Get Ready for Middle-mile Grants

Alan Davidson, the Administrator of NTIA, recently held a press conference and webcast talking about the $1 billion middle-mile grant program. The biggest takeaway from that conversation is that the NTIA is likely to make these awards much sooner than the awards from the $42.5 billion BEAD grants for last-mile broadband. Mr. Davidson was not specific about the dates of these grants, but anybody wanting to request one of these grants should start getting ready.

It’s worth noting that the last-mile BEAD grants will not fund middle-mile fiber. The early NTIA rules indicate that the grants will expect any constructed fiber to have closely-spaced and regular access points. This is what distinguished last-mile fiber from middle-mile fiber. Middle-mile fiber is aimed at connecting two points, be that fiber huts, electric substations, core fiber sites, or two communities. It’s a lot more expensive to build fiber that has a lot of access points. It costs labor and extra materials every place that fiber is spliced off to a handhole or MST. While a fiber route can be built to serve both purposes, the assumption of the BEAD grants is that the fiber is used to serve those living close to a fiber route.

Recent experience from both state and federal grants shows that the entities awarding grants are allowing for a relatively short window from the date of announcement of a grant until grants are due. On state grants, I’m seeing grant requests that are due within six weeks of the announced opening of a grant. The NTIA grant window will likely be a little, but probably not a lot longer.

This means anybody interesting in the grants should already be figuring out the engineered cost of the desired middle-miles routes. You are not going to have time once the grants are announced to determine costs.

More importantly, anybody wanting the middle-mile grants needs to craft a good story about why a specific middle-mile grant is needed. $1 billion might sound like a lot of money, but on the national scale, it’s not a lot. This works out to an average of only $20 million per state. If you assume an average cost of middle-mile fiber at between $35,000 and $50,000, that’s only 400 – 575 miles of new fiber, on average, per state. To put this grant program into perspective, California has established a $3.5 billion middle-mile grant program just for within the state.

Another thing that must be considered is that the NTIA has a history of making fewer numbers of larger grants rather than a lot of little grants. It’s hard to picture the agency awarding hundreds of grants because the work needed to administer the grant is nearly the same for a small grant and a large grant. If that history holds true, these funds are more likely to go to larger projects that connect distant rural communities than to projects that connect places relatively close together in a middle-mile project. I picture grants that connect a dozen communities being far more attractive to the NTIA than a project connecting a dozen local fiber nodes or electric substations.

Finally, it’s fairly clear that the NTIA is currently favoring non-profit entities more than commercial ISPs. I’m sure some of this grant will go to commercial entities, but I’m going to bet that collaborations of local governments will have a better chance of winning these grants. I’ve written a few times about project THOR in northwest Colorado, which is a consortium of local governments that built middle-mile to connect 14 communities with fiber. The benefits of this fiber for anchor institutions like hospitals were seen almost immediately after the first fiber routes were connected.

I envision that the projects with the biggest chance of success will be similar to Project Thor, which was organized by local communities, or to projects done by states to reach remote areas like is being done by ConnectMaine.

People are often surprised about the lack of middle-mile fiber in rural places. It’s hard to justify building last-mile fiber to an unserved rural community if there is no affordable way to connect that community to the Internet. I’m guessing that the NTIA will look hardest at projects that can make these connections.

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