White House to overhaul $42.5bn Biden-era internet plan – likely to Elon Musk's advantage
The Trump administration is preparing to overhaul a $42.5bn Biden-era program designed to connect tens of millions of rural Americans to reliable and affordable high-speed internet, in a move that is expected to benefit billionaire Elon Musk.
Howard Lutnick, the commerce department secretary who has oversight of the federal program, recently told senior officials inside the department that he wants to make significant changes to the federal program, sources with knowledge of the matter told the Guardian.
Instead of promoting an expensive buildout of fiber optic networks – as the Biden administration sought to do – Lutnick has said he wants states to choose the internet technology that would be low cost for taxpayers.
That, experts agree, would favor satellite companies like Musk's Starlink. Musk, whose company owns about 62% of all operating satellites, has not hidden his disdain for Biden-era program, telling voters last year that he believed it should be brought down to 'zero'.
Sources spoke on the condition of anonymity because of the sensitivity of the matter.
Experts generally agree that using satellite services costs less to connect difficult-to-reach homes than fiber. But fiber also provides a more reliable, faster and less expensive option for consumers.
Any change to the program could face substantial pushback from states and Congress, including Republican senators who have previously sought assurances from administration officials that the federal program, which is expected to generate billions of dollars in long-term economic growth across some of the poorest states in the US, would largely be left alone.
The so-called Bead program (which stands for 'Broadband Equity Access and Deployment') was passed with bipartisan support in 2021 and aimed to connect 25 million Americans to high-speed internet. Under the Biden plan, states were left to make their own plans, request federal funding and hold competitive bids for internet service providers that would build the network. Given different choices of how to connect homes to high-speed internet, the Biden administration said it wanted states to build fiber optic networks, which are expensive to set up but are considered reliable and can offer affordable rates to consumers. In cases where fiber optic networks were too expensive to build, states could opt for cheaper options, like using satellite.
'I don't think there is doubt that Bead will continue,' said Blair Levin, policy advisor to New Street Research, a telecommunications and technology analysis firm. 'What is in doubt is whether people get a long-term solution or something that is definitely good for Elon Musk.'
Lutnick has told commerce officials that he wants Bead to be 'tech neutral', which means not favoring one technology over another. It is unclear whether Lutnick would try to force states to choose satellite service over others.
Such changes – which would probably be challenged by individual states – would radically alter a program that has faced some criticism but has generally been embraced by both Republican and Democratic governors across the US, who have been expecting to receive billions of dollars in federal funding. The funds would provide an economic lifeline that, according to estimates by Pew, would connect an estimated 56m household in mostly rural communities who are unserved or underserved to high-speed internet. Pew also estimates that the program, as it stands now, would generate at least 380,000 new jobs and fuel more than $3tn in economic growth.
The commerce department did not respond to a request for comment.
'The driving force behind Bead was parity. Can you get internet service in rural Wyoming what you can get in suburban Denver?' said one analyst who requested anonymity because they are providing advice to some states on the issue. 'Fiber is utterly critical. If the internet is the most important infrastructure asset a state has, and you are using satellite, then it means you are not building something in your state. It can be turned on and off by the satellite provider.'
Any dramatic change to the federal program also raises legal questions. States have spent years planning for Bead, including holding competitive bids for companies to build fiber networks. It is unclear whether the commerce department can force these states to restart their planning from scratch. The overriding criticism of the Biden program is that the bureaucracy took too long, and that not a single household has yet been connected to high-speed internet yet. The Trump administration might argue that states may as well start again to benefit taxpayers.
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For states like Louisiana, which was poised to receive $1.355bn under the Biden program and was the first state to get full approval for its plan, any change could upend estimates that the fiber optic build-out would drive $2bn to $3bn in economic growth for the state and between 8,000 and 10,000 new jobs. Planned investments, like a $10bn AI center that is poised to be built by Meta in Richland parish, a poor farming region in the north-east corner of the state, would depend on fiber optic connections. In a recent letter to Lutnick, the Louisiana governor, Jeff Landry, said the state would be ready to break ground on its fiber optic network within the first 100 days of the administration.
The top Louisiana official working on the program, Veneeth Iyengar, has said about 95% of the state's funds will be used to build fiber, and the remaining 5% will be used for cable, fixed wireless and satellite.
Trump administration officials have balked at the program's price tag.
Musk made his views about the program clear at a town hall meeting in Pittsburgh last October, before the election. When he was asked about what he would do to help make the government more efficient, Musk immediately raised Bead as an example of a program he would cut.
'I would say that program should be zero,' he quipped at the time, while also suggesting that his own satellite company, Starlink, could provide internet connectivity to rural homes at a fraction of the connectivity cost.
Starlink did not immediately respond to a request for comment.
Some Republican senators asked Lutnick about his views on Bead during his confirmation hearing, but he offered no promises. When Republican senator Dan Sullivan of Alaska asked Lutnick whether he could assure him that commerce would not rely on Starlink 'as a solution to all of our problems', Lutnick declined to answer, saying only that he would work to pursue the 'most efficient and effective solutions for Alaskans'.
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