Network Builders Bullish on Broadband Business, Incompas Told

C Spire can tackle new technologies to deliver more broadband, said Chief Financial Officer Ben Pace. "We're looking at 5G," he said, though it's "not ready for prime time yet." He told us during Q&A the company is optimistic about the rural spread of 5G, but uses "aren't there yet," and clear standards aren't developed. The company plans to follow customer demand as it develops, and he noted even larger wireless providers are talking about 5G as a 2023 proposition. C Spire plans to be a 5G network provider and to continue to partner with the bigger wireless providers that require fiber backhaul support. Pace called 5G "a good technology for the future" that's "not completely ripe yet."

For a while, network infrastructure was viewed as a commodity, but now stakeholders recognize the core network's value, said Mark Fahner, Cincinnati Bell vice president-corporate business development. "It's a tremendous time to be in this industry." The telco is one of the few LECs gaining share in its core businesses against cable companies, said Fahner. He said the company doesn't have a dividend and reinvests in its business to support long-term goals. "It's the right thing to do."

For smaller providers, funding options can be harder, some said. Convincing private equity firms or small-town banks to invest in broadband can be a hard sell, said Phillip Deneef, GeoLinks chief strategy officer. "A lot of investors have shied away from the 'If we build it, they will come' model," he said, though evidence of strong demand can help. Monthly recurring revenue is defensible, especially in suburban and urban markets, he explained, but investors have to understand that networks will take a couple years to build.

Government funding is an option, especially for providers that can bid for USF programs. Network builders without ISP businesses can partner with participants in programs such as the upcoming Rural Digital Opportunity Fund, said consultant Carol Mattey. Smaller providers serving neighboring communities might bid on unserved locations but need help deploying fiber during their expansion, she said. Likely candidates for such bidders include small ILECs, Mattey said.

Better broadband mapping can help direct USF support where it's needed, speakers said. "Broadband is critical, and without it, there's no cloud service," said Paula Boyd, Microsoft senior director-U.S. government and regulatory affairs. She said the company's usage data indicates about 49 percent of Americans are using the internet at broadband speed. She acknowledged Microsoft's data sets don't match the FCC's, partly because they measure different things.

Preston Wise, special counsel to the office of Chairman Ajit Pai, said that from the FCC's perspective, it's hard to tell the difference under current mapping reporting rules between lack of broadband availability and lack of consumer adoption. Proposed new mapping systems will let the FCC separate that data, he said.

Agencies are also large purchasers of communications services, and the General Services Administration has recently gone out of its way to solicit competitive bids, said Michael Galvin, Granite Telecommunications general counsel. He advised federal agencies and their contractors to plan ahead to anticipate what communications services they would need over next several years.

Cybersecurity and cloud services will be important to federal purchasers, said Pamela Hollick, CenturyLink associate general counsel. "We don't want to be locked into the old services, just on a new contract." Competing for business with those that traditionally had government contracts forces everybody to compete with the best price, the best service and the best products they have, she said.