This week at Mountain Connect, one topic keeps coming up in hallways, panel discussions, and private conversations: Broadband providers are increasingly discovering that building to the last unserved locations is significantly more difficult and expensive than many anticipated.

Bree Maki, executive director of Minnesota’s broadband office, said her office would support waivers to increase grant support if they made sense, suggesting NTIA use BEAD surplus funds to address rising costs and meet the goal of connecting the unserved.

Sarah Baska, director of Georgia’s broadband office, said NTIA’s process made it “very hard to overcome lowest price” and since then has seen the increased costs of projects, with one provider pulling out having run the numbers and needing three time what they bid.

This is not an isolated event. We’ve already seen similar declines in Oregon, Nebraska, and Texas.

In Oregon, multiple providers declined previously awarded BEAD projects, representing more than 13,000 locations and over $120 million in planned funding. One provider alone reportedly walked away from more than $90 million in awards after concluding that the economics of building isolated project areas no longer made sense. The state was ultimately forced to conduct a replacement process to reassign the projects.

In Nebraska, state officials were forced to reopen portions of their broadband grant process after several providers declined to sign awarded contracts, leaving approximately 1,700 locations without an identified builder.

In Texas, providers backed away from nearly $190 million in subsidy funding, leaving roughly 31,000 locations behind.

These are early warning signs of what's to come. After years of delays, changing conditions, and on-the-ground reality checks, we need to be honest about the challenges emerging as states move from planning to execution.

Providers submitted BEAD applications based on broadband maps and location data that were developed years ago. Since then, the marketplace hasn't stood still. Cable, fiber, fixed wireless, and satellite providers have continued investing billions of dollars in network expansion. As a result, many locations that appeared eligible when planning began have since received service through private investment.

That leaves a smaller pool of truly unserved locations. Unfortunately, those remaining locations are often the hardest, most remote, and most expensive places to reach.

While providers have continued to build to increasingly rural areas, the industry has learned a great deal over the last several years about the practical realities of rural deployment. Pole replacement requirements are more extensive than many expected, and make-ready timelines remain unpredictable. New York Law School’s Advanced Communications Law & Policy Institute recently estimated BEAD-related pole costs ranging from about $1.25 billion to $4.6 billion. Additionally, permitting delays continue to add months to project schedules, which is considerable when you factor that the majority of BEAD projects will require more than 10 permits. Access challenges, supply chain, labor shortages, terrain issues, and rising construction costs all compound the difficulty of reaching the final few percent of locations.

Every year of delay has made those challenges more acute.

Projects that may have penciled out in 2024 or even during the benefit of the bargain round in 2025 can look dramatically different in 2026. Material costs have increased. Interest rates and capital costs have increased. Construction timelines have stretched. At the same time, competition has only increased. So, it’s not surprising that in addition to changing project economics, providers are concerned about matching fund requirements, cost overruns, compliance exposure, and BABA-compliant inventory constraints.

The result is a growing gap between assumptions made during planning and realities encountered during implementation. Rather than treating such developments as failures, policymakers should view them as valuable market signals. They reflect the reality that connecting the hardest-to-reach locations has always been the most difficult part of the broadband challenge.

Policymakers and stakeholders should prepare for more BEAD project modifications, more requests for reassessment, and potentially more awards being returned as providers take a closer look at the economics of individual builds.

If BEAD is going to succeed, I would echo the message of other state broadband officers asking NTIA to consider using portions of the $21 billion, and counting, in left-over funds to help with cost over runs associated with inflation, capital costs and a portion of pole-related costs. As with any public funding, additional allowable uses of non-deployment funding need to also have sensible limits so that these additional monies are not just a form of giveaway.

I know the broadband industry remains committed to finishing the job, but if conversations at Mountain Connect are any indication, we should expect to see more providers reassessing projects as we collectively face the hard realities of rural broadband deployment. It would be incredibly unfortunate for NTIA to miss this opportunity to bolster awardees' ability to meet the current challenges of building long-lasting fiber networks in rural America, particularly when money appropriated by Congress is available.

Mark Vasconi is the principal of Vasconi Consulting and is the former State Broadband Director in Washington. He also spent over a decade as the Director of Regulatory Analysis at the Washington Utilities and Transportation Commission. Prior to his work in the public sector, he had an extensive career in the private sector principally with AT&T. This Expert Opinion is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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