The Q2 Watch List

Q1 is already behind us, and just like I shared a newsletter earlier this year highlighting some key points to watch for in Q1 , here's the list of significant events to keep an eye on in Q2. Enjoy!

What to Watch for in Rural Broadband

It's time to work on BEAD

Last quarter, I suggested focusing on other issues over BEAD because we were still in the middle of a lengthy approval process. Looking ahead to Q2, I have some slightly different advice. By now, 43 states and entities have had their Volume I challenge process approved by the NTIA and submitted a revision of their Volume II for approval.?

This means we are going to see a massive increase in challenge processes and likely start seeing some approvals for Volume II, paving the way for competitive processes. Now is the time to get serious about BEAD, meaning actively participating in the challenge process and outlining your broader build plans, which could utilize some BEAD funding. Don’t forget to do your competitive game theory work as you apply.

Prep equipment orders (still)

It's prudent to place purchase orders before the glut of BEAD-influenced builds begins. This is in addition to the ongoing ReConnect round 5 window, which will close in May.

Shift away from the Affordable Connectivity Program (ACP)

The ACP funds will expire this month. While there's a possibility of a last-minute appropriation getting through the year, the lack of clarity on the best path forward and gridlock in Washington suggests an uncertain future.

While continuing advocacy for the ACP program in your areas, it would be prudent to explore alternative product sets or approaches for your ACP clients. Don't rely on it until a sustainable funding mechanism is in place (likely after the 2024 election).

What happens with cable broadband ads?

Last year, we witnessed a significant impact of 5G-based fixed wireless access (5G FWA) on the broadband market dominated by major cable providers. We've continued to see softness here, so it's crucial to watch for Q1 impacts to determine if this trend has accelerated.?

This would indicate ongoing efforts by mobile carriers to roll out 5G FWA. Additionally, Ericsson recently published a report on the global impact of 5G FWA, revealing a noteworthy finding: 70% of customers who have tried it see it as a replacement for fiber. This underscores the need to monitor your region for increased 5G FWA presence and get your competitive plans in place.

Big fiber push?

Last year, we saw some pullbacks on fiber targets due to financing challenges and escalating costs. Recently, AT&T announced an expansion of their commitment to broadband from $2 to $5 billion, which includes adoption and 5G FWA.

This indicates a more optimistic view on growth. This could be a sign of some easing in cost forecasts or simply a more aggressive approach. Either way, it's essential to stay informed about industry activity.

What to Watch for in Wireless

Get ready for another round of OpenRAN grants

We are expecting a new NTIA Innovation grant window in spring. Rumor on the street suggests that this will have a much larger total allocation from the $1.5 billion fund compared to round 1.

According to NTIA officials, this round will likely focus on hardware, with a second window planned for the fall focusing on software. Not much more is known at this point, but if you haven't already started planning some rough ideas and getting your grant teams in place, you're likely behind.

What about the 800 MHz?

DISH's option to purchase the 800 MHz ESMR band from T-Mobile expired on April 1st, and Echostar (DISH's parent company) indicated, by their own admission, that they were unlikely to auction it. This sets up the likelihood of an 800 MHz auction for this fall.

I expect some news this quarter on T-Mobile's plans to remain compliant with the DOJ order. If you'd like to learn more about this topic, I wrote a collaborative piece with Brian Goemmer at Spektrum Metrics about what's next for the 800 MHz band .

The 5G Mobility Fund

FCC Chairwoman Jessica Rosenworcel recently circulated a draft to her colleagues outlining plans for administering a $9 billion 5G Mobility Fund reverse auction. Details have been scant, so I'll be paying attention to any public releases to gauge timing, eligibility, format, and other important factors, including the $900 million "set aside" for OpenRAN deployments.

Spectrum pipeline

With the release of the NTIA's National Spectrum Strategy Implementation Plan, I'm curious if we will start to get any sense of a spectrum pipeline this quarter. This has been a key focus for the wireless industry, and outside of 3.1 to 3.45 GHz, there's little clarity on available spectrum. If anything, it looks like a longer timeline. The longer the timeline, the more likely we'll see activity on the secondary market and pressure on DISH's timelines for the major carriers to find spectrum.

What to Watch for in General

Monitor the Title II fight

With the FCC proposing new net neutrality rules, expect a significant battle over the coming months that is likely to tie up the FCC. The last push was intense, and we can anticipate similar resistance, as well as ongoing debate over why the FCC isn't using this opportunity to ensure sustainability for the Universal Service Fund.

There's not much you can do on this front outside of your own advocacy, but it's important to pay attention as it has ramifications for all elements of the telecommunications industry for years to come.

Keep an eye on the interest rates?

I recently had an opportunity to dive deep into the state of the private equity market and was struck by how much interest rates affected deal activity, including for telecommunications. According to most experts, we should see an increase in deal activity in the latter half of 2024 due to a major backlog and LOTS of dry powder.

The spark that could ignite that powder keg is interest rates, and with the Fed signaling some potential slowdown in reducing rates, I'm concerned this could delay an uptick in M&A, affecting every sector, including telecom. Watch rates as this will continue to have ripple effects throughout the economy.

As we transition out of the first quarter and the year begins to shape up, it's becoming clear this will be a critical quarter before things potentially slow down in Q3 as we approach the election.

Now is the time to actively engage with government programs while also building your plans in case Q3 gets a slowdown or post-election changes cause further delays. I encourage you to review your plans and seek an objective perspective to ensure you're not missing any significant opportunities!

What other challenges are you dealing with in the second quarter?

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