Potential Supply Chain Delays Raise Questions for BEAD Participants

These days, reference to “the supply chain” for rural companies building broadband services is really shorthand for a host of problems. Even before the Covid-19 pandemic, there was high demand for fiber optic cable and other materials need for broadband projects. Covid delayed deliveries even more. With supplies being scares, prices are rising at unpredictable rates. And if a rural provider wins broadband funding through $42 billion Broadband Equity, Access, and Development (BEAD) Program, it must find a way to meet the program’s construction deadlines in spite of almost inevitable delivery delays.

A panel of experts during a recent webinar, “Supply Chain/Build America, Buy America” suggested ways to treat the various problems. The webinar was the first in a series of sessions to help prospective BEAD participants prepare for the program. NRTC and several other telecommunications-industry organizations are working together to present the monthly, 30-minute sessions.

“Supply chain challenges can stem anywhere from the availability of raw materials, to manufacturing to the assembly, and even labor shortages,” said Gary Bolton, president and CEO of the Fiber Broadband Association, who moderated the session. All of those factors currently are contributing to bottlenecks, he said.

The scarcity and price challenges deepen as program participants examine new “Build America, Buy America” (BABA) provisions that apply to BEAD awards. BABA requires preference to domestic U.S. suppliers for purchase of manufactured products and construction equipment. The National Telecommunications and Information Administration’s (NTIA), which is administering the BEAD program, has proposed BABA waiver processes. However, “it’s become pretty clear that there’s no intent at this point to grant blanket waivers,” said panelist Michael Romano, senior VP, industry Affairs and Business Development for NTCA – The Rural Broadband Association.

Romano expects there will be three different varieties of waivers – public-interest, nonavailability and unreasonable-cost waivers – and they will be “time-limited, targeted and conditional.” Seeking waivers is likely to be costly and time-consuming, especially for small and rural internet providers. His advice was for all BEAD stakeholders to emphasize the need for streamlined waiver guidelines from NTIA and the Office of Management and Budget. “The clearer the goalposts are defined for obtaining waivers, the more likely we are to see success,” he said.

Webinar participants expressed concern about contracts with suppliers. Will they be able to lock in prices, or will the cost go up during delays. John McGirr, senior VP, Manufacturing for fiber optic supplier Corning Inc., agreed that during an era of “unprecedented inflation” providers could see surcharges or enter renegotiations over price. “It’s part of the environment now with supply chain challenges that we’re having to navigate through, and quite honestly, [we have to] rethink what our supply chain network looks like,” McGirr said.

“Make sure you’re working with your vendors. Use partners you trust; work with ones that you’ve been working with in the past that you’ve built camaraderie,” said Brandon Peyton, chief network officer for FirstLight, a company that builds fiber networks. “They’re less likely to say, ‘Well, here’s the cost. It’s yours. Have fun.’ Instead, you work as a collaborative partnership through whatever the situation is that arises.”

The next BEAD webinar on Oct. 12 will cover workforce development. Registration is open.