BEAD's high-cost threshold 'key area' of concern for fiber advocates

While NTIA's notice of funding opportunity prioritizes fiber builds for those applying for BEAD grants, a 'high-cost threshold' exception has been a point of concern for fiber advocates.

Nicole Ferraro, Editor, host of 'The Divide' podcast

July 27, 2022

6 Min Read
BEAD's high-cost threshold 'key area' of concern for fiber advocates

While the NTIA's notice of funding opportunity prioritizes fiber builds for those applying for BEAD grants, a "high-cost threshold" exception has been a point of concern for fiber advocates like the CEO of the Fiber Broadband Association, Gary Bolton.

"The key area that we have to worry about is this thing called a 'very high-cost threshold'," said Bolton. "Everybody wants a number."

Figure 1:

That threshold is a cost, to be set by the states, at which they may choose not to prioritize end-to-end fiber deployment. According to the NTIA's notice of funding opportunity (NOFO) for the Broadband Equity Access and Deployment program (BEAD):

  • Each Eligible Entity must establish its Extremely High Cost Per Location Threshold in a manner that maximizes use of the best available technology while ensuring that the program can meet the prioritization and scoring requirements ... NTIA expects Eligible Entities to set the Extremely High Cost Per Location Threshold as high as possible to help ensure that end-to-end fiber projects are deployed wherever feasible.

The Fiber Broadband Association is trying to make sure the states and territories writing up their funding plans keep that threshold as high as possible.

To that end, the organization – in partnership with NTCA–The Rural Broadband Association – recently released a new version of their Broadband Infrastructure Playbook: a guide for state and territory broadband offices applying for grants through the $42.45 billion BEAD program.

The organizations released an initial version of the playbook in March but followed up with an update in July after NTIA published its funding rules that officially prioritized fiber.

With the new version, they wanted to "talk about the process a little more, and also highlight the focus on fiber," said Bolton.

The playbook addresses the high-cost threshold directly, noting that the "intent of NTIA is clear: the Extremely High Cost Per Location Threshold should not be used to deny fiber to individuals, businesses, and communities unless absolutely necessary."

Furthermore, the playbook offers a series of recommendations to try to get states closer to that number. The six-step process instructs them to:

  1. Use state and federal data to estimate the number of unserved and underserved locations

  2. Model deployment costs and compare them to the state's estimated BEAD allotment to see if there are enough funds for full fiber

  3. Meet with local providers to see how fiber can be expanded through other means (e.g., existing infrastructure, in-kind matches, etc.)

  4. Explore supplemental grants

  5. Calculate costs over time

  6. Use all of the above to "determine the highest point at which the Extremely High Cost Per Location Threshold can be set while still ensuring all unserved areas will be served"

On number five, the playbook points out that while some argue it's cheaper to deploy alternative technologies, those deployment costs add up over time.

"In cases where alternative technologies are considered, States should conduct due diligence on the long-term financial sustainability of proposed solutions, given that non-fiber networks have higher ongoing costs and a greater need for ongoing investment to replace obsolete equipment," says the playbook.

Bolton offers stats to back this up. In a recent white paper developed by the Fiber Broadband Association, and shared with Light Reading, the organization showed that – based on its own data – while initial fiber deployment costs double that of fixed wireless, the total cost of ownership over ten years flips that equation when you factor in operations and replacement costs per passing.

Another recent study published by the Benton Institute for Broadband & Society – commissioned by the Communications Workers of America and prepared by CTC Technology & Energy – also supports those findings.

"Fixed-wireless network coverage is adversely affected by line-of-sight obstructions (including buildings and seasonal foliage) and weather. While a fiber network can physically connect every household in a service area (and deliver predictable performance), it is significantly more complex for a fixed-wireless network to deliver a line of sight to every household in a service area," wrote Andrew Afflerbach, CEO of CTC Technology & Energy.

"While the cost analysis illustrates that fiber's upfront capital costs are higher than those of fixed wireless in many circumstances, the total cost of ownership over 30 years is comparable for fiber and fixed wireless," wrote Afflerbach.

Whither WISPS

While the fiber industry is focused on overcoming the BEAD program's high-cost threshold, those most disgruntled with the outcome of NTIA's rules are players in fixed wireless, or WISPs.

The NOFO not only prioritizes fiber but also excludes providers using unlicensed spectrum, which is utilized by many WISPs in the US.

As Matt Larsen, CEO of Vistabeam, a fixed wireless provider covering rural areas of Colorado, Wyoming and Nebraska with unlicensed spectrum, told Light Reading on a recent episode of The Divide, "the idea of fiber being future proof compared to fixed wireless is just completely ludicrous."

Rather, Larsen said that "unlicensed spectrum is also future proof" and "a tool in the toolbox that can be used for a very long time."

Furthermore, he added, fiber needs to be upgraded too. "You know, we got fiber originally installed in Scottsbluff, [Nebraska] at our office. The electronics have been upgraded three times," said Larsen.

But Bolton argues that fiber offers a superior experience compared to other technologies. "You can deliver 1,000 times more capacity with fiber ... why would you put fixed wireless in?"

Further, he says federal funding should be spent laying the future digital infrastructure that will support high-speed, low-latency applications: from telehealth to the metaverse.

"The way people think of it is, you know, 'where's our money?' If you're handing out free money, 'where's our money?' And that's not the way we should be thinking about this," said Bolton. "It's: What are we building for generations to come?"

Next steps

Earlier this month, the US Department of Commerce announced that all 50 states and eligible territories had submitted their letters of intent to participate in BEAD ahead of the July 18th deadline. ("We were working Texas hard," said Bolton.)

The next big deadline is August 15, when states and territories must submit their requests for initial planning funds. States are eligible for up to $5 million in planning funds ($1.25 million for territories) to add staff and for other activities related to grant administration.

Though the funds are available, hiring may be a challenge.

"While NTIA is staffing up there, they're taking talent from the state broadband offices," said Bolton. "So what I anticipate is that most of these offices are going to leverage consultants to be able to do a lot of the heavy lifting, because there's a lot of work here to do."

Related posts:

Nicole Ferraro, editor, Light Reading, and host of "​​The Divide" podcast.

About the Author(s)

Nicole Ferraro

Editor, host of 'The Divide' podcast, Light Reading

Nicole covers broadband, policy and the digital divide. She hosts The Divide on the Light Reading Podcast and tracks broadband builds in The Buildout column. Some* call her the Broadband Broad (*nobody).

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