How BEAD could fund incremental "edge outs"

Funding allocated in the National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program could support incremental "edge outs" of  delivery infrastructure to relatively small numbers of homes and small businesses at the edges of incumbent providers' service footprints.

Incumbents know exactly where these addresses are located – no “broadband map” needed. They are bereft of landline connections because while they in most cases are serviceable addresses – i.e., able to be connected -- they’re spaced too far apart to meet providers’ internal return on investment (ROI) standards to build out delivery infrastructure to connect them. Infrastructure thus extends part of the way down a road, street or cul de sac where the ROI standard can be met and ends where it cannot.

Clusters of serviceable addresses may meet the density cutoff when viewed in isolation. But they are cut off from the network because lines to service them would have to be extended along roads and streets where there too few homes, businesses or institutions to meet the density standard.

Consequently, residents and small business operators have felt dissed and bitterly complained for many years they unable to order service while addresses a mile or two – or even hundreds of feet away -- can. And because these are a relatively small number of addresses among a much larger number of those served by an incumbent provider, there aren’t enough of them to justify a contiguous project for an alternative provider. This circumstance is typically found in small towns and exurban locations where dwelling density is below that of suburbs but well above that of rural areas – but not at a level sufficient to attract investor-owned incumbents.

According to BEAD program guidance spelled out in the NTIA's Notice of Funding Opportunity (NOFO), incumbent providers selected by states as subawardees could fund line extension projects to these premises. Under the NOFO, a project eligible for up to a 75 percent capital subsidy can be a small number of serviceable addresses and even a single address. It's possible incumbent providers could propose these line extensions to state offices charged with subawarding BEAD funding as a single project or grouped in large geographical regions, arguing batch processing their funding requests this way would expedite the BEAD goal of ensuring all state residents have access to service. 

For incumbent providers, incremental edging out minimizes the challenge of having to bear the operating expense of maintaining entirely new networks serving many addresses that in order to qualify for BEAD subsidies would have to be built in isolated, insular areas lacking reliable service. Adding a few addresses at the periphery of existing infrastructure allows the associated opex to be more easily absorbed without the need for ongoing subsidization.

Cable companies are most likely to do BEAD backed edge outs, extend their existing coax plant to reach addresses on the edges of their current footprints that fall below their current density standards. Incumbent telephone companies aren’t likely to have existing fiber plant to support edge outs to BEAD eligible unserved addresses (those where at least 80 percent are unable to order service with throughput of 25/3 Mbps or higher and latency not exceeding 100ms) since they tend to concentrate fiber builds in densely settled areas far from unserved areas. Copper cable plant in these areas is also less likely to be able to reliably support VDSL.

Cable companies can also meet the BEAD throughput requirement: at least 100/20 Mbps with less than 100ms of latency 95 percent of the time. Although BEAD funding is prioritized for fiber to the premise delivery infrastructure, states are likely to sign off on incremental cable build outs to increase access.

A possible obstacle for this potential strategy is challenges from fixed and mobile wireless providers claiming these addresses are served by them and are thus ineligible for BEAD funding. States could then be in the position of having to sort through these addresses to determine whether they are eligible as unserved or “underserved” – without service of at least 100/20 Mbps. Due to various factors affecting radio frequency propagation, that could vary considerably among these locations, making sorting out the challenges a tedious task.