Is BEAD Essential to Your Organization’s Long-Term Strategic and Financial Future?
Have you heard about BEAD and wondered what you should be doing before your state or territory gets its funding distribution?
The $42B of Broadband funding coming available is opening the door for a wide range of competitors that may compete with you. It is imperative to develop a strategic plan to address this potential threat that is based on fundamental analytics.
JSI firmly believes the time is now to begin analyzing potential BEAD/Capital Grant opportunities and, if warranted, begin setting the stage for a compelling application.
Environmental Risks to Current Earnings:
Trends in broadband pricing and the introduction of the Affordable Connectivity Program (ACP) have the potential to significantly reduce broadband margins in the medium term.
Inflationary trends in operating costs hold the potential to further reduce operating margins.
Diminishing Returns on Non-Grant Funded Expansion Opportunities:
Over the past two years, fiber deployments costs have increased between 50% to 75%.
During the same period, lending costs / cost of capital have nearly doubled.
The combination of these two factors have dramatically increased payback periods, and decimated the internal rate of return (IRR) on non-grant funded fiber deployments.
These factors hold the potential to significantly dilute, and even erase, the progress RLECs have made toward reducing their reliance on the Universal Service Fund (USF), while simultaneously reducing or eliminating non-grant funded expansion opportunities.
JSI has created a low-cost, high-value BEAD Opportunity Assessment Analysis Package that provides essential insight including:
- An analysis leveraging company data, forecasting the potential margin impacts related to broadband pricing compression and operating cost trends;
- A map plotting BEAD opportunities within 25 miles from your organization’s operating boundaries as well as BEAD/Capital Grant funding-eligible locations within your operating state(s);
- An analysis and “accretive cash flow matrix” available from identified locations at varying average revenue per user (ARPU) and market share combinations – both pre- and post-debt service;
- A straightforward and easy-to-use model that allows your organization to explore a range of hypothetical scenarios surrounding:
- The impacts of differing price compression, operating cost inflation, and USF attrition scenarios on prevailing cash flow;
- The number of locations within the 25-mile radius from your existing service territory or territories that would be required to offset the impacts of forecasted pricing compression and operating cost inflation;
- The accretive cash flow produced by defined modeling scenarios based on specific values supplied for cost per location passed, level of grant match required, cost of capital, and assumed realized ARPU and market share; and
- A basic best-practice BEAD preparation plan identifying the essential steps to maximizing your company’s prospects for being a successful BEAD/Capital Grant fund recipient