As the subgrantee process for the Broadband Equity, Access, and Deployment (BEAD) program gains steam, incumbent service providers, both big and small, have a potential edge over new providers.
Speaking at the Bank of America 2024 Media, Communications & Entertainment Conference, Dycom’s outgoing CEO Steven Nielsen said that the very nature of the fact that an incumbent has an established set of processes and infrastructure in place gives incumbent cable operators or telcos a running start.
This is especially true in the rural areas that the BEAD funding is initially targeting.
“One of the things we’re looking to see as the subgrantee process begins in earnest across the country is to the extent that program is attractive to the incumbent operator has an advantage of getting started,” he said. “They have existing aerial facilities they can attach to, pole attachment agreements, and permitting relationships with the county Department of Transportation (DOT) as well as central offices and transport fiber.”
Besides being able to ramp up quicker than a newcomer, capital is less burdensome for an incumbent.
“It will also be much less costly because an incumbent provider has existing infrastructure they can build upon,” Nielsen said. “Someone that’s not an incumbent will take longer to get started because they have to negotiate pole attachment agreements, get with permitting agencies and get middle mile support for the builds.”
However, Nielsen added that every market in each state will likely look different. “It’s going to be interesting to see the blend,” he said. “There will be a market that develops state by state that will be an intensive geospatial modeling process where it works for the incumbents, or it works on an attractive basis for someone else.”
BEAD ramps up
The BEAD program is picking up steam.
NTIA has approved the second-round proposals for 39 state approvals, representing 60% of the BEAD money.
During its second-quarter 2025 earnings call, Dycom noted that more states are getting their funding proposals approved by NTIA.
Nielsen said that it has continued to talk with customers pursuing BEAD funding.
“We’ve had preliminary discussions with our customers, but until you go to the volume 2 subgrantee process that’s where it becomes real,” he said. “Montana, Louisiana, and West Virginia are out with their subgrantee, and windows are open, and we look forward to seeing what kind of market develops, what states, and at what terms.”
He added the industry won’t need to see approval from every state. “We don’t have to go through all 50 states to go through that process to know,” Nielsen said. “After 10-15 states, it will be clear where the market is and where programs are in the subgrantee process.”
One of the other exciting dynamics is that service providers could upgrade other areas adjacent to where the BEAD funding has been allocated.
“Because there are all these interrelated funding sources, even in areas that are not deemed as underserved or unserved, a provider may enable upgrades along the way to get there of plant that’s not even covered,” Nielsen said. “Not only is there all the work that needs to accomplish the BEAD spending but also other areas that may not be covered by the BEAD footprint that will now be economically upgraded.”
ARPA continues
However, BEAD is the only government funding source providers use to enhance rural broadband.
Allocations for the American Rescue Plan Act (ARPA) continue to be doled out across various states.
In Pennsylvania, the ARPA broadband funding will be matched by more than $200 million in private investment, bringing the total investment for Pennsylvania broadband projects to more than $400 million. This will provide affordable internet access for more than 40,000 homes and businesses.
Verizon was awarded about $78.3 million from the Pennsylvania Broadband Development Authority (PBDA) through the Broadband Infrastructure Program, which is funded through the federal Capital Projects Fund, in April.
Joining Verizon were Comcast, Windstream, Frontier, and Brightspeed. Comcast was awarded about $61.7 million, while Windstream is slated to get $12 million, Frontier will get about $3.5 million, and Brightspeed will get just over $782,000.
"What’s interesting about the Pennsylvania program as it relates to BEAD is that the BEAD allocation for Pennsylvania is a little under 1.2 billion,” Nielsen said.
He added that the COVID-19 crisis highlighted the need for public sector funding to connect rural communities with broadband so that they can access education and employment opportunities.
“Before you get to BEAD, states are still working through ARPA, and you got a quarter of a billion dollars plus that’s going to be deployed in anticipation of the BEAD process,” he said. “There are analogous situations around the country where our view of BEAD is it’s a continuation of an increased government subsidy to rural broadband that became more relevant with COVID than before.”
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Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.