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On September 11, 2025, the FCC released a Consent Decree with T-Mobile US, Inc. (“T-Mobile”) formally resolving an investigation into whether T-Mobile violated section 302 of the Communications Act of 1934 and parts 2 and 15 of the FCC Rules, specifically concerning the import, marketing, and sale of its REVVL 7 PRO 5G smartphone. The core issue was that T-Mobile imported, marketed, and sold the smartphone device before it had received the necessary FCC equipment authorization. To settle the matter, T-Mobile agreed to the terms of the Consent Decree, including the implementation of a comprehensive compliance plan and monetary payment of $7,000.

The FCC regulates radio frequency (RF) energy-emitting equipment, primarily to prevent harmful interference. The FCC’s Rules require such devices to meet specific standards and obtain authorization before being marketed in the U.S. The Rules apply to devices that intentionally radiate RF energy, like cell phones or Wi-Fi devices, but also to devices that unintentionally emit RF energy, like digital cameras and toys. Section 2.803(b)(1) of the FCC’s Rules specifically prohibits, with very few exceptions, marketing RF devices without proper authorization. Additionally, Sections 2.1203 and 2.1204 of the FCC’s Rules generally provide that an RF device can only be imported if it has received an equipment authorization from the FCC, or if it does not require such authorization but still complies with certain FCC technical and administrative regulations.

According to the Consent Decree, T-Mobile announced the REVVL 7 PRO 5G’s availability on May 14, 2024, and began sales on May 23, 2024. However, the device did not receive its official FCC equipment authorization until May 29, 2024. Even given the brief period of non-compliance, thousands of smartphones were sold during the gap. The FCC initiated an inquiry on October 1, 2024, questioning T-Mobile’s premature marketing and its documentation of import compliance, which was eventually concluded by the Consent Decree.

As part of the settlement, T-Mobile admitted to the factual background and acknowledged the Commission’s jurisdiction. T-Mobile also agreed to a robust Compliance Plan. Within thirty days of the settlement, T-Mobile must appoint a senior corporate manager with the authority to halt marketing activities if compliance issues arise as a Compliance Officer. The Compliance Plan requires strict new operating procedures, such as a compliance checklist, enhanced contractual obligations for T-Mobile’s manufacturers, and verification of equipment authorization before accepting product delivery. The Compliance Officer must also verify equipment authorization at least forty-eight hours prior to marketing or sale. Additionally, T-Mobile will develop a Compliance Manual and implement a mandatory Compliance Training Program for all “Covered Employees,” with annual refreshers.

The Consent Decree is notable for a couple of reasons:

First, T-Mobile informed the FCC that it “generally relies on manufacturers to ensure that FCC equipment authorization procedures are met” and that “compliance with FCC rules are routinely memorialized in the agreement between T-Mobile and the manufacturer.” The FCC generally provides that consignees must “be able to document compliance with the selected import condition and the basis for determining the import condition applied.” Here, the FCC disagreed that the terms of T-Mobile’s agreement satisfied its documentation requirements. Although the exact terms of the agreement are not available, this indicates that contractual representations and warranties, by themselves, may not be sufficient to ensure compliance with the FCC’s Rules.

The Consent Decree is also notable in that T-Mobile is required to pay a voluntary contribution of $7,000 to the United States Treasury within thirty calendar days of the Consent Decree’s effective date. For several years, the FCC has been moving away from allowing voluntary payments in Consent Decrees, instead characterizing such payments as “civil penalties,” reinforcing culpability for the alleged violator. A voluntary contribution may have been allowed in this instance due to the relatively short period of non-compliance paired with T-Mobile’s documented efforts to comply with the Rules. However, the fact that a voluntary contribution was allowed at all is noteworthy.

For more information, please contact Greg Kunkle (kunkle@khlaw.com; 202.434.4178).

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The following post discusses legal and financial matters and is provided for general informational purposes only. It is not intended to serve as legal or financial advice, particularly with respect to an individual entity’s tax status. Readers should consult qualified legal, accounting, and tax planning professionals for advice as to their specific circumstances.

On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (OBBBA), a massive budget reconciliation bill that codified many of the Trump Administration’s tax and spending policy objectives. While the final version of the Act did not exclude broadband grants from treatment as gross income for purposes of federal taxation (as proposed under the Broadband Grant Tax Treatment Act re-introduced earlier this year), the OBBBA’s 100% bonus depreciation provision provides some consolation, as it promises to significantly benefit some broadband network owners.

In general, depreciation provides a tax deduction equivalent to the purchase price of the property, normally realized over the economic life of the property. Bonus depreciation enables the tax deduction to occur on an accelerated basis and is intended to incentivize capital investments by businesses. First enacted in 2002, some form of bonus depreciation has been in effect for most of the past two decades. The percentage rate of bonus depreciation, and property eligible for it, has changed under various legislative enactments over that period.

The 2017 Tax Cuts and Jobs Act established a 100% bonus depreciation rate (meaning a business may be able to deduct all of a qualifying asset’s cost in the year that asset was acquired) for assets acquired and placed in service between September 27, 2017 and January 1, 2023, but would have phased down the bonus depreciation rate to zero percent in 2027. The OBBBA, however, now provides a permanent 100% bonus depreciation provision of eligible assets acquired and placed into service after January 19, 2025.

What does this mean for fiber optic networks and other Telephone Distribution Plant (including conduit and related outside plant and equipment (OSP))? AT&T and others in the industry are very bullish on it, touting bonus depreciation as enabling, in AT&T’s case, “over $1 billion annually in cash-tax deferrals, effectively reducing the cost of capital for fiber projects.”

But fiber network owners should note that bonus depreciation may or may not be available to them, depending on what accounting methods they follow.

Bonus depreciation is available only for assets with a recovery period of 20 years or less under the Modified Accelerated Cost Recovery System (MACRS). Fiber optic networks and other OSP, however, generally have a long economic life: the IRS lists the “class life” of Telephone Distribution Plant as 24 years, which is also the recovery period for depreciation of Telephone Distribution Plant under the Alternative Depreciation System.

At first glance, the 24-year class life of telecommunications OSP would suggest that fiber optic networks simply are not eligible for bonus depreciation. But that is not the case, as is evident from the reaction of AT&T and others.

The key is that bonus depreciation eligibility depends on the recovery period of the asset, not its class life. Under the Alternative Depreciation System (ADS), the recovery period of Telephone Distribution Plant is 24 years. But under the General Depreciation System (GDS), the recovery period is 15 years.

In the most general terms, then, eligibility of fiber optic network assets for bonus depreciation depends on the provider’s chosen accounting and depreciation methods.

We must emphasize that the above is a greatly simplified explanation, and there is considerable nuance in the tax treatment of capital assets. As noted in the introduction, readers should consult with their own legal, financial, and tax professionals with respect to their particular circumstances.

If we can be of assistance with respect to the above, please contact an attorney within Keller and Heckman’s Communications and Technology practice group.

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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.