CCG Consulting

For anyone planning on funding a broadband project with a grant, there are some important costs to consider. First, grants don’t cover all assets. Most grants cover network assets and assets needed to connect to customers, but grants typically don’t cover vehicles, computers, furniture, test equipment, and any other assets needed to launch a new internet service provider (ISP) or a new market. Grants also aren’t going to cover major software costs like upgrades to billing systems or marketing software.

In April 2021, State District Court Judge Matthew Wilson in New Mexico ordered school officials to take steps to provide the needed devices and broadband connections for students who are forced to attend school remotely. This ruling was made during the deepest part of the pandemic when most schools in New Mexico were shut down. His ruling was based upon complaints that The New Mexico Public Education Department was not complying with a court decision in the case of Yazzie/Martinez v.

The upcoming Broadband Equity, Access, and Deployment (BEAD) Program grants bring a huge once-in-a-generation grant to states to solve the digital divide and build broadband infrastructure. The average state will get over $800 million dollars, with the exact amount per state still to be determined. It seems almost too absurd to imagine for communities with poor broadband, but there are some states that may end up not getting this funding.

For the last twenty years, the industry has talked about broadband in cities as a duopoly, meaning there was competition between cable and telecom companies – competition between cable modem broadband and DSL broadband. Whether coordinated by backroom deals or by listening to smart advisors, both industries have given up trying to compete on price. By the time cable modem speeds hit 30 Mbps speeds, the market competition was over, and cable clearly won the price war.

The Federal Communications Commission recently issued a Second Notice of Proposed Rulemaking concerning the allocation of costs when replacing poles to accommodate adding fiber or other communications wires communications devices to poles. The traditional rule has been that the new attacher must pay for 100 percent of the cost of make-ready, including the cost of pole replacement if there is not sufficient room to add a new wire or device (like a small cell).

For many years there have been people extolling the huge benefits of public-private partnership for broadband. For all of that talk, there is not a big number of partnerships, but there are some successful examples around the country. Communities that are looking for broadband solutions might want to consider public-public partnerships and non-profit partnerships. I’m seeing public-public partnerships develop that are similar to the more traditional public-private partnership. Existing municipal internet service providers (ISPs) are reaching out to help neighboring communities.

Casey Lide of Keller & Heckman wrote a recent blog that warns that federal grant funding might be considered as taxable income by the Internal Revenue Service (IRS). This would be a dreadful outcome for any taxable entity that receives the grant funding since it would create a huge tax liability that would have to somehow be covered outside of the grant funding.

AT&T announced that it has plans to cut its copper network footprint in half by 2025. However, Jeff McElfish, the CEO of AST&T’s Communications division, said the company isn’t planning to forcibly move customers off copper as they decommission copper. According to McElfish, customers are naturally migrating off copper. I find that hard to believe. CCG Consulting is still seeing DSL penetration rates in cities between 10 percent and 40 percent.

Leichtman Research Group recently released the broadband customer statistics for the end of the fourth quarter of 2021. The numbers show that broadband growth has slowed significantly for the sixteen largest broadband providers tracked by the company. LRG compiles these statistics from customer counts provided to stockholders, except for Cox which is privately owned. Net customer additions sank each quarter during 2021. The first quarter of 2021 saw over 1 million net new broadband customers.

Rural counties are facing some interesting dilemmas about where to offer local support for the giant upcoming federal grant funds that will hopefully build broadband in their counties. Counties that are willing to provide local matching grants from American Rescue Plan Act or other funds may well rise to the top of the list of lists of who gets funded. I think many counties fear that nobody is going to seek the $42.5 BEAD grant funding in their county – and some are probably right.