- NTIA updated its FAQ page stating BEAD contracts between states and subgrantees “may not redefine program terms”
- NTIA seems to be targeting SpaceX's proposed contract rider, though SpaceX wasn't named
- SpaceX could try to sue states for refusing to sign its rider, though NSR’s Blair Levin thinks it’s unlikely SpaceX succeeds
NTIA clarified that Broadband Equity, Access and Deployment (BEAD) subgrant agreements may not go against program policy — a move that apparently targets SpaceX.
A leaked document from last week indicated SpaceX wants states to sign a waiver that would alter state requirements for satellite service, including requirements for capacity reserves and performance testing that would conflict with BEAD’s policy notice.
NTIA declined to comment on the waiver, but the most recently updated NTIA FAQ states that eligible entities and subgrantees can’t negotiate an agreement inconsistent with program rules.
“Federal law, regulations, and program rules will always govern in the event of a conflict with a BEAD subgrant agreement term,” NTIA said in section 9.4 of the FAQ. “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."
The text makes no mention of SpaceX or Starlink, but NTIA “appears to be advising states not to sign the proposed contract riders,” wrote New Street Research Policy Analyst Blair Levin in a note today.
Once states turn down the SpaceX rider, the company has a few potential moves, he said. First, SpaceX could lobby Commerce Secretary Howard Lutnick or the White House to overturn NTIA’s guidance. “This is possible but we think unlikely,” Levin said.
SpaceX could also refuse to sign a proposed state contract and threaten to sue. Levin thinks states would likely win the legal battle but litigation could still delay BEAD funding disbursement.
Alternatively, SpaceX can “simply agree to the state agreement and then, in the implementation, challenge any state enforcement action that is inconsistent with the proposed riders,” he said, which is slightly more likely than pursuing litigation.
What if SpaceX drops out of BEAD?
Given SpaceX’s pushback against BEAD requirements, there’s a chance the company could drop its winning bids altogether. That would be a big problem since SpaceX won 472,000 locations – the most out of any ISP.
“It would be funny if SpaceX now decided to default on its awards,” said Fierce Network Chief Analyst Linda Hardesty. “It would be exactly like RDOF turned out.”
As you recall, Starlink was slated to receive $885 million to cover over 642,000 Rural Digital Opportunity Fund (RDOF) locations. The FCC rejected SpaceX’s bid in 2022, arguing the company failed to demonstrate it could meet its promised speeds and program requirements.
Fast-forward to today, RDOF is in rough shape with more than $3.3 billion of awards in default. NTIA has said RDOF locations that defaulted after June 6 would not be eligible for BEAD subsidies.
If SpaceX walks away, states may consider shifting their funds to Amazon Leo, Levin said. But it's anyone’s guess when Amazon can meet its BEAD commitments is, as Amazon Leo just requested a 2-year extension to launch its satellite constellation.
The other BEAD elephant in the room
Apart from potential conflict between SpaceX, the states and NTIA, another pressing matter is the fate of the $21 billion in BEAD non-deployment funds.
At an Incompas event Wednesday, NTIA Chief of Staff Brooke Donilon touched upon President Trump’s executive order linking AI and BEAD, seeking to deny non-deployment money to states with “onerous” AI laws.
“The U.S. has to be a leader in AI and one lever that we have with states is [to use] this $21 billion carrot to really kind of try to motivate states not to pass laws that will kind of harm our leadership in AI,” she said.
NTIA is working on a report due March 11 that would clarify which AI laws are “impacting American leadership and innovation,” Donilon said. But she thinks the guidance would impact “a handful of states.”
NTIA wants to use the BEAD non-deployment funds to explore broadband permitting reform, Donilon said, which is an industry priority.
“What we’re really interested in is spending that money on expediting deployment,” she said.