by Dan Hays, PRTM
While the recent announcement of an initial $183 million of broadband stimulus awards from the U.S. government may seem like a drop in the bucket when compared to the $7.2 billion in planned disbursements, it provides an important glimpse into the challenges ahead for award recipients.
As an additional $2.2 billion of awards are released through the end of January, broadband stimulus funding recipients will begin to turn their attention to the hurdles to come. For many, the challenges of deploying, launching, and operating new broadband networks and businesses will be new. For others, the hardships are quite familiar, albeit with the added complexities of meeting stringent government requirements for project milestones, reporting, and compliance.
Regardless of experience, technology, or geography, one thing is certain. The world will be watching the broadband stimulus award recipients closely, and looking out for real or perceived failures.
A new world, but without order
Before looking ahead, we must consider developments to date. The February 2009 American Recovery and Reinvestment Act (ARRA) allocated a total of $7.2 billion in funds to help extend broadband access to unserved and underserved communities across the U.S. The program is administered by a combination of the Department of Commerce's National Telecommunications Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS). Its goals include the creation of new jobs, generation of investment in technology and infrastructure, and provision of long-term economic benefits such as increased access to education and healthcare.
Given the 2,200 applications received for the first round of broadband stimulus awards, we expect to see some significant projects come out of this program. While the average size of the initial awards barely crosses $10 million, dozens of applicants have requested more than $100 million each, with the largest applicant topping $2 billion in projects submitted. Many applications are from small, existing, rural broadband service providers, and an award would multiply the size of their networks and businesses many times over.
Although the ARRA clearly outlines the objectives and scope of the broadband stimulus program, and has generated significant interest from public and private entities in all 50 states, it stops short of outlining what the government and award recipients will do to ensure the success of funded projects. To date, the NTIA and RUS have not stated what rules will govern award recipients, or what they might do to assist recipients in increasing their chances of success. But, if past government subsidy programs are any indication, recipients would do well to think through the critical needs themselves and ensure that they are addressed well in advance of commercial launch.
Ensuring the success of broadband stimulus projects
My firm, PRTM, has worked with public and private organizations to plan for and implement successful broadband networks since the early days of broadband technologies and businesses. Based on hundreds of such projects worldwide, we see three critical capabilities needed to ensure the success of broadband stimulus projects and the overall program. These capabilities span the areas of deployment, launch, and operations:
- Network Deployment - As experienced network operators know, successful deployment is a complex and exhausting affair. While stimulus award recipients benefit from relatively constrained geographic regions, many will be literally breaking new ground in network deployment. Proven, successful approaches must be used for project planning, governance, and program management to ensure efficient and effective uses of funds as well as adherence to strict government-mandated milestones.
- Operational Scale-Up - Beyond the network, service providers must deploy and scale up operations required to sustain their new or expanded broadband businesses. This includes securing devices and network equipment, commercializing new service offerings, marketing products and services, developing sales channels, and providing customer care. And that's not even counting the myriad back-office functions required to operate successfully, including facilities, information technology, and perhaps most importantly--billing and collections! Strong plans are required to ensure that each of these functions has a clear operational strategy and scale-up plan that aligns with the overall plan for the business.
- Market Launch - No stimulus-funded broadband business will be considered a success until it achieves market launch and commercial availability. But, before doing so, it is critical that all functional processes and capabilities be tested and validated. At PRTM, we do this through a process called Service and Market Readiness Testing (SMRT), which aims to validate not only systems and processes, but the actual, end-to-end delivery of service to customers.
Launching a new broadband business is never easy, and even less so when dealing with stringent government timelines and reporting requirements as well as the watchful eye of the media and public. But, all is not lost. Though recipients of the broadband stimulus awards face major obstacles in building successful and sustainable broadband businesses, they can learn much from the countless projects and pioneers who have come before them.
Dan Hays is a director in the telecommunications and electronics practice of PRTM (www.prtm.com), a global management consulting firm focused on helping companies find new and innovative ways to operate to achieve strategic advantage. You can reach him at [email protected]