NTIA advises states against signing SpaceX’s request for BEAD program exemptions

The National Telecommunications and Information Administration on Wednesday formally advised states against signing a “contract rider” that the aerospace firm SpaceX circulated last month, requesting special exemptions from certain requirements of the Broadband Equity, Access, and Deployment program.

The NTIA’s advisement, included in a new volume of FAQs about the BEAD program, comes after several states reported receiving letters over the last couple weeks from SpaceX with riders attached. The riders sought to modify the subgrantee agreements between the states and its low-Earth orbit satellite internet provider, Starlink, without rewriting them, on the claims that the BEAD program’s rules “could render LEO participation in the program untenable,” because they were originally written for terrestrial broadband projects.

But the NTIA affirmed that its rules are final and internet providers like SpaceX’s Starlink cannot rewrite or alter the rules of the contract or BEAD’s terms and conditions.

Under the question: “May Eligible Entities and BEAD subgrantees negotiate a subgrant agreement that is inconsistent with program rules?” the NTIA says no: “Every subgrant agreement must comply with all BEAD program requirements, including, but not limited to, the requirements outlined in the BEAD [notice of funding opportunity], the BEAD Restructuring Policy Notice, and the BEAD General Terms and Conditions.”

“Federal law, regulations, and program rules will always govern in the event of a conflict with a BEAD subgrant agreement term,” the guidance continues. “The BEAD subgrant agreement may not redefine program terms, relieve either party of responsibilities established by program rules, or assign responsibilities to the potential subscriber that program rules already assigned to the Eligible Entity or BEAD subgrantee.”

This can be read as a direct response to SpaceX’s rider, which requested concessions and sought to redefine how performance obligations are met for LEO satellite service. The firm had objected to BEAD’s “capacity reservation” requirement and how evidence of it is documented. In its letter to states, SpaceX said it will not produce a single document showing reserved network capacity, and will instead include BEAD capacity needs in general network planning and use performance testing as proof of compliance.

The company claimed that the reserved network capacity requirement misunderstands how satellite internet, and specifically Starlink’s network, works, as it dynamically allocates capacity.

In the Wednesday guidance, the NTIA also said that to “help ensure that the subgrantee is meeting the terms of the subgrant agreement,” BEAD-funded locations will be tested at random.

SpaceX had also proposed in its rider that it would limit covering the costs of three sets of customer equipment, including a user terminal and router, per BEAD service location. The NTIA clarified that both capacity subgrant terms and general BEAD rules state that all necessary equipment must be provided at no cost as part of installations.

The BEAD program — which is entering its final phases, as 43 out of 56 states and territories have had their final proposals approved by NTIA so far — has already undergone major changes to make it more friendly to internet service providers. Shortly after confirmation to the position last year, Commerce Secretary Howard Lutnick signaled his intent to “revamp” the $42.45 billion program, after critiquing a number of the program’s regulations, including that its original preference for fiber projects had made participation by satellite internet providers nearly impossible.

Lutnick made good on those intentions last June, sharing new BEAD program guidance that directed states to favor a technology-neutral strategy. This opened more pathways for states to spend BEAD funds on technologies on satellite and fixed wireless technologies

The new FAQs arrive after broadband offices in states like Virginia and North Carolina told this publication that they had not received guidance from NTIA on the contract rider by SpaceX. A spokesperson from North Carolina’s Division of Broadband and Digital Opportunity said: “We are aware that Low Earth Orbit providers may require slightly different contract arrangements, but we have not yet entered into contract negotiations with any BEAD contingent awardees.”