Subsidizing Rural Broadband Networks

The National Telecommunications and Information Administration preparing to award over $44 billion to construct rural broadband networks. Almost by definition, these networks will be built in rural areas where it’s hard to justify a business plan where revenues generated from the grant areas are sufficient to fund the ongoing operation and eventual upgrades to any broadband networks. There has been a tickle in the back of my brain for the last year wondering why companies like AT&T, Charter, and Comcast seem to be willing to pursue Broadband, Equity, Access and Deployment (BEAD) grants for rural areas where it will be a challenge for revenues to fully cover costs. These companies have been working feverishly to ditch copper networks, and it’s hard to understand why they are now willing to go back into rural areas that have low density and long drive times. But it recently struck me—these big companies are betting on the Federal Communications Commission creating a future subsidy program for areas being built with the current flood of BEAD grants. My bet is that we’ll barely make it through the BEAD grant awards before the big companies start lobbying for new subsidy programs that benefit them more than other rural internet service providers.