Fixed-wireless internet service providers (WISPs) are trying to finesse some broadband subsidy funds out of an American Rescue Plan Act (ARPA) program that the Biden administration has signaled should focus its dollars on wired broadband.

Included in ARPA's broadband billions is a homeowners assistance fund in the Department of Treasury that will contain $9,961,000,000 that states can tap (until 2025) for payment assistance for "qualified expenses" of individuals, primarily low-income households, who need help due to the COVID-19 pandemic.

In response to the Treasury's interim guidance on ARPA spending that says it should go to wired networks rather than other technology, the Wireless Internet Service Providers Association (WISPA) has reached out to the governors of all 50 states, plus territories, to argue that a one size fits all solution is not the right fit for a rollout of ubiquitous broadband and that the government needs to take a "technology neutral" approach.

Also Read: NCTA: Biden Broadband Bucks Should Not Favor Government Nets

"This approach will result in slower deployment of much-needed services, arbitrarily constraining the market to use the most expensive and time-consuming option to connect Americans who need broadband today, not years from now," WISPA told the governors in making its case.

That case, said WISPA president Claude Aiken, is that the states have the flexibility to follow treasury's guidance while still using "the right tool for the job" when that tool is not wired broadband but a more cost-efficient and expeditious route to online broadband.

Also Read: Broadband Billions to Flow from American Rescue Plan

“As [your state] considers applications for ARPA funds, we respectfully ask that you instruct the relevant broadband officials in your state to fairly and equally consider the ARPA applications of all viable technologies, whether fixed wireless, fiber, or cable,” writes Aiken to the governors.

Sen. Roger Wicker (R-Miss.), chairman of the Senate Commerce Committee, is getting a shout out from wireless internet service providers (WISPs) for a bill he is introducing (co-sponsoring the bill are Shelley Moore Capito [R-W.V.] and Marsha Blackburn [R-Tenn.]), the “Accelerating Broadband Connectivity Act of 2020” (ABCA), to speed up the FCC's Rural Digital Opportunities Fund auction so it can get broadband deployed more quickly to close the rural digital divide in Mississippi and elsewhere. 

The divide has been magnified by the COVID-19 pandemic-generated reliance on remote life and work.  

"This bill will help even more rapidly more rural Americans get the Internet. We want thank Chairman Wicker for his dedicated leadership on this integral matter – one which accommodates today’s exigencies and works to comprehensively expand broadband deployment in unserved areas," said WISP Association president Claude Aiken."Rural providers who have won RDOF support and who voluntarily choose to begin construction within 180 days and deliver broadband within one year would be eligible to receive expedited, one-time funding offers from the FCC to build those networks. Importantly, it does this in a truly technologically neutral manner, leaving the decision process to the FCC and its upcoming auction." 

Related: FCC Votes on Rural Broadband Subsidy Framework 

The FCC is scheduled to auction access to the first $16 billion (phase one) of the $20.4 billion Rural Digital Opportunity Fund (RDOF), starting Oct. 22.   

Wicker's bill would direct the FCC to allocate money to applicants who were expected to be the sole bidder and who promised gigabit speeds. It would also require the FCC to start processing provider applications for the auction by July 31 (it could more quickly identify which sole bidders might be able to get money early).  

Wicker says he has heard from providers in his home state who are ready to deploy in unserved areas--the first $16 billion is targeted to unserved areas--but need the subsidy money to do so.  

The senator said expediting the funding could help close the digital divide. He said that while Congress is considering the bill and is cognizant of the legal and procedural constraints on modifying FCC rules already approved, Wicker wanted some questions answered--by June 12--to help them with the legislation.  

They include how the FCC would modify the auction to meet accelerated deadlines or make awards of money early and when it will update its March 17 list of areas eligible for that phase one support.  

Wicker's desire to advance the auction and funding is in contrast to a number of Democrats who have been arguing the auction should be delayed until the FCC can collect more accurate data on where broadband is and isn't.  

In a preview of its plan to free up the lower 45 MHz of the 5.9 GHz spectrum band for WiFi, the FCC said the wireless internet service providers (WISPs) it has allowed to use the band temporarily during the pandemic are increasing speeds, reducing congestion and extending coverage areas. 

The FCC began extending special temporary authorities for emergency use of the band in late March. To date, it said it has granted more than 100 WISPs to handle the increased demand during the COVID-19 pandemic.  

Related: FCC Lends WISPs 5.9 GHz Spectrum for Pandemic-Driven Traffic 

The STA's are kind of a dry run on the FCC's grander plan. 

The commission voted unanimously Dec. 12, 2019, to share that 5.9 GHz band by dividing it up. The proposal is to free up the lower 45 MHz exclusively for unlicensed use and to keep the the upper 30 MHz for V2V communications, including 20 MHz of that for C-V2X. 

But that has not officially happened yet, so the STAs are a preview of things to come.

“American consumers are relying more than ever on broadband, so I’m pleased that 5.9 GHz spectrum is helping fixed wireless broadband providers deliver faster and more efficient service for consumers,” said FCC chair Ajit Pai in a release from the FCC promoting the efficacy of the STAs. “I’m grateful to these companies for making a positive difference in their communities, delivering Internet access that’s sorely needed in some of the hardest-to-connect places in our country.” 

"Americans are depending on WiFi networks to work, learn and stay connected to critical information and the FCC is using all the tools in its toolbox to expand network capacity," said WiFi Forward. "The Chairman, his colleagues and WISPs have taken quick action to connect people when they need it most. We hope these efforts show that the FCC's longer-term compromise approach to the 5.9 GHz band is the right one: take unused spectrum and put it to work for our communities, now." 

The compromise was to allow V2V communications exclusive use of the upper 30 MHz--it used to have all 75 MHz--and WiFi the lower 45--rather than have them all try to share all 75 MHz. 

"We are grateful, too – to both the FCC who granted the STAs, and our members," said WISPA, the wireless internet service providers association, "including: Amplex, Bolt Internet, Gtek Communications, Intermax Networks, MetaLINK Technologies, Nextlink, Softcom Internet Communications, Southern Broadband, TCC Skywire, Wavelinc Communications, ZIRKEL Wireless, and countless others who are using the 5.9 GHz spectrum to keep Americans connected and safe through the pandemic."

Sen. Mark Warner (D-Va.) is urging the FCC to loosen regulations on wireless broadband providers to help further close the digital divide in the time of COVID-19.

In a letter he praised steps the FCC has already taken to help get broadband to the over 20 million people who still lack it, but he said more needs to be done to close the gap now.

Sen. Warner Urges FCC to Open More White Spaces

Specifically, in a letter to FCC chair Ajit Pai, he asked that the FCC make it easier for terrestrial wireless providers to increase their signal coverage, including by increasing power limits for Wireless Internet Service Providers (WISPS) in rural and exurban areas and relaxing antenna height restrictions. He also wants the FCC to clarify that underused E-Rate-funded connections can be "leveraged" to support backhaul for fixed and mobile wireless.

Related: FCC Grants Various E-Rate Extensions

"While I applaud a number of the steps the Commission has taken to improve service and widen access, including encouraging spectrum leases to utilize underutilized spectrum, temporarily waiving the E-Rate and Rural Health Care gift rules, and (after encouragement from offices such as mine) releasing a public notice clarifying that community use of E-Rate supported WiFi networks is permitted," he wrote, "much more work remains to be done. While a number of preexisting broadband programs, such as the Rural Digital Opportunity Fund, will help close the broadband gap in the long-term, I encourage you to take action that can enable expanded coverage now."

He also wants WISPS to be able to take advantage of the FCC's special temporary authority (STA) that allows unlicensed use of the 5850-5895 MHz band, which would mean working with the National Telecommunications and Information Administration and DOD to reduce the exclusion zones that prevent WISPs from doing so. 

The FCC has granted almost three dozen terrestrial wireless internet service providers (WISPs) the loan of 5.9 GHz spectrum.

The 60-day grant of special temporary authority (STA) for use of the lower 45 MHz of the band is to help them serve rural communities during the COVID-19 pandemic.

The FCC said the grants will help with telehealth, distance learning and telework in rural communities in Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Virginia, Vermont, Washington, Wisconsin, and West Virginia.

The STA is kind of a dry run on the FCC's plan to free up that lower 45 MHz for wireless broadband.

The FCC voted unanimously Dec. 12, 2019, to share that 5.9 GHz band by dividing it up. The proposal is to free up the lower 45 MHz exclusively for unlicensed use and to keep the the upper 30 MHz for V2V communications, including 20 MHz of that for C-V2X.

The FCC has issued numerous STAs to boost bandwidth using its spectrum inventory and spectrum lent from various companies including Dish and Comcast. 

"During this unprecedented crisis, Americans are depending on their Wi-Fi networks to work, learn and stay connected to critical information," said Wifi Forward, which has been advocating for freeing up that lower 45 MHz. "Today, the FCC took an important step, allowing WISPs access to the lower 45 MHz of the 5.9 GHz band to connect people — safeguarding vital community functions and ensuring Americans are not left behind during this time of surging home and community broadband use. This is a great opportunity to take unused spectrum and put it to work for our communities, now. The FCC is showing leadership to expand providers’ network capacity during this time of crisis..."

The FCC has proposed fining three Puerto Rican fixed wireless internet service providers (WISPs) and issued a formal warning to the resort of the industry after the FCC concluded three WISPs had "apparently caused interference to the Federal Aviation Administration’s terminal doppler weather radar station in San Juan."

The fines are $25,000 apiece and are levied against Boom Solutions, Integra Wireless, and WinPR. The companies have a chance to appeal, so the fines are not final. The bureau also said they were the largest that could be imposed for the alleged offense.

The FCC's Enforcement Bureau, which issued the Notices of Apparent Liability, said that the companies had misconfigured devices by turning off a feature that would have prevented the interference to systems meant to detect wind shear and other dangerous weather, meaning such interference could be life-threatening.

The fines highlights the tough issue of spectrum sharing, including with existing weather sensing systems, sharing that the FCC is promoting but that some stakeholders say creates potential interference problems like the one it identified in Puerto Rico.

But the bureau suggested that if the devices were used properly properly and certified by the FCC, which it warned the industry to make sure it was doing, they would not be interfering.

When a vision of growth arises in the mind of a small-to-mid-sized telecom entrepreneur/operator, often the very next step is for him/her to ask, “How will I pay for it?”

Described below are four distinct types of small-to-mid-sized telecom providers. Each delivers broadband content as a core part of its network.

Why do they need money? How much do they need? Who do they ask for funds? When do they ask? What is involved in the process? Is it public funding or private financing that they ask for?

These and a plethora of additional questions are “must asks,” if success is to be expected. This article presents the basics to get there from a private financing POV, and a view at what comes next.

Succeeding articles will provide operators with additional guidance through the lending process. These will include focused looks at key players in each silo, as well as a look at public funding.

Cable Operators

Likely no better spokes group for America’s small-to-mid-sized cable operators exists than the Pittsburgh, Pennsylvania-based trade group, ACA Connects – America’s Communications Association (ACA). Formerly branded as the American Cable Association, ACA has, for decades, been guided by top execs including Matt Polka, president and CEO, Matt Polka; , Ross Lieberman , senior VP, government affairs; Rob Shema , executive VP/chief of staff; and Ted Hearn, communications VP. Like its peers below, ACA is eager to put new funding options and thus new funds into the hands of its then, usually, much better-off constituents.

For example, many small-to-mid-sized ACA cable operators are looking to study and implement new wireless operations, on top of their current wired models (See, article about cable operator, Midco, buying a regional wireless provider, WOW Lawrence (Kansas)).

Moves like this place the cable ops in the realm of a new generation of wired providers, known as “Hybrid Operators.” Another version of these “Hybrids” comes in the form of fixed wireless operators, adding more fiber to their infrastructures.

Not unlike their usual rivals, i.e., WISPs and FISPs (discussed below), the next generation of cable TV and other broadband providers needs mature financial support from those other than sometimes-unreliable friends and family. All broadband providers are competing aggressively in more populated areas, most are reaching deeper into rural areas, and thus are constantly looking at development options.

For these growth and long-term development opportunities, fortune supports them: more and more banks are “getting it.” More financing is coming to these four broadband sectors, as more banks understand and accept—as a substitute for traditional, personal, assets-backed collateral—the relative steadiness of loyal subscribers, together with a new-found appreciation for the financial strength that monthly cash flow presents.

WISPs

Wireless internet service providers (WISPs) have been around since the early 1990s. They are also known as broadband wireless access providers, or BWAs. These operators’ growth as a U.S. industry has been sometimes slow, but steady, to the point where today they number well over 2,250 nationwide (See, “2017 BWA Report“).

Recently revised estimates by The Carmel Group suggest WISP/BWA 2023 U.S. subscriber growth will stretch to over 11 million in the next five years, from a current base of over six million users. Growth in overall U.S. industry revenue increases during the next two years from just under $4 billion currently, to over $6 billion. Concurrently and well into the future, churn and subscriber acquisition costs (SAC) remain the lowest in the industry (i.e., lower than satellite, fiber, cable, mobile, or telco). In general terms, return on investment continues to exceed that of the four major competitors.

Most BWA operator funding today is aimed at expansion. This expansion comes typically in the form of spending for new infrastructure, such as more fiber in the ground to connect the broadband pipe to towers and some neighborhoods. Other WISP development needs include next generation, in-home equipment (AKA: consumer premises equipment, or CPE), towers and antennas, marketing, operational purchases, supplementing government grants and loans, partner buy-outs, employees, benefits, spectrum acquisition, working capital, refinancing, and audits, as well as mergers and acquisitions.

Yet, traditionally, WISPs have been stymied by traditional banks and those maintaining traditional banking perspectives that base lending decisions primarily upon the pure collateral of the business, rather than a focus on the steadiness of cash flow and the loyalty of a growing subscriber base.

Recently, several bankers are beginning to investigate broadband and are finding new avenues to introduce those operators to better choices, having to do with terms and lending decisions. CoBank’s website notes, “CoBank customers form the backbone of the economy in rural America –- agribusiness, power, water and telecommunications.” iNet Capital professes, “Financing that provides secured growth capital to businesses in the fixed wireless and broadband industries.” Live Oak Bank claims, “Financing to acquire, refurbish, refinance and operate America’s small businesses.” And United Community Bank states, “We have small business financing options offered through the Small Business Administration that help your business grow stronger…loans for major fixed assets, payment of operating expenses, equipment purchases and more.”

The main U.S. WISP trade group, WISPA, assists member operators and vendors in their quest for a better financial basis upon which to expand their businesses. Non-members are encouraged to join WISPA, and members are recommended to reach out to WISPA communications director Mike Wendy, specifically within WISPA, in order to discover more about WISP funding choices. WISPA’s CEO and president Claude Aiken, transitioned to WISPA a year ago from then-FCC commissioner Mignon Clyburn’s staff, where he served as that office’s wireline legal advisor. Before that, Aiken was associate general counsel and special advisor on internet law and policy in the FCC’s Office of The General Counsel.

FISPs

Newly appointed Fiber Internet Services Provider Association (FISPA) executive director Betty Burke has her work cut out for her on multiple levels, as she and her FISPA team try to grow a trade group of many hundreds, to many more hundreds of members, in the few years ahead.

FISPs are not unlike WISPs, in many regards. In fact, as noted above, many WISPs find that once they have created a wireless pipeline to profitably service their new wireless customers, that often the investment of wires into the ground or hanging from telephone poles is a good one, because of enhanced capabilities offered only by fiber. Those WISPs then become both FISPs and WISPs, in the true “hybrid” sense of the word.

As fiber continues to be generally regarded as the optimum form to deliver content to the world, the attractiveness of FISPs, to more and more consumers, will rise. Thus, as more and more financiers realize the trend of more broadband being delivered by more fiber operators, that financial playing field will become more fruitful and accretive.

Hybrids

These new “hybrid providers” (such as WISPs becoming FISPs, and cable ops becoming WISPs) then need additional funds to supplement their wireless with wired (and vice versa) growth. This is often because fiber can be so much more expensive to deploy than wireless (See, “2017 BWA Report,” page 12, figure 6, which notes on a relative scale that fiber usually costs five times more than fixed wireless to deploy, and cable costs typically three times more).

Taking Oklahoma-based @Link as a model, it calls itself a “Hybrid Wireless-Fiber Network.” Within its systems, @Link typically deploys fiber to its towers in the form of the trunk or backhaul of the content to that distribution point. Less often, @Link takes fiber right to the home, but only in rare cases where that makes sense. Adds @Link principal, Samual Curtis, “@Link still uses some wireless point-to-point backhaul wireless links, but when use increases, we often switch to fiber.”

More Money Moving

As noted above, in recently updated figures, The Carmel Group finds both the subscriber and revenue growth of just the WISP industry, to be substantial. Indeed, in a world looking inside the traditional pay TV industry and seeing significant shrinkage, there is on the other hand optimism among FISPs, WISPs, and “Hybrids.”

Much of this expansion comes as the wise money minds become more creative, making money not just for their institutions but, as importantly, working with and guiding their broadband lending clients toward making far more money – and thus “wise money” – in the process. That “wise money” will typically be the funding that comes from things like the lowest rates, plus less or no business collateral, longer payment time frames, and serving the borrower and its business after the loan closes.

It’s a good time – and getting better – to be a WISP, a FISP, a “Hybrid,” and/or a small-to-mid-sized cable operator in America. It’s also a good time to be a specialized SBA- and USDA-backed government lending bank, because those banks are increasingly jumping in, as well.

The money is beginning to move. And America’s broadband borrowers are delivering much better answers to that age-old inquiry: “How will I pay for that?”

Jimmy Schaeffler is the chair and CSO of The Carmel Group, a broadband, broadcast, and pay TV/video consultancy. He has spent nearly five decades studying, writing, researching and analyzing, working with every type of player in the space. If you are a small-to-mid-sized operator looking to expand or better understand the industry, and the financing and funding available, feel free to reach out to him at jimmy@carmelgroup.com.