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The Issue: The 2021 Infrastructure Investment and Jobs Act (IIJA) included a bold $65 billion investment in modernizing and expanding U.S. broadband infrastructure. These investments were subject to “Buy America” requirements which promoted domestic manufacturing of key inputs to broadband infrastructure in an effort to spur job growth and private investment. Purely domestic sourcing has proved impractical, and federal implementers of the IIJA have pursued a series of waivers to “Buy America” requirements which create carveouts to allow for the sourcing of some inputs from abroad. This report tracks the progress of these waivers and assesses how they fit into the broader U.S. economic security landscape.
The Infrastructure Investment and Jobs Act (IIJA), commonly known as the Bipartisan Infrastructure Law (BIL), was enacted on November 15, 2021. Heralded as a “a once-in-a-generation investment,” it authorizes $550 billion in additional spending for dozens of new infrastructure-related initiatives across the United States.
The IIJA melded several key economic security policy objectives. First, it sought to rebuild America’s roads, bridges, and rails—the bedrocks of domestic supply chains and services and important keys to the global competitiveness of American companies. Substantial further investments, on the scale of tens of billions of dollars each, were made to expand access to clean water and broadband internet, modernize the U.S. power grid, and expand airports and ports, among a host of other applications. One overarching objective was to invest in the “forgotten” communities of the United States. Lastly, the worker-centered economic agenda was designed to create as many good-paying union jobs for Americans as possible, aided by the inclusion of “Buy America” requirements for much of the materials necessary to carrying out these upgrades to the nation’s infrastructure.
With this laundry list of priorities, inevitable tensions arise. The imposition of Buy America requirements stemmed from the understanding that U.S. sources would not be the default for many of the inputs for this work. Foreign sources are often more cost-efficient for many materials required for the IIJA’s projects, from concrete to broadband equipment. By requiring that these materials be sourced domestically, the bill can cause buyers to experience higher materials costs in the short term, lessening the reach of IIJA investments in American communities. The promotion of union labor, popular with the workforce due to employment security, increased wages, and bargaining power, can also exacerbate the expense of necessary inputs. Furthermore, applying sourcing restrictions that reduce the availability of green goods and technologies from China—the dominant producer of solar panels, wind turbines, and batteries—is likely to slow the green energy transition in the United States. The story of IIJA implementation is in large part the story of federal agencies and departments grappling with these tradeoffs.
The IIJA’s broadband provisions illustrate the relationship between the impact of Buy America requirements on IIJA implementation and the technological competitiveness of U.S. industry. The act invests $65 billion to expand broadband in rural areas and low-income communities, with the stated goal of ensuring that “all Americans have access to affordable, reliable, high-speed internet service.” According to OECD data released before IIJA implementation, Americans pay some of the highest broadband costs in the world, and, according to a June 2023 White House report, more than 8.5 million households and small businesses do not have access to high-speed internet. The IIJA’s broadband investments are designed to promote the deployment of new broadband infrastructure in underserved areas while also lowering broadband costs. This funding falls into six major program areas:
The centerpiece of the broadband funding, BEAD is administered by the National Telecommunications and Information Administration (NTIA). It provides each state, the District of Columbia, and Puerto Rico with at least $100 million, with additional funding granted via a formula-based need calculation. These funds can be used for the planning and deployment of broadband infrastructure, as well as for the promotion of broadband adoption through the provision of affordable internet-connected devices or internet access to multifamily housing units. Communities with internet speeds below 25 megabits per second (Mbps) downstream and 3 Mbps upstream (considered “unserved”) are the highest priority; those with speeds below 100 Mbps downstream and 20 Mbps upstream (“underserved”) are of secondary priority. BEAD funds are intended primarily for the deployment of end-to-end fiber projects, though they may also support the use of alternative technologies, such as low Earth orbit satellites, in limited cases.
Administered by the Federal Communications Commission (FCC), the ACP directly provided internet service providers (ISPs) with funds to give qualifying low-income families a $30 monthly discount on internet services ($75 on tribal lands). It also provided a $100 discount on tablets, laptops, and desktops for eligible households. The program ran out of funds on April 30, 2024, and efforts to extend funding have not been successful in Congress as of publication.
These are three related grant programs administered by the NTIA with the shared goal of promoting equity of access to the digital economy. In particular, this program distributes funds to states, territories, and tribal governments and organizations for the purpose of promoting “meaningful adoption” of broadband technologies by “low-income households, aging populations, incarcerated individuals, veterans, individuals with disabilities, individuals with a language barrier, racial and ethnic minorities, and rural inhabitants.” The largest chunk of this funding ($1.44 billion) is allocated via a need-based formula, with most of the remaining funds distributed via a competitive grant process. The NTIA announced an $811 million allocation from the $1.44 billion in March 2024 and is expected to begin issuing competitive awards around January 2025.
Also directed by the NTIA, this program provides tribal governments with funds to deploy broadband on tribal lands, in addition to promoting telehealth, distance learning, broadband affordability, and digital inclusion. TBCP awarded $1.78 billion in a first round of funding, and, as of August 2024, the NTIA was considering applications for nearly $1 billion more in grants.
Unlike the vast majority of IIJA broadband funding, this program is administered by the Department of Agriculture (USDA). The ReConnect program predates the IIJA, having been initially created by Congress in 2018. Through combinations of loans and grants, it provides funding to construct, improve, and expand broadband infrastructure in rural areas where at least 90 percent of households lack 25/3 Mbps internet speeds. These funds are available not only to state and local governments, but also to corporations or nonprofits operating in these rural areas. Proposed networks must serve all premises in the area with 100/100 Mbps speeds. To date, the USDA has invested a total of $5.12 billion through the program.
Also administered by the NTIA, this program seeks to reduce the cost of connecting rural and underserved areas to broadband infrastructure by improving the U.S. internet backbone. The NTIA defines middle mile infrastructure as “the mid-section of internet infrastructure that carries large amounts of data at high speeds over long distances.” These improvements will not target end users, but rather the high-speed networks that connect communities to the rest of the country. All of the funding was allocated by the summer of 2023 to a combination of government and corporate recipients, and the first project—a 645-mile fiber network connecting Reno, Nevada, with rural areas in Oregon and California—broke ground in June 2024.
While investment in domestic manufacturing is understandably an important focus of the IIJA, these massive expansions in broadband infrastructure have broader implications for U.S. economic security. Some studies have linked broadband adoption in rural areas to higher incomes and economic growth. Particularly as employment, healthcare, and educational resources have become increasingly available online in the aftermath of Covid-19, access to high-quality internet has become essential to opportunity and full participation in economic and social life.
Promoting American manufacturing through the federal procurement and grantmaking process has been a powerful policy tool as the United States has sought to secure its supply chains and strengthen its domestic economy. The trillions of dollars invested through the IIJA, the Inflation Reduction Act, the CHIPS and Science Act, and other legislation have been seen as a “dual opportunity to create good jobs in both construction and manufacturing” in the United States. These aims were made explicit in Executive Order (EO) 14005 (issued by President Biden in early 2021), which declares that “the United States Government should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.” The EO builds upon the corpus of what it terms “Made in America Laws,” which include the Buy America Act of 1978 (part of the Surface Transportation Assistance Act), the Buy American Act of 1933 (BAA), the Jones Act of 1920, and a host of related statutes and regulations.
The BAA, signed by President Herbert Hoover, is specific to direct procurement by the federal government, while the 1978 law and its related statues deal with federal financial assistance for transportation infrastructure such as highways, railways, and airports. Each law must also make distinctions about what qualifies as an American product: In the BAA, “(i) the item must be manufactured in the United States, and (ii) more than 55 percent of the cost of all the component parts is also manufactured in the United States.”
Waivers or exceptions to the various “Made in America Laws” have existed for decades, as there are numerous cases in which it may not be feasible or in the government’s best interest to strictly enforce rules that require all materials to be domestically sourced. The Federal Acquisition Regulation (FAR), which took effect in 1984 and governs U.S. government procurement, recognized potential exceptions to the BAA. The table below also includes the Office of Management and Budget (OMB)’s interpretations of FAR exceptions, giving insight into how they are understood with respect to IIJA broadband programs.
Federal agencies have traditionally been charged with individually issuing waivers under one of the six categories delineated above. For example, the DOD uses a “public interest” waiver to forgo the BAA requirements in cases where they conflict with efforts to promote harmonization of defense equipment with partner militaries pursuant to reciprocal agreements. EO 14005, which—as noted above—established organizing principles for promoting domestic procurement, seeks to bring more order to this piecemeal system by establishing the Made in America Office (MIAO) within the OMB. The MIAO’s chief responsibility is to review waivers to Made in America laws that are issued by federal agencies’ requirements. By centralizing the waiver process, the MIAO is designed to promote consistency throughout the federal government, serve as a hub for improved data collection to inform waiver decisions, and introduce more transparency into the waiver system for the benefit of domestic producers. OMB predicted at the time that these advantages would “increase U.S.-made content and limit the use and impact of waivers” over time.
The passage of the IIJA provided statutory authority to MIAO and significantly altered the scope of Made in America laws in the United States. Contained within the act are the “Build America, Buy America” (BABA) provisions, which extend Buy America rules to several of the IIJA’s important material inputs. BABA required that no later than May 14, 2022—180 days after the enactment of the IIJA—the head of each covered federal agency should ensure that “none of the funds made available for a federal financial assistance program for infrastructure, including each deficient program, may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.” U.S. inputs must make up more than 55 percent of the total cost of manufactured components. This number will gradually increase to 75 percent by 2029.
Notably, these requirements apply to all infrastructure projects receiving federal funding going forward, not just to those funded by the IIJA. The MIAO instructs agencies to interpret the term “infrastructure” broadly, with broadband infrastructure explicitly included. The waiver system established by BABA roughly follows that of the BAA, defining three cases in which federal agencies can apply waivers:
(1) Applying the domestic content procurement preference would be inconsistent with the public interest (a “public interest waiver”);
(2) Types of iron, steel, manufactured products, or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality (a “nonavailability waiver”); or
(3) The inclusion of iron, steel, manufactured products, or construction materials produced in the United States will increase the cost of the overall project by more than 25 percent (an “unreasonable cost waiver”).
In addition to fitting within one of the three waiver categories, the MIAO requires that waivers should also be limited by project or time constraints and targeted to specific necessary products. This guidance must also be applied in a manner consistent with the obligations of the United States under its international agreements. Agencies must post their proposed waivers for public comment for at least 15 days, after which waivers are submitted to the MIAO to determine whether they are consistent with government policy. The results of these reviews are now posted in a database on the MIAO’s website.
The buildout of broadband infrastructure under the IIJA’s programs is heavily reliant on the supply of two crucial inputs—fiber-optic cables and electronics—which had predominantly been sourced from abroad in the years before the implementation of the IIJA. As the rollout of the IIJA progressed, it became evident that domestic production alone would not meet the demand for these two inputs. The Department of Commerce has selectively employed waivers to address these supply chain concerns, seeking to ease supply burdens on IIJA programs while still incentivizing some domestic production.
Absent waivers, all of the iron, steel, manufactured products, and construction materials used for the IIJA’s broadband programs would be subject to BABA requirements. Importantly, “construction materials” has been construed by OMB to include fiber-optic cable and optical fiber, key components of broadband infrastructure. Fiber-optic cable is the means by which the vast majority of electric signals are transferred from one location to another, forming the backbone of the internet. Tiny pulses of light that pass through these fibers communicate everything that traverses the internet, from emails to YouTube videos—and this reliance on light is what gives these cables the distinction of being “optical.”
At the time of implementation, there was strong industry pushback against the application of BABA restrictions to the broadband sector. Commenters on OMB’s rulemaking proposal asserted that the United States lacked sufficient domestic production capacity in several key broadband components to comply with BABA requirements for BEAD and other broadband programs. Indeed, around the time of the IIJA’s passage, there had been a shortage of fiber-optic cables and optical fiber for several years due to global supply chain issues—which commentors predicted would continue for several more years. Increased demand for fiber driven by the IIJA’s investments could potentially worsen supply chain concerns. A 2023 OMB report noted one corporate commenter’s protest that “even with the doubling of its domestic optical fiber capacity … it would still need to supplement its optical fiber production from Japan and Denmark, its preform inputs from Germany and Japan, and its fiber optic cable and optical connectivity from Mexico.” There are only three companies that make BABA-compliant optical fibers in the United States: STL, OFS, and Prysmian.
Another area of concern was the supplying of electronics, which send, route, and receive all signals passed through broadband networks. Crucial equipment includes optical line terminals (OLTs), remote optical line terminals (rOLTs), optic pluggables, routers, switches, and power systems. Radios and antennas used for the wireless transfer of data are also critical to serving locales that cables do not reach. All of the above are heavily reliant on semiconductors, which often make up more than 70 percent of the total value of a given electronic product. Given the United States’ well-documented reliance on foreign sources for semiconductors, the application of BABA requirements to electronics would exclude many U.S. manufacturers who would be unable to meet the standard that 55 percent of a product’s value be produced in the United States. Though the CHIPS and Science Act promises to build up domestic semiconductor manufacturing capacity in the long term, it is not likely to see results within the BEAD program’s shorter timeline.
In February 2023, the Department of Commerce’s NTIA sought to address these concerns via a nonavailability waiver for the BEAD Program after determining that certain manufactured products and construction materials are not produced in sufficient quantities in the United States. It provides a waiver of Buy America preference requirements for BEAD funds recipients for the following inputs:
This waiver significantly eases the supply chain difficulties associated with the BEAD program by allowing for foreign sourcing of key fiber-optic cable inputs and many relevant electronics. In both areas, the government has left restrictions in place that promote domestic procurement in selected viable sectors. Though the waiver reduces the total percentage of the value chain that will be sourced by U.S. companies, its aim is to find a middle ground that ensures the BEAD program can be successfully implemented.
The nonavailability waiver described above applies to all funding distributed via the BEAD Program and will lapse once the program’s funding is exhausted. It does not apply to any other broadband funding, authorized by the IIJA or not. However, the NTIA has also issued a similar nonavailability waiver that applied to the $1 billion Middle Mile Grant Program (MMG) from March 1, 2023, to March 1, 2024. Perhaps owing to the smaller amount of funds available for MMG relative to BEAD, the NTIA’s waiver for MMG is somewhat broader and does not carve out exceptions where expanded U.S. manufacturing must replace foreign sources of electronics. For example, the BABA requirements for both OLTs and rOLTs are waived in the MMG waiver, while they were specifically not exempted in the BEAD waiver. The only crucial inputs to middle mile infrastructure that are explicitly not included in the MMG waiver are fiber-optic cable and optical fiber, which is consistent with the BEAD waiver.
The NTIA also issued a limited public interest waiver for the Tribal Broadband Connectivity Program (TBCP), which effectively deferred all BABA requirements for recipients of the first TBCP Notice of Funding Opportunity, which had an application due date of September 1, 2021. This waiver was not motivated by domestic sourcing concerns, but rather by equity: Regulators were concerned that fund recipients would be subject to drastically varying requirements, depending on whether they received the funding before or after May 14, 2022, when BABA came into force. All other IIJA broadband programs have not received meaningful waivers of BABA requirements as of this publication. In fact, a USDA waiver that delayed the implementation of BABA requirements for the former’s rural development programs for a period of six months after August 4, 2024, did not include the $2 billion ReConnect Program that is under the USDA’s jurisdiction. This omission was explicitly in response to a comment letter that the USDA received from Corning Incorporated, a major domestic producer of fiber-optic cable, which asserted that domestic production of optical fiber and fiber-optic cable would be sufficient to meet the program’s needs.
BABA requirements have undeniably bolstered domestic investment, manufacturing, deployment, and job growth: In March 2023, CommScope and Corning announced that they were investing “a combined nearly $550 million and creating hundreds of new jobs in America to build the fiber optic cables that will help close the digital divide.” STL—a leading optic fiber firm based in India—has invested $56 million in the United States since September 2023 and has opened a new North American headquarters in South Carolina, creating a reported 125 jobs. OFS, a Georgia-based subsidiary of the Japanese conglomerate Furukawa Electric Group, invested at least $139 million in an expansion of optical fiber and fiber-optic cable manufacturing that was already “fully operationalized” by 2022. It was projected to bring about 100 new jobs to the Atlanta area.
Even with the February 2023 BEAD waiver, the NTIA still estimates that close to 90 percent of the equipment purchased under BEAD will be made in the United States. This estimate may hide the fact that high percentages of the value of these products will come in goods purchased overseas (like semiconductors), an arrangement encouraged by the BEAD waiver’s removal of the 55 percent content requirement. The hundreds of jobs created through these investments may have political value, but they make only a small difference in overall labor statistics. However, the government estimates that BEAD will create 150,000 jobs overall. As with the CHIPS and Science Act’s investments, there is serious concern that the U.S. workforce may not be able to supply enough workers with the appropriate skillsets to carry out the program’s goals. The Telecommunications Industry Association has launched an initiative known as “Broadband Nation” which seeks to close this skills gap; it remains to be seen whether labor issues will impede the ambitious goals of BEAD. The cost per job is high for the government: Even if BEAD creates 200,000 jobs, the program will have spent roughly $212,000 per position to deliver them. While there are certainly cheaper ways to go about creating job growth, this figure seems justifiable given the myriad other benefits in infrastructure development and economic security that BEAD provides.
The February 2023 waiver seems to have been successful in striking an appropriate balance between promoting domestic manufacturing and allowing the IIJA’s broadband infrastructure programs to proceed without undue barriers—it even appears to be popular with the telecom industry. Nokia, the Finnish telecommunications giant that provides supplies for 70 percent of U.S. broadband connections, has been a first mover in the production of Buy America–compliant products. Working with U.S.-based electronics manufacturer Samina, Nokia’s first OLT cards began shipping in April 2024 from the Samina manufacturing line in Kenosha, Wisconsin. A similar partnership is underway between Nokia and Fabrinet in Santa Clara, California, to produce optical modules. Sweden’s Ericsson, the third-largest telecom equipment manufacturer in the world (after Huawei and Nokia), advertises that the “5G radios and basebands made in [its Texas factory] are BABA-complaint with or without the BEAD non-availability waiver.” This claim points to what would be a welcome dynamic for U.S. policymakers: firms competing against each other to go beyond the minimum standards for BABA as circumscribed by the BEAD waiver. Such credentials, while not required, could plausibly help Ericsson win bids from states or other government entities.
The reaction from trading partners has been relatively muted, incurring no discernable retaliatory action. On the European front, the IRA has drawn much more ire than the IIJA. German Economy Minister Robert Habeck spearheaded an effort to enforce local content requirements in response to the IRA’s $369 billion in subsidies and tax breaks for American green businesses. French President Emmanuel Macron has called for a “Buy European” movement repeatedly since the passage of the IRA in August 2022. There has thus far been no significant progress in actualizing these aims. China, too, has been mum on U.S. purchasing restrictions, which fall in line with other recent policy shifts away from Chinese technologies.
Separate from BABA requirements, the IIJA requires that “fiber optic cable and optical transmission equipment manufactured in the People’s Republic of China” may not support its infrastructure projects unless waived because of unreasonable cost discrepancies—a waiver the Commerce Department does not plan to grant. Chinese telecom giants Huawei and ZTE were fully banned in 2022 by the FCC after a decade of warnings—predating the BEAD—about national security risks; the IIJA’s provisions, therefore, did not come as a surprise. However, these Chinese options are both cheaper and popular throughout the developing world, and will likely continue to be the standard in those nations over more expensive BABA products.
The IIJA has succeeded in bringing some parts of the broadband supply chain to the United States, a boon for economic security. Whether the United States can become a successful exporter of these goods is another question entirely. In the near term, domestic manufacturers will be busy fulfilling the dramatic investments of BEAD and the other IIJA broadband programs. BEAD is expected to run until 2030, and the implications of these investments for the public and the manufacturing community are only just beginning to be felt. Despite this optimistic moment, the long-term viability of the jobs and supply chains created by the IIJA and BABA should be considered. This is the largest investment in broadband in the nation’s history, and another should not be expected for quite some time. After these transformative upgrades to the United States’ broadband infrastructure, there is a serious possibility that demand for additional fiber-optic cable or OLTs will be much lower in the 2030s. Further, advances in broadband technology may also leave some of these newly flourishing domestic sectors out of future networks, though there is no indication of that at present. With higher prices making it difficult to export these goods to other markets, will these jobs and factories stay profitable? Or will they return to foreign sourcing once unburdened by BABA? Policymakers should continue to concern themselves with these questions.
Evan Brown is the program coordinator and research assistant for the Economics Program and Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS). Thibault Denamiel is a fellow with the Economics Program and Scholl Chair in International Business at CSIS.
This report is made possible by generous support from Amazon.
