What the Infrastructure Bill Means for Telcos

The $1.2-trillion bipartisan infrastructure bill recently passed by the Senate makes broadband access a right in American society and opens a raft of opportunity for incumbent telcos and their vendors.

Nestled in the legalese of the 2,702-page bill is the following declaration: “Access to affordable, reliable, high-speed broadband is essential to full participation in modern life in the United States.” And shortly after, this follows: “In many communities across the country, increased competition among broadband providers has the potential to offer consumers more affordable, high-quality options for broadband service.”

To consumers and businesses suffering in regions deemed unprofitable by carriers, this is welcome news indeed. And to carriers, it offers a path to expanding broadband service without having to cope with a government-owned alternative provider or having to run fiber to places where cable or wireless will do. To the vendors that serve those telcos, it’s all hands on deck.

Details of the Broadband Bill

To spread broadband equitably throughout the U.S. and its territories, the bill allocates $65 billion in a series of tightly regulated and well-defined budget items, including the following:

$42.45 billion in grants -- $100 million per state and $100 million divided among the territories, to bring broadband services to government-defined unserved and underserved regions.
$14.2 billion to an Affordable Connectivity Fund Program that includes $30/month stipends for low-income applicants.
$2.75 billion to support a Digital Equity Act that extends education about technology to groups that need it, such as seniors and the disabled.
$2 billion for grants specifically targeting rural areas.
$2 billion for grants to indigenous Native American tribes.
$1 billion to fund so-called Middle Mile projects that interconnect key broadband elements within the network, including “leased dark fiber, interoffice transport, backhaul, carrier-neutral internet exchange facilities, carrier-neutral submarine cable landing stations, undersea cables, transport connectivity to data centers, special access transport, and other similar services,” including private wireless broadband.

Additional Details

The broadband portion of the infrastructure bill contains a few additional details aside from itemized funding, including the following;

Any broadband project resulting from a state grant must have a low-cost service option, though specifics aren’t given.
Broadband for completely unserved areas is defined as 25 Mbit/s download, 3 Mbit/s upload; and speeds for underserved areas is 100 Mbit/s download and 20 Mbit/s upload. This opens up the field for connectivity options such as cable broadband that don’t require fiber, which should bode well for carriers that want options, including 5G, for broadening the service range.
All broadband service options must support latency “sufficient to support real-time, interactive applications.” Clearly, technological expertise was tapped for broadband specifications, and no wiggle room for cheap options is allowed.
State grant projects are barred from deploying transmission gear made in China, except in circumstances when the government can be shown that buying elsewhere would “unreasonably increase the cost of the project.”
Middle Mile project funding is open not just to states, territories, or tribal entities but to technology companies, utilities, telcos, nonprofit organizations, and partnerships among any of these groups.

All of these factors play to the strengths of incumbent telcos, who already have the means to widen their service areas but now have financial incentives to do so. Further, the vendors whose equipment supports infrastructure projects have a host of new opportunities to promote their wares.

The 5G Question

One question is whether the infrastructure bill will boost 5G deployment. The broadband speeds indicated allow for data rates as low as DSL in unserved areas that have no service. And though higher data rates are indicated for underserved areas with sparse service, speeds are still below 5G. Until deployment of mid-band spectrum allows for 5G to reach across wider geographic areas, the infrastructure incentives may not apply to 5G as much as 4G LTE.

Still, to broaden service in the middle mile, telcos are encouraged to future-proof their networks for 5G and private wireless services. The bill clearly states that the purpose of the middle mile incentives will be to “reduce the cost of connecting unserved and underserved areas to the backbone of the internet” and to “promote broadband connection resiliency through the creation of alternative network connection paths that can be designed to prevent single points of failure on a broadband network.” As 5G networks emerge to meet those criteria, providers will clearly benefit from the bill’s incentives.