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25 April 2023

FWA sees BEAD opportunity, but do the numbers add up?

The US’ National Telecommunications and Information Administration (NTIA) is in the midst of establishing plans for its Broadband Equity, Access, and Deployment (BEAD) program. With a pot of $42.5 billion, BEAD’s budget has come under fire by fixed-wireless access (FWA) vendor Tarana Wireless.

Tarana claims that a fiber-only implementation of BEAD would cost north of $200 billion, some five-times greater than the available funds. Of course, the likes of Tarana would prefer that FWA approaches were chosen over fiber, and so a reader should immediately be uneasy about the claimed cost of $13,900 per home made for fiber.

With BEAD having a target of some 16 million homes, that cost would imply a total budget requirement of some $222.4 billion. This is some 5.23x larger than the available budget.

The data that Tarana bases this claim on stems from some 132 state-funded broadband projects, dating back to 2019. These connected 52,700 homes, at a cost of $733.5 million, which equates to the $13,918 above.

Vendors like Tarana are trying to get the NTIA to reconsider its preference for fiber, and opt for FWA where viable. Back in February, the Wireless ISP Alliance (WISPA) also published a study that claimed BEAD’s current plan could lead to between $30 billion and $60 billion of overspend, across some 1.92 million locations, once BEAD-backed fiber was laid in areas serviced by WISPA members.

Currently, BEAD does not allow funding for FWA projects that use unlicensed spectrum, due to reliability concerns, unless an area was found to be in an extremely high-cost location.

Based on Tarana’s estimate, BEAD will only connect 3.01 million homes at that price – a far cry from its target of 16 million.

As there are still around two months until the NTIA finalizes its financial plans, and starts distributing cash to regions and states in the US, Tarana has published its model, to attempt to change the NTIA’s mind.

“The often-high costs and long deployment timelines of fiber will leave millions of families unserved,” said Carl Guardino, VP of Government Affairs for Tarana.

“Some interpret the BEAD Notice of Funding Opportunity (NOFO) in the context of the Bipartisan Infrastructure Law as fiber-only, which is unrealistic and the reason why states should exercise their rights in finding a balance to ensure state and federal funds serve 100 percent of their unserved, and to use alternative technologies — without compromising service.”

Before diving into some alternative numbers, it is worth exploring the difference in the technologies. Fixed-line fiber requires digging a lot of trenching, as well as a direct connection to each premises. This means it has a significant up-front cost. However, once it is laid, fiber has a very long lifecycle, with many equating it to the ‘buy-once-cry-once’ ethos.

For a small village or hamlet, a fiber connection might be very expensive, to dig all the way out from a built-up area. However, that initial connection is likely enough to provide multiple decades of bandwidth to the location, even factoring in future likely growth.

Once that fiber is in the ground, it is effectively a permanent asset for the community. Should an ISP go bust, the physical asset is still available for a successor, in a way that cannot be said for FWA deployments. There is not a viable fixed-line alternative to fiber, these days, and so a BEAD project has to evaluate lifetime costs.

Here, the mercurial state of spectrum allocations in the US should give unconnected communities pause for thought. Who is to say whether a ten-year project can actually last that long, given the seemingly insatiable appetite for spectrum that the largest MNOs display, combined with their immense lobbying reach.

If a fiber deployment can realistically be measured in a twenty-year time frame, and could reach as far as fifty years, the rapid pace of wireless technology and its economic landscape will seem off-putting. Factor in the potential of low-earth orbit (LEO) satellite constellations too, as well as the growth of the incumbent MNOs, and it seems that a project-based FWA approach could be quite risky in the long-term.

Running in parallel to the NTIA’s BEAD program is the FCC’s Rural Digital Opportunity Fund (RDOF). This is a $20.4 billion fund that has fairly similar goals as BEAD, although it has drawn criticism for its definition of broadband as a service with a download speed of 25 Mbps and an uplink of just 3 Mbps.

The RDOF program had a target of some 5.2 million homes, with its $20.4 billion, which equates to around $3,923 per home. However, many of the initial bidders for funding have had to bail on their commitments, with supply chain problems, labor shortages, and the pressure of inflation to blame. Starry is perhaps the most high-profile example of such an exit, although SpaceX was unceremoniously stripped of some $885.5 million it had initially been awarded by the FCC too.

As for comparable cost estimates, cable operator Comcast recently announced that it could upgrade its DOCSIS 3.1 infrastructure to DOCSIS 4.0 for around $200 per home passed. Given that it passes around 50 million homes, the total cost is around $10 billion.

It should be noted that there are dozens of stories of comical quotes from Comcast, for the cost of connecting a home to the Comcast network, with some being large enough to inspire the creation of a DIY ISP entirely – one that is now bidding on RDOF contracts, as was the case for Jared Mauch’s Washtenaw Fiber Properties, after being quoted $50,000.

When searching for companies that can provide fiber-to-the-home (FTTH), much of the estimate depends on how far the nearest fiber node is. A ballpark cost of $60,000 to $80,000 per new-mile of fiber laid is given, however, a much lower cost-per-home figure of between $1,000 and $1,500 is found.

This is, of course, where some of the most headline-grabbing numbers come into play. A remote farm could not tolerate a six-figure price for a fiber line, but a hamlet of 10 homes that requires two miles of new fiber trenching could cost around $152,500 based on the above numbers. This is a per-home cost of around $15,000, and really not far from what Tarana is currently claiming.