A couple of weeks ago I wrote about the Connecting Rural America report, essentially a snapshot of the RUS-awarded projects so far. I had pointed out that the report (and continued information) will help provide us with tips and tricks for deploying broadband elsewhere. Craig Settles takes that a step further in the Daily Yonder.

He also looks at the specifics of the report, but it’s the financial conclusions he draws from their decisions that are so helpful to communities or businesses making decisions themselves about how invest locally…

An interesting item in the report involves the percentage of grants versus loan guarantees the awardees received. Most last-mile non-remote and middle-mile projects were awarded a 50/50 balance between loans and grants, but the last-mile remote projects only have a tiny percentage of loans compared to grants. Rivada Sea Lion in Alaska, for example, received a $25 million grant, no loan. The RUS rules allowed these projects to be funded up to 100% with grants.

The financial composition of last-mile remote projects shown in Figure 1 causes me to wonder. Is the reason we don’t see a higher percentage of loans that RUS believes lenders find these projects too high risk to fund, preferring for RUS to award grants and so avoid the chance of defaults?

Here’s my conclusion for communities that aren’t chasing stimulus money. If you plan to build a last-mile network in a remote area, particularly more than 50 miles from a major metro area, give extra attention to the financial planning. Where are you going to get your revenue given the sparse population? Will the cost of building that middle-mile to remote locations bump up your financial risks? You’ll need to be creative in sourcing revenue and super-effective at grant writing in order to reduce the risks. It could very well be that grants are the only way to ensure these projects get off the ground.