Managed by the National Telecommunications and Information Administration (NTIA), BEAD aims to bring fibre networks to the most underserved parts of the U.S., democratizing access to reliable, high-speed internet.

Now more than four years later, NTIA is awarding funding to states and U.S. territories, who in turn are allocating sub-grants to individual projects proposed (and to be constructed and operated) by broadband and telecommunications companies. However, while these companies have now spent more than three years proposing, revising, and re-proposing projects, receiving a BEAD sub-grant is not the end, but rather the beginning of another, even larger effort.

These operators must now manage fibre buildouts, source broadband facilities and equipment, contract with labour forces, interact with state and local permitting offices, and overcome numerous obstacles to deploy broadband projects in often rural and frequently neglected locations. On top of this, sub-grant recipients come in all shapes and sizes, from Tier 1 telecommunications firms operating across the country to small, legacy providers who may be present in just one corner of a state.

In order to best utilise BEAD sub-grants, even for those providers that may not have the resources or capacity to leverage this funding like other larger operators, we believe that the following considerations should be considered to fully take advantage of this funding opportunity.

The legal ramifications of BEAD

To operators that receive BEAD funding: Be wary of what you signed up for. BEAD grants come with a plethora of legal requirements that require a careful, nuanced understanding of applicable rules to ensure fibre projects meet an ever-changing set of legal standards.

For example, in June 2025, BEAD was substantially changed with the issuance of the Restructuring Notice. Among other things, the notice removed the program’s fibre preference, cut back on reporting and documentation requirements, and eliminated various labour, environmental, affordability, and diversity-related requirements. This required every state and territory to retool programs and substantially changed how providers were approaching the program. Further, BEAD, as well as many other federal broadband programs, require Build America, Buy America (BABA) compliance, which, at its most basic, requires equipment and parts purchased using federal funds to be sourced domestically. For BEAD, these requirements have gone through numerous changes as broadband providers and advocates lobbied NTIA to ease some of these procurement requirements, particularly given long-lagging supply chain shortages, historic and more recent inflationary pressures, and other industry demands, caused in large part from AI and data centre expansion.

Notwithstanding these changes, it would not be surprising if further on-the-fly changes are made to the program, particularly given recent international developments that have further exacerbated supply chain shortages and increased inflationary effects.

Given these considerations, broadband and telecommunications companies of all sizes will need outside legal support to navigate existing and future legal complexities.

For example, state draft BEAD sub-agreements identify, among other things, federal government guidelines and terms by reference. Given federal regulatory requirements, these obligations cannot be excluded or negotiated, and before signing on, those terms should be carefully reviewed in order to understand the full extent of ongoing obligations.

Further, federal broadband programs have increasingly taken a harder, less understanding look at buildout defaults, and we expect BEAD, particularly given the administration’s focus on ensuring the Benefit of the Bargain, to hold providers to buildout commitments. Before signing up for a sub-grant, providers should ensure they are capable of meeting those obligations and also review to make sure that state officials haven’t made any mistakes regarding location identification.

As with the other federal broadband programs, states’ sub-award agreements require extensive documentation, which may be requested by the relevant broadband office or NTIA to support deployment, fund matching, eligible expenses, and many other areas. Enacting policies and procedures to ensure that documents are correctly produced and retained is a critical aspect of program compliance. With other federal programs, some companies have been able to meet buildout obligations, but because they failed to maintain clear and sufficient documentation—which can be requested years after deployment completion—they have started to run into compliance issues.

These are just a few of the legal issues arising as broadband and telecommunications companies consider whether to officially sign up for their BEAD sub-grant—and we expect further legal complexities to develop over the lifecycle of the BEAD program.

The capacity constraint

For many companies (especially smaller operators), a BEAD sub-grant may double or triple their footprint, which can present many difficulties. Such a funding opportunity can be the opening for a platform to scale up, increase its value, and extend its organic growth period.

However, as we covered in our 2024 article, “The 5 uncomfortable truths of the BEAD program,” rural areas present unique challenges for successful fibre rollouts: low population density, vast distances between locations, and varying topography that makes laying fibre a high-capital endeavour. It is critical that fibre companies stay in constant communication with vendors, contractors, and local authorities to ensure success, and that their tech stack can support the increased footprint.

A second capacity constraint ties into the rise of AI. Since BEAD was announced, we have witnessed an explosion in AI advancement and data centre expansion, which also necessitates vast fibre networks. This has led to a crunch in terms of build and deployment capabilities. Companies will need to ask themselves if they can secure a delivery force to meet BEAD commitments alongside teams to meet ballooning data centre operations.

Prime time for fibre M&A

As a result of the legal and capacity questions raised above, the time is ripe for more mature fibre platforms to buy up smaller companies receiving BEAD funding before they start building. According to AlixPartners’ 2026 U.S. Fibre Consolidation Sentiment Index, 82% of operators expect industry consolidation over the next 12 months, and 95% believe M&A activity will focus on companies with less than 500,000 fibre passings.

Scaling up small operations to deliver on the commitments of BEAD will not be easy, and supply chain challenges, AI expansion, and labour shortages will only present greater challenges for smaller providers. Larger firms already have the capability to meet many capacity constraints, and by integrating smaller companies into their networks, they can increase the efficiency and efficacy of fibre deployment projects. While fibre companies often assume mergers will lead to challenges around combining network operations and technology, integration is actually less difficult if assets are small enough and have a pure fibre play.

The key is finding the right partner and aligning business strategies to best combine and leverage collective resources.

This article was written by Andrew Lipman, Partner at Morgan, Lewis & Bockius LLP, and Andrej Danis of AlixPartners.

RELATED STORIES

Metro Connect 2026: Andy Lipman’s top 10 things to watch in a broadband market on fire

The 5 uncomfortable truths of the Broadband Equity, Access, and Deployment Program (BEAD)