Analyst flags 'significant disparities' in BEAD funding

The broadband industry of late has been buzzing with excitement after the White House revealed how much each state is getting from the $42.5 billion Broadband Access, Equity and Deployment (BEAD) program.

Some states, like California, Texas and Missouri, bagged sizable BEAD allocations. But PwC Principal Dan Hays noted there are some “very significant disparities” with the allocations that aren’t apparent at first glance.

He told Fierce if you were to take the $42 billion and divide it by the number of households in the U.S. (around 123 million), it amounts to an allocation of roughly $336 per household.

That sounds like a lot of money for the average household, but Alaska for instance “is actually getting more than 10 times that amount on a per household basis,” Hays said.

Alaska received a BEAD allotment of around $1.02 billion, which he estimated is probably approaching $5,000 to $10,000 per unserved or underserved households in a state like Alaska.

Whereas a state like Massachusetts, with $147 million in BEAD funding, “is getting like $56 per household.”

“You don’t see numbers that dramatic everywhere, but in places such as West Virginia, Wyoming, Montana and Mississippi, they’re all three to five times the average national subsidy,” Hays said. “So it gives a little bit of a view into the places that the U.S. government believes really need help to get broadband access.”

Another aspect of the allocations Hays found surprising was how much money the National Telecommunications and Information Administration (NTIA) gave to U.S. territories.

Puerto Rico bagged the highest BEAD allotment ($334.6 million) out of the territories, followed by Guam ($157 million), the Northern Mariana Islands ($80.8 million), American Samoa ($37.6 million) and the U.S. Virgin Islands ($27.1 million).

“Most of us don’t think about some of the far flung U.S. territories that are out there,” said Hays, noting households in the Northern Mariana Islands “effectively got a $7,000 subsidy, whether they have broadband already or not.”

And it’s not too dissimilar when you look at American Samoa, which is over $4,000 per household, or Guam, which was over $3,500, he added.

Hays thinks territories are receiving such an influx of BEAD funding because their locations are “strategically important,” particularly for the U.S. military.

“The household counts may not be indicative of what the real need is there,” he said. “But the dollars flowing into territories are just unbelievable in many ways.”

Supply and labor

Hays noted some other factors that could impact BEAD projects, such as workforce shortages and the cost of supplies.

“On the people side, we’re already starting to see shortages in labor, for fiber trenching, for splicing, for all of the skilled labor that’s needed to deploy fiber networks,” he said.

Although the broadband industry is striving to train more workers, that takes time and Hays expects the labor shortage “to get worse before it gets better.”

As for supplies, he said he’s noticed concerns about the price of materials like fiber optic cables and machinery for micro-trenching.

“These are things that are in short supply, and there’s significant concerns about price increases that are already starting to creep in, given where we’ve been over the past year with inflation,” said Hays.

Compliance challenges

The BEAD program has opened the door for more providers to take advantage of federal funding. But many of those ISPs, Hays said, “either don’t have established operations or in some cases just aren’t used to taking federal grant dollars.”

“Those monies come with significant handcuffs,” he said, as providers must fulfill reporting requirements, regulatory obligations and compliance activities. So, those companies are reaching out to accounting firms like PwC to make sure they are complying with funding requirements.

“The last thing you want to have happen is that you wind up penalized or losing some of the money because you’re unable to properly account for it in accordance with the government’s requirements,” said Hays. “It’s a whole new world in many ways.”