A Look at Cell Towers

The Wireless Infrastructure Association (WIA) released a recent report that looks at the state of cellular infrastructure in the country. WIA is a trade association representing the companies that build, own, and operate wireless infrastructure. Membership includes wireless carriers, firms that own towers, and professional service firms.

It’s always been a challenge outside of reports like this to get a good snapshot of wireless infrastructure. According to the report, at the end of 2024, there were:

  • 154,800 cell large towers built for the purpose of serving a single wireless carrier.
  • 248,050 macrocell sites. These are tall towers that provide space for two or more carriers.
  • 197,850 small cell sites. These are neighborhood cell sites located on poles and rooftops that are generally under 50 feet in height.
  • 802,500 indoor small cell nodes that support DAS, small cells, CBRS private network, millimeter wave transmitters, and other licensed frequency bands.

The report says there was a slight decrease in the number of small cell sites in 2024. A decade ago, the industry promised to build a million of these and put a small cell site in every neighborhood. However, when people started working at home during the pandemic, there was a decreasing need for small cell sites that needed to support a workday concentration of cell users. It’s interesting that there are still twice as many large cell towers as there are small cell sites.

The cell tower business nationwide supports 368,750 people who are engaged in building, maintaining, and operating cell networks.

There is still a lot of spending on cell infrastructure, and WIA says the industry spent $10.8 billion in 2024 to expand capacity and coverage. That figure represents only new and upgraded cell sites and includes the cost of new towers, electronics, installation, engineering, and deployment costs. The biggest part of this spending was $8.4 billion on RAN electronics.

Total network operating outlays for the industry in 2024 was almost $63.6 billion. That includes the $10.8 billion mentioned above for new towers and upgrades. Spending on cell tower maintenance is increasing while spending on new cell sites has been falling. Part of the increase in maintenance costs is for carriers paying to lease towers rather than build new ones.

The fastest-growing industry segment is indoor infrastructure that serves locations like stadiums, convention centers, hotels, business buildings and complexes, and large apartment complexes. Landlords and owners of this infrastructure are investing in infrastructure to bring good cell coverage indoors – something that is becoming increasingly problematic as cell carriers shift to higher frequencies that don’t penetrate buildings as well.

WIA thinks the most important trend in the industry is carriers moving to more shared macrotower sites. The infrastructure savings and the efficiencies for transport are too large to ignore.

From a broadband perspective, this means that existing sites might need a lot more bandwidth when multiple carriers share an existing tower. But the trend also means a lot fewer new cell sites being constructed, meaning less new revenue opportunity for fiber providers.

This report made me wonder how enthusiastic the big carriers are for the FCC to ever launch the 5G Plan for Rural America, which would have them opening a lot more low-margin rural cell sites. I suspect the folks who build towers love the idea, but I have to wonder if carriers are lukewarm on the idea of permanently supporting new rural towers.

Cellular Upload Speeds

T-Mobile recently announced a cellular speed test where the company was able to achieve an upload speed of 550 Mbps on a live cellular link. The test was clearly done in ideal conditions in order to achieve the fast speed, but T-Mobile acknowledges that upload speeds are increasingly important to customers. Fierce Network quoted T-Mobile President of Technology Ulf Ewaldsson as saying, “uplink is the next big thing.”

This is something the broadband industry has known for many years. Fiber companies set a standard of symmetrical download and upload speeds, which frankly provide more upload speed than people need. But the public complained loudly about the slow upload speeds from cable companies during the pandemic, and cable companies have scrambled to increase upload speeds using mid-split upgrades. Cable companies have upgraded many markets to upload speeds of 100 to 200 Mbps.

This new speed test record seems to have been released to complement T-Mobile’s press release in April, where it announced that it now offers the first nationwide 5G Advanced network. By that, T-Mobile means its 5G network has begun to incorporate the latest industry 5G standards included in 3 GPP Release 17 and 18. According to the press release, T-Mobile has implemented 5G Advanced nationwide, although there is some discussion in the Fierce Network article saying that is not likely.

There is no doubt that T-Mobile has upgraded networks to a greater degree than the competition, as documented in the latest report from Ookla for the end of 2024 where T-Mobile had a median download speed of 281.5 Mbps, compared to 199.1 Mbps for Verizon and 140.1 for AT&T.  However, during that same period, T-Mobile’s median upload speed, as measured by Ookla, was much slower at 21.3 Mbps. In the April press release, T-Mobile said its typical upload speeds are between 6 and 31 Mbps.

Upload speeds likely matter a lot more to T-Mobile now that it has passed the 6 million customer mark with its FWA home broadband product. Folks who use broadband for gaming, working from home, online schooling, and conferencing are not going to be enamored with a broadband product where poor upload speeds can degrade performance. The current median speed of 21 Mbps is basically the same as the speed customers don’t like on cable company networks.

Upload speeds are probably the biggest long-term weakness of FWA broadband. FWA customers who live in rural areas might not have another alternative other than Starlink, which also has slow upload speeds. But a lot of FWA’s growth is coming from suburbs and cities where customers have a broadband alternative. Cable companies are scrambling to get much faster upload speeds, and fiber generally has symmetrical speeds. Ookla points out in its latest quarterly report that upload usage is growing at a much faster pace than download usage. T-Mobile is being smart in looking at a way to improve upload speeds.

Implications of Satellite Being Broadband

We’ve had a quiet policy change in the country over the last year where satellite broadband is starting to be considered to be broadband by the federal government. Any rural household that subscribes to and loves Starlink would wonder why this is news, but from a policy perspective, it is a big deal. I’ve been considering what this shift might mean in the future.

The FCC decided that Starlink wasn’t broadband when it rejected Starlink’s long-form filing in August 2022 where Starlink wanted to claim the funding it had won in the RDOF reverse auction. The FCC ruled in that process that it couldn’t “subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements”. NTIA recognized low-orbit satellite as an acceptable alternative for BEAD funding for high-cost locations in a ruling in 2024 that made it acceptable for States to make RDOF awards to satellite companies. The real change in policy came with the recent Notice from NTIA that reshuffled BEAD grant rules and put satellite on an equal footing with fiber, fixed wireless, and other broadband technologies. The NTIA Notice said that satellite is eligible to win any amount of BEAD funding if it asks for the lowest amount of BEAD funding at a location.

But as is typical with regulatory policy, the NTIA didn’t make a full pivot to satellite. The same Notice that allows satellite to win BEAD anywhere did not change the BEAD map to recognize existing satellite customers as served. The Notice allows WISPs that use unlicensed spectrum to ask to remove locations from the BEAD map if they are already providing speeds of at least 100/20 Mbps. The NTIA did not give this same option to satellite – which could have theoretically allowed Starlink to ask to take all BEAD locations off the map and kill the grant program. I’m having trouble grasping why a home in a BEAD area that is using Starlink is not considered to be served with broadband while Starlink can ask for funding to serve the neighbor, who will then be considered as served. That dichotomy highlights the satellite regulatory issue in a nutshell – is satellite service broadband or not? Apparently, it’s not broadband for mapping purposes, but it is broadband for awarding federal grants and subsidies.

There are definite implications for satellite service being considered as broadband. First, doing so might eliminate any perceived federal need for future broadband grants. There will likely be millions of rural homes incorrectly left out of BEAD due to the faulty FCC maps. We’re still seeing additional RDOF defaults, like the 41,000 locations that CenturyLink just turned back to the FCC. But the FCC and the rest of the federal government can be totally off the hook for future grants with a simple finding by the FCC that satellite service is fully considered to be broadband. The FCC will be able to take a bow and declare rural universal service has been accomplished – regardless of the rural folks who still don’t think they have a broadband option.

If satellite service is broadband, there probably is no need for future federal subsidies that support high-cost areas. Rural subsidies are the biggest part of the Universal Service Fund at $4.5 billion in 2024. That includes subsidies for RDOF, EA-CAM, and other high-cost support mechanisms for rural telcos.

The only part of this fund that might not be a target to end is the $500 million spent each year to support rural cellular carriers. As satellite companies continue to get into the business of connecting directly to cell phones, this subsidy might also eventually be questioned.

If satellite is broadband, then the big telcos are completely free to finally dismantle rural copper. The California Public Utility Commission has been making that hard for AT&T and other telcos.

We have reached the place where satellite broadband is considered to be broadband for some purposes but not others. It will be interesting to see how long we maintain this dichotomy. I’m guessing for now that we’ll live with treating satellite differently depending on the context – but that can’t last for long.

Supreme Court Upholds the Universal Service Fund

On Friday, the Supreme Court ruled that the FCC has the authority to operate and fund the Universal Service Fund.

The case that prompted the Supreme Court Decision was FCC v. Consumers’ Research.  Consumers’ Research is a nonprofit activist group that originally filed cases in multiple courts alleging that the method used to fund the USF is an illegal tax since it did not arise from specific direction or approval from Congress. Consumers’ Research also argued that Congress neglected its legislative responsibility allowing the FCC to establish the size of the Universal Service Fund and to decide the method for collecting revenues to fund it.

The case made it the Supreme Court when the U.S. Court of Appeals for the Fifth Circuit agreed with Consumers’ Research and said that the USF is unconstitutional. That ruling conflicted with rulings from the Sixth and Eleventh Circuits that largely blessed the FCC and the USF.

Consumers’ Research had argued that fees to fund the Universal Service Fund are a tax, and, as such, must fit a special nondelegation rule such that Congress must set a numeric fixed cap, a tax rate, or the equivalent. The Court rejected this argument. The Court points out that Section 254 directs the FCC to collect contributions that are “sufficient” to support universal service programs. The Court said the word “sufficient” acts as a cap on the amount of revenue that the FCC can collect since it can only collect money for purposes to benefit those “in rural areas and other high-cost areas (with a special nod to rural hospitals), low-income consumers, and schools and libraries.”

Consumers’ Research had argued that the Act gives the FCC boundless authority, but the Court disagreed and said that the FCC is free to periodically redefine its programs as long as those programs are aimed at accomplishing universal service goals.

Consumers’ Research also took exception to the FCC’s delegation of the USF to USAC (Universal Service Administrative Company). The Court rejected this assertion because USAC is broadly subordinate to the FCC. The FCC appoints the Board of Directors, approves the budget, and requires USAC to act consistently with FCC rules and directives.

Finally, the Court rejected the argument that the combination of Congress’s grant of authority to the FCC and the FCC’s reliance on USAC together violate the Constitution, although neither one does so alone.

Overall, the Supreme Court ruling is a total repudiation of the ruling of the Fifth Circuit. This ought to put attacks on the existence of the Universal Service Fund to rest for a while. Just as an aside, if you’ve never read a Supreme Court ruling, they are not easy reading, but worthwhile for those interested in the topic.

However, this doesn’t take the Universal Service Fund out of the news or off the hot seat. The funding mechanism for the USF is clearly broken and the fund can’t continue with fees assessed only on interstate telecom services. There are bills pending in both the House and Senate that would spread funding to broadband customers and to the biggest companies that use the web (referred as edge providers in the legislation).

USF and Cloud Services

The Computer & Communication Industry Association (CCIA) released a paper recently warning about the impact of imposing Universal Service fees on what it characterizes as cloud services. CCIA is an association that lobbies on behalf of some of the largest web companies like Amazon, Meta, Google, Apple, Netflix, and Cloudflare.

The author quantifies the impacts of imposing a USF fee on cloud service providers and uses an example of a 5% USF fee on cloud services. Some of the cited impacts include:

  • The author of the report says that the cloud service industry is extremely price-sensitive and that there would be a loss of business if a cloud service provider passes USF fees to customers. The report says that a 1% increase in the price of cloud services would result in a drop in business between 0.5% and 0.6%.
  • A 5% fee passed on to customers would decrease national GDP between $59 billion and $148 billion annually. This means impacts on State GDPs, with California having a downside as large as $25 billion, Texas an impact up to $17 billion, and South Carolina an impact of as much as $2.2 billion. To put that last number into perspective, the total annual State budget for South Carolina in 2024 was only $40.2 billion.
  • The industry invests around $54 billion annually on infrastructure, and the report suggests that this would cause the industry to cut back on new investments by $7.6 billion.
  • A 5% fee would increase overall national inflation by up to 0.13%.

It’s somewhat refreshing to see that the lobbyists in other industries are as willing to greatly exaggerate claims about the impact of regulatory and legal changes as the telecom industry. Let’s put the claims to a reasonableness test.

The total Universal Service Fund was $8.5 billion in 2024. USF is funded today entirely by a fee levied on telecommunications services. There are no proposals that I’ve seen that would ask cloud companies to fund that entire amount – the current bills being contemplated by the House and Senate would ‘equitably’ allocate the fee between telecom services, broadband services, and ‘edge services’, which is the same as what the paper calls cloud services.

It’s hard to think that the share of USF allocated to cloud companies would be much more than perhaps $3 billion per year – far smaller than the 5% increase included in the CCIA analysis. A $3 billion fee would not create the dire consequences warned by the paper.

Cloud companies are already paying a significant portion of USF fees that are imposed on the fiber circuits sold for Internet backbone. Fiber circuits to data centers are a big piece of the fiber transport network that is part of the telecom base for USF. Reducing the USF fees paid by telecom companies would significantly reduce the fees charged for backbone fiber. This might offset a significant portion of new direct fees on cloud companies.

The interesting thing that nobody knows yet is which companies in the cloud industry would pay any new fees. That’s something that would only be solidified by Congress at the time they adopted the new method of funding the USF. The fees charge to telecom companies are assessed on everyone from the giant telcos down to the smallest telco. The impact of a USF fee on cloud companies will be diluted if the fees are spread across a wider number of companies than just the large members of CCIA.

The bottom line is that the CCIA analysis is downright silly when it threatens that a $3 billion fee on cloud services might wipe out 5% of South Carolina’s annual State budget or might decrease national GDP by at least $59 billion. But you have to give it to lobbyists – the purpose of the analysis was to provide talking points for politicians in DC, and I suspect it provided the talking points CCIA was looking for.

This blog is being published on Friday morning. Later this morning, the Supreme Court should be announcing the results of the case that asks if the FCC has the authority to operate the Universal Service Fund. Expect my reaction to that case on Monday if the Court decides the FCC has the authority – expect something sooner if they don’t.

BEAD and Vendors

Today’s blog looks at the impact that the recently announced changes in BEAD funding will have on industry manufacturers. It’s clear that the new NTIA guidelines for BEAD will both significantly pare down the overall outlay from the $42.5 billion BEAD grant program and also will reduce the amount of the grant funding that will be used for fiber construction. To offset the spending on fiber, there should be increases in spending on WISP radios and hardware to support LEO satellites.

We can’t look at the impact of BEAD on fiber spending in a vacuum. While $45 billion is a lot of spending, there is a lot of other fiber construction already underway.

  • There is a huge amount of fiber construction underway from other grants like ARPA, the Capital Projects Fund, ReConnect. RDOF, EA-CAM, etc. I’ve estimated these projects are generating more than $13 billion in fiber construction this year, nearly $11 billion next year, and another $4.5 billion in 2027.
  • The big telcos and fiber overbuilders are busily building fiber in cities and suburbs. Led by AT&T’s announced plans to pass more than 25 million new passings by the end of 2029, there are announced plans of at least 10 million new fiber passings per year from the many other fiber overbuilders. It wouldn’t be surprising if the impacts of tariffs and general financial uncertainty slow some of these plans, but there is an immense amount of fiber construction being planned.

BEAD spending is going to drop in two ways. First, unlicensed WISPs have an opportunity to remove passings from the BEAD process. After that, the States have to start over again with at one round of BEAD. Like everything else associated with BEAD, there is a wide range of opinions on what’s going to happen when the states start over. Optimists are saying that there are ways for States to maintain many of the fiber grants that have already been decided. Others are predicting that fixed wireless and satellite will sweep the grants. The reality is probably somewhere in between.

Any shift away from fiber will have a definite impact on fiber cable vendors like Corning, CommScope, Lightera (formerly OFS), and Prysmian. Fiber vendors love rural projects like BEAD since low population density means a lot of miles of fiber are needed. Losing a lot of BEAD won’t badly hurt these vendors, but they’ll definitely notice the hit.

The impact of BEAD on fiber electronics vendors is also significant. The recent increase in AT&T’s planned passings will largely offset any impact from losing BEAD fiber customers. However, there will be a negative impact on the electronics vendors that specialize in serving rural ISPs. Interestingly, major fiber electronics vendors like Nokia, Adtran, and Calix all announced American manufacturing capability by opening factories here to meet Build America, Buy America requirements for BEAD. However, considering the shift to higher tariffs, those facilities might have a competitive advantage now, even without BEAD.

These aren’t the only impacts of a shift away from fiber. Large ISPs deal directly with vendors, but a lot of the smaller ISPs that might win BEAD buy most electronics and other construction materials through supply houses – and a shift in BEAD from fiber will hurt these companies. Makers of huts and cabinets will see noticeably less demand.

The shift in the BEAD rules probably means a boom for WISP vendors – assuming they don’t get underbid by satellite companies. Build America will be an issue for WISPs. Tarana might have a big edge since it manufactures radios in the U.S., while most other manufacturers make their radios in Asia.

It’s hard to say if BEAD will really increase the overall number of customers for Starlink since the company is growing quickly around the world. It could be that an increase in connections for BEAD just means fewer connections elsewhere for a while. The company that might get a surprising bump from BEAD is Kuiper. The company won a first-round award in the first BEAD process in Louisiana, and the company could try to snag billions to give it a boost during the start-up phase. Build America won’t be an issue since both Starlink and Kuiper manufacture satellites and receivers in the U.S.

The New BEAD Map Challenge

Perhaps the most unusual element of the new BEAD guidelines is a requirement that BEAD not be used for ‘overbuilding’. The new rules allow an ISP using unlicensed spectrum to stake a claim for areas it already serves and remove those areas from the BEAD map.

Judging if a WISP is really offering service that is considered as served for BEAD is complicated and involves multiple factors. First is speed. There are WISPs that have invested in new radios and backhaul to be able to deliver 100/20 Mbps to everybody. But there are WISPs (and other ISPs) that have been playing a regulatory game by claiming broadband speeds of exactly 100/20 Mbps while delivering something slower.

Second is geographic coverage that identifies the homes a WISP reach from a given radio. A landline network can serve everybody it touches, but terrain can make it increasingly hard for a WISP to reach every home, particularly as the distance from a tower increases. It’s not easy for a WISP to guarantee who it can reach or not reach.

Finally is overall capacity – the ability to be able to serve everybody in a given area. Judging capacity involves a number of factors – the density of homes in the area around a tower, the physical limitation n the connections a radio can make, the brand and age of the radios being used, the amount of backhaul bandwidth, the frequencies being used, and the number of other WISPs in an area that are vying for the same channels of frequency.

Broadband offices have already wrestled with understanding these issues in the original BEAD map challenge that involved WISPs using licensed frequency. But the new map challenge is crazy because State Broadband Offices are going to have to make super-quick decisions. NTIA is giving WISPs only seven days to claim they offer service that should be considered as served under BEAD, and the process is already underway in most states. States are also facing an incredibly short overall time frame and are now supposed to make all grant awards by September 4. That leaves no time to investigate, deliberate, or possibly even fully understand mapping and speed claims made by WISPs.

Contrast this with the BEAD mapping challenges that dragged on for half a year in some States where local governments and ISPs disputed the speed claims in the FCC map. NTIA created a torturously complicated process for the original map challenge to force challengers to prove that locations should be removed or included in the BEAD map. But now, we’re going to have a whirlwind process for excluding possibly millions of locations from BEAD. WISPs won’t have to go through any of the many steps required by the original map challenge, such as getting customers to prove their claims using speed tests.

I’ll be curious to see how many WISPs make a map claim. Removing locations from the BEAD map is not necessarily a good strategy since keeping BEAD locations provides an opportunity for a WISP to pursue BEAD funding under the revised rules that favor fixed wireless and satellite technology.

This quick process is troubling for another reason. I foresee a WISP or other ISP suing a State for making a quick decision about the maps they don’t like. The entire BEAD process has been surprisingly free of lawsuits, but a lawsuit at this late stage would really gum up the works. One area that could lead to lawsuits is the short decision-making time frame that leave WISPs with no chance to appeal a State’s decision. The short process also means that local governments or other ISPs don’t get a chance to review or comment on a State’s decisions.

Whatever happens, it’s going to be chaos. ISPs that still want to participate in BEAD now need to wait until this new map challenge has been resolved to see what is left on the map for BEAD grants. ISPs have been deliberating about where they want to serve for years and could suddenly be facing a different map. NTIA seems to be assuming that ISPs will somehow quickly cope and pivot to a changed map – but that is often going to mean reworking engineering designs and business models in a hurry. There are a lot of ISPs thinking about dropping out of the BEAD process because of the last-minute rule changes.

There has been a lot of criticism of NTIA in the past for being too deliberate. But this new process goes to the other extreme, and introduces major changes in the BEAD map and grant award rules with practically no time for the industry to react or provide input to the States. It seems inevitable that States are going to take widely different approaches to the issue, which makes it even more of a crap shoot for ISPs interested in BEAD.

Another Significant Supreme Court Ruling

The Supreme Court came down with another decision last week that is going to further hobble administrative agencies like the FCC. The case is McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., No. 23-1226.

This case started in 2013 as a class action lawsuit filed in federal court in the Northern District of California. The dispute between the parties began when McKesson Corporation sent unsolicited advertisements by fax to class members of the suit, including McLaughlin Chiropractic. The advertisements were sent to traditional fax machines as well as to online fax services.

The plaintiffs claimed that the unsolicited faxes were in violation of the Telephone Consumer Protection Act (TCPA) which forbids unsolicited communications with consumers without giving them a chance to opt out of the communications. The alleged damages come from recipients spending money on paper and toner to print the unsolicited faxes, which the TCPA refers to as advertiser cost-shifting.

While the case was pending in California courts for six years, the FCC issued an order that excluded online fax services from the TCPA since online faxes receive electronic files and don’t print hard copies of a received fax.

The McLaughlin case made it to the Supreme Court because the District Court found that it was required to follow the new FCC order, even though it disagreed with the FCC’s interpretation of the TCPA. The District Court also felt constrained by 1950 legislation referred to as the Hobbs Act, which has been interpreted as barring district courts from disagreeing with a federal agency’s interpretation of a statute.

The recent Supreme Court ruling sided with the District Court by a 6-3 vote. The Supreme Court ruled that “The Hobbs Act does not preclude district courts from independently assessing whether an agency’s interpretation of the relevant statute is correct.”

This is a significant ruling because it gives more explicit power to District Courts to disagree with an administrative ruling of a federal agency. It’s likely that there is a District Court somewhere in the country that will disagree with almost any federal agency ruling, meaning that it will be that much easier to tie up every decision made by the FCC or other federal agency in court.

When you tack this ruling onto the Supreme Court’s ruling last year in Loper Bright Enterprises v. Raimondo, it’s going to be increasingly difficult for federal agencies to issue decision that will stick. The Loper Bright ruling overturned a long-standing deferential approach to agencies’ interpretations of statutes, making it easier to sue them.

This new ruling also has practical implications since it explicitly weakens FCC enforcement of the TCPA. Among other things, the TCPA rules are the FCC’s primary tool for its effort to restrain the use of autodialers and artificial voices used in spam messages to consumers.

BEAD and the Economy

I’ve written about how the new BEAD rules impact County governments, broadband offices, and the general public. What’s not being talked about enough is the impact of building infrastructure on the overall economy. BEAD was part of the Infrastructure Investment and Jobs Act, which, while called an infrastructure bill, was foremost a jobs bill. Early on, NTIA envisioned that $42.5 billion was enough money to fund a lot of fiber construction and the jobs and economic benefits that go along with that construction.

I’m not sure if most people understand how labor-intensive it is to build rural fiber. Consider a BEAD project to build 1,000 miles of rural fiber to serve 5,000 homes and businesses. Such a project would involve the following labor:

  • The actual construction will require 50–60 man-years of technicians and supervisors to build the fiber network.
  • The project will require 10-12 man-years to construct fiber drops and install customers in homes and businesses.
  • There are probably 2 man-years of effort by the engineers, consultants, and others who design the network, order materials, obtain the grant, obtain permits and rights-of-ways, track construction, create maps and records, and report to the grant agency.

Direct labor is only the beginning. The benefits from constructing this project will spread through the local and national economy:

  • There is labor from employees of the vendors who manufacture fiber and electronics. With Build America rules, this labor is mostly in the U.S.
  • There is labor at the supply houses that warehouse, sell, and ship the materials.
  • There is work for truckers who deliver the materials from factory to supply house to construction site.
  • There will be half a dozen vehicles purchased or used to support the project. There are also computers, smartphones, test equipment, and related electronics.
  • There is work required by local people who locate buried facilities. There is work required at the electric utilities or other pole owners to coordinate adding facilities to their poles.
  • There is a huge boom for the local hotels, restaurants, gas stations, and other local merchants due to having contractors working in the local economy for an extended time.
  • There’s work for local electrical contractors to bring power to new electronics locations. Local contractors may be used to build or place huts and cabinets.
  • There is work at the banks and other firms that fund and insure the project.
  • There is work by the firms who will market and sell the new broadband to the people in the grant area.
  • This list could go on and on since the project will drive the ISP to spend money on software, office supplies, auditors, and a long list of other related expenses, all of which benefit somebody in the economy.

Finally, there are the permanent jobs created by the ISP that will operate the network. Depending on the size of the ISP who will operate the network, adding this network and customers will add 2-4 permanent technicians and customer service representatives along with the vehicles, office space, management, and benefits to support them.

That’s a huge amount of jobs and economic benefits from a single 1,000-mile fiber project, and the $42.5 might have funded the equivalent of 1,500 such fiber projects.

It’s clear that the new NTIA rules are going to greatly curtail the amount of fiber built with BEAD in favor of fixed wireless and satellite ISPs. The alternate technologies also benefit the economy, but at much lower levels. The major jobs benefit comes from building the physical infrastructure. Perhaps somebody has done the math, but I’m guessing that building a fixed wireless network probably brings only a tiny fraction of this benefit to the local economy. Giving  BEAD funding to satellite ISPs brings almost no benefit to the local economy.

I’ve seen economist estimates made over the years on how an infrastructure project like building fiber or a bridge brings 3-4 times the benefit to the economy than the local infrastructure spending. The changes the NTIA is will likely cut BEAD spending in half. It’s poor fiscal policy to focus on saving $20 billion in grant awards that might have brought $100-150 billion of benefit to the overall economy – and most of that benefit would have come to rural counties that most need it.

A Lesson Not Learned

Decades ago, I was lucky to have interviewed a number of rural people who told me what it was like when they finally got electricity. Almost every person I talked to mentioned how life-changing it was to brightly illuminate their homes with electric lightbulbs.

Other than that, everybody’s electricity story varied according to their economic circumstances and priorities. Wiring a home with electricity was a big expense for a lot of folks, and many got loans from their electric coop to help pay for wiring and appliances. Others introduced wiring gradually as their budget would allow. Farmers often lit their barns before their homes. The most valued and first appliances bought by many homes were washing machines and refrigerators.

People also told me about the frustration of waiting for decades to get electricity that was available in the county seat or other nearby towns. They said that most adult children left the farm, attracted by the lure and conveniences of electricity. They described how access to electricity clearly defined a world of haves and have-nots.

Rural electricity was largely funded by low-income loans to newly formed electric cooperatives. Electricity to the farm enabled the agricultural revolution that made the U.S. the breadbasket of the world. Rural electricity immediately raised the standard of living for rural residents and gave them the same opportunities as everybody else. I’m not sure how to do the math, but electrifying rural America was probably the best infrastructure investment that the U.S. Government ever made – rivaled perhaps only by the interstate highway system.

We took a different approach to stringing telephone copper in rural areas, with a mix of private and public investment. In 1900 there were over 3,000 telephone companies in the country – many of them in small towns and rural areas. Many of the rural networks were built and financed by farmers, but a huge amount of rural copper was also funded by government loans given to small telephone companies and newly formed rural telephone cooperatives.

Since it’s now clear that broadband is the newest utility that homes need to participate in today’s economy, the federal government naturally got involved in funding rural fiber networks. Some of this was funded with subsidized loans, but a lot more has been accomplished through federal grant programs like RDOF, ReConnect, and the Capital Projects Fund. The BEAD program was supposed to be the big grant program that filled in the final gaps in rural fiber – and many State Broadband Offices were well on the way to fulfilling that goal.

I’ve never understood why and how we lost the lessons we learned in the past. I am certain that a lot of rural America would already have fiber today if the federal government had offered 40- or 50-year loans at 1%. Electric and telephone cooperatives would have gladly taken that money to expand fiber networks across regions. Some of the big telcos would have taken the money. I am certain that new cooperatives would have been formed in areas where there were no logical recipients of the loans. Just like with electrification, the vast majority of these loans would be repaid, meaning there would be very little net cost to the government to fund rural fiber through loans.

Instead, the FCC chopped the rural landscape into Swiss cheese areas with the RDOF program, and other grant programs have tried to fit fiber projects around the messy jigsaw puzzle that was left over. I’m not sure that we could have designed a worse way to mess up the rural broadband landscape.

We’ve now suddenly decided that it’s too expensive to build rural fiber – even though we were near the finish line with BEAD. And to be fair to the critics of BEAD, it is expensive to give away billions in grants. But once we started down the grant pathway instead of the loan pathway, BEAD was the logical conclusion to the effort.

It’s sad we didn’t remember the lesson we learned from electrification. The best solution for stringing a wired network in rural areas is to loan the money to local companies who have a vested interest in making it work for the long haul.