What will the network operator winners of the fiber broadband race have in common?

Hello everyone and welcome to IQGeo's IQ Industry Chat. Today we have the pleasure of having Gary Bolton with us today who is the President and CEO of the Fiber Broadband Association. Many of our listeners today will know the FBA for the great work they do in the fiber broadband industry. And today we really wanted to talk to Gary about the challenges that these operators are having with fiber rollout. Gary Bolton- So as the President and CEO of the FBA Gary you've really had a front row seat to the race to fiber and 5G. As with all races there are winners and losers. And so we what we wanted to talk about today was what you feel are the common characteristics of the winners of this race. You know, what vision will they share? What common characteristics will they have? Gary Bolton- Steve, thanks for having me. It's great to be here. Gary Bolton- And you know, the good part is the real winners are the consumers, right? All Americans that are going to be getting fiber. But you know, our industry is at the beginning of the largest fiber investment cycle in history. And over the next five years, we're going to deploy more fiber than has been deployed in the past 20. There is currently about $130 billion of federal subsidies between the CARES Act, the Consolidated Appropriations Act, the RUS Reconnect, the NTI's traditional broadband programs, the FCC's RDOF program. And then now coming down the pipe is the $65 billion in the IIJA, the Investment Infrastructure and Jobs Act. That's going to be that funding is going to be rolling out next year. Gary Bolton- And on top of all this federal subsidies, it's really attracted a ton of private equity. So we have a ton of money to be able to get fiber to every American. And this is not just in America, but across the world, we're seeing this. Gary Bolton- So operators and communities that are investing in fiber will be richly rewarded. You know, our fiber broadband association studies show that when a consumer has a choice between fiber or anything else, they choose fiber, which seems obvious. But for good reason, because if fiber provides future-proof capacity, low latency, and resiliency, that will unleash the metasphere of features, services, and applications that we can't even begin to even imagine today. So as a result, in the near future, competing on speeds is not going to cut it anymore. You know, network operators that are going to succeed in the future are going to be the ones that are able to maximize efficiency and network optimization. You know, as Marc Andreessen famously said, software is eating the world. So we're in the midst of the broadband gold rush, and operators that can optimize their planning, deployment, and operations efficiency will have a huge competitive advantage. You know, we'll have to think about, you know, we're going to have fiber to every home, but the operators now are going to go beyond that DMARC and inside the home, because, you know, consumers need to be able to get all that gigabit to their devices. And so that means that we're talking about managed in-home networks with the latest technology. Also, you have to think about, you know, post-pandemic, this whole work from home isn't going to disappear, right? Everybody is either going to continue to work from home, so they can live anywhere and be able to have that Silicon Valley job or wherever they want to work, or they're going to be some kind of hybrid. So that means the enterprise network doesn't stop at the edge of the building, but it's going to include every employee's residence. So in short, you know, we're entering the most exciting time in telecommunications history. And the opportunity for operators are unlimited. Well, that's really interesting because you said at the beginning of your comments that we're really at the beginning of this process. How far along do you think we are, Gary? Are we 10% into this? Are we 50% into this? You know, how long is it going to take for this to really mature? Well, you know, so as I just said, you know, in the next five years, you know, we will deploy more fiber than has been deployed in the last 20. And so, you know, if you think about the money that's been going out, and so what that's really is kind of teed it up. So you see a lot of projects that got started with ARPA, and now we have that Coronavirus Capital Projects Fund, so that's another $10 billion. And so that's kind of got it teed up. The ARDOF, the Remote Digital Opportunity Fund, that auction now was almost 18 months ago, and it's just kind of been trickling out. So that really hasn't really kicked in yet because there's the $9.3 million, excuse me, billion dollars that was awarded, so to speak. There's only about $5.2 billion that's actually been approved to be deployed. And so that money is just starting. So we're really kind of at the beginning. What we've also seen is that a lot of the incumbent operators are, you know, doubling down in fiber. We've seen all the Tier 1s and Tier 2s, so like the Verizons and AT&T are really ramping back up. You know, they had started early on, and then like for AT&T example, they had to meet their merger obligations when they merged or acquired DirecTV. And so they kind of paused after they hit that milestone. And now they're full force, and you've probably seen all the ads and deployments. But also all the, you know, I'd say the national operators, you know, are the large regional ones like the Frontier, Wind Streams, Consolidated, and Lumen. They're all doubling down in fiber. And then, you know, when we look at across the landscape, the fastest growing segment that we're seeing is the rural electric co-ops. And so this is really interesting because by definition, a rural electric co-op is in a location serving, you know, their members are the hardest to reach, right? And that's how they ended up being a co-op is that no one else wanted to provide electricity. And so 85 years ago, you know, created these rural electric co-ops. And so they are very focused on serving their communities. And so of the over 900 of those, about 200 are currently deploying broadband or in the beginning of deploying broadband. And so I anticipate that at some point, probably all 900 will be serving their communities. We even see the large electric companies. They're not necessarily going to be doing fiber at home, but they're going to be leveraging their dark fiber for Middle Mile and other things. Matter of fact, our conference, which is in Nashville on June 12th to 15th, it's co-located with the American Public Power Association. So we're going to see kind of have all the broadband guys with all the power guys together. But it's a really exciting time. And so there's kind of operators of all sizes, but they're all right now focused on making sure every member of the community is served. Well, to get a plug in for IQ Geo, we'll be at your conference too. So we look forward to seeing you all in Nashville. But I think that's also for these electrical operators, that's a whole new discipline for them to learn, isn't it? There are some technical challenges behind that. Well, you know, and that's where we see a lot of public-private partnerships. You know, kind of what we saw last year at our conference was kind of a sea change where the incumbents became, took a different tack on, instead of, you know, trying to, you know, pick and choose where they deploy, they've become more, much more aggressive at being able to say, how can we partner with communities? And, you know, what model works best for you and how can we be able to, you know, I've never met a mayor that said, hey, I want to be in the broadband business, but they all say I want to be in the jobs and economic development business. And so being able to have good partners is awesome. And so, you know, we're seeing a lot of public-private partnerships. There's a lot of different network models that have come, you know, into Bear. And I think what you're going to see is those models will be kind of sewn around the glove of the communities they're serving. So we'll see, you know, continue to see a lot of different models that work, you know, well for different communities. But at the end of the day, it's about serving every member of that community. Right, right. And we're seeing partnerships on our side too, Gary. We're working with electrical utility co-ops or technology providers in that space to assist them with fiber technology. So it's working kind of around the whole ecosystem. So there's tremendous commercial opportunities here. But with that also brings some technical challenges. What do you think are the biggest technical challenges that this race to fiber rollout is creating? Well, you know, planning is huge because, you know, right now coming out of the pandemic, everybody's worried about supply chain. And just, you know, when you think about the project. So say you go in and you want to ask for a grant, right, part of the infrastructure money or however you're going to be building this. You need to be able to have your network planned out to very detailed levels so that you can be able to have really credible forecasts to make sure that you get all your fiber and your equipment and it arrives on time. Also, you know, deployment. You know, when you think about how do you budget your project, the fiber, you know, when you think about the whole fiber of the home electronics and so forth, you know, that's only 10 to 15 percent of the overall build. So if you're not really efficient at, you know, the construction part and deployment techniques, you're going to end up overspending. So you need to be able to, you know, the operators are going to really come up on top are the ones that do a lot of really good network planning and are very efficient on their deployment techniques and modeling. Yeah, I think that's something we've seen with some of our customers as well is how important that front end is and also across the whole lifecycle, really making sure that they've got strategies in place for ongoing maintenance as well. And then with some of the recent storms that we've seen, you also need to make sure that you've got some disaster response and resilience built into the network. Is that a disaster response? Yeah, so Steve, you know, we've seen that, you know, a lot of buried fiber, you know, especially Pacific Northwest for forest fires, a big issue along the Gulf where you have a lot of major weather events. And that's one of the other great things about fiber is it not only is great for broadband and the best for broadband, but it's also great for smart grid modernization and be able to really improve your power grid. So that you have better resiliency on, you know, kind of all the different weather events that we have and, you know, energy efficiency and so forth. And one of the other things that I guess, you know, Steve, you've and IQ Geo have taken the leadership is on sustainability. You know, one of the big new programs that we're working on is to, you know, have the whole fiber industry really focus on sustainability and kind of get to a net zero carbon footprint. So I think that's going to be extremely important going forward is not only have great connectivity, but also be good stewards of our environment and really think about, you know, the future generations. Yeah, you've kicked off that great initiative around net zero sustainability with the FBA. And I think fiber already has a great start because it's a very low power consumption technology to begin with and then very, very long life. So it's, yeah, there's a wonderful framework that can be put in place for those operators. Well, thanks so much for your time, Gary. I wanted to kind of wrap things up, but there's just sort of one question I wanted to ask at the end, and that is for these operators who are involved in this race, there's all kinds of technical as well as commercial challenges that they face. Is there one bit of advice that you might offer an operator as they take on this challenge? Well, you know, as we're moving into this, I mean, the good news is that the pie is just getting huge. So everybody's going to benefit and there's a lot to go around. So, you know, I think what I really love is that our whole industry is kind of linking arms and really working together to, you know, not only on sustainability, but every, you know, trying to solve, you know, deployment, best practices and so forth. So we're really excited about that. But, you know, I think what to really bubble up to the top is really on planning. You know, if you're going to be able to make sure that you have the network of the future, you need to really make sure that you have good long -range forecasts and good solid planning so that when you put in your requirements for fiber and your, you know, fiber-to-home equipment and everything you need, that you know exactly when it's going to be available and so that you don't have any delays in your deployment. Because in a race, you can't afford to be delayed or to run up costs by not having good network planning. Like most things, it all starts with good planning. Excellent advice. Thank you very much, Gary. And thank you for joining us today. I really appreciate you having me. And, you know, congratulations to all the success at IQgeo. Thank you.