The Grant Drop Dilemma

The short time frame for many state grants is out of synch with the reality of the way that internet service providers (ISPs) can add customers to a network. Grants generally pay only for the capital cost of assets. The largest cost for fiber grants is likely the cost of the fiber running up and down streets to pass customers. The second largest cost in many grants is the fiber drops that connect from the street to customers. In short, an ISP has two concerns with a grant with a short timeframe. Make sure to ask for enough money upfront. If you only ask for enough money to install 50 percent of customers and then exceed that, then you won’t get extra grant money to cover them. But on the flip side, an ISP must realize that there is often going to be a good chance of not meeting the target penetration rate in a short-term grant. Even if you eventually get 75 percent households in a grant area, the grant will only reimburse you for customers who were installed before the last day covered by the grant period. For short grants of two years, that means starting the sales process early and diligently to get customers sold and installed before the funding clock runs out.

[Doug Dawson is President of CCG Consulting.]