Fiber Connect: The Promise and Pitfalls of Private Funding

Broadband mergers and acquisitions have increased five-fold over the last 10 years, according to Jeff Brown, segment marketing manager for Calix. And Brian Vu, chief investment officer for Connect Humanity, estimates that there are about 50 investment funds at an average size of $2.5 billion that have invested or could invest in broadband. All that could be good news at a time when some industry observers are questioning whether the amount of broadband funding that the government has made available will be sufficient to get broadband to all Americans. Kristy Szabo, director of consulting for Vantage Point Solutions, estimates that there is a gap of $150 billion between the government funding available for broadband deployments and the amount needed to make fiber broadband available nationwide. CostQuest estimates the cost to reach nationwide broadband goals at $300 billion, of which government funding will cover about $100 billion. A key question is how interested private investors will be in investing in projects that also receive government funding. As Claude Aiken, chief strategy officer for Nextlink Internet, noted, the strings tied to private capital are based on financial performance and private investors may not be accustomed to the sorts of strings that are tied to public funding—such as meeting buildout deadlines or using minority contractors.