Companies Generally Pleased With Proposed BEAD Buy America Waiver

Build America, Buy America (BABA) requirements imposed on participants in the broadband, equity, access and deployment program will inevitably slow deployment, said Technology Policy Institute President Scott Wallsten Wednesday. Other speakers said during a Broadband Breakfast webinar NTIA’s proposed partial waiver of the requirements is helpful, and their companies are ready to comply with the rules (see 2308220081).

“The goal of BEAD is to build as much broadband as possible,” Wallsten said: “That is what BEAD is supposed to do. Every condition you put on it, no matter how good you think that condition is, is a cost to BEAD and means that less broadband will be built.”

The NTIA waiver should be as broad as possible to encourage deployment, Wallsten said. The government provided a broad buy American waiver as part of the Broadband Technology Opportunities Program a decade ago, but that wasn’t likely for BEAD given the current political climate, he said: “It’s a more populist time now, so it’s not going to happen.”

Nokia started working on addressing the BABA requirements 18 months ago and took them “very seriously,” said Lori Adams, vice president-broadband policy and funding strategy. Nokia said Aug. 3 it will open a U.S. plant to domestically manufacture fiber products for use in the BEAD program (see 2308030076).

The administration had made clear it wouldn’t provide a blanket waiver of the buy American requirements, Adams said. But President Joe Biden’s comments on the topic in his State of the Union address in February were “so much more emphatic than what I was expecting,” she said. NTIA made clear shortly after it would issue a partial waiver only after it fully explored “what is possible,” she said.

“We leaned in and spent thousands of hours examining supply chains and products,” Adams said. “We talked to customers in almost all the states, and other stakeholders, to make sure that our decisions were informed and appropriate for BEAD,” she said. With the release of the partial waiver last week, Nokia products are now “fully compliant” with the BABA rules, she said.

Adtran recently called attention to its efforts, noting increased investment in its Alabama plant as it “onshores” more of its production (see 2308160067). “This is something that if you told us that, ‘Hey, you guys need to be ready this year,’ no problem -- we’d be there,” said Robert Conger, general manager-software platforms and strategy. BABA requirements “are more just an extension of what we were doing.”

Optical pluggable modules would typically not be manufactured in the U.S. but will now be made here by Adtran, as part of a $5 million investment, Conger explained. Adtran made optical line termination (OLT) electronics here, “but that’s not necessarily the case with everybody else,” he said. Adtran announced it would expand production of OLT gear and also onshore the manufacturing of optical network terminals (ONTs). Its cabinets for electronics will also now be made in the U.S., while in the past they were made partially here and partially overseas, he said.

DZS “never left the U.S.,” said Bill Sproull, consultant to the Texas-based fiber and optical technology provider. DZS is the only company that has “BABA-compliant OLTs, ONTs available right now,” he said. “We’re ready to certify,” he said.

Sproull said the waiver was “well crafted” and NTIA staff did “a really thoughtful and thorough job of trying to understand our industry, trying to understand the products and the nuances, the challenges that we were facing on electronics.”

Costs are already rising, with fiber up 15% in a year and the cost of wireline network equipment increasing for the first time in decades, Wallsten said. Countries other than the U.S. are constantly imposing requirements for making products at home as a part of similar programs, he said: “It never works,” though “it generates large political benefits.”

DZS has found U.S. production costs are economically competitive, Sproull said. When DZS shifted some production to Fabrinet in California it found that company “can produce twice as much with the half the resources -- they’re highly efficient,” he said. Customers like to buy U.S. products, he said: “We’re more responsive. We’re closer to them. They can come and see our plants. … It’s not just an increased cost.”

If the buy American requirements didn’t add to the costs, they wouldn’t need to be a requirement, Wallsten said. The administration hasn't done a cost-benefit analysis to say what the costs will be, he said. That’s not a criticism of NTIA, since Congress made it a requirement for BEAD when it passed the Infrastructure Investment and Jobs Act, he said. “The goal here is to build broadband, and we want to build as much of it as possible,” he said.