Private investment in broadband has increased dramatically in recent years. Panelists offered some enlightening data points and advice about this in two breakout sessions at the Fiber Connect conference in Orlando this week.
Broadband mergers and acquisitions have increased five-fold over the last 10 years, according to Jeff Brown, segment marketing manager for Calix.
And Brian Vu, chief investment officer for Connect Humanity, estimates that there are about 50 investment funds at an average size of $2.5 billion that have invested or could invest in broadband.
All that could be good news at a time when some industry observers are questioning whether the amount of broadband funding that the government has made available will be sufficient to get broadband to all Americans.
Kristy Szabo, director of consulting for Vantage Point Solutions, estimates that there is a gap of $150 billion between the government funding available for broadband deployments and the amount needed to make fiber broadband available nationwide.
CostQuest estimates the cost to reach nationwide broadband goals at $300 billion, of which government funding will cover about $100 billion.
“So, there’s got to be capital coming in from external sources,” commented Richard Rousselot, senior consultant for CostQuest, in a Fiber Connect breakout session titled “Investment Strategies for Fiber Broadband.”
A key question is how interested private investors will be in investing in projects that also receive government funding. Panelists offered advice about this and how to avoid pitfalls.
As Claude Aiken, chief strategy officer for Nextlink Internet, noted, the strings tied to private capital are based on financial performance, and private investors may not be accustomed to the sorts of strings that are tied to public funding—such as meeting buildout deadlines or using minority contractors.
Nevertheless, we have seen some broadband providers that are backed by private investors pursuing government funding. A recent example: The biggest winners in a recent Nebraska funding round were backed by private funding.
As broadband providers pursue private funding, they should look toward the future, advised Jessica Koch, broadband program manager for Calix, at the Fiber Connect breakout session titled “How Public and Private Capital is Changing the Landscape.” Service providers should consider how to take the financial stability they’ve built and turn it into a strategy that emphasizes a vision for the future.
Updated to change a Vantage Point reference that initially said $150 million to instead say $150 billion
Great piece!