DALLAS, March 30, 2023 — Private sector investment continues to play a key role in supporting and shaping digital infrastructure development, as the increasing demand for high-speed connectivity clashes with industry-wide economic challenges, experts said Wednesday at Connected America.

“Despite a possible recession… it doesn’t feel like there is a slowdown in the need for digital infrastructure,” said Jennifer Fritzsche, managing director at Greenhill & Co.

While this infrastructure comes in many different forms, Fritzsche said that she was seeing particularly fast growth in data centers. “There’s been tremendous need for more capital there.”

Fritzsche also emphasized the growing demand and competition for fiber, calling it the “lifeblood” of future networks. “A lot of people are leaning in here, and I think that’s created a more challenging environment in the fiber-to-the-home space,” Fritzsche said.

As several providers aggressively attempt to expand their fiber footprints, some are turning to open access networks. The use of shared infrastructure “opens up an interesting model for competition, but it also makes it very difficult for anybody to really get a good, solid return,” argued David Rottmayer, telecommunications expert and host of the “Let’s Talk Telecom” podcast.

In December, AT&T announced a plan to bring fiber to 1.5 million customer locations outside its existing footprint, utilizing an open access platform. The outcome of this “1.5 million test” may influence other providers to either embrace or avoid similar models, said William Dauska, managing director at Citizens Capital Markets.

In response to the growing popularity of fiber, incumbent telecommunications and cable providers are investing heavily in advertising and sales, said Steve Lee, founder and managing director of Layer 7 Capital.

“Fixed wireless is becoming a real thing,” Lee said. “These carriers are being really focused on 5G as an alternative to FTTH, and I think you’re going to see a lot more of that in the new future.”

Fritzche countered that while fixed wireless may be the “here and now,” the rapid growth of fiber adoption means that major providers will have to be very careful in maintaining the same standard of service for existing wireless customers.

“I tend to think fiber is always the preferred solution, especially as you see the consumption that’s happening,” she said. “I do think there’s a place for fixed wireless, LEOs, satellite, but it’s probably not in the areas that are consuming the most demand.”

Across different types of infrastructure, Rottmayer pointed to high interest rates and government grant programs as two factors potentially hindering private sector investment. The grant programs tend to favor incumbents with an established base, he said, which poses a challenge for startup entities.

DALLAS, March 29, 2023 — Local broadband stakeholders should take advantage of the time before federal grant funding is disbursed to make detailed plans and build strong community relationships, according to state broadband officials and industry experts at Connected America on Wednesday.

“I like to start with setting reasonable expectations — it takes a while to design a grant program, administer it, score applications,” said Earnie Holtrey, deputy director of the Indiana Broadband Office. “And then once the ink dries on the contract, the real work begins, and the implementation timelines… can stretch out six or eight years.”

While many state officials are eagerly awaiting funding from the $42.5 billion Broadband Equity, Access and Deployment Program and other government initiatives, taking the time to thoroughly plan will be key to maximizing the awards, advised John Tait, director for North America at Biarri Networks.

“The giant influx of money in and of itself is not a panacea,” he said. “The more detailed your plan is [and] the more data you have available, the faster you’re able to shift and make better use of that capital when it does come.”

BEAD funds are unlikely to be disbursed before early 2024, Holtrey predicted. This gives state broadband offices, service providers and other stakeholders a year to refine their plans and educate their local communities, he said.

Local leaders should then “use the next four years to know where your local assets are and really begin to leverage those,” said Brian Mefford, vice president of broadband strategy at VETRO.

Although the federal grant processes move slowly, Holtrey encouraged stakeholders to begin planning and launching connectivity projects as soon as possible. “Spend some money now, get some projects going — there’s still going to be plenty of projects to do when the BEAD money comes around,” he said. “And we really know that even after BEAD, probably, it’s not going to be completely done.”

One potential first step is investing in education at the local level in order to become a trusted resource, Holtrey added.

State broadband officers “don’t just need to be a vehicle to transmit funds — they need to be an educator for their state,” Tait said. “They need to be a resource for their communities.”

Tait also emphasized the importance of local community involvement, calling it a “key common denominator to projects that are successful.”

“Where you’ve got that engagement and that drive at the local level, typically, you’ll see a really, really good outcome in a broadband deployment,” he said.

Glen Howie, director of the Arkansas State Broadband Office, said that his team is fostering this engagement by visiting each individual county, meeting with local leaders and helping them to create their own connectivity plans.

“Yes, there’s a lack of capacity, but there’s strong passion,” he said.

Grant programs that operate at the state and local levels are better able to work with regional providers, said Amanda Hofer, assistant general manager at the Central Texas Telephone Cooperative. “When it’s made at a federal level, they don’t understand the microeconomics and the players who are there supporting those local communities, so… the communities do not always get served the way that is best for them.”

However, local operations often involve a separate problem: “They just don’t have the manpower and the resources, and they don’t even know where to begin,” Hofer said.

Another challenge is that some of the compliance requirements of federal grant programs are difficult for small, local service providers to meet, Howie said. “That’s something that we have to continue as an office, as a state, to try to triage.”

WASHINGTON, March 23, 2023 – American Rescue Plan Act funds sets the United States ahead in economic resiliency, said experts at a Brookings Institution event Thursday. 

When ARPA was passed in March of 2021, the United States Department of the Treasury was tasked with ensuring that funds would be used to build sustainable programs past the 2026 expenditure deadline as well as programs that would build capacity for future government programs, said Jacob Leibenluft of the Treasury.  

At the onset of the COVID-19 pandemic, states did not have the systems in place to reach people in need of help, said Leibenluft. ARPA funds help communities invest in a strong system to provide support to community members, which sets the United States ahead of where it would have been otherwise, he said, claiming that the funds will help the country weather upcoming economic turmoil. 

To take advantage of this opportunity, Leibenluft suggested that localities develop and share best practices. The most effective way to use ARPA funds is to develop the “plumbing” that connects citizens to government programs which localities can then maintain on their own budgets, he said. 

“There are certain things that are just not sustainable in the absence of ARPA funds,” he continued, “what we have built is really a demonstration of programs that can be sustained through a combination of local, state and federal funds.” 

Local governments need to view ARPA as one-time spending, added Tishara Jones, mayor of Saint Louis, Missouri. Saint Louis did not develop any ARPA-reliant programs that would extend beyond the 2026 expenditure deadline. Instead, the city is finding revenue in its existing budget for supporting new programs on its own. 

Even so, state officials suggest that the Treasury’s 2026 expenditure deadline is too soon, claiming that not all funds necessary for broadband infrastructure upgrades will be received by that time.  

The American Rescue Plan gave $1.9 trillion for direct financial assistance, education support, health programs, transportation, and state and local fiscal recovery. An estimated 10% of funds are being used to build infrastructure, including broadband deployment, according to Brookings. The program’s allocation phase is set to be complete by the end of 2024.