One of the biggest challenges for BEAD grant is for State Broadband Offices to make sure that every unserved location gets covered by the grants. My understanding of the process is that NTIA will not approve the BEAD grants being made by a State until they can demonstrate that every unserved and underserved location will be covered by the grants.
I think that requirement will lead to what this blog calls the Smallest BEAD Dilemma. The problem States will encounter is finding solution for the many small pockets of unserved customers. The map below is a good representation of the issue. This is a map of the BEAD serving areas in a real county. I squared off the county to hide its identity. The blue areas are considered unserved for BEAD, the yellow areas are underserved, and the orange areas are served.
The first thing to notice is that that there are small pockets of unserved and underserved customers throughout the county. Finding an ISP willing to build to construct to these many small areas is going to be a challenge for a Broadband Office.
An ISP seeking BEAD has a big dilemma. In practically every state, the number one criteria for awarding grant points is by having the lowest construction cost per passing. An ISP can achieve the lowest cost per passing by designing a coherent network that only goes to larger pockets of unserved customers. The cost per passing climbs dramatically if the ISP extends a network to reach scattered smaller pockets. To make matters even worse for an ISP, the BEAD grant rules frown on funding any middle-mile fiber that might be needed to reach the remote pockets.
The issue is even worse than is implied by this map due to the scale of the map. There are even tinier pockets of unserved customers in the middle of the orange areas on this map, buried inside the larger towns and County seats. Some of these smaller areas are the unlucky households that were bypassed somehow by cable companies. These are the folks you hear about who are told they can connect to the cable network for a $20,000 construction fee.
An ISP who wants to build BEAD in this county is going to be asked to reach and serve the many small pockets. We already know this is true in states where the Broadband Office is drawing the grant service areas to make sure that any big pockets of customers also includes nearby small pockets. These State Offices are trying to force ISPs to solve the small pocket problem while also judging ISPs on the cost per passing of their proposed network.
This dilemma doesn’t only apply to fiber ISPs. Wireless networks don’t reach everywhere because of dead spots created by hills and terrain. It’s likely that the heat map of the homes that can be reached by a tower will not pick up every unserved house in a series of BEAD grant areas. A wireless ISP will often have to build extra towers and backhaul to reach every home in the disjointed BEAD areas.
I predict that trying to force ISPs to serve tiny pockets of customers will be the stickiest negotiating point between ISPs and State Broadband Offices. ISPs are not going to be agree to spend a lot of extra money to reach remote customers. But Grant Offices have to insist on this since they are mandated by the NTIA to reach everybody before grant funding can flow.
I think most Grant Offices are going to run headlong into this problem when ISPs refuse to take on impossible service areas. I predict this issue will likely add many months to the grant award process – and in places where the BEAD areas are true Swiss cheese – much worse than my example map – Grant Offices might not find a solution. What will grant offices do when there are large geographic areas where no ISP is willing to serve? Even worse, what will they do when ISPs walk away from a BEAD negotiation when they are asked to do the impossible?
Policymakers and many Grant Offices seem to be under the impression that ISPs will jump through endless hoops to get ‘free’ government grant money. All the ISPs I know will not accept a grant award to serve an area that will ultimately lose money. I think awarding the grants is going to be a lot harder than anybody is anticipating.
This article, and numerous others of yours, paints a really bleak picture of the whole BEAD situation. What do you think the outcome will really be?
About the only way I see for this to work out is for the powers that be to eventually ease the restrictions. Unfortunately if they do this late enough in the game only the bigger ISP’s with the ability to gamble will remain, the smaller ISP’s will have given up before then.
But I am curious if there are any other possible outcomes here that I’m not thinking about. Is there a chance that BEAD money will just get left to sit, no ISP will touch it in some states?
This is another indication of why BEAD favors large ISPs. Notably, AT&T has urged contiguous projects comprised of a mix of prems in order to most efficiently allocate subsidies.
https://eldotelecom.blogspot.com/2023/10/at-urges-states-to-favor-contiguous.html
The incumbents created all these little holes in the mini Swiss cheese by their deployment policies of cherry picking and redlining discrete neighborhoods and even portions of rights of way when the per road mile density fell below their ROI and internal ROR standards.
But it could also be argued public policymakers are also responsible. If a subsidization is the policy as it is with BEAD, it would have had to been undertaken much earlier (mid 1990s) when it was clear the companies were not structured to meet what AT&T termed the “enormous” costs of modernizing the network from copper to fiber.
Fiber is too expensive to run to far flung rural homes even with government money. $20,000 a mile is the absolute minimum price per mile and it’s more commonly $60,000 a mile. That just can’t work out economically for a home here or there. And if you look at these rural fiber builds and what the companies sell, people are still envious of a 10 year old docsis plan.
Wireless obviously serves a better chance of reaching, but hills and trees also create problems. However, $100,000 in a wireless tower can serve over 1,000 square miles and with top-end gear does very well for surpassing broadband speeds and getting through some trees etc.
If the FCC would open up dedicated, large channel, high output PTP only channels specifically for ‘internet’ (and not cellular) then it would be almost trivial for a quality wisp to build to these areas and offer the speeds and latencies needed to meet the next 10 years of needs.
Fiber becomes very economical as neighborhoods and subdivisions are built. There’s isn’t a massive growth in rural home builds that aren’t a neighborhood project. ie, getting fttx is economical and attractive without government spends.
Funding a backhaul/longhaul network with a point of precense for *isps to connect to in every county would allow all sorts of products be build off of it without the need for direct payments.