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.

Fiber is Not Always Fiber

Fiber CableI had a conversation today that is the same one I’ve had many times. I was talking to a City that has already built hundreds of miles of fiber to connect municipal buildings. They were shocked to hear that the network they had built had very little value if they wanted to build FTTP for all homes and businesses. To do that would require building additional fiber on just about every route they had built in the past.

In order to understand why this is so, you have to understand that there are several very different kinds of fiber networks in the world – long-haul, distribution and last mile. Each kind of these networks is built in a very different way that doesn’t make them useful for the other two uses.

Consider long-haul fiber. This is the fiber that is built to connect cities and to stretch across the country and the world. The key to having an affordable long-haul fiber route is to carry each leg of the network as far as possible without stopping and having to repeat the signals. So generally long-haul fibers will only stop in major POPs in cities or wherever necessary along the way at repeater sites that are used to boost the signal.

I have a client who is sitting on one of the major east-west Interstates in the country. Every major long-haul carrier in the country is passing very near to him with owned or leased capacity on the long-haul route. My client was shocked when not one carrier would come off of the long-haul route to provide him with bandwidth. But it’s very costly to break into long-haul fibers, and every splice creates a little interference, and so long-haul providers are generally extremely reluctant to provide bandwidth anywhere except at established POPs along the fiber.

Distribution fiber is similar to long-haul fiber, but within local fiber networks. Distribution fibers are built to connect very specific points. The networks that cable companies build to get to their neighborhood nodes are a distribution network. So are networks built by telcos to reach DSL cabinets or networks built by cities to reach traffic signals and networks built by school boards to connect schools. These networks were generally built for the specific purpose of reaching those end points.

Distribution fiber routes share the same issue as the long-haul routes and the companies that own them are generally reluctant to break these routes along the way to connect to somebody that the network was not designed for. Certainly distribution fibers have very little use for providing service to many homes or businesses. There are generally not enough pairs of fiber in distribution routes, but more importantly they are not built with access points along the way.

The major characteristic of last mile fibers (and the one that makes them the most expensive) is the presence of many access points – using handholes, manholes, splice boxes or other ways to connect to the fiber where it’s needed. Providing these access points every few hundred feet adds a lot of cost to building fiber, and it’s very expensive, and often impossible to add access points after the fact to existing distribution fiber.

This is why I actually laughed out loud last year when I read about Comcast’s 2 gigabit product that they would sell to people who were close enough to their fiber. The Comcast fiber network is almost entirely a distribution network that connects from a central hub or ring to electronic boxes in neighborhoods known as nodes. When Comcast said a customer had to be close to their fiber, they didn’t mean that fiber had to be close the home, because distribution fiber passes lots of homes and businesses. They meant that a customer had to live close to a neighborhood node which are the only access points on a cable distribution network. Cable nodes are often placed where they aren’t an eyesore for homeowners and so I laughed because in most places hardly anybody lives close enough to a Comcast node to buy the touted 2 Gig service. In a city of 20,000 like mine I would be surprised if there are more than a dozen or two homes that would qualify to buy the Comcast service.

The same is true for most of the big ISPs. Verizon has built a lot of last mile fiber with FiOS and now CenturyLink is starting to do the same. But some of the other large companies like AT&T are very happy to talk about how close they are with fiber to homes and businesses without mentioning that the vast majority of that fiber is distribution fiber, which is close to worthless for providing fiber to homes and small businesses. This is not to say that companies like Comcast or AT&T don’t have any last mile fiber. They just don’t have very much of it and it’s generally limited to business parks or to greenfield neighborhoods where they’ve installed fiber instead of copper.