States Flag Terrain, Workforce Barriers in 5-Year Draft Plans

NTIA announced BEAD funding allocations in late June (see 2306260007). States offered various takes on whether they will be able to close the digital divide with amounts they're to receive.

Even with $4 billion in combined state and federal funding, including $1.86 billion from BEAD, California wouldn't have enough cash to deploy broadband to all unserved locations in the state, said the state's draft five-year plan. That's even if the final number of unserved locations were reduced, it said. "The timeline for universal service with fiber-to-the-premises would extend beyond the BEAD funding timeline and require additional federal and State funding." A CostQuest model shows "an estimated $9.78 billion investment will be needed for new fiber and equipment to serve all unserved locations with a fiber-to-the-premises network design, including plans for additional hardening for locations in high fire threat districts,” the state said.

Vermont estimates it would cost $500-$700 million to extend fiber to all unserved and underserved locations. While the state was allocated $228.9 million from BEAD, combining that with American Rescue Plan Act, subgrantee matches and other funding "will cover this cost," said Vermont's draft plan. The state said it expects to use all its BEAD funding on broadband deployment, though if it can encourage "subgrantees to reduce costs, maximize private sector matches, and obtain additional funding for deployments,” the office might have some for digital equity efforts.

New Jersey broadband office Director Valarry Bullard wants to say her state’s $263.7 million BEAD allocation will be enough to connect everyone, she said on a Broadband Breakfast webinar last week. But there are always new unserved locations “popping up,” for example from new construction, she said. Still, Bullard predicted New Jersey will “make a significant dent with that funding.”

The amount of federal money dedicated just to universal access on tribal lands -- while unprecedented -- won't be enough in large part because of the geography involved, said Traci Morris, executive director-Arizona State University's American Indian Policy Institute, last week in a Security and Sustainability Forum (SSF) digital divide panel. The 334 reservations in 35 states covering more than 100 million acres are often "really rugged areas," she said. Adding to the challenge is lack of existing infrastructure in some of the most remote areas, she said. She said some remote Navajo areas lack running water or electricity. "These moneys are a great start but should be considered a down payment," Morris said, noting the price tag for universal access on tribal lands would likely exceed $8 billion.

Louisiana's broadband infrastructure needs to be "future-proof," but the state's cost modeling shows there are thousands of broadband serviceable locations "that may require a non-fiber solution such as fixed wireless, satellite or other," said the state's draft plan. Most of Ohio's unserved locations, and many of its underserved locations, are clustered in its Appalachian counties, where the topography "has been noted as a chief driver for the lack of reliable broadband today," said its draft plan.

Locations that are "extremely remote, off-grid" or otherwise can't be covered by terrestrial fixed wireless "will be targeted for an alternative solution such as Low Earth Orbit satellite service," said Maine's draft plan. Utah's draft plan estimates the state's $317 million BEAD allocation and provider match could cover the cost of fiber for more than 37,000 unserved and underfed homes, and fixed wireless or unnamed alternative will be used for the remaining 4,000-plus extremely-high-cost locations. Ohio's draft plan said there are likely multiple extremely-high-cost areas where at least 80% of serviceable locations are unserved, and fiber might be cost-prohibitive. It said its BEAD funding could then be allocated to licensed fixed wireless.

Michigan's "large size and rural areas make it expensive to install and maintain broadband infrastructure,” said its draft five-year plan. “The terrain, including forests, hills, and waterways, can impede the signal, making it difficult to provide reliable service to remote areas. Additionally, the harsh weather conditions in Michigan can cause damage to the infrastructure, requiring frequent repairs and maintenance." Michigan, which received a $1.56 billion BEAD allocation, also cited regulatory barriers including the pole attachment process, state and local taxes and complex permitting.

Workforce, Supply Chain Woes

The surge in broadband funding "caused a spike in demand for labor and materials,” California’s draft said. “This increased demand compounded an already disrupted market still recovering from Covid-19 caused factory closures and other issues in the supply chain." Not to mention inflation, said the state. “The fiber optic cable producer price index from the Federal Reserve Bank of St. Louis rose more than 20 percent between January 2020 and January 2023.” Also, the state said it “received public feedback that equitable workforce development, fair labor practices and high-quality job opportunities are a significant obstacle to widely deploying broadband networks.”

Labor and supply chain challenges delay network deployments and increase project costs, Vermont’s five-year plan noted. “Inflation is increasing the cost of inputs, resulting in cost overruns.” Smaller companies and new entrants “may lack the economic capacity to secure irrevocable letters of credit, contribute 25 percent matching funds, and offer low-cost service pricing,” it said. Vermont had broadband worker shortages before BEAD and the pandemic; high turnover in the fiber construction industry “adds to the challenge,” it said.

"Michigan is facing a projected worker shortage in 12 NTIA identified occupation groups,” that state’s five-year plan said. “The most significant occupation groups impacted by projected shortfall are ‘laborers and material movers,’ ‘trenchers,’ and ‘inspectors’ which are facing a 11.9%, 10.4%, and 9.8% shortfall respectively.” Labor shortages may “cause delays and increase costs for broadband providers,” reduce service reliability and “limit the ability of smaller broadband providers to compete with larger providers.” Michigan said it plans to tap diversity, equity and inclusion efforts, and help people with criminal history expunge records, to fill the gap.

Supply chain issues will be exacerbated by every state and territory “investing in broadband network deployment on roughly the same timeline,” while Buy America rules could add to delays if strictly enforced without waivers, warned Michigan.

Wireless, Satellite Options

The five-year drafts show fixed wireless "is going to need to play some kind of substantial role" if states want to close their digital divides and connect anchor institutions on budget and on time, Steven Schwerbel, Wireless ISP Association state advocacy manager, told us. He called California "a glaring example," with it estimating use of all fiber will cost $10 billion -- far above the $4 billion available via BEAD and state funding (see 2307180013). "The only way" California can come close is by employing fixed wireless, he said. He said other states indicated in conversations with WISPA that their BEAD funding will be insufficient for fiber-alone plans.

At the same time, NTIA's fiber focus is a challenge for fixed wireless, Schwerbel said. He said some states indicated they don't want to do anything that might slow down disbursement of BEAD funding. The BEAD notice of funding opportunity includes a waiver process for rules that don't fit a state well, but there's reluctance among some states to ask for waivers, he said.

Even after BEAD and other investments, notable numbers of households nationwide still will lack access to adequate broadband because of the cost of deployment, said Mike Lubin, Viasat vice president-corporate development, during the SSF webinar, saying satellite could be the solution.

The number of unserved locations could shrink by several thousand due to ISP spending and an FCC "proposal to require participants in the Alternative Connect America Model (ACAM) and Connect America Fund Broadband Loop Support (CAF BLS) programs to extend 100/20 Mbps or better networks to align with BEAD program obligations,” Vermont’s draft noted. Cloudflare Director-Network Strategy Mike Conlow estimated in a blog post last week that the FCC concept could take 582,675 locations off the board nationally for BEAD if all ISPs participate. Some states could especially benefit, he said. “In Nebraska, the ACAM areas include 24,776 Unserved and Underserved locations, 23% of their total.”

There are "so many predictions about the sufficiency of the money that I don’t trust any of the predictions,” emailed CCG Consulting President Doug Dawson. Some bigger ISPs might accept “far less than 75%” of a project’s needed funding, he noted. “Nobody really knows what is going to happen until ISPs start asking for money."