The Trump administration is preparing to overhaul a $42.5 billion Biden-era program designed to connect tens of millionaire Elon Musk to trust and affordable high-speed internet.
Howard Lutnick, the secretary of the Department of Commerce, who oversees the federal program, recently told senior officials within the department that he wanted to make major changes to the federal program, a source with knowledge of the matter told the Guardian.
Instead of promoting expensive build-outs of fiber optic networks, as the Biden administration tried to do, Lutnick says he wants to choose low-cost internet technology for taxpayers in the state.
Experts agree that agreeing would support satellite companies like Musk’s Starlink. Musk, which owns the company, owns around 62% of all operating satellites, told voters last year that they believed voters should be defeated by “zero.”
Sources spoke on condition of anonymity due to sensitivity to the issue.
Experts generally agree that using satellite services makes it costly to connect homes that are more difficult to reach than textiles. However, fiber offers more reliable, faster and cheaper options for consumers.
The change to the program could face a significant backlash from states and Congress, including Republican senators who sought guarantees from administration officials that federal programs expected to generate billions of dollars in long-term economic growth in some of the poorest states in the United States are largely expected to remain alone.
The so-called Beads Program (short for “broadband equity access and deployment”) was passed in 2021 with bipartisan support and aimed to connect 25 million Americans to the high-speed internet. Under the Biden plan, the state was left to plan its own, request federal funding, and hold competitive bids for internet service providers that build the network. Given the various options for how to connect your home to high-speed internet, Biden Administration said the state hopes to build a fiber optic network that is considered expensive to set up but reliable, and that can provide affordable rates to consumers. If the fiber optic network is too expensive to build, states can choose cheaper options, such as using satellites.
“I don’t think there’s any doubt that the Beads will continue,” said Blair Levin, policy advisor at Newstori Research, a telecommunications and technology analytics company. “The questionable is whether people will get a long-term solution or something that’s definitely good for Elon Musk.”
Lutnick told Commerce officials that he hopes Bead is “technically neutral.” It is unclear whether Lutnick will force the state to choose satellite services over others.
Such changes will likely be challenged by individual states — radically alter programs that have faced some criticism but have generally been accepted by both Republican and Democrat governors across the United States. The funding provides an economic lifeline that connects an estimated 56 million households to high-speed internet in unrelated or underserved rural communities. The program, as it is currently, is estimated to generate at least 380,000 new jobs and fuel over 3tn of economic growth.
The Commerce Department did not respond to requests for comment.
“The driving force behind the beads was parity. Can you get internet services in rural Wyoming? An analyst who requested anonymity because he is providing advice to several states on the issue said. “The textiles are absolutely important. If the internet is the most important infrastructure assets that a state has and you are using satellites, that means you are not building anything in your state. You can turn it on/off by a satellite provider.”
Dramatic changes to federal programs also raise legal issues. The state has spent years planning Beads, including holding competitive bids for businesses to build fiber networks. It is unclear whether the Commerce Department can force these states to reopen from scratch. The top criticism of the Biden program is that the bureaucracy is taking too long and a single household is not yet connected to high-speed internet. The Trump administration may argue that states could start again to benefit taxpayers.
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Possibly poised to receive $1.355 billion under the Biden program and in states like Louisiana, the first state to get full approval for the plan, it could estimate that fiber optic build-outs will drive $2 billion to $3 billion for state economic growth and 8,000 to 10,000 new jobs. Planned investments like the $10 billion AI center poised to be built by the Richland Diocese Meta on the northeast corner of the state rely on optical connections. Louisiana Governor Jeff Landry said in a recent letter to Lutnick that the state is ready to break through the ground with its fiber optic network within the first 100 days of the administration.
Veneeth Iyengar, a Top Louisiana official working on the program, said about 95% of the state’s funds will be used to build textiles, while the remaining 5% will be used for cables, fixed wireless and satellites.
Trump administration officials are balking to the program’s price tag.
Musk revealed his views on the program at a Town Hall Conference in Pittsburgh prior to the election last October. When asked about what he would do to make the government more efficient, Musk quickly grew beads as an example of a program he would cut.
“I think the program should be zero,” he said at the time, suggesting that his own satellite company, Starlink, can provide internet connectivity to rural homes with just a small portion of connectivity costs.
Starlink did not respond immediately to requests for comment.
Some Republican senators asked Rutnick about his views on Beads at his confirmation hearing, but he did not offer a promise. When Alaska Republican Sen. Dan Sullivan asked Lutnick if he could guarantee that commerce would not rely on Starlink “as a solution to all our problems,” Lutnick replied that he would only work to pursue “the most efficient and effective solution for Alaskans.”
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