CCG Consulting

The Rural Digital Opportunity Fund Fixed Wireless Dilemma

I’m working with a number of rural counties that are trying to come to grips with the long-term implications of Rural Digital Opportunity Fund (RDOF) awards in their counties going to internet service providers' (ISP) that plan to deliver broadband using fixed wireless technology. Most of them are not sure what to make of the situation for the following reasons:

Regional Differences in Broadband Costs

Broadband costs are always unique to a given community. Population density—the number of homes and businesses per square mile—tells almost nothing about broadband costs. It’s far more important to know where homes are located in relation to roads. Such as how far the homes are from the roads. While the relationship between homes to roads is a major factor, it’s not the only one. There are some counties where the cost to build is higher than expected for other reasons. 

Inflation and Grants

TekWav, Nextlink, and Plains Internet won Rural Digital Opportunity Fund (RDOF) funding in the December 2020 reverse auction. Two of the three providers were quoted as saying that the cost to build the networks to satisfy the RDOF obligations has doubled since they won the award – the third said costs have risen materially. Most providers I’ve been working with estimate the increase to be between 15% and 30%, differing by region and the planned technology.

Speeding Up Fiber Construction

There are a lot of factors that contribute to the speed of constructing infrastructure. The White House announced an initiative to address some of these issues to speed up the construction of the $550 billion in infrastructure that was funded with the Infrastructure Investment and Jobs Act, along with earlier money from the American Rescue Plan Act.

The Price for Faster Upload Speeds

Comcast is introducing a new product in the Northeast that offers faster upload speeds – for a price. The company knows that its biggest weakness is upload speeds. The current upload speeds for products with download speeds up to 300 are only at 10 Mbps.

Using AM Radio Towers

One existing resource that is often overlooked in designing wireless networks is AM radio towers. For the most part, companies deploying fixed wireless and microwave antenna have avoided these towers. The conventional wisdom has been to avoid the AM towers as being too hot in power and frequency to use for other purposes. But the AM towers don’t have to be a wasted asset. There are two methods that can be used to install other radios on AM towers that often get overlooked by cellular companies and wireless broadband providers.

Restricting FCC Mapping Data

The Federal Communications Commission rejected dozens of requests from broadband providers to keep confidential the method that the providers use to identify broadband coverage areas. This was prompted by the FCC requiring each provider to explain to the agency how it determined broadband coverage areas in the latest round of gathering data for the FCC broadband maps.

Regulating Hidden Fees

Big telecommunication companies (telcos) and almost every large cable company use what the industry calls "hidden fees." These fees are not mentioned when advertising for a service but are put onto customer bills. There is a class action lawsuit in California that shows why broadband providers are not worried about using hidden fees. In times past, when the big companies were regulated, they might have been ordered to make a 100% refund of a fee that regulators decided was questionable.

Economy-of-Scale for Broadband Providers

I’ve worked with a number of small communities that want to explore the idea of having a community-owned broadband provider. My advice to small communities is the same as with all clients – economy-of-scale really matters for providers. Economy-of-scale is the economic term for describing how businesses get more efficient as they get larger. A large percentage of the costs of operating a broadband provider is fixed or nearly fixed. Any fixed cost acts in the same manner as the general manager’s salary.