The Road Ahead for Rural Broadband

After recent federal grant funding decisions, a thorough review of project costs and an analysis of the competitive landscape, United has significantly slowed its fiber buildout in certain rural areas. 

The shift follows a collective decision by the Department of Commerce (DOC) and the Texas Broadband Office to not award United federal grant funding through the National Telecommunications and Information Administration’s (NTIA) BEAD Program. 

BEAD stands for Broadband, Equity, Access and Deployment and is a $42.5 billion federal grant program administered by the DOC’s NTIA. Under the federal program, the DOC distributes funding to eligible U.S. states and territories, which then administer and facilitate the flow of funding to grant award winners. United applied for several of these grants necessary to help offset the cost of building  in extremely high-cost areas, but was not awarded a BEAD grant.

United CEO Cameron Smallwood said the cooperative is disappointed by the outcome, but remains focused on the broader impact of its efforts.

“We are disappointed that we were not awarded a BEAD grant,” Smallwood said.  “However, when we announced in 2020 that we would add high-speed internet service to our portfolio of service offerings, we also knew it would draw the attention of other internet service providers who would eventually want to serve certain areas of our territory. While we are disappointed that we weren’t awarded the federal BEAD grant funding, we take pride in knowing that our efforts brought other providers to our communities—and those  providers are now required to serve  the unserved members in those areas with high-speed internet.”

Constructing fiber in the regions for which United applied for the grants requires an exceptionally high investment per household. At the same time, two other internet providers—Nextlink and Starlink—have been awarded federal BEAD funding to serve those same areas. This federal support gives them a significant financial advantage and obligates them to high-speed internet to United members in those areas—through a BEAD-funded network rather than a privately funded one.

Chris MacIntyre, United’s vice president of internet services, said continuing the buildout under these conditions would not be fiscally responsible.

“Because of these factors, continuing our buildout would not be financially responsible and would duplicate infrastructure that will already be heavily funded through BEAD awards,” MacIntyre said.  “While we recognize this may be disappointing, we want to be transparent about the reasons behind this decision and ensure our members are informed about the providers responsible for bringing them internet service in the near future.” 

Under the terms of their agreements, BEAD recipients, Nextlink and Starlink  are expected to be required to meet buildout and service requirements (e.g., speed and coverage standards) but timelines vary by state and by project. 

“We expect the NTIA to release maps that will allow people to search their address to determine which grant winner will be required to serve them,” Smallwood said.

Members currently served by United are unaffected by the grant outcome and their internet service through the cooperative will not change. 

“We remain committed to providing reliable connectivity, investing in network improvements, and supporting all of our members across the communities we serve and are able to serve,” MacIntyre said.