Some BEAD Winners Are Walking Away. What Happens Next?

With BEAD awards moving into the contract execution phase, a small but growing number of proposed subgrantees are deciding not to proceed. In some cases, companies are walking away voluntarily. In another, questions remain about what happened behind the scenes.

Nebraska. It’s Not for Everyone

In Nebraska, The Nebraska Examiner reported that three ISPs backed out “due to changes in their business plans.”

The three BEAD participants in the state that didn’t sign contracts appeared to be Amazon, Northeast Nebraska Telephone Company, and Pinpoint Communications.

 

Subgrantees Messing With Texas

The Texas Broadband Development Office (BDO) announced that 17 BEAD subgrantees have executed grant agreements. Contracts total $1,067,572,757 in funding to provide broadband service to 208,873 BSLs. 

Left off Texas’ list are four proposed subgrantees. Agreement was not reached with AMA Communications, Astound Broadband, Resound Networks, and Thrive Broadband. The most significant withdrawals involve Astound and Resound as together they represented ~$189M in proposed awards and more than 30K BSLs.

In all, Texas will revisit ~35K locations using at least part of the prior designated ~$247M. The Texas Broadband Office tells me that “The BDO is now working diligently through a competitive federally compliant process to award those remaining locations. This approach will help the state and providers identify the best overall solutions for communities in need of high-speed, reliable internet access.”


Resound Networks’ BEAD Footprint Shrinking

Resound is dropping off other states’ subgrantee lists. Most notably, New Mexico where they were in line to receive ~$60.2M in BEAD.

The New Mexico OBAE (Office of Broadband Access and Expansion), provided broadband.io with the following statement… 

  • “In the case of Resound Networks, OBAE found instances of financial misconduct and evidence that an employee of the company attempted to defraud the state. OBAE is taking appropriate actions to address the findings.” 

Misti Willock, Resound Network’s VP, Strategic Partnerships commented to broadband.io regarding the dispute…

  • “Resound is fully cooperating with New Mexico OBAE to correct any issues. Additionally, Resound has notified several states that due to organizational changes we would not be able to proceed with our BEAD awards. For employee specific matters we are unable to comment.”

The allegations can be found in this 9-page recap from the state. OBAE questioning invoices and payments that may have gone to a vendor owned by a Resound employee. According to LinkedIn, an unreliable data point, the employee in question is still employed by Resound.

Originally, Resound Networks was designated $139.1M for 89.4K locations in 7 states. Today, Resound is down to no more than ~$38.5M in potential BEAD grants. If California's awards ultimately move elsewhere, Resound would have lost or relinquished almost all of its originally proposed BEAD portfolio. A complete recap:

Rescinded

  • Arkansas $5.2M

  • Colorado $3.9M

  • Kansas $8M

  • New Mexico $60.2M

  • Texas $23.1M


Status Quo

  • Arizona $2.3M

  • Oklahoma $1.8M


Unknown (final results in limbo)

  • California $34.4M


It is unclear if Resound Networks simply made a business decision and withdrew from these states on its own. It’s certainly in the realm of possibility.  

Kansas told me that “Resound has formally rescinded their Kansas provisional awards.” 

Another, more sinister version has the states asking Resound to rescind. Regardless, allegations of financial misconduct create obvious challenges for companies seeking to secure and maintain large public-sector awards.


Starlink: Not Untenable Afterall

Finally, when speaking of agreements between states and subgrantees, despite earlier warnings that certain BEAD requirements were “untenable”, SpaceX ultimately reached agreements in multiple states.

SpaceX had previously asked state broadband offices to exempt the company from some BEAD rules around performance monitoring, something the NTIA ultimately said wouldn't fly.


Views expressed are the author’s own and do not necessarily represent the official position of broadband.io or its affiliates. Contact Doug Adams at doug@broadbandmarketers.com with any comments or questions.