In the course of my work with Telecompetitor, I work with several broadband vendor companies on articles and white papers. On Monday, I met with Finley Engineering Client Vice President Andy Heins — a 25-year veteran of the broadband industry — about an article we are developing with them. During our conversation, Heins was frank about the challenges he foresees in the Broadband Equity, Access, and Deployment (BEAD) Program’s future.
The combination of Heins’ unique perspective and his years in the industry made my ears perk up. Finley has not paid Telecompetitor to write this article; in fact, I asked Heins’ permission to report on his privately shared comments.
Heins thinks that future challenges with BEAD may lie in two key areas. (Spoiler alert: The article we are developing with Finley will address these challenges.)
First, the National Telecommunications and Information Administration (NTIA) is setting three cost-per-location thresholds. Depending on the threshold reached, providers must (1) explain and justify their price, (2) explain, justify, and lower their price, or (3) renegotiate and accept other providers’ technology to serve the proposed area.
The practical result of these thresholds and the revised BEAD guidelines established in June is that, in the future, some rural areas and communities may not have access to the reliable, high-speed connections they want, need, and have been promised by the BEAD legislation. Heins believes rural areas and communities across the nation that want fiber will end up with low Earth orbit (LEO) satellite connections and will be disappointed with its quality.
The second challenge Heins identified is equally troubling. The provisional awards announced so far suggest that private equity may play a significant role in funding BEAD projects.
Private equity is not inherently a bad source of funding. But the typical investment profile for private equity involves making investments and seeking an exit with positive returns in a shorter timeframe than is typically required for rural network deployments.
This approach can lead to faster deployment, but it also raises questions about the long-term commitment to operating and maintaining these networks. Heins said rural communities need partners that foster both investment and sustainable stewardship to ensure these broadband projects continue to serve them for years to come.
While NTIA must sign off on every state’s final BEAD proposal — and retains the authority to request further revisions to approved budgets and projects — Heins wonders if the race to drive per-location costs lower will push the industry toward the same pitfalls we saw with the Rural Digital Opportunity Fund’s (RDOF) low-bid auctions, where aggressive underbidding has already led to widespread defaults and unfinished builds.
These are grim possibilities. It’s not what any of us wants for the future of BEAD. But when someone with years of industry experience speaks, it behooves us to listen.
