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Broadband Now or Later?

I just heard about a U.S. County that is using its American Rescue Plan Act (ARPA) funds to build fixed wireless broadband. This is a traditional fixed wireless broadband technology that will probably deliver speeds of 100 Mbps to those close to the towers, slower speeds to homes further away, and which will not reach all homes in the County.

I understand why they did this. The County is listening to residents who want a broadband solution right now—and an ISP knocked on their door and offered a quick solution. I can’t fault them for this decision. But the wireless company they are partnering with is one of the larger ones and is not known for great customer service. The wireless Internet service provider (WISP) doesn’t have any customers in the area today, and one hopes the WISP will hire a few local technicians to make this work.

The County had an alternative. It could follow the lead of other counties and used its ARPA money to instead attract an ISP to build fiber to everybody in the rural parts of the county. There are several regional ISPs close to this county that would probably jump at the chance to build a fiber network that is funded by both Broadband Equity, Access, and Deployment (BEAD) grants and local matching grants. It’s my firm belief that counties that form such a partnership with an ISP and also bring local cash to the deal will be the ones that will win the BEAD grants.

But this is not an easy choice. For an area that doesn’t have broadband today, the BEAD grants sound like a far distant opportunity. It’s hard to think that any recipients of BEAD grants will be constructing networks any sooner than 2024—assuming by then that they’ll be able to get the needed fiber and electronics. Building fiber to a whole county can easily take two or three years, meaning that the last household in this county might not see fiber broadband until late 2026—or even later with supply chain issues.

The BEAD grant program is feeling agonizingly glacial to anybody in the industry. To some degree, it’s good that the grants weren’t awarded right away since most communities needed time to prepare for grants. To win the grants, somebody has to estimate the cost of building a new network, and the community must choose an ISP partner to fulfill the broadband goal. These are not things that can happen overnight.

But the processes described in the legislation to release BEAD funding are slow and cumbersome. The cynical part of my brain suspects that some of the slow pace of the BEAD grant program was inserted into the legislation through influence from some of the big ISPs. I’ve heard that lobbying is why the grant process insists on using only the FCC maps to determine areas with grant availability. Color me cynical, but a big ISP can use that rule to show poor broadband to the FCC in areas where it wants to pursue grants and show good broadband in areas it would rather protect against competition.

The decision is easy for some counties that have already been approached by local ISPs they know and trust, like small telcos or cooperatives. Such counties know that they are going to get a solution they like, provided by somebody they know will do a good job. But even for these counties, having to wait for fiber construction is torturous. What does a county official say to the family of an eighth-grader who needs home broadband now but may not see it until senior year?

And what about all of the counties that don’t have these trustworthy local ISP partners? Can they just assume that somebody will step in and ask for the BEAD grant funds for their area? What if the ISP winning BEAD grants is one of the giant telcos they don’t trust or some new venture capital firm that is only chasing grants to build and flip the networks? Can a county even assume that anybody will be funded in their area? $42.5 billion sounds like a lot of money, but I’m certain that there are still going to be areas with no broadband solution after all of the smoke clears from the grant awards.

There will be great long-term benefits for a county that is willing to wait to get a fiber network. It’s an asset that is going to be good for the rest of the century and that can provide as much broadband as homes and businesses are ever going to need. I know some of the WISPs are telling communities to let them build wireless now and that they’ll take the profits and roll that back into fiber eventually. If the ISP is telling you that it is somebody other than an electric or telephone cooperative, the chances of them self-funding the future conversion to fiber is basically zero. It takes about five minutes of math to show that there will ever be enough profits to fund that promise.

What makes the decision harder is that there will be some WISPS who will do a great job. They’ll start with the best electronics on the market, will build fiber backhaul to towers, and will invest in every coming decade to upgrade radios to keep up with state of the art. A county that gets this kind of WISP probably is in great hands and made a good decision to get broadband now and not wait. But there are other WISPs who will take the grant money and never invest another dime. It’s hard for a community to know what to believe since both kinds of WISPs will likely make the identical sales pitch.

By Doug Dawson, President at CCG Consulting

Dawson has worked in the telecom industry since 1978 and has both a consulting and operational background. He and CCG specialize in helping clients launch new broadband markets, develop new products, and finance new ventures.

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