The Broadband Equity Access and Deployment (BEAD) program has $42.5 billion to invest in rural broadband. But that funding is not expected to cover the full cost of making broadband available to unserved areas. That’s where matching funds come in.
Program rules call for network operators seeking BEAD funding to use other funding sources to cover at least 25% of project costs, except in the highest cost areas. States have the option of setting the minimum even higher.
Where can networks get matching funds?
Telecompetitor talked to two experts on rural broadband economics and grant programs to get their take on it.
In-kind Contributions
“Be creative,” said Brooke Coleman, senior manager at Widelity, a telecom consulting company specializing in grant acquisition and compliance. Coleman noted, for example, that network operators can use a combination of cash and in-kind contributions to meet matching fund requirements.
According to BEAD program rules, in-kind contributions can include donations of property, goods or services that benefit the project. BEAD administrator NTIA advises applicants to be consistent with uniform administrative requirements for federal awards, but notes that examples might include volunteer services, equipment, supplies, rights of way access, pole attachments, conduits, and easements.
BEAD rules also allow operators to use funds from certain other government programs as matching funds.
Funds from four federal programs are allowed, noted Jorge Fuenzalida, managing partner at JLA Advisors, a consultancy focused on broadband strategy, technology and execution. The programs include the Families First Coronavirus Response Act, the CARES Act, the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021, also known as ARPA.
Some counties may still have funds available that were awarded to them through the state and local fiscal recovery fund that was created in the ARPA, and they may be willing to use them to cover some of the costs of bringing broadband to their communities.
BEAD Matching Fund Sources
When in-kind contributions and government funding sources aren’t sufficient to meet matching fund requirements, network operators may need to turn to more traditional sources of funding such as loans or equity investors. The latter will seek to own a piece of the company.
Different options may be more appropriate for different types of companies, said Fuenzalida.
He noted, for example, that an electric cooperative won’t be giving out shares in the company but instead is more likely to turn to a bank. And large publicly held companies will cover matching funds “through their normal debt financing program.”
Coleman noted another potential source of loan financing – Millennium Infrastructure Fund, a company that also distributes equipment to broadband providers. Fuenzalida cited family offices that invest the money of wealthy families as another potential funding source.
As for how to make contact with potential funding sources, Fuenzalida suggested attending industry conferences, which he has seen many potential investors attending.
Coleman and Fuenzalida encourage network operators to have a complete business plan with project costs, expected take rates and other details when seeking any type of funding.
Consider providing more than the minimum match, advised Coleman, who expects to see Tier 1 carriers doing exactly that.
Decision makers, she said, “will want to make taxpayer dollars go as far as possible.”
