Quantifying Grant Matching

For anyone planning on funding a broadband project with a grant, there are some important costs to consider. First, grants don’t cover all assets. Most grants cover network assets and assets needed to connect to customers, but grants typically don’t cover vehicles, computers, furniture, test equipment, and any other assets needed to launch a new internet service provider (ISP) or a new market. Grants also aren’t going to cover major software costs like upgrades to billing systems or marketing software. They cover only minimal amounts of expenses, but they don’t cover any of the costs of operating the business until the time that revenues are sufficient to cover expenses. Grants often cover the cost of preparing the grant, and some grants give some funding for the overhead costs of tracking future grant paperwork – but many don’t even cover this. But grants don’t cover the big expenses of launching a new market. They won’t cover additional bandwidth or maintenance agreements on the new technology. Getting into a new market often means fees to consultants, lawyers, and accountants, as well as all other operating costs. Grants also are not going to cover the cost of financing – with the biggest expense usually being interest. The amount of the uncovered costs will largely be a function of how long it takes to launch a new market and connect customers. Connect customers quickly, and the operating loss might be small. Get stuck with supply chain issues that delay construction after you’ve already hired a few new employees, and losses could be significant.

[Doug Dawson is President of CCG Consulting.]