The BEAD Funding Gap
Finding the point where ISP funding + BEAD funding is not enough
There is a maximum broadband serviceable location (BSL) cost where BEAD funding wont be enough.
How much is available per address?
Doing some math, dividing $990m by 228,382 gave a rough average investment per address. That results in an average of $4334.84 per address. The minimum match would be $1444.95. That is a total of $5779.79 per address. The problem is none of those numbers are final/real and are “old” (ie prior to challenge process and RDOF defaults).
Once the final Wisconsin Public Service Commission Wisconsin Broadband Office BEAD project unit map is completed we will have a real total number. This should occur before mid-October 2024.
Even with the project unit map, and final total number of qualifying addresses, we still have some unknowns. We do not know what the actual cost per address and resulting cost per project unit will be.
Calculating the BEAD Funding Gap
Each address is worth some cash value over time. In general that number is accepted to be about $2000 in Wisconsin. Note: It could be lower or higher in areas with higher population or higher “take rates” (percentage of paying customers as a percentage over the distance of the investment).
For all practical purposes, all of the high population density areas are served in Wisconsin, likely over 99%. That leaves the lower population density or “rural” areas.
That leaves us with that same ISP passing “value”. So if we add BEAD FUNDING + PASSING VALUE the resulting amount is the total available funds.
Here is a quick table showing a few ISP value amounts
This means a passing that an ISP calculates will cost more than $8k to $12k will be declined. The exact ISP passing value is specific to each ISP, financial/market factors and as noted take rate percent’s.
Regardless that means there is a point where there is a funding gap even with the $1B in available funds. That point is 4x whatever that ISP value is.
$2000 BSL Example
The ISP will fund a maximum of $2000. Therefore the maximum match is $6000 and total project maximum is $8000. This means the ISP cant afford any address over $8000.
$2000 Example in a Project Unit
The ISP will fund a maximum AVERAGE of $2000 per location per project unit. Therefore the maximum average match is $6000 and average location project cost per BSL is a maximum of $8000. This means the ISP cant afford any project unit that has an average cost per address over $8000.
Example 1: if the ISP passing value is $2000, and there are 20 BSLs in a project unit. That results in at most $40,000 from the ISP and $120,000 from BEAD or a total of $160,000 for the project. If the costs are higher than that the provider the provider will decline that project unit entirely.
Example 2: if the ISP passing value is $3000, and there are 20 BSLs in a project unit. That results in at most $60,000 from the ISP and $180,000 from BEAD or a total of $240,000 for the project. If the costs are higher than that the provider will decline that project unit entirely.
What is the
The BEAD Funding gap will likely be the “breaking point” for “HIGH COST” as defined in the BEAD NOFO and approved WI PSC WBO Volume 2.
Using this formula
“per BSL” — ISP Value + BEAD funding equaling 3x of ISP value = 4x ISP value
“per project unit” — average ISP value + BEAD funding equaling ex of average ISP value in the project unit. This means the max project cost can still only be the average of 4x ISP value per location for the project.
Basic Visualization
A friend from Calumet County, Jason Pausma came up with the great idea of using a simple pie chart to explain the WI PSC (NTIA) BEAD Funding. A pie chart of 75/25. That got me thinking about how to explain the “maximum cost” per qualifying BEAD location
His pie chart got me thinking about the challenge of explaining the funding problem in more detail. Presenting all the math at committee meetings will be a challenge at best, so using a simpler graphic with example funds gives a much quicker
Visualization of Funding Gap
Below is the result of using Jason Pausma’s idea applied to the funding gap.
*If the ISP value is $2000 per location, anything below $8k does not likely require local funding but anything over $8k will require an increasing amount depending on cost (the red part of the pie chart).
*If the ISP value is $3000 per location, anything below $12k does not likely require local funding but anything over $12k will require an increasing amount depending on cost (the red part of the pie chart).
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