Sen. Eric Schmitt Condemns NTIA for Engaging in Broadband Rate Regulation

By Lawson Faulkner

Sen. Eric Schmitt (R-Mo.) has recently taken aim at the NTIA for misleading lawmakers over its administration of the Broadband Equity, Access and Deployment (BEAD) program. In a letter addressed to NTIA administrator Alan Davidson, Sen. Schmitt accused NTIA officials of instituting rate regulations as a requirement to access BEAD funding.

Established in 2021, the BEAD program is responsible for expanding high-speed broadband infrastructure to underserved communities throughout the United States. Armed with a $42.45 billion war chest, the NTIA is tasked with appropriating funds on a state-by-state basis in hopes of narrowing the digital divide between rural and urban communities.

Under fire from lawmakers, the NTIA has repeatedly defended its controversial conduct while administering the BEAD program. According to Davidson, the NTIA has offered “a lot of flexibility” on broadband pricing requirements, insisting that his agency is “not engaging in rate regulation.”

Instead, NTIA officials have repackaged these rate ceilings as “low-cost option” requirements, which they insist are acceptable because BEAD is a voluntary program.

However, these deflections have failed to impress Sen. Schmitt. In his letter, he accused the NTIA of openly engaging in a “pressure campaign on states…to regulate the rates of broadband service.” For instance, the NTIA’s interaction with the state of Virginia provides a prime example of BEAD rate regulation. Although Virginia “satisfied statutory requirements” to receive BEAD funding, the NTIA has still demanded “an exact price or formula” for broadband options.

Under the BEAD program’s founding legislation, the Infrastructure Investment and Jobs Act, this form of artificial rate regulation has been strictly prohibited. Historically, this practice has been reserved for public utilities, excluding broadband infrastructure from consideration. However, according to Sen. Schmitt, the NTIA has “run afoul of longstanding federal precedent” by predicating access to BEAD funding on broadband rate regulation. While the NTIA has professed its “fidelity” to the law, Sen. Schmitt reminded officials that if broadband price ceilings were truly the will of Congress, lawmakers “would not have enacted such a provision explicitly prohibiting it.”

In tandem with its unlawful abuse of the BEAD program, Sen. Schmitt also expressed disgust with the NTIA’s willful manipulation of lawmakers’ trust. In a recent hearing before the House Committee on Energy and Commerce, Davidson publicly guaranteed that the NTIA was not engaging in broadband rate regulation through the BEAD program. Instead, because BEAD is a voluntary program, Davidson chose to strategically concede that “there are a lot of requirements” for participation, including the occasional compulsory rate ceiling. As Sen. Schmitt concluded, this concession was “baseless” because although BEAD is a voluntary program, lawmakers have still “provided statutory language prohibiting rate regulation.” With forty-one states still awaiting approval for BEAD funding, it is evident that the NTIA’s “covert strategy to implement rate regulation” has created a substantial broadband backlog. As rural communities struggle to adapt to an increasingly digitized economy, the NTIA is busy deploying its “strategy of double talk” to solidify a national broadband price ceiling. As Sen. Schmitt warns, this will certainly “lead to fewer people served and less competition.” Rather than constructing a national pricing cartel, the NTIA should pursue free-market solutions to broadband deployment within rural American communities.