Is 75% Grant Funding Enough?

It seemed like a really big deal when the ReConnect program and the new Broadband Equity, Access, and Deployment (BEAD) grants upped the amount of federal grants to 75% of funding. But, I still see a lot of situations where a 75% grant is not enough assistance to create a viable ongoing business plan. It is the interplay of many variables that determine the percentage of grant funding that is needed for any particular broadband provider in a given market. For example, if two broadband providers have the same cost per passing, interest rate, and expected customer penetration, the broadband provider with the lowest broadband rates will need more grant funding. The National Telecommunications and Information Administration (NTIA) is going to allow for some grants greater than 75% based upon categorizing areas as high cost. This is a mixed benefit because being classified as high-cost can also mean that the BEAD grants can fund a technology other than fiber. The NTIA hasn’t announced its high-cost parameters yet, but it seems likely that this will be some variation of cost per passing. The agency still hasn’t released that number, and I’m hoping that’s because they are finding out that concentrating on just one of the key variables cannot suffice to define a high-cost area. Ultimately, there has to be enough future revenue generated by broadband providers to satisfy the debt used to finance the matching grant funds. So, if that means starting with higher rates, then that’s what is needed to accept grant funding.