Spotlight on the Middle

November 2, 2022 | The Enabling Middle Mile Broadband Infrastructure Program — a $1B program for the construction of middle mile infrastructure — is in position to be one of the first significant IIJA (Infrastructure Investment and Jobs Act) programs to reach the awards phase. The deadline for applications was September 30, with award announcements by NTIA expected to begin next March, and the appetite for these funds appears to be voracious. After the initial application deadline, NTIA announced significantly over-subscribed results, having received over 235 applications requesting funding of more than $5.5B.

Handicapping how and to whom these dollars will be awarded is challenging. NTIA released very specific guidance on submitting a winning application, which requires a priority focus on one of three areas:

1. Connecting middle mile infrastructure to last mile networks that will serve currently unserved areas

2. Connecting non-contiguous trust lands and/or

3. Offering wholesale broadband service at reasonable rates.

Applications will also be prioritized for review depending on how they score against a detailed list of criteria that will consider things like the fiscal sustainability of the project; the use of supplemental investment or in-kind support to accelerate completion of the project; and benefits to national security interests.

In short, applications must navigate a complex scoring process that will at best yield success for only about one in five of all program dollars requested.

The effort is further complicated by the “Buy America” preferences included in IIJA, which requires that domestically purchased materials make up more than 55 percent of the cost of all components of a subsidized project. NTIA has been fielding complaints for months that an inflexible approach to the “Buy America” requirements will stall or outright kill broadband deployment efforts, as many of the necessary component parts are simply not manufactured in America.

Acknowledging this challenge, in mid-September, NTIA released a waiver proposal outlining a possible limited exemption where specific materials for middle mile infrastructure are not available “in the quantity or quality needed.”

For example, and as acknowledged by NTIA in the proposal, 67 percent of the value of a middle mile network device is derived from components sourced exclusively from Asia and over 70 percent of global semiconductor production occurs in Asia. This basic math makes compliance with “Buy America” virtually impossible.

NTIA’s limited and component-specific waiver approach is a smart and much needed approach to the challenge, and an approach that could define the path forward for the $42B in broadband funding to come. If the waiver is granted as proposed, it would cover all middle mile program money awarded between March 2, 2023 and March 1, 2024, at which time NTIA will no doubt re-assess supply chain conditions.

NTIA would also require waiver grantees to report on their foreign equipment purchases, which will inform future NTIA grant programs and support incremental supply chain research by the agency.

While yielding only $1B in grant allocations, the Middle Mile program is an important precursor to the main event to come and is worth monitoring for important insights into how NTIA will advance the IIJA agenda and how the BEAD program will likely unfold.

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