Press Release

This article was originally published in Multichannel News

Are You Ready for the Rural Digital Opportunity Fund?

Best practices to compete in $20 billion federal program

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“The task ahead of you requires integrity of planning, especially cost-to-performance analysis with the ability to compare different architectures/deployment options, and insight into potential competitive bids, guided by clear milestones and business objectives along the way.” -Raj Singh, CEO, VCTI

Nothing in U.S. history has exposed the rural digital divide as has the COVID-19 pandemic. Too many students in rural communities are being asked to participate in “distance learning” but are being left behind because their community’s infrastructure is insufficient. Adults, too, in rural communities are struggling with access to job listings and unemployment benefit applications as these services are frequently only available online. Without access to broadband, working from home is not an option, nor are the video chat services that many of us use to catch up with our friends and family.

Prior to COVID-19, the FCC announced its next step to bridge the digital divide, the Rural Digital Opportunity Fund (RDOF). This $20 billion program aims to drive better broadband more deeply into the un-served and underserved communities around America. The final list of eligible locations is not yet published (as of this writing) but is expected to include approximately 6 million households.

The auctions for phase 1, with $16 billion allocated, are scheduled to begin on October 22, 2020.

Like its predecessor, the Connect America Fund II (CAF II), winning bids will be determined by a combination of committed speed (up and down) and latency performance. The performance tiers will also be weighted to provide a bias to speeds above 100/20 Mbps. Unlike CAF II, which gave incumbents the right of first refusal, there is no advantage to incumbency in the RDOF auctions.

Incumbents and Independents will be competing to out-underbid each other from the starting gate.

With more competition and less predictability to factor into bid decisions, the caliber of the analysis on prospective markets – the demographics, the services, and the best technology to deploy — is more critical than ever to the development of bids that will have a high probability of success and profitability.

Develop the Framework

The task ahead of you requires integrity of planning, especially cost-to-performance analysis with the ability to compare different architectures/deployment options, and insight into potential competitive bids, guided by clear milestones and business objectives along the way.

Which takes us to the first best practice. Define the products/services and cost structure needed to win the bid for each specific target market, and the shortlist of deployment architecture options to be modeled.

The weighting gives an advantage to speed and performance, but that does not mean fiber is the only viable architecture. For homes that can’t be viably served by fiber, fixed wireless is a practical and attractive option.

Therefore, your shortlist of deployment options should include both fiber and fixed wireless architectures.

In bidding for multiple markets, maybe even hundreds of communities, establishing standard templates to model against is critical to work through the analytics efficiently. Anticipate running multiple iterations with different architecture criteria so that you can glean insight into the best end state architecture, technology, economic return and bid viability for each target market.

Here are four critical planning analytics that you need to guide your target market selection and bids:

Determine middle mile costs-options-constraints.

For the non-incumbent prospective service provider, understanding the options and costs involved with reaching remote locations is a critical component in building your cost model.

For the incumbent service provider, understanding capacity constraints and any required upgrades are one of the critical foundation data points for your cost model.

Review architecture options.

Analyze fiber reach to DLC/DSLAMs/Routers in current infrastructure (COs/remote cabinets/data centers/substations). Model adding fiber and converting current equipment to Ethernet-based backhaul, or model using wireless backhaul options, when the cost of extending fiber makes the upgrade out of reach.

Model Fiber-to-the-Premises (FTTP) and next generation XGS PON and beyond.

Model Fixed Wireless Access and propagation analysis and bandwidth estimation.

For service providers with cable infrastructure, model fiber closer to the customer, deep fiber and DOCSIS support for Symmetrical.

Evaluate service target penetration by architecture, including hybrid options.

What percentage of the market will receive above average vs. baseline vs. minimum speeds? What individual or hybrid architecture delivers the best, broadest coverage?

Model cost and projected revenue per household with each of the service target scenarios.

Be sure to include a complete cost per home as well as first cost to upgrade to the service targets and technology.

Preparation for the bidding process will require modeling numerous network scenarios. The fixed wireless modeling must include the specifics of the signal propagation, such as strength and reach, within the target coverage area. An automated planning tool that lets you analyze across technologies, such as fiber and fixed wireless and household demographics, is a necessity.

With focused decisions on fiber and fixed wireless architectures, supported by automated planning tools, you’ll be in a position to undertake in-depth, detailed comparative analysis of hundreds of markets and define your bid packages with greater precision and confidence.

Raj Singh serves as CEO of VCTI, the broadband network services firm.