Metronet forging ahead on fiber builds without federal funds

With state funding allocations for the $42.5 billion Broadband Equity Access and Deployment (BEAD) program unveiled this week, many service providers in the US are looking toward forthcoming grant opportunities to fund their broadband buildouts in unserved and underserved communities.

But another source of funding has been fueling fiber builds in communities across the US: private equity. With those dollars in hand, some small and regional service providers are forging ahead in new and competitive markets without applying or waiting for federal funds.

That includes Metronet. The Evansville, Indiana-based company, founded in 2005, deploys full-fiber networks and is currently operating in over 250 communities in 16 states, including: Colorado, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Missouri, New Mexico, North Carolina, Ohio, Texas, Virginia and Wisconsin. In recent years, Metronet has grown its footprint by merging with and acquiring other fiber players including Vexus Fiber in 2022, Jaguar Communications in 2020 and LightSpeed Fiber Communications in 2019.

Metronet has had support from Oak Hill Capital since 2014. In 2021, the company announced additional backing from KKR "to help accelerate MetroNet's growth in building and connecting fiber-to-the-premise (FTTP) data, television, and telephone services to homes and businesses," according to a press release. Terms were not disclosed. In addition to Metronet, Oak Hill Capital is supporting other US fiber players including Lit Fiber, Omni Fiber and GoNetspeed.

According to Craig Zimmerman, manager of government affairs at Metronet, the company considers itself a "leader in developing greenfield markets" but also enters some markets with existing or forthcoming fiber competition. "The markets we tend to migrate to are those that are underserved by a telecommunications company or a cable company, but that's not always the case," he said.

One market where Metronet has recently entered as a competitor is St. Joseph, Missouri. Zimmerman described the region as initially "underserved" when Metronet started discussions with the city, with an incumbent cable provider and no fiber provider. However, he said there is now a fiber provider building in the city. "So we'll be competing head-to-head with a fiber solution there," he said. (United Fiber, part of United Electric Cooperative, is currently servicing part of St. Joseph and has planned construction for 2024.)

FCC mapping data further shows the city as "served," with access to advertised cable speeds up to 940/35 Mbit/s from Optimum, alongside unlicensed fixed wireless and satellite services.

Metronet started construction on its fully funded, $25 million dollar investment in St. Joseph in November 2022 and launched service for its first customer in the region in February of this year. Zimmerman anticipates that the entire buildout will take 24-36 months from start to finish. The company launches service as it goes along, said Zimmerman, usually for 200-500 residents at a time.

"We just doubled the number of contracting crews that we're using in St. Joe, so we've got the pedal on the gas there to get that deployment going," he added.

The ability to move quickly is one way Metronet hopes to set itself apart, even as it competes with other fiber providers on service offerings. In recent weeks, Metronet has announced installations and service launches in James City, North Carolina, and Rochester, Minnesota.

In St. Joseph, Missouri, Metronet currently plans to "cover a majority of the city," said Zimmerman, but he added that "there is always a strong likelihood that we will expand beyond our original footprint."

In comes BEAD

Thus far, Metronet has privately financed all of its broadband deployments. But according to Zimmerman, the company is "monitoring what is getting funded" and "where it's getting funded" when it comes to federal and state grants.

According to funding allocations released by the NTIA this week, over $19.5 billion in federal BEAD dollars will flow to the 16 states where Metronet operates, to build out fiber networks in unserved and underserved communities.

While Metronet has prioritized being able to move "fast and furiously" with private funding, Zimmerman said the company is "certainly open" to forthcoming opportunities to get grants through BEAD or otherwise.

"We're obviously watching very closely what's happening in the states and with the cities as it pertains to federal commitments and monies that are going to be provided to them. But in the meantime, we're not waiting around," he said.

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— Nicole Ferraro, editor, Light Reading, and host of "The Divide" on the Light Reading Podcast.