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There's more interest in rural broadband now than possibly ever before
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But even with BEAD, business models must be written carefully to ensure a profit
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If there's a rural electric co-op in the area, that may be a place for new fiber deployers to avoid
One of the funniest quotes that came out of the Connect(X) show last week was from John Greene, a crusty telecommunications exec and former CEO of New Lisbon Holdings.
Greene said, “Who would have ever thought we’d see private equity filter into rural areas and small companies?”
Greene was speaking on a panel discussing investments in rural broadband.
He added, “For years we’ve been begging for some support. Now, the very companies that have ignored rural America are now standing at the front of the line. Comcast, Charter, they’re now going after grants. Why? Because there’s money involved. We’ve seen a complete paradigm shift in rural America.”
Jonathan Adelstein, chief strategy and external affairs officer with TWN Communications, said, “A couple of years ago, the last place private capital wanted to look was rural America.”
But then there was a land grab, spurred by lower interest rates, lower inflation and low competition. The land grab was followed by higher interest rates, higher inflation and higher competition. “Now, there’s a bit of a pregnant pause,” said Adelstein.
Rural broadband is very expensive to build. That’s why the Broadband Equity, Access and Deployment (BEAD) program is designed to subsidize the gap where it otherwise doesn’t make financial sense for private companies to build.
“It’s a very delicate balance,” said Adelstein, adding that business plans must be written carefully. “But there’s more interest in rural right now than we’ve maybe ever seen before,” he said.
Claude Aiken, chief strategy officer with Nextlink Internet, noted there’s more competition in rural areas than you might think. “You’ve got these small, local companies that don’t have the history of an ILEC, but they’ve got history with their communities. Just because fiber comes in doesn’t mean folks are going to switch.”
The panelists noted that one of the main competitors in some rural areas is the local electric co-op. Sometimes, these co-ops build a broadband network to serve their own needs, and then they provide fiber broadband to residents as a side business. Adelstein said, “Nobody wants to come in on top of rural electric co-ops. They’re so local.”
Greene said rural electric co-ops “are going to be a force to be reckoned with. They’ve been there longer, and people know them. They’ve got all the infrastructure.”
Everyone on the panel agreed that partnerships are critical in the process of delivering broadband to rural America.
“For smaller entities to be able to participate effectively, they’ve got to come up with good partnerships, with the vendor community, the local community. We’ll partner with just about anybody,” said Aiken.