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Extremely High Cost Threshold – Playbook 3.0

Latest Broadband Infrastructure Playbook 3.0 Module Looks at Setting Extremely High-Cost Thresholds to Maximize Impact of BEAD Investments

One of the most critical questions that each State and Territory must tackle in implementing the Broadband Equity, Access, and Deployment (BEAD) program is how to make efficient investments in the most reliable, capable, and sustainable broadband connectivity for those residents and businesses that have been left behind while reaching as many unserved and underserved locations as possible. To make this calculus, the National Telecommunications and Information Administration (NTIA) directs each State and Territory to set an “Extremely High Cost per Location Threshold” (or EHCT), which defines the point at which a stated preference for future-proof fiber deployment is no longer cost-effective and alternate technologies will be given greater consideration.

To be clear, and in the interest of full disclosure, our organizations are unabashedly pro-fiber. We believe, and research supports, that fiber represents the most efficient and effective, long-term investment in virtually all cases. Moreover, it is the technology that will level the playing field, giving residents and businesses in rural and more remote locations the same opportunity that those living and working in urban and suburban areas have. And, by building fiber networks, policymakers will ensure that we do not face the prospect of needing to rebuild networks in the too-near future to keep pace with demand. The goal of this funding is to maximize the opportunity for everyone to be connected to fiber, not to recreate a future digital divide.

At the same time, we understand that some locations in sparsely settled areas will be very expensive to reach, and government funding is finite. The BEAD program rules account for this reality and contemplate that in these places alternate technologies will play a role as well in meeting a shared national goal of universal connectivity. Our members recognize this dynamic in their own operations, preferring to rely upon fiber where they can but turning to other technologies from time to time as needed (and often as a transition to fiber), to establish baseline levels of connectivity in harder-to-serve areas.

The EHCT is the tool by which each State or Territory will make such determinations about the mix of network technologies needed to reach unserved and underserved consumers. State and Territory broadband offices should not “settle” too low in setting the EHCT, as this will deprive consumers of reliable and scalable technology that will best leverage BEAD’s historic investment and stand the test of time. On the other hand, there are risks in setting the EHCT too high because this could lead to BEAD funding being depleted before every unserved location is connected.

In today’s Playbook 3.0 module, working with the experts at Cartesian, we examine these trade-offs, dive deeper into the factors to consider in setting the EHCT, and provide recommendations on how to go about setting a reasonable EHCT. As this module explains, each State and Territory ultimately will need to consider its own circumstances in terms of locations and geographies to be served and other economic considerations in making this important decision, but our hope is that the thoughts articulated in today’s Playbook module will provide a methodological “roadmap” in approaching this question—and ultimately help in maximizing fiber deployments while further ensuring universal connectivity.