As Congress is handing out relief money for the COVID-19 crisis, rumors are flying around that rural broadband relief is one of the issues being discussed. The plight of employees and students unable to work from home has certainly bubbled up to a majority of those in Congress.
My advice to Congress is to not be to hasty. Don’t have the knee-jerk reaction of just tossing big bucks towards the rural broadband problem, because if you do much of the money will be wasted. There have been back-of-the-envelope estimates made that it would take anywhere from $60 billion to well over $100 billion to bring fiber to everywhere in rural America. Nobody knows the number and my guess is that it’s towards the upper end of that scale.
The typical Washington DC approach to the problem would be to earmark a pile of money to solve the problem, with no forethought of how to use the funds. This tendency is bolstered by the fiscal year spending nature of government funding, and Congress would likely expect broadband money to be spent quickly.
And that’s where the rub comes in. The broadband industry is not prepared to handle a sudden huge influx of funding. Consider all of the following issues that would quickly become apparent if this were to happen:
- The first big question that would be asked with funding is where to spend the money – which parts of the country need the funding help? Unfortunately, the FCC will be of nearly zero help in this area, so you can’t run a giant grant program through them. The upcoming RDOF grants are supposedly aimed at bringing broadband to all of the places that don’t already have 25/3 broadband. But due to the dismal FCC mapping process, the current maps miss huge swaths of rural America that also need better broadband but that are misclassified by the FCC maps. If Congress gives the money to the FCC to disperse, the agency has no idea where to spend it according to its flawed data.
- The next big question is how to award funds. The FCC’s RDOF grant program is using a reverse auction to award funds – but this only works when the funding is awarded to a specific footprint of grant areas. More traditional grant awards require the writing of extensive grant requests to prove the worthiness of a grant applicant and the worthiness of grant project. Anybody that remembers the Stimulus grants for broadband recalls that even at that time there were almost no qualified and experienced people available to review grant applications – and a lot of the Stimulus funding went to unworthy projects. A poorly run grant program also invites fraud and waste – the bigger the dollars the bigger the problems.
- In perhaps the hardest issue for many to believe, there are not enough qualified ISPs ready and able to handle a big influx of funding and of operating the ensuing broadband businesses. We hear about small ISPs offering service all over the country, but all of them together don’t serve more than perhaps 5% of the broadband customers in the country today. Most small ISPs are already fully leveraged today as they’ve borrowed money to expand their footprint. Any grants that require matching funds might find a dearth of takers. If we throw money at the industry too quickly, it’s going to all end up going to the big telcos – and that likely just means pouring money down a black hole. It’s not hard to look back at the total bust of the CAF II program where the big telcos spent $11 billion in FCC funding and didn’t make any dent in the rural broadband problem. If Congress spreads awards out over time, then big new ISPs like electric cooperatives can prepare to go after the awards – most of them are not close to ‘shovel-ready’ today.
- You can’t ask for broadband funding without some sort of engineering estimate of the cost of building a network and some sort of business plan showing that the network can operate profitably at the end of the funding. There are not a lot of ‘shovel-ready’ broadband projects laying around waiting for funding, and so the first step after a big Congress funding program would be to develop hundreds of new business plans. All of the consultants and engineers I know are already full-time busy helping companies to prepare for the $16.4 billion RDOF grants and the various state grant awards around the country.
- The same is true of fiber construction companies. During this last construction season, we started seeing construction companies bidding up rates to go to the builder willing to pay the most for their services. There are not a lot (if any) idle fiber construction crews sitting around waiting for work. Fiber construction is not something that can be taught quickly to new workers – it takes years to develop a good fiber splicer or to train somebody to be able to determine pole make-ready.
- We’re also starting to see backlogs for fiber materials. The waiting times for ADSS fiber that goes into the power space recently crept up to six months. The far bigger concern is electronics. Right now, the world supply chains are a mess due to COVID-19 and the industry is expecting delays in electronics delivery in the coming construction season. Supply houses and vendors aren’t talking about this, hoping it will magically go away, but there will likely be electronics shortages in the 2020 construction season even without pressure from new grants. Such shortages can cripple construction projects.
- Finally, I am positive that any federal broadband grant money will come with stupid rules, many slapped on the funding by the big ISP lobbyists. There will be needless hoops to jump through and rules that make it hard to spend the money well. There is zero chance that federal grant funding wouldn’t come with ridiculous rules and ridiculous restrictions. If Congress is going to award big money they need to take a little time that the rules are fair and efficient.
There will be people reading this in amazement and wondering how a rural broadband advocate could be recommending caution. One only has to look back to the stimulus grants to recall that probably half of that money was wasted due to the haste of the grant programs. My fear is a knee-jerk federal reaction that will throw giant bucks at the problem when the proper solution would be a series of grants awarded over five or more years to allow ISPs time to get ready. Funding in one giant lump would result in a mess of epic proportions. I fear that DC would then wash their hands of rural broadband by saying that they already funded it, and any communities left behind after a flawed grant program would likely be left behind for decades to come. Congress, if you want to help your constituents, please ask for advice and get it right.