D.C. Memo: TPI Analysts Say Lutnick's BEAD Rules Certain to Waste Billions on Network Gold Plating
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BEAD: Two Ph.D economists say Commerce Secretary Howard Lutnick’s new BEAD program rules have a major flaw and they claim it’s a costly one. In a recent essay, Scott Wallsten and Gregory Rosston argue that Lutnick’s June 6 plan updating the rules gave states the incentive to blow through their $42.45 billion BEAD wad because NTIA won’t allow states to use leftover deployment funds on “on other broadband priorities,” such as digital connectivity programs. “The point is that by eliminating the ability of states to use the leftover money for anything, the rational thing for them to do is to spend as much of it as possible as long as it meets NTIA’s criteria,” Wallsten and Rosston said, adding that NTIA’s decision not to impose a per-location spending cap would also fuel wasteful spending. The two compared the situation to a car-buying hypothetical: “Your boss gives you a $50,000 budget for a company car. Two rules: 40+ mpg and 5-star safety. Anything you don’t spend disappears. The Honda Civic Hybrid, which costs $30k, and the Lexus ES 300h, which costs $45k, both meet the specs. Which do you choose? Obviously, the Lexus,” they said. Wallsten and Rosston said they have a fix: “States are now at the car dealership with $42 billion, choosing between the Honda and the Lexus. NTIA has ensured that every state official should choose the Lexus. NTIA can fix this by letting states keep savings for other broadband priorities,” they said. (More after paywall.)
