Tag: NTIA

Categories
Regulation - What is it Good For?

NTIA Releases Digital Equity Funding

The NTIA recently announced $811 million in funding for digital equity that is available for States and Territories. This round of funding is part of the $1.44 billion Digital Equity Capacity Grant program of money that will go to States to administer digital equity grant programs. $60 million of this fund was allocated to States in 2022 for planning purposes. The NTIA has taken so long to deploy these funds that these disbursements represent the grant funding allocated for the law for years 2022 through 2024. There will be a few more future years of grant funding.

The total funding for digital equity in the IIJA (Infrastructure, Investment, and Jobs Act) was $2.75 billion. It’s expected that the NTIA will launch the $1.25 billion Digital Equity Competitive Grant Program this summer that will make grants directly available to entities like political subdivisions of states, non-profits, schools, libraries, and others.

States have two months to ask for their share of the funding. In this round of funding, $760 million is available to 50 states, Washington, D.C. and Puerto Rico, $45 million for Native entities, and $8.4 million is allocated for territories. The NTIA established a tentative award amount for each government entity. As expected, the largest amounts of funding goes to the states with the largest populations – California ($70 million), Texas ($55 million), Florida ($41 million), and New York ($37 million). Even states with small populations get a significant amount of funding, like North Dakota ($4.5 million), South Dakota ($5.0 million), and Wyoming ($5.3 million).

The States will use this money to make digital equity grants in each state. These grants are not intended for ISPs, but for non-profits, local governments, and related entities. Expect to hear about grant programs in every state as the summer progresses.

These grants are part of the larger effort of the IIJA to tackle all aspects of the digital divide. BEAD grants are intended to address the deployment and availability of broadband. The soon to be defunct ACP plan was intended to address affordability. It’s unfortunate that the NTIA has finally gotten around to spending money for the digital equity effort just as the affordability component is dying.

These grants are intended to tackle digital equity, with the stated purpose for identifying and solving barriers for people to use digital resources. It seems likely that most of the grants under this program will be used to get broadband devices into people’s hands and teach them how to use broadband. I expect to see a wide range of creative proposals made to States under this wide umbrella of uses.

Most States have been telling the public about these upcoming grants for years, and many of the entities that can use the funding have gotten prepared to file digital equity grants. But I have to imagine that States have varied in the effectiveness of this communication and there may still be non-profits, and others that haven’t heard of these grants.

A lot of communities have taken the approach of trying to consolidate all of the various stakeholders in a community into one grant application – with the reasoning that this might be the best way to be sure a community gets its fair share of funding. That might mean pulling in schools, colleges, libraries, and others to develop digital training classes and curriculums. It might mean pulling in the folks who are equipped to refurbish computers or distribute laptops to the public. Any community that has not considered this consolidated approach still has a little time, although it seems likely that we’re only months away from States announcing grant application cycles.

Categories
Regulation - What is it Good For?

BEAD Pressure on Broadband Rates

State Broadband Offices and the BEAD grant process have designed grant rules that put pressure on ISPs to provide inexpensive rural broadband. But in doing so, I’m not sure that they understand the high prices that rural folks are paying for broadband today.

To provide an example, my consulting firm just finished a statistically valid broadband survey in a rural county. Most of the rural folks in this county are already spending more than $100 per month on broadband. The incumbent telephone company has largely walked away from the county, and there is no DSL available in most of the rural parts of the county. There is only one cell tower that has been upgraded to offer FWA broadband. This means that most rural residents only have access to expensive broadband.

There is one WISP that covers only a small portion of the county. The WISP’s rates are high, with a 10/1 Mbps product for $76 and faster speeds cost more than $100.

Cellular hotspots are expensive. For example, T-Mobile has hotspot plans that vary in price from 5 gigabytes of data for $20 to 50 gigabytes of data for $50. AT&T and Verizon have similar prices for hotspots. Thos rates sound low until you realize the cost of buying broadband over the data caps. For example, Verizon offers 150 gigabytes of data for $110.

The data caps on hotspots put horrendous pressure on a household. OpenVault recently said that the average U.S. home uses 641 gigabytes of data per month. It’s hard to imagine trying to restrict a home to using less than 100 gigabytes per month to keep the bill under $100 per month. During the pandemic, I talked to several parents of students working from home using a hotspot who were paying more than $500 per month through extra bandwidth fees to get the same kind of bandwidth that homes with unlimited bandwidth take for granted.

Satellite broadband is mostly over $100. Starlink prices start at $110. HughesNet advertises unlimited data, but their plans have data caps for all practical purposes. For example, a plan with 200 gigabytes of priority data costs $109.99. They label the plan as unlimited usage, but data usage above 200 gigabytes is choked to extremely slow speeds. All plans require a 2-year contract.

Viasat is even more expensive. For $119.99 per month a customers gets 100-150 gigabytes of high-speed data and then unlimited choked and slow broadband. 500 gigabytes of usage is $249.99.

In this county, most rural residents are already paying over $100 per month for broadband. Since many of the plans include data caps, 4% of residents report spending more than $150 per month.

There are state BEAD rules that are trying to force rates down to rates between $50 and $75 per month for gigabit speeds. I find several faults with these rate-setting efforts:

  • The rates the Broadband Offices are seeking are typically far cheaper than what the large cable companies charge – the companies that have the most customers in almost every state. It’s hard to think of a reason why grant offices want rural rates to be lower than urban rates, particularly when operating costs are higher in the rural areas.
  • The low rates don’t acknowledge that rural residents are already paying a lot more for inferior broadband. Do we really need to cut what folks are paying in half if they are going to upgrade from crappy broadband?
  • The high rates are counterproductive. I talked to an electric cooperative this week that has zero interest in BEAD grants due entirely to the insistence on low rates. They understand the rates necessary to win BEAD would create a losing business plan.
  • Probably most important is that the IIJA legislation strictly forbid NTIA and the States from using the grants for setting rates – and yet States are openly doing it anyway. Why isn’t the NTIA rejecting these rate plans?

This is one more issue that I find ironic about the BEAD process. The Department of Commerce and NTIA have repeatedly said that BEAD grant rules are conservative to protect taxpayers. However, putting tremendous pressure on ISPs to have low rates does the exact opposite and will put ISPs at risk for failure after taking the grant funding. There seems to be an underlying assumption that ISPs have unlimited and hidden profit reserves and can absorb whatever penalty grant folks want to invent. That may be somewhat true for a few giant ISPs, but it sure isn’t true about everybody else.

Categories
Regulation - What is it Good For?

The Buy America Waiver for BEAD

If there is any upside to the interminable delays in the BEAD grant process, it’s that American manufacturers have had the time to gear up to build the components needed to build broadband networks in the U.S.

When the BEAD grants were first announced, there was a widespread expectation that the industry was going to need a lot of blanket waivers from the tough Build America, But America (BABA) rules. But in the last two years, a wide range of equipment manufacturers have begun making gear in the U.S. and gone through the process of being approved as a BABA vendor.

Early in the process, the NTIA announced that it hoped that as much as 90% of the materials needed to build networks would be made in the country. At that time, that sounded like an impossible goal. But vendors of all sorts now have an American-made product. In a recent NTIA blog, NTIA claims there are now reliable sources of fiber, fiber cables, electronics, and enclosures – the key elements of a fiber network.

The  Department of Commerce just announced a minor BABA waiver for BEAD that recognizes that U.S. chip manufacturing will not be ramped up in time to supply the millions of chips needed for BEAD. The limited waiver also covers some non-optic glass inputs that are used in the glass manufacturing process. The limited waiver will recognize the chip issue by relaxing the rule that 55% of optical terminals and optics must be U.S.

The bottom line of the limited waivers is that NTIA is still estimating that 90% of the materials used to build BEAD networks will be America-made. That is phenomenal, and it’s great to see a big chunk of the $45 billion in grants supporting American manufacturers.

This is a drastic change since the $2.5 billion BTOP grant program in 2009 that was funded by the American Recovery and Reinvestment Act. Those grants had to issue widespread waivers of the BABA requirements since there was not a lot of American manufacturing of fiber components at the time.

One of the best long-term consequences of the BEAD effort is that U.S. factories and jobs can continue to make network components in the U.S. The determination to adhere to the BABA rules is also being applied to a wide range of other components that are being funded by the Infrastructure Investment and Jobs Act. That’s going to pay dividends in the U.S. economy for decades to come.

 

Categories
Regulation - What is it Good For?

Gaming the BEAD Maps

From all over the country, I’m hearing stories about ISPs who are gaming the FCC broadband maps in order to block area from being eligible for the BEAD grants. It’s relatively easy for an ISP to do this. All that’s needed is to declare the capability to deliver a speed of 100/20 Mbps in the FCC maps.

ISPs can largely do this with impunity since there is nothing wrong with them doing this. The archaic FCC rules allow ISPs to claim ‘up-to’ marketing speeds in the maps, and ISPs can self-determine the speed they want to declare.

A lot of ISPs decided to start claiming 100/20 Mbps capabilities in the last update to the FCC maps. This is being done across technologies. We’ve suddenly found rural DSL claimed at speeds of 100/20 Mbps and faster. Older DOCSIS 3.0 cable networks that previously declared upload speeds of 8 or 10 Mbps are suddenly in the FCC maps with 20 Mbps upload speeds. Some WISPs and FWA cellular carriers are claiming speeds of 100/20 Mbps across a large geographic footprint that doesn’t match the capabilities from its tower locations.

It’s not hard to understand the motivation for this. We’ve seen this before. Just before the FCC was to announce the eligible areas for the RDOF reverse auction, CenturyLink and Frontier declared that tens of thousands of Census blocks suddenly had the capability to deliver speeds of 25/3 Mbps. This was the speed in the FCC maps that would have made these areas ineligible for the RDOF auction. The FCC rightfully rejected these last-minute claims. But if the telcos had been less greedy and had declared a smaller number of Census blocks, they may well have gotten away with the deception. The motivation of these telcos was obvious – they didn’t want anybody else funded to bring broadband to their monopoly service territories, even though they were not delivering decent broadband.

The motivation to do this today is identical. When an ISP declares 100/20 Mbps speed capability, the area is removed from BEAD grant eligibility. The ISP operating in that area will have squelched a new competitor from entering the market using BEAD grants.

The ISPs aren’t finished with this effort. I know several communities where the cable company recently knocked on the door at City Hall to say they are going to upgrade the cable networks this year. These communities are expecting that the cable companies will try to kill BEAD eligibility by declaring the upgrades in the upcoming BEAD map challenges being done in each state.

The NTIA’s and the FCC’s response to this issue is that it is the responsibility of communities to police this issue and to engage in the upcoming state BEAD mapping challenges. I can barely talk about that position without sputtering in anger. Most counties are not equipped to understand the real speeds that are available from an ISP. From my own informal survey, I don’t think that even 10% of counties are considering a map challenge.

But even communities willing to tackle a map challenge will find an incredibly difficult time. First, many states only have a 30-day long map challenge process, and some of the challenges are already underway, with many more challenges to start very soon. Communities have to somehow convince customers of the suspect ISPs to take a speed test multiple times a day in a specific manner. That is hard to do under any circumstances, but particularly hard to do considering the short time frame and specificity of the challenge process.

Consider a real-life example of the difficulty of doing this. I know a county where a WISP claims 100/20 Mbps speed for over five hundred homes in a corner of the county. The county purchased trailing 12-months of Ookla speed test data, and there was only one speed test for this ISP in that area in the last year. If the State Broadband Office won’t accept that as proof for a valid challenge, the County can’t convince nonexistent customers to take a speed test.

This feels like another example of the NTIA ‘protecting the public’ by requiring a lot of proof for a map challenge. The fact is that the folks living in rural areas know the ISPS that work and don’t work. If a ISP appears with decent speeds in an area with no good broadband, word of mouth spreads quickly and a lot of people try the ISP. If a new ISP gains almost no customers, they are either making bogus claims of speed capabilities or they have prices that nobody can afford. Market success should be one of the criteria for a map challenge, and States should invalidate claims by any ISP who have only a sprinkling of customers in an area from blocking BEAD grants. Unfortunately, the FCC does not gather actual customer data in the same detail as the FCC maps – they only gather the speeds claimed by ISPs and the supposed capability to connect customers within 10 days.

The bottom line of all of this is that map manipulation is going to mean that a lot of areas will be excluded from the BEAD grants. Counties are ill-equipped to do the map challenges, and even motivated counties will have a hard time mounting a successful map challenge.

I expect my blogs in a few years will be full of stories of the neighborhoods that got left behind by BEAD and which still won’t have an ISP option with decent speeds. I’m predicting this will be millions of homes. Unfortunately, those homes will be scattered, and it will not be enough homes to drive another big grant program. I fear these folks will be left behind, served only by the ISP that exaggerated the speeds in the FCC map. In the case of the FCC maps, it seems that cheating pays.

Categories
Regulation - What is it Good For?

The Sudden Mad Rush of BEAD

From an ISP perspective, the BEAD grant program has progressed at a glacial scale. The BEAD grants were signed into law on November 15, 2021, as part of the Infrastructure Investment and Jobs Act. The general anticipation is that it would take a year before State Broadband Offices would begin seeing the first 20% of funds and could begin awarding grants. Folks in the industry assumed that BEAD would follow a timeline similar to the earlier grants that were awarded using federal CARES and ARPA funding.

Certainly, the entire vendor community thought grant awards would start in 2023 with construction already underway this year. Fiber and electronics vendors cranked up production to meet the expected rush of orders. Construction contractors started freeing up slots in their work plans to accommodate BEAD grants. And then nothing happened.

The BEAD process got bogged down in paperwork and bureaucracy. The reliance on the new FCC maps has been a complete boondoggle, and the maps are still terrible in many ways. The NTIA required states to write extensive grant and policy manuals which were never required for earlier state grant programs. The paperwork process for states has been numbing.

So here we sit 28 months after the announcement of the grant program and no grant money has flowed to states. Communities who heard about possible federal broadband grants at the end of 2021 are still waiting for the grant process to start and much of the public now believes these grants will never happen.

What is most mind-boggling is that BEAD is part of an infrastructure program, and the whole point of the IIJA was to spend money quickly to improve infrastructure and spur the economy. There has been pressure from the White House since the beginning to get the BEAD money spent and broadband networks under construction.

After the delays and endless paperwork, States will now be under tremendous pressure to award the grants and quickly shove the money out the door. It’s scary to look at the proposed timelines in most states. Some States are proposing steps like announcing the geographic boundaries where they will accept grants and then expect grant applications a month later. ISPs will have to somehow scramble to determine the cost and economics to build to specific geographic boundaries in a timeline that most will not be able to meet. This one requirement will be the final straw for many ISPs since they can’t get the engineering and business plans done that quickly. Even the giant ISPs are going to get overwhelmed by the proposed short timelines.

If there is any one part of a grant program where the process should be careful and deliberative, it’s the process of choosing grant winners. States are now expected to rush through that process and award grants as soon as possible this year.

This is ironic in a program where the NTIA took a lot of slow and deliberate steps to craft policies that would shield them from states making bad grant awards. But it’s almost guaranteed that State Broadband Offices are going to make big mistakes when rushing through grant applications from ISPs that they really don’t know. Anybody who has ever reviewed grant applications knows that every application paints a picture of an ISP that walks on water, and it’s not easy for inexperienced reviewers to distinguish good proposals from shoddy ones. A fast award process means less time for due diligence.

Even after States pick winners, there is a huge amount of work to do before construction can begin. Some State broadband offices have a ponderous process for negotiating and approving contracts with grant winners. I’ve seen examples where this process took almost a year. Once a grant contract is in place, many BEAD grants will require that time-consuming environmental studies be performed before any work can begin.

There might be a few tiny BEAD projects that will start construction before the end of this year. If so, NTIA and politicians will make a big splash with ribbon cuttings to show that the BEAD process is working. But most BEAD award winners won’t be able to start design engineering and order materials until 2025. Then, the giant industry crush that everybody feared will begin. Vendors will get overwhelmed with orders, and we’ll suddenly hear stories of supply chain issues again.

I always expected that the States would be under very different timelines, which would have strung out the impact on the industry over several years. But every grant office is now using the same starting gun, and all are going to race to get grants awarded at the same time.

As many have already predicted, a hurried process this year will make it even easier for State Broadband Offices to take the safe pick and award money to the giant, well-known ISPs. Giving large grants to big companies means fewer contracts to negotiate and a lot less paperwork. The pessimist in me wonders if this has been the plan all along.

Categories
Regulation - What is it Good For?

Why ReConnect Now?

The USDA just announced a new round of ReConnect grants. These are grants that can only be used to serve the most rural places in the country, and one of the qualifications is the distance between the grant market and the nearest towns.

The new program provides $600 million in new funding, as follows:

  • $150 million in grants that must include at least 25% matching
  • $150 million is being offered as 100% grants with no matching for tribal areas
  • $100 million is available as 50% grant and 50% USDA loan
  • $200 million is available as 100% USDA loans.

There are a lot of grant scoring points awarded for serving areas with high poverty rates or that are socially vulnerable. The grants also favor projects that pay prevailing wages.

The homes served by the grants must not have any broadband available at speeds of at least 25/3 Mbps. A grantee must serve every home in a grant area. Anybody who has been following my blogs about the broadband maps knows that it’s not going to be easy to find a grant area that is rural and that has no homes where ISPs claim the capability to deliver speeds of at least 25/3 Mbps. A few other consultants I’ve talked to are wondering if there will be enough markets that can meet the ReConnect grant parameters.

But the oddest thing about these grants is the timing. This grant program was announced just as states are gearing up to award the much larger BEAD grants. Having both grant programs running concurrently is going to cause all sorts of problems for both ISPs and State Broadband Offices.

Two years ago, the Biden administration directed the FCC, the NTIA, and the USDA to coordinate everything associated with federal funding for broadband. It’s pretty obvious that there is no coordination happening.

Last year, the FCC released its A-CAM order only three weeks after the NTIA announced the BEAD allocations that would go to each State. The A-CAM program provides a subsidy to small, regulated telephone companies from the Universal Service Fund to upgrade rural broadband to speeds of at least 100/20 Mbps. The timing of the FCC announcement made no sense because the allocation of BEAD funding to states would have changed significantly had the A-CAM locations been removed from the universe of unserved locations before the allocation to states.

The timing of the FCC announcement gave the appearance of the FCC wanting headlines about how it’s tackling rural broadband right after NTIA got all of the headlines. It’s impossible to believe that the FCC couldn’t have provided this information to NTIA before the $42.5 billion was allocated.

It’s hard to imagine how State Broadband Offices can handle the concurrent grant program. What does a State do with an area where there is a pending ReConnect grant? They can’t take it off the table because the ISP might not win the ReConnect grant. If the State awards a BEAD grant in the same area as a ReConnect award, they will probably be duplicating or overlapping the ReConnect grant.

An ISP considering a ReConnect grant has a similar dilemma. Should they also apply for a BEAD grant for the same area to be safe? What does an ISP do if a State awards a BEAD grant in some portion of the ReConnect area before the ReConnect awards are announced?

It’s not hard to understand why the USDA did this because once BEAD grants start getting awarded, there might not be many places left that meet the ReConnect eligibility rules. Both grant programs provide grants to the same areas.

It’s clear that the FCC and USDA ignored the White House directive to coordinate grants and have done the opposite. I have to frankly wonder how much of this boils down to policymakers who want to make grant awards for the headlines and photo ops at ribbon cuttings. This duplicate effort is not making it any easier to solve the rural broadband gaps.

Categories
Regulation - What is it Good For?

Will Small ISPs Pursue BEAD?

In a recent article in FierceTelecom, U.S. Commerce Secretary Gina Raimondo was quoted as urging small ISPs to participate in the upcoming BEAD grants. She was quoted in the article in a speech made to small ISPs saying, “We want you to apply. We need you to apply. We will work with you and hold your hand so that you can apply. The message is: Prepare to compete and win. You can win.” She went on to say that small ISPs are the only ones who will likely be interested in serving some of the most remote places in the country.

I was honestly floored by these quotes. I’ve been working with broadband grant programs for decades, and the requirements for BEAD are massively over the top compared to other broadband grant programs. Raimondo is quoted as saying that the grant requirements have been crafted to “protect taxpayers.” The first day I read the legislation I knew that small ISPs would have huge problems making these grants work.

I’ve been hoping that State Broadband Offices would soften the harsh requirements that were suggested or mandated by NTIA. Unfortunately, most State Broadband Offices did just the opposite and doubled down and made it even harder to justify pursuing a BEAD grant. As an example, the legislation offered that BEAD grants could fund as much as 75% of the cost of building a rural project. However, most state grant scoring rules are pushing that number a lot lower. There are states that only give worthwhile grant points to somebody taking a 35% or 40% grant. It’s not hard to understand the reason for this. A lot this comes from pressure from the NTIA to make sure that the BEAD money can be spread around enough to serve all unserved locations. But all of the policy folks don’t seem to understand the basic financial fundamentals of serving broadband in rural areas. This one issue alone is making it impossible for many ISPs to even contemplate a BEAD grant.

But it doesn’t end there. The requirement to have an irrevocable letter of credit that feels like punishment to small ISPs. I have one client that would struggle to somehow come up with $3 million needed for the BEAD matching requirement. The letter of credit adds over $1 million in additional investment for this small ISP – and that breaks the financial model. The folks who made this requirement don’t seem to realize that a lot of small ISPs could never qualify for a letter of credit of this magnitude.

The most expensive requirement might be the requirement to pay prevailing wages that are being required by many states. In all of the business plans we’ve examined, this requirement increases the cost of building a network by 15% to 20% (which then also inflates the matching and the letter of credit).

I understand the federal goal of the NTIA to protect the public, but are they really protecting the public when the grant rules favor huge companies over small ones? It was clear from the first day of the process that NTIA is more worried about not having any BEAD failures than it is about having wide participation by ISPs – you can’t have both. The funny thing is that the three items listed above have added so much cost to building a BEAD-funded network that the chance of an ISP failing is far higher than it would have been without these requirements. Networks that cost too much to build are going to be at risk in future years when ISPs realize that it was a mistake to take the grants.

In addition to the high costs that come from the NTIA being super-cautious, the paperwork process for reporting on the grants is also way over-the-top. A lot of ISPs who take this money are going to regret it when they see the volume and frequency of reports that are going to be due for years after taking the money.

On top of all of this, the grant maps are a mess in many places due to the decision to allow licensed fixed wireless ISPs to claim a monopoly for rural locations simply by reporting a speed of 100/20 Mbps to the FCC. It’s virtually impossible to dispute this kind of claim in areas where the WISPs don’t have many active customers. The FCC BEAD map in many rural areas is a jumbled mix of served, underserved, and unserved households in the same rural neighborhoods. It’s almost impossible to make a workable business plan out of the mess that has been created by the FCC maps along with the residual mess created by RDOF.

There are going to be small ISPs who will brave BEAD and win grants. But a lot of ISPs cannot tackle BEAD even if they wanted to. Their balance sheets are not iron-clad enough, and they don’t have the borrowing power for the matching and letter of credit. Many can’t find a coherent service area due to the mess created by the maps.

I had to laugh at the “we will hold your hand” quote. Is the NTIA going to go to the bank with a small ISP to convince the banker that they should take a chance on lending a lot of money to a small company? There is only one way that the NTIA could increase participation in BEAD – and it’s something that other grant programs have done. If NTIA wants small company participation, it could give State Broadband Offices the ability to waive the harshest rules for smaller ISPs. I’m pretty certain that is not being discussed.

Categories
Regulation - What is it Good For?

Another BEAD Mapping Mess

Now that State Broadband Offices are undertaking mapping challenges, I’m sure many of them are seeing the phenomenon that I’m going to describe in today’s blog. When the NTIA decided to allow licensed fixed wireless to be counted as reliable broadband, they made a monstrous mess of the BEAD maps and greatly drove up the cost per passing to implement BEAD.

Before expanding on that claim, let me show you a typical map. This map is a small part of a county where all of the homes would be considered to be unserved if licensed fixed wireless was not considered to be broadband. Every home on this map has zero landline broadband option, and before wireless carriers recently claimed to be providing service, their only broadband option was satellite.

On the map, the blue dots are locations that are still counted as unserved on the State BEAD-eligible map. But the orange locations are all shown as served due to a claim that the homes can be served with fixed wireless.

The map is a real hodgepodge of served and unserved homes. Anybody wanting to claim the BEAD funding for this area can only be funded to reach the blue dots. They can’t claim any costs or get any grant reimbursement for the orange dots.

The key thing to notice is that an ISP that wants to build fiber will still have to build along every road on this map. There is zero savings on fiber construction compared to a network where every home is considered to be unserved. This has a huge ramification for the BEAD grants. While the cost for building fiber is identical in both cases, the cost per passing is almost double when considering only the unserved blue dots. This is important because State Broadband Offices have calculated a target cost per passing to build broadband – and in situations like this one, the cost per passing might have doubled from something like $6,000 per passing to $12,000 per passing. The fiber doesn’t cost more, but the all-important cost per passing goes off the charts, and this area will be considered to be high-cost.

This wouldn’t be much of a problem if this is only found in a few places in a state. But I’ve been recently working with ISPs in several Midwest states, and we’re seeing this phenomenon everywhere. In one county I just examined, two-thirds of the county looks just like this map.

I think there are going to be several bad consequences of the NTIA ruling on licensed wireless. First, states have been doing back-of-the-envelope math to see if they have enough money to serve everybody.  If they have large areas similar to this example, the actual cost per passing will much higher than they have assumed, and they will not have nearly enough money.

This is going to be a nightmare when administering a grant in this area. Is a State Broadband Office going to meticulously make sure that it doesn’t pay for pedestals or handholes that might reach a served location? Is a Broadband Office not going to want to fund extra fibers and spices that are used to reach all of the homes?

This also has a huge impact on ISPs pursuing BEAD. A BEAD winner building fiber is clearly going to offer broadband to every home on this map. But that means they will have to cover the full cost of pedestals, drops, and electronics for the supposedly served customers. This means their actual out-of-pocket costs are going to be far higher than what the grant calculation will recognize. If the BEAD calculation recognizes that the ISP is contributing 25% of the cost of the project, the ISP will actually be contributing something much higher for this area.

As an aside, the BEAD map also includes oddities. In this case, the FCC fabric has placed locations far into the middle of farm fields where no homes exist. There are a few homes that don’t show up on this map. There are also a few places where there are multiple dots where there are not multiple homes. In two locations, the FCC has counted the same house as both served and unserved. But ISPs shouldn’t worry about this – the FCC and NTIA assure us that the BEAD maps are solid.

Even worse than all of this, the chances are that nobody knows if the wireless ISP can actually serve any of these locations. The FCC originally was going to require wireless ISPs to provide heat maps from each tower. They also originally had a requirement that a licensed engineer had to sign off that the claimed coverage and speeds are technically feasible. Unfortunately, the FCC excused these requirements, and wireless carriers can claim any coverage and put the burden on ISPs and communities to prove they are exaggerating coverage or speed capabilities – something that is nearly impossible to document. It might turn out that all of the orange dots on this map are unserved – but that’s a whole different BEAD disaster to consider.

Categories
Regulation - What is it Good For?

Serving the Hard-to-Reach Areas

It’s clear in reading the various proposed BEAD rules that State Broadband Offices are following the lead of the NTIA and putting a lot of emphasis on making sure that everybody gets served with the grant funding. I’m not sure they understand the costly consequences of this emphasis. Let me use two real examples to highlight how hard this is going to be.

I was working with a County government that was providing an ARPA grant for ISPs to build fiber. The County and a cooperative were negotiating a grant that would bring broadband to about half of the unserved locations in the county. However, the proposed map from the cooperative left out a pocket of fifteen homes. The County really wanted these locations to be added to the grant because it was clear that after this grant that nobody else would likely consider building to this small pocket of folks.

The cooperative explained that the cost of getting to these few locations was astronomical and they didn’t want to ask for that much grant funding. This particular pocket has about every permitting issue you could imagine. The pocket is bounded on one side by an interstate highway and on the other by a major dual lane state highway. There are no exit ramps or underpasses nearby from either highway. There is also a railroad line that blocks getting to this area. Finally, the poles are in bad shape and this area is largely all rock. The cooperative said that it would cost over $60,000 per location to get fiber to these folks – and the County agreed that it was not willing to provide the needed funding.

This area could be served by a WISP, but there aren’t any WISPs serving close to this area today. Because of that, I’m not sure that building a new tower and figuring out backhaul would make any sense for these few locations. Would a distant WISP want to take on future truck rolls to this area?

I saw a similar situation in a rural county in New Mexico. There is an isolated part of a county with about one hundred passings that is far away from everybody else. This county has the extreme terrain you see on postcards of the West. The terrain is all rock and the utility poles are in bad condition. In many places there are no shoulders on either side of the winding roads. We figured the cost to bring fiber to this area is nearly $7 million (and that was calculated before the inflation of the last two years).

We instantly pivoted to see if fixed wireless made sense, but there are also a lot of impediments putting wireless in the area. It would require a whole string of towers to snake through the terrain, and there are major obstacles getting rights-of-way for constructing new towers because of the current use of the land. It also looks impossible to get electric power to the towers. Our estimate for building a wireless network was not much lower than the cost of building fiber.

I’m not sure that State Broadband Offices are braced for these extreme places. There are similar pockets of extremely high-cost areas in the majority of counties I’ve examined. When SBOs have budgeted the amount of money needed to get everywhere, I’m not sure they’ve built in the extreme examples where costs are $50,000 to $100,000 per passing, which can eat up a State’s BEAD money in a hurry.

The reason this is an issue is that the NTIA rules expect states to fund 100% of unserved locations – 99% coverage will be considered a failure. Serving these extreme locations has a priority over funding many more underserved locations and anchor institutions.

I don’t have an answer for this. If I was designing a grant program from scratch, I would probably conclude that super high-cost locations shouldn’t be funded unless there is excess grant funding – but the NTIA rules don’t leave any latitude for this decision.

These are the kind of places that would best be served by somebody like Starlink. But even Starlink doesn’t work for a lot of the homes in New Mexico that are nestled into rock cliffs. This leads me to conclude that there are some passings in the country that are largely unservable.

Many States are saying they don’t have enough funding to serve everybody, and when you consider that every state has some of these extremely high cost locations, it’s easy to believe them. Interestingly, a few states seems to be skirting this issue by only looking at the hardest-to-serve places after they’ve given grants for everybody else. I have to imagine that’s something that the NTIA will find fault with, but it’s the right approach to take.

Categories
Regulation - What is it Good For? Technology

The Licensed Wireless Dilemma

As we head into the final set of map challenges leading up to BEAD grants, State broadband offices are going to be wrestling with a host of sticky issues for the map challenges. One of the stickiest issues is how to recognize the service areas for ISPs that use licensed spectrum to deliver rural broadband.

The licensed wireless issue comes from a ruling from the NTIA that, for purposes of BEAD grants, fixed wireless networks using unlicensed spectrum are deemed to be unreliable. That means that WISPs that serve customers with unlicensed spectrum are assumed to be unserved – regardless of the speeds being delivered. This ruling set off a firestorm of comments for and against the NTIA decision, but the original ruling still stands for purposes of determining BEAD grant-eligible locations.

The corollary to that decision is that any area covered by wireless technology using licensed spectrum is considered to be served if the ISP can deliver speeds of at least 100/20 Mbps. There are two sets of ISPs using licensed spectrum to deliver broadband – cellular carriers and WISPs using licensed CBRS spectrum. The sticky question for a State broadband office is how to verify the service area of an existing wireless ISP using licensed spectrum. It’s not a straightforward answer.

Can a Customer Really Be Served? All ISPs are only supposed to claim locations in the FCC maps that the ISP can install in ten working days. It’s fairly easy to determine if a wireline ISP can serve a location just by looking at the presence of a physical wired network. It’s much harder to apply the 10-day test to define the coverage area of a wireless network. The starting assumption for BEAD grants is that claims of coverage made by ISPs in the latest FCC maps are considered to be accurate unless somebody challenges them.

There is a natural distance limitation set by physics for how far a given spectrum can deliver a strong wireless signal. All wireless transmissions get weaker as the distance from a tower increases, and there is some distance where a radio can’t deliver a guaranteed 100/20 Mbps signal. It doesn’t take much searching through the FCC mapping to find wireless ISPs that claim coverage across large expanses. A cellular carrier tends to only be on the tall towers in rural areas, but a WISP might be covering a large area by using secondary towers on grain elevators, monopoles, or other structures to increase coverage. A Broadband office needs to know the location of radios as a starting point to understand coverage.

The more challenging issue is to know if a specific customer can be covered. Physical impediments like hills can make it impossible to reach customers from a given tower site. While radios have gotten better at going through trees, heavy woods can still knock down the speeds below the 100/20 Mbps threshold required to be considered as served. WISPs that operate in challenging topographies will tell you that they often don’t know if they can serve a customer until they visit the customer and try to find a signal.

WISPs might point to wireless propagation studies to prove their claimed coverage area, but anywhere other than a flat, treeless plain, a propagation study is more theoretical than reality. If there is a map challenges, a State broadband office still ought to ask for any propagation studies. It would be a lot easier to believe claimed coverage areas (for all technologies) if the FCC had kept the rule that FCC map reporting must be certified by a licensed engineer – unfortunately, that requirement has been waived at a time when we’re striving to get the maps right for BEAD.

The Stickiest Issue. The biggest challenge for State broadband offices is how to apply the NTIA rules for licensed and unlicensed spectrum. Most WISPs using licensed 3.5 GHz CBRS are also using unlicensed 2.4 GHz, unlicensed 5.7 GHz, and unlicensed CBRS spectrum. WISPs are also anticipating the upcoming ability to use the unlicensed 6 GHz spectrum that brings gigantic channels and promises much faster speeds.

This raises a lot of questions about how to apply the NTIA ruling on unlicensed spectrum. I think all of the following questions can validly be asked, but since the NTIA hasn’t provided any specific guidance, I haven’t the slightest idea how to answer any of them:

  • Does a WISP that claims to be licensed have to serve every customer using licensed spectrum? Does a WISP using licensed spectrum meet the NTIA rule if it also serves some customers with unlicensed spectrum?
  • Is there some threshold percentage of licensed versus unlicensed customers that must be met to be considered as licensed? Is there a minimum threshold? What if a WISP serves only a few customers with licensed, or even just one – would it still be considered as using licensed spectrum? What if the WISP owns the spectrum license but serves all customers with unlicensed spectrum?
  • In defining what is served today, can the WISP only claim customers as served with licensed spectrum that can also reach a speed of 100/20 Mbps?
  • Another interesting issue to consider is when a tower using licensed spectrum delivers broadband to customers outside of the spectrum license footprint – are those customers considered to be served if the WISP is violating its license?

Why This Matters. BEAD has an obligation to bring broadband to every unserved location in each state. It’s incredibly difficult for a State broadband office to verify the claimed coverage footprint of an ISP that is using licensed spectrum. It’s hard to define the distance from a radio where speeds of 100/20 Mbps can’t be reached since that distance will vary according to obstacles in the signal path like trees. It’s hard to identify homes that don’t have a good enough line-of-sight be to served. And it feels overwhelming to know what to do about a WISP that mixes licensed and unlicensed spectrum. I don’t envy a State broadband office that gets challenges on this issue because it’s not an easy issue to understand or resolve.

Exit mobile version