The high-cost thresholds that will be established on a state-to-state basis for the BEAD rural broadband funding program will determine how extensively fiber is deployed to unserved and underserved locations in each state. NTCA—The Rural Broadband Association and the Fiber Broadband Association offer advice for the states about setting the threshold in their newly updated Broadband Infrastructure Playbook.
BEAD rules call for funding recipients to deploy fiber broadband except in the highest cost areas, where awardees have the option to use less costly technologies such as fixed wireless. The high-cost threshold, officially known as the extremely high-cost threshold, defines the deployment cost point at which awardees will not be required to deploy fiber.
“State and territory broadband offices should not ‘settle’ too low” in setting the threshold, writes Shirley Bloomfield, CEO of NTCA, in a blog post. Setting the threshold too low, she said, “will deprive consumers of reliable and scalable technology that will best leverage BEAD’s historic investment and stand the test of time.”
She added, however, that setting the threshold too high could lead to BEAD funding being depleted before every unserved location is connected.
According to NTCA and FBA, states should consider three key parameters in setting the high-cost threshold. These include:
- Determining the range and distribution of fiber build costs per location
- Considering fiber builds from the providers’ point of view. How much potential revenue can providers make? How many customers can they gain? What existing network assets can providers use? What is the expected return on investment and payback period?
- The overall build goal
Regarding the latter, the associations suggest that some states may emphasize a future-proof approach, while others may emphasize reaching as many locations as possible with a minimum level of performance.
The playbook has four specific recommendations for the states:
- Determine a reasonable estimate of fiber costs based on the miles to be deployed, local labor and permitting costs, geography and other factors
- Build realistic business cases for providers, including an assessment of borrowing costs and market rates of return
- Test different deployment scenarios using different thresholds
- Identify the threshold that leads to the state’s goals and BEAD requirements most comprehensively
