “reasonable” as the last. Rather than promoting reliance by fixing the meaning of the law, Chevron deference engenders constant uncertainty and convulsive change even when the statute at issue itself remains unchanged.[7]

C. Standard of Review in the Wake of Loper Bright

Rather than defer to agency determinations, the courts will now instead exercise their own independent judgment in determining the meaning of statutory provisions. The Court in Loper Bright, however, stated that in exercising such judgment, “courts may – as they have from the start – seek aid from the interpretations of those responsible for implementing particular statutes.”[8] The Court indicated that “such interpretations constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.”[9] Thus, the key difference is that while courts may, and often should, look to agency expertise for guidance, the courts may not defer to agency interpretations.[10]

D. Impact on Prior Agency Decisions

The Court stated that it was not reversing previously decided cases that relied on Chevron deference, stating that “the holdings of those cases that specific agency actions are lawful – including the Clean Air Act holding of Chevron itself – are still subject to statutory stare decisis despite our change in interpretive methodology.”[11]

The Dissenting Opinion, however, notes that the majority’s ruling does not address the fact that many agency rulings and interpretations were never challenged and may therefore be vulnerable to challenge. The possibility of such challenges to existing agency rulings has increased further with a decision by the Supreme Court just a few days after the Loper Bright decision was announced. In Corner Post, Inc. v. Board Of Governors of the Federal Reserve System, the Court held that legal challenges to federal regulations can be brought outside the normal six-year statute of limitations if someone is not adversely affected by an agency rule until after the six-year window of time to file suit.

II. POTENTIAL IMPACT ON TELECOMMUNICATIONS AND BROADBAND POLICY

The Supreme Court’s abandonment of Chevron deference could have a significant impact on a variety of telecommunications and broadband rules and policies. The decision will likely result in a flurry of challenges to FCC and NTIA rulings and polices that may not be clearly supported by statutory language.

A. Open Internet Order

Among the most notable FCC rulings that will be impacted by the Loper Bright decision is the FCC’s 2024 Open Internet Order. As discussed above, the FCC’s back and forth reclassification of broadband Internet access service under the federal Communications Act, as a Title I unregulated “information service” or a Title II regulated “telecommunications service,” was specifically referenced in the Concurring Opinion of Justice Gorsuch to illustrate the inconsistent policy that can result from deference to agency rulings.

Several Internet service provider groups are currently challenging the FCC’s Open Internet Order in the U.S Court of Appeals for the Sixth Circuit. The removal of Chevron deference and Justice Gorsuch’s Concurrence have given the petitioners an additional basis to overturn the FCC’s Order, which the court will likely do if it does not agree with the FCC’s interpretation that broadband Internet access service is a “telecommunications service” subject to Title II regulatory authority. In fact, immediately following the Loper Bright decision, the Sixth Circuit directed parties to file supplemental briefing material addressing the effect of the decision on the court’s analysis of a motion to stay the Open Internet Order.

B. Other Likely Challenges

Among the other key telecom and broadband policy areas that we would expect to see challenges, or an expanded basis for challenge, are the following:

  • The FCC Digital Discrimination Order, which has been appealed to the U.S. Court of Appeals for Eighth Circuit.[12]
  • Challenges to the scope of the FCC’s administration of the federal Universal Service program under the so-called non-delegation doctrine,[13] as well as the FCC’s appointment of the Universal Service Administrative Company to manage the federal Universal Service Fund. There have been multiple challenges in various federal courts, some of which are still ongoing.
  • NTIA’s adoption of a low-cost service option requirement for Broadband Equity, Access and Deployment (“BEAD”) funding.

C. Prior FCC Determinations

The Loper Bright decision, when combined with the aforementioned Corner Post decision, could enable litigants to reopen FCC decisions in areas where the law is thought to have been settled. A putative petitioner might argue that the agency’s prior decision was never challenged (and therefore not granted Chevron deference), or the specific matter did not harm the petitioner so during the initial six-year statute of limitations. A petitioner could challenge prior FCC decisions involving spectrum regulations, pole attachments, and myriad other issues if the issue was never previously challenged, or if the petitioner is impacted only after the regulation was upheld.

D. An Updated Telecommunications Act? 

We expect that uncertainty surrounding the FCC’s authority to undertake crucial policy initiatives will lead to increased calls for major new telecommunications/broadband legislation.   Universal service contribution reform, for example, is viewed as a priority across the political spectrum, yet the FCC’s authority to do so is now in question. In the absence of clear legislative direction on that and other issues – including net neutrality, digital equity, consumer privacy, and the question of whether the FCC may exert regulatory authority over broadband Internet access as a general matter – the future of telecommunications policy will be clouded by uncertainty.

[1] Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837.

[2] Loper Bright Enterprises Et Al. v. Raimondo, Secretary Of Commerce, 603 U. S. ____ (2024)(“Opinion of the Court”) https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf. The Loper case was adopted with a companion case Relentless, Inc., et al. v. Department of Commerce, et al.

[3] The Magnuson-Stevens Fishery Conservation and Management Act. See 90 Stat. 331 (codified as amended at 16 U. S. C. §1801 et seq.).

[4] Opinion of the Court, at 21.

[5] Id., at 1.

[6] Id., at 5.

[7] Concurring Opinion of Justice Gorsuch, at 23.

[8] Opinion of the Court, at 16 citing Skidmore v. Swift & Co., 323 U. S. 134, at 140 (1944).

[9] Id., at 16.

[10] The Court further clarified that the ruling does not impact instances where Congress specifically conferred authority to an agency to interpret statutory terms, noting that some statutes “expressly delegate to an agency the authority to give meaning to a particular statutory term.” In such instances, the court’s role is to determine whether the agency has engaged in “reasoned decision making” within the boundaries of the authority delegated under the statute.

[11] Id., at 34. “Stare decisis” is a legal doctrine governing judicial adherence to the precedent set by prior rulings.

[12] Implementing the Infrastructure Investment and Jobs Act: Prevention and Elimination of Digital Discrimination, Report and Order and Further Notice of Proposed Rulemaking, GN Docket No. 22-69, FCC 23-100 (rel. Nov. 20, 2023).

[13] The “non-delegation doctrine” is the principle under the Constitution’s separation of powers that holds that legislative bodies cannot delegate their legislative powers to executive agencies or private entities.