By John M. Celentano, Market Development Manager, TESSCO
Reprinted from Connected Planet
Well, folks, the clock has run out and the Broadband Stimulus Bowl is over. This contest is one for the history books. The Recovery Act set a prize of $7.2 billion for this event with $2.5 billion in the Rural Utilities Service (RUS) Broadband Initiative Program (BIP) and $4.7 billion in the NTIA’s Broadband Technology Opportunity Program (BTOP). BIP funds are intended for broadband access (last mile) network deployments in poorly served or unserved areas. BTOP grants are intended to support comprehensive community infrastructure (middle mile) inter-city, inter-building, and public safety facilities; public computer centers (community entities-schools, libraries and municipal facilities); and sustainable broadband adoption (broadband education and training programs).
Why wasn’t more money allocated to wireless infrastructure? Wireless systems can extend broadband to subscribers over many miles at much lower deployment costs, around $1,500 per subscriber for the access portion (base station and subscriber units). Moreover, wireless systems are easier and faster to deploy than trenching fiber cable over long distances. It appears to be a matter of numbers or maybe less familiarity among the reviewers with wireless broadband, even with many wireless products on the RUS LOM.
BIP budgeted $10,000 per subscriber for FTTH deployments. Most of these projects are in rural areas with lots of wide-open spaces, so deployment costs will be higher than if FTTH were deployed in denser-populated areas. Still, that figure is probably 2-3 times what can actually be done to extend fiber into rural markets.
Comprehensive community infrastructure (CCI)/middle mile BTOP projects are adding significant dark fiber capacity to the national network. While there is a "build it and they will come" feel to some of these projects, if the demand for broadband services continues, that capacity should be burned off at a steady pace. Still, it behooves players on both the last mile and CCI squads to team up to make end-to-end broadband a winner.
Overall, $9.4 billion was designated for 653 projects with $6.6 billion in grants, $1.3 billion in loans, and another $1.5 billion in matching funds. Infrastructure projects took 434 awards, with $5.8 billion in grants and $1.3 billion in loans.
The first half--Round One--was a free-for-all with seasoned veterans almost overrun by a pack of undisciplined, freewheeling walk-ons and free agents scrambling to score a piece of the action. Those that couldn’t demonstrate viable performance were cut almost immediately.
Second half action in Round Two was much more orderly with applicants showing more disciplined approaches and greater technical and economic feasibility.
Team BIP Highlights: A total of nearly $4.0 billion, well above the original appropriation, was awarded in grants, loans, and matching funds to 310 BIP players that include 294 last mile, 12 middle mile, four Satellite Broadband projects and one Technical Assistance grant.
The vast majority, 79% last-mile projects went to wireline plays, either fiber-to-the-home (FTTH) or digital subscriber line (DSL) over copper. A total of 50% of all BIP projects were for FTTH. Another 19% of the plays went to a mix of wireless or hybrid wireless/fiber projects. Wireless-only projects accounted for just 15% of the BIP awards, up from around 5% in Round One.
Team BTOP Highlights: The term “middle mile” was used until Round Two when CCI came into the game, presumably because it applies to projects that involve more than just intercity backbones. CCI applies to backhaul facilities between towns and cities, and interconnecting major institutional buildings and campuses. Over $4.4 billion was awarded to middle mile/CCI projects alone, including $973 million in matching funds. As expected, the majority (83%) of these projects went for fiber technology that is a proven reliable high-capacity technology for inter-city and long-haul applications. Wireless accounted for 10% of BTOP projects along with another 7% that went for hybrid fiber-wireless combos.
A couple of points to note:
First, the referees (reviewers) faced a monumental task in sorting out projects that had merit from those that did not; they did a commendable job.
Second, most BIP awards went to established companies that have a history of borrowing, and repaying, RUS funds. Scores of BIP applicants were turned down flat because they had no track record or because their proposals were not feasible.
Third, fiber projects far outweighed wireless alternatives. This is, in part, because more wireline companies (independent telcos, ISPs, small cablecos) applied for funds. Fiber systems are the safe bet; the technology is stable and the players are established. Fiber equipment manufacturers are well-known, reliable, and have a good performance record. Plus, most of the FTTH products picked for these projects already are on the RUS List of Materials (LOM).