By: Richard Rousselot, Senior Director, Custom Solutions with contributions from Hailey Farrow, Marketing Manager, on behalf of CostQuest Associates.
This analysis will cover at a high level how to start narrowing down markets and what information to investigate when looking to uncover fiber expansion opportunities.
To start, we’ll take the FCC’s Broadband Data Collection data and tie it to each Broadband Serviceable Location_ID (roof-top level) in the Fabric data. Now, we can start to narrow down which locations have access to fiber service, and which do not.
From this analysis we can see in the U.S., there are 2,294 counties that have less than or equal to 60% fiber service coverage.
This means there are over 2,294 counties, with 40% to 100% of locations in those counties available to a new fiber entrant.
Below is a more granular breakdown of the number of counties with x% fiber coverage:
Here are some key questions to answer when assessing fiber expansion into a market
- In the market, which carriers are providing service nearby? How many of those carriers have fiber assets?
- Potential market share to capture?
- What is the market size? How many Broadband Serviceable Locations (BSLs) are there that are not served with fiber?
- Where are the BSLs? What is their Location_ID? Address? Coordinates?
- What are the income and education levels in those areas?
- Are any of those BSLs already under a federal funding commitment?
- What are the capital costs? What are the operating costs?
- What is the revenue potential?
- What are the risks of entering?
Unserved fiber county example
Below is an example of how to answer the above questions in an unserved fiber county: Gem County, Idaho
Key facts:
- Gem County has only 0.1% fiber coverage
- Total Broadband Serviceable Locations in the county are 8,403
Now, diving into OnLook with the BroadbandFabric locations and other data layers aggregated at the Hex9 level, we can dive deeper into:
- Where to locate the unserved locations
- What carriers and technology are in the area
- Median Income, Household Size, and Education levels
- How many locations are already being funded by a federal program
From this snapshot, we can see there is a good portion of unserved BSLs in the western region of Gem County, Idaho.
Here’s a breakdown of the information from all the unserved Hex9 cells (in purple) from this example area:
- 231 locations are unserved
- 210 locations are residential
- 18 locations are funded by the FCC’s RDOF Funding Program
Carriers in the area:
- White Cloud Communications – Licensed FW
- CenturyLink – Copper
- Farmers Mutual Telephone Company – Licensed FW
- Fatbeam – Licensed by rule FW
Demographics:
- Median Income: $67,649
- Household size: 2.8 people
- Highschool education: 36%
- Some college or associate degree education: 33%
- Bachelor degree or higher: 21%
Fiber expansion economic viability analysis
Based on CostQuest’s national FTTP cost model, we can see that it would cost $6,095 per unserved location for a greenfield fiber build-out, and $1.4 million if you were to pass all 231 unserved locations.
From our cost models we estimate a new fiber entrant could get up to 57% market share in the selected Hex9 cells.
Key considerations:
- Idaho BEAD Award Amount: $583 million
- Total Unserved BSLs in Idaho: 92,471
- $6,304 per unserved BSL, if Idaho were to use all $583 million on deployment to unserved (unlikely).
Key questions:
- Is $6,095 per unserved location, $1.4 million total, considered “high cost” to serve 231 locations?
- What is the potential ARPU? If one were to capture 57% market share – 131 locations
- 131 x $70/ month = $9,170/ month x 12 months = $110,040/year
The next question is, if one were to apply for BEAD funds in this area, how much should one contribute? How much subsidy to ask for? What are the operating costs? What is the revenue potential and time to pay back? What are the risks?
Example of how this might look:
- Contribution = $500,000
- Subsidy = $540,000
- Total Bid Amount = $1.4 million
- Time to pay back the $500,000 using the same ARPU calculation above:
- 131 locations x $70/ month = $9,170/ month x 12 months = $110,040/year
- $500,000/$110,040
- Payback period = 4 to 5 years
Now, insert operating costs and risk assessment.
Result: To enter or not to enter with fiber service? That is the question.
Closing thoughts – Reliable data is key to inform fiber expansion
This analysis uses a sample area to display how one might go about assessing fiber expansion into unserved or underserved markets. When it comes to submitting grant applications for BEAD, it will be about assessing the data within the state or territory’s defined project areas.
Some BEAD programs have defined project areas, and some will allow for custom area submissions. The point is that it’s critical to have reliable data to drive the analysis of which markets are ideal for fiber expansion and other types of broadband services.
Want to get access to all the broadband data presented above to conduct your own analysis?
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OnLook Broadband Analytics App