BEAD Funding for FTTH: What We Know So Far
By now, we all know that the Broadband Equity Access and Deployment (BEAD) Program, enacted under the Infrastructure Investment and Jobs Act in November 2021, authorizes more than $42B to expand high-speed internet access by funding planning, infrastructure deployment, and adoption programs in all 50 states, Washington D.C., Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. Since funding allotments were announced on June 26, 2023, states and territories have been actively creating and submitting their required Initial Proposals and 5 Year Action Plans. We know projected timelines for the major milestones required by the states and territories and know approximately when funding will be issued. Up to 20% of allocated funds can be requested upon approval of Initial Proposals for planning purposes and the remaining 80% of funds is tied to Final Proposal approvals. Final Proposals are not due until 365 days after Initial Proposal approval which at least on the “timeline” puts it at earliest in late 2024. As my mother used to say, “Good things come to those that wait.” (Unless you are a Green Bay Packers fan in which case we are not used to waiting for good things, they just [used to] happen. But I digress…) What about the Affordable Connectivity Program?But what about the unknowns? There is the Affordable Connectivity Program (ACP). BEAD requires service providers receiving funding to participate in the low-income ACP. But the ACP program funding is expected to run out in 2024. The ACP pays up to $30 a month toward the cost of internet service of low-income households. This helps increase the estimated take rate and reduces operating costs in many of the high-cost-to-serve areas. The Biden Administration recently requested $6B to continue ACP as part of a $56B supplemental domestic budget request. But politics aside, will the appropriation get budgeted? While many Republican leaders represent districts with high numbers of ACP enrollees, do not assume that is a guarantee for passage. How Does BEAD’s Letter of Credit Affect Funding?Also in discussion is the Letter of Credit (LOC) requirement within BEAD. BEAD applicants were required to provide the National Telecommunications and Information Administration “NTIA” with a LOC from a bank as evidence that they have at least 25% of the grant dollar amount in a cash bank account. That capital would need to be set aside for the entire duration of a BEAD-funded project. Recently, several regional Internet Service Providers (ISP) wrote the Secretary of Commerce stating the LOC requirement was burdensome and will reduce private investments. On November 1st, 2023, the NTIA issued a conditional programmatic waiver of the LOC requirement for BEAD participants. NTIA said other acceptable alternatives may include a letter from a qualified credit union, or a performance bond for 100% of the award. It also allows states and territories to reduce the percentage requirement of the performance bond or LOC over time as service providers meet certain project milestones. It also allows states and territories to request waivers for additional circumstances not covered by the waiver where prospective subgrantees are able to meet the requirements by other means. Outside the waiver, we are seeing an active influx of private capital being invested in the industry through acquisition or investment as additional levels of support. How the letter of credit requirement and waiver allowances are addressed will be an important aspect in the selection of subgrantees for the implementation of BEAD deployments. Why Does Extremely High Cost Per Location Threshold Matter?A third area of discussion is the determination of what is called Extreme High Cost per location Threshold (EHCT). BEAD established performance standards that the NTIA has determined are best served with “end-to-end” fiber optics. It does not prohibit other forms of technology but established the EHCT which is the point at which a preference for fiber deployment is no longer cost-effective, and thus, other technologies that are typically less expensive to deploy can be considered. But it is not as simple as setting the threshold too high or too low that impacts the decision, it is also the size of the geographic area being served. A large rural county can prove to have an EHCT but if it is divided into sub-sectors, it could show a percentage of it could fall below that EHCT and then only address the alternative technologies in the EHCT areas. (It is our understanding that the states, territories, and the NTIA do not recommend an EHCT dollar amount but instead use a formula to calculate the EHCT by location.) And while BEAD clearly prefers fiber, there are locations that cannot be cost-effectively served without considering alternative technologies. The state of Louisiana makes note of this and has stated it will accept applications for providers using alternative technologies (FWA, Satellite) and will not define high-cost areas until the end of the bid process. So, the states will have a lot of say in this area. The Impact of a Trained WorkforceLastly, an area not necessarily tied to BEAD exclusively is the availability (or unavailability) of a trained and experienced workforce. Obviously, BEAD and other funding programs have spurred broadband deployments and put a strain on employers to have a workforce in quantity and experience of their needs. There are many entities providing training in fiber and outside plant technologies. There are community technical colleges that do so as well. But don’t forget to consider many of the well-qualified vendors in the industry and review their product solutions for features and benefits that make installations fast, easy and accurate with both experienced and inexperienced tradespeople. Some companies, like UCL Swift, have developed patented technologies to provide labor and material savings that enable the government-provided funding to go further. The time to ask vendors to come in for a demo or training is now. Develop your knowledge of the competitive solutions available to you and use them to your advantage to make the most of your BEAD (and other Broadband) deployments.
Feb 09, 2024