Making Smart Costing Assumptions: The Key To BEAD Success for Service Providers
February 06, 2024
Earlier this month, we shared our Top Predictions for 2024. Among the trends we saw driving many of these predictions was intensifying competition as BEAD monies started flowing into the market. One of the chief challenges service providers now face is accurately costing out network buildouts as they bid for these funds.
While BEAD offers an opportunity for service providers to expand their market position, the sheer magnitude of opportunities and the corresponding volume of investment analyses to assess them can make organizations vulnerable to a build-up of general assumptions in their cost calculations, leading to significant under or overestimation of the actual cost to deploy. Over estimations can jeopardize their success in responding to an RFP or even put them in the position of rejecting highly attractive opportunities, thus both losing out on revenue and opening the door to competitors.
Alternatively, we are already seeing some grant opportunities being rebid because the original winner withdrew after discovering that their bid had been too low and executing the project would go way over budget.
In both cases, precious time, energy, and capital are wasted, and communities and service providers alike are denied the opportunity to benefit fully from the spirit of government subsidies.
Here at VCTI, we’ve been listening to the frustration of CFOs and their network planning teams and the rumblings from state and local governments needing to know that commitments will be delivered to the defined quality and time parameters.
So, for the past year, we’ve been closing the gap between high-level plans and business cases and the actual cost to deploy our core mission.
Leverage AI to Build An Accurate Business Plan
VCTI’s PoleIQ™, an AI-powered automated utility pole assessment tool, geo-locates and delivers a high-level assessment of the usability of each utility pole on the proposed network, including the possibility of space and location for installation of new wiring. This information allows service providers to quickly identify and quantify route possibilities, focusing permitting and inspection resources on only the routes with the highest viability for aerial. This can eliminate weeks, if not months, to design the construction process at a fraction of the cost.
In the early stages of planning the broadband expansion, the service provider estimated that 90 percent of the deployment could be done aerially, with only 10 percent of the infrastructure deployed via fiber in the ground. The business case was built with this assumption, and plans proceeded to begin work.
When construction began on the project, the construction partner believed that the opposite was actually the case – that 90 percent of the deployment would need to be underground, with only 10 percent viable via aerial deployment.
VCTI Pole IQ™ was able to determine that 28 percent was viable for aerial deployment. Given the size and geography of the deployment, it would have taken a team of two people more than 70 days to inspect the entire route physically. Using PoleIQ, VCTI was able to save the service provider more than four weeks’ worth of man-hours and more than $100,000 in physical inspection costs. In addition, the ability to plan a nearly 30 percent aerial deployment delivered construction cost savings of more than $2 million versus a 10 percent aerial deployment.
Know Before You Dig
We are also expanding our insights into the actual geology along the route, looking at the layers up to 6 feet below the surface. With topographical data identified at this level, service providers can more precisely assign the cost for digging and laying fiber in the ground.
Combined with Pole IQ, a robust comparison of deployment options for fiber and comparison with other technologies, such as Fixed Wireless, can be achieved quickly and effectively without sending any resources out to the field.
We’ll be sharing more about our developments here in the coming weeks.
Smart Planning = Success
Despite offering a massive opportunity, the race for BEAD funds can also be challenging. Without an accurate business plan, service providers face two potential negative outcomes: 1) they can submit a bid that is so conservative that they risk not winning, or 2) they can win a bid only to find out once construction begins that their planned budget is woefully inadequate, leaving them to decide whether to proceed and go way over budget or to abandon the project and the grant.
Today's technology and expertise allow service providers to make smart decisions quickly. Using real data, technology tools, and deep expertise in network deployments, we help service providers to truly understand the landscape – from technology, homes passed, and competitive factors – and to build an accurate business case that will translate to successful bids that advance the Broadband for All agenda.