CCG Consulting

There is a tendency to think of high-cost areas—places where it’s expensive to build fiber—as only being in remote places with tough terrain. We’re going to see a lot of other cases of high cost locations that I think are going to surprise State Broadband Grant offices. There are many reasons that drive up the cost of building a landline network. Some places are high-cost by definition. I know of a small town in Arizona that is fifty miles away from the nearest other people.

In a recent press release, John Deere announced an agreement with Starlink to provide broadband for smart farm equipment in areas where cellular coverage is not strong enough. Anybody familiar with rural America understands that there are gigantic holes in cellular coverage, so this arrangement puts Starlink in a strong position with farmers. The decision means that John Deer will include a Starlink receiver in smart farm equipment along with a 4G LTE receiver.

A large majority of internet service providers seeking BEAD grants will be financing matching funds using loans. Matching funds are the contributions expected from providers—a 75 percent grant means 25 percent in matching funds. Very few providers carry enough cash on hand to consider using equity to pay for broadband expansion. This contrasts significantly with large telephone and cable companies that will be pursuing BEAD grants, most of whom will finance grants using equity. When it comes to financing using equity vs using loans, equity is the clear winner for the provider.

Some State Broadband Offices are taking a stab at social engineering by trying to force BEAD grant winners to offer low broadband rates. I understand the sentiment behind this because everybody in the industry involved with digital equity issues hears stories about homes that can’t afford broadband even when it is available. I know this feels like a broadband office is doing something good, but there are a number of reasons why this is a terrible idea.

I recently checked on the status of Dish, which is trying to become the fourth major cellular company in the country. Dish entered the cellular business in 2020 as a consequence of the merger of Sprint and T-Mobile. Dish was already under pressure at the time from the FCC to use its spectrum portfolio, and the FCC gave Dish until June 2023 to cover 70% of the U.S. population with cellular facilities.

From all over the country, I’m hearing stories about internet service providers who are gaming the Federal Communications Commission (FCC) broadband maps in order to block areas from being eligible for the BEAD grants. It’s relatively easy for a provider to do this. All that’s needed is to declare the capability to deliver a speed of 100/20 Mbps in the FCC maps. Providers can largely do this with impunity. The archaic FCC rules allow providers to claim ‘up-to’ marketing speeds in the maps.

From an internet service provider perspective, the BEAD grant program has progressed at a glacial scale. The BEAD grants were signed into law on November 15, 2021, as part of the Infrastructure Investment and Jobs Act. Folks in the industry assumed that BEAD would follow a timeline similar to the earlier grants that were awarded using federal CARES and ARPA funding, and vendors certainly thought that grant awards would start in 2023 with construction underway by 2024. And then nothing happened. The BEAD process got bogged down in paperwork and bureaucracy.

T-Mobile recently announced that it was able to aggregate six channels of spectrum into one bandwidth signal to a customer. The ability to wed channels together was one of the promises of the original 5G specification. The test combined two channels of 2.5 GHz, two channels of PCS spectrum, and two channels of AWS spectrum, creating an effective 245 MHz of aggregated channels. T-Mobile worked with Ericsson and Qualcomm to make this work and was able to create a single 3.6 Gbps connection from a cell tower.

The US Department of Agriculture just announced a new round of ReConnect grants. These are grants that can only be used to serve the most rural places in the country, and one of the qualifications is the distance between the grant market and the nearest towns. The homes served by the grants must not have any broadband available at speeds of at least 25/3 Mbps. A grantee must serve every home in a grant area. It’s not going to be easy to find a grant area that is rural and that has no homes where internet service providers claim the capability to deliver speeds of at least 25/3 Mbps.

It’s easy to understand the growth in download bandwidth due to people streaming higher quality video and similar uses. Why do you think upload broadband usage is growing even faster? According to OpenVault, average upload usage has increased 290% since 2019, while average download usage has increased by 270%. There are some obvious reasons why upload bandwidth usage has been growing. There is now a substantial percentage of people who work from home.