One national broadband provider nearly did—walking away from a grant-eligible fiber buildout because their cost models deemed it too expensive. But were their assumptions accurate? In a landscape where competitive overbuilds and incorrect terrain estimates can make or break a business case, relying on incomplete data can be a costly mistake. By partnering with VCTI, this provider uncovered a 65% lower cost per passing, a 9% increase in market opportunity, and secured nearly $90 million in subsidies. Want to know how? Read the full story here.
Examining the Business Case
A top-five national broadband services provider came to VCTI after determining that a fiber buildout in a grant-eligible market in their portfolio would be too expensive to pursue, even with the grant funding.
Based on their own models, the service provider determined that almost none of the buildout could be done aerially, necessitating a fiber dig through what they believed was 100 percent hard rock.
Inaccurate assumptions regarding the viability of aerial deployments and the true nature of terrain can be a threat to a service provider’s bottom line. Understanding the threat of competitive overbuilds, and accurately assessing homes passed, is also critical to developing an accurate business case.
Without robust data and analytics, service providers can be vulnerable to inaccurate builds and cost analysis. Often, service providers can find themselves either passing on opportunities because the cost seems too high, or applying for grants with inaccurate assumptions and a business case that doesn’t hold up.
The service provider turned to VCTI to test whether assumptions about the project were correct. Our team looked specifically at four areas: homes passed; competitive threat; viability of existing utility poles for aerial deployment; and geology along the route.
Addressable Market and Competitive Considerations
The service provider faced a pivotal challenge in a competitive market where they operated with dated infrastructure. While parts of the upgrade project qualified for grants, concerns over high costs made them hesitant to invest in upgrading their network. Their only alternative—abandoning the market to competitors—threatened their market share and long-term viability, impacting their bottom line.
When planning broadband expansion projects, one fundamental challenge for service providers is the variability in how addresses are captured in their systems, across government records such as tax files, and within the FCC Fabric. Leveraging their expertise and suite of geospatial tools, the VCTI Address Integrity Mapping solution identifies missing and misclassified locations to help service providers to maximize total addressable market.
In this case, VCTI’s analysis identified additional locations within the opportunity areas and along the backhaul, uncovering a nearly nine percent increased market opportunity, which could translate to more than $1M/month in potential revenue.
Equally important was an analysis of the competitive threat. The grant opportunity was located close to a market where a competitor had already built a fiber network. The service provider’s analysis had not included someone else leveraging the grant and overbuilding them. VCTI’s analysis found that nearly 50 percent of their existing revenue base would be at risk from competitive overbuild in the market.
Leveraging AI to Understand Aerial Viability and Terrain
To understand build costs, the service provider turned to VCTI's innovative solution, Fiber IQ™, which helped them understand their aerial and underground deployment options. The solution allows service providers to create more accurate build plans and cost estimates, and reduces the risk of unforeseen delays or expenses.
Key to the solution’s success was VCTI’s ability to synthesize a broad range of data inputs and perform complex analyses. This process transformed vast amounts of information, such as competitive and demographic trends, modeling of competitive overbuild impact, cost implications for aerial and underground deployment, and more, into clear, actionable insights, empowering leadership to make confident, informed decisions about market expansion.
VCTI’s analysis found that 70 percent of the utility poles along the proposed route were viable, where the service providers’ original estimates assumed little to no opportunity for aerial.
Until recently, on-the-ground visual inspection of utility poles has been required to obtain the measurements necessary to get an accurate picture of aerial viability and potential make-ready costs. This approach is both expensive and slow, and often not employed in the early stages of investigating an opportunity. Today, AI and machine learning are capable of powering “Enhanced Virtual Estimates” that give significantly more accurate insight into aerial viability, for each individual pole along identified pole lines.
Fiber IQ can also map the soil type/rock hardness level going down to 4-6 feet and provide the relevant construction implications. In this case, the analysis found that the terrain along the proposed route was nearly 10 percent sand, which lowers construction costs significantly.
Leveraging both tools, VCTI was able to project a 65 percent lower cost per passing for the project.
Solid Data is Key to Broadband Expansion Plans
Today, the sheer magnitude of grant opportunities and the race to respond to bids can make service providers vulnerable to significant under or over estimation of the actual cost to deploy.
Over estimations can jeopardize their success responding to an RFP, or even put them in the position of rejecting highly attractive opportunities, thus both losing out on revenue and opening a door to competitors. On the other end of the spectrum, the marketplace is already seeing some grant opportunities being rebid because the original winner withdrew after discovering that their bid had been too low and executing on the project would go way over budget.
In either case, the households and localities these programs were designed to help are denied – or at least delayed – the opportunity to benefit from the broadband services these government subsidies were designed to deliver.
But the technology and know-how to deliver more accurate and optimized network expansion plans exists today. By leveraging data, analysis, and machine learning, VCTI enables service providers to drive every dollar further and make investment decisions with confidence.
In this case, the support from VCTI resulted in securing nearly $90 million in subsidies, aligning with their growth and strategic objectives. Additionally, VCTI’s support proved instrumental in successfully navigating eight protest challenges across seven states, further solidifying the service provider’s competitive position.
