Do the state challenges to the FCC maps really matter for BEAD?

As the January 13 deadline looms for states to challenge the current FCC coverage maps, many states are asking for more time.  I'm starting to wonder, however, whether more time is actually all that important. The specific FCC rules and timelines -- as well as what NTIA has said about how the FCC maps will (and won't) be used for BEAD -- suggest that the current frenzy to challenge the November 18 FCC maps may be both futile and irrelevant when it comes to BEAD.  Anyway, this is a less quantitative post than you may be used to seeing in this space, but there still a lot to unpack so here goes.

Let's start with the FCC, which has published detailed rules for the "Broadband Data Collection" (BDC) process, agency-speak for the overall mapping effort.  Even before we get to challenges, the BDC rules specify a few critical things.  First, the BDC rules adopt the FCC's longstanding definition of broadband coverage: can a service provider provide service at an advertised speed to a given location within 10 business days? In other words, the FCC process is NOT building a location level map of actual delivered broadband speeds today, but rather a map of the performance that providers say they can deliver if a customer requests it. Obviously this has become a point of criticism, but my understanding is that this is just not up for legal debate under the FCC's rules.

Then the BDC rules go on to establish the rest of the process that we are all now increasingly familiar with.  It creates the "fabric" -- the national map of locations that need broadband.  It establishes a process and timelines for ISPs to report their coverage (using the definition above) against the fabric; in fact we are now in the second such 60-day reporting window.  And it creates the challenge process.

So let's turn to the challenge rules. There are actually two distinct kinds of challenges: (1) "fabric" challenges (a given version of the fabric is either missing locations needing broadband or or includes locations that don't actually need broadband), and (2) "coverage" challenges (the ISP reported coverage to a location is incorrect).

With respect to fabric challenges, the BDC rules are pretty vague and high level.  They just say that a party that thinks the fabric has errors can report that, and the FCC staff (presumably with help from CostQuest) will review and decide whether to incorporate. And since this decision doesn't involve overruling anyone (unlike coverage challenges, as we'll talk about next), presumably those "challenges" should be easier to win as long as they are backed up with reasonable information.  After all, even CostQuest has been the first to admit that with well over 100 million individual locations, it is inevitable that there will be some misses in the fabric.

In contrast, the BDC rules for coverage challenges are much more detailed. However, the core point to remember is that the nature of a coverage challenge is this: a successful challenge must prove that a given ISP is incorrect when it claims that it is able to deliver an advertised speed if it was to be requested by a customer. Based on that definition, challenges that claim, for example, "this location can’t be served today," or ones saying that speed test data shows actually delivered speeds below reported levels, are at best only circumstantial in nature to the actual legal standard.

And the BDC rules have a final key item that seems to mean that even good circumstantial evidence won't win the day.  The BDC rules say that for challenges specifically by states (as opposed to the general public), an elevated standard of proof  -- "clear and convincing evidence"  -- must be met to overcome the initial ISP coverage submission. I'm not a lawyer, but what I've been told is that in effect this means that if both sides submit reasonable evidence and insist their view is correct, then the ISP wins the challenge. 

Now let's turn to NTIA and the BEAD rules. The core issue is which locations are "unserved" and "underserved" in a state, which drives two core issues: (1) the state-by-state allocation of BEAD funds, and (2) where states are allowed to use BEAD funds to support new broadband projects.

NTIA has actually been pretty clear on the difference in how the FCC results will be used  for each of these two areas.  For the first, it's clear that a final FCC view of which locations are unserved is determinative -- hence the focus on the upcoming June 30 version of the FCC map.  For the second, however, NTIA has clearly suggested that states will be permitted to propose their own overlay information about which locations are unserved and underserved when it comes to where BEAD funds can be spent.  In other words, for area two, states will have a second bite at the challenge apple directly with NTIA, avoiding the unfavorable FCC challenge rules.

So let's try to put all of this together and see what it means.  For me, a few key takeaways stand out:

1. For BEAD, the only reason for a state to be prioritizing resources now to coverage challenges (and/or seeking more time) is if the result could be a higher BEAD allocation. To be precise, this means that the state's efforts must result in MATERIALLY MORE unserved locations, and that the increase is finalized at the FCC BEFORE the allocation is made. Given that the national denominator of around 10 million unserved locations, state challenges would need to result in tens of thousands of new unserved locations to be material. Although it may be satisfying for a given local area to win a few dozen challenges based on a unique set of facts, it just won't move the needle for allocation purposes. (And of course, given the fixed math of the allocation formula, at least some other states would have to NOT do the same).

2. Given the actual nature of the coverage challenge process, I am skeptical that even with an additional 60 or 90 days the result of the FCC challenge adjudication process will be tens of thousands of locations in which the ISP's original submission is overturned. Again, the question is not whether a given challenge is valid; the question is whether enough challenges can be won under the FCC’s specific rules for it to be worth the likely change in allocation levels. Further, a successful challenge to one provider’s coverage of a location will only result in that location becoming unserved if no other providers offer a 25/3 or better service to the location.

3. It seems tempting to instead focus on fabric challenges, and in fact a number of states apparently did submit fabric challenges last fall. After all, a successful fabric challenge from October 2021 basically says "this is a location that no provider even realized was there" in the prior summer 2022 coverage submission, which a common sense view says should create a strong presumption that those "newly discovered" locations should be unserved.

However, I think this again fails to understand the actual FCC rules.  A "newly discovered" location added to the fabric in November or December 2022 must go through the legal process. Which means that providers have 60 days (January-February 2023) to report whether they serve those locations as a first step, followed by full coverage challenge process starting sometime in April probably. But we know from the current timeline that the FCC seems to need four or five months for a full challenge cycle.  So even if those "new" locations end up being shown as unserved, it won't be until the December 2023 map, too late for BEAD allocation purposes unless that timeline changes.

And as one last step step down this rabbit hole, I'll note that: perhaps if all of the ISPs in an area agree that a "newly discovered" location is actually unserved, that would mean that no new coverage challenge process is needed. So under that scenario, maybe that October fabric challenge by a state would result in a higher allocation in June.

4. If points 1, 2, and 3 are roughly right, then a I think a final point is hard to get around.  If the current January 13 deadline is "extended", mostly what will happen is states will spend even more time and energy generating coverage challenges that will at best have a very low yield rate likely immaterial to the allocation outcome.  Even worse, if the cascading result was that NTIA felt compelled to delay the allocation notice -- to give the FCC enough time to process the even higher number of challenges that would flood in from an extension  -- states would have lost additional months of delay in actually receiving any BEAD funds.

All of this is not to say that state efforts to understand their own view of coverage are not needed.  My observation is just that the current surge of activity seems unlikely to accomplish what states actually want: higher BEAD allocations.  But when it comes to running their own state BEAD grant programs, states will be able to use all of this work to ask NTIA to approve adjusted versions of unserved and underserved locations so that the right areas in a state can receive funds. But those programs are all  more than a year away under the BEAD timeline, so there is plenty of time.