Broadband Funding: The Key to Success is Strategic Planning - ETI
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May 15, 2023

Broadband Funding: The Key to Success is Strategic Planning

The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. The Broadband Bunch is sponsored by ETI Software.

Brad Hine:

Hello, everyone in broadband land. Welcome to another episode of The Broadband Bunch. I’m your host, Brad Hine. Today, I’m on-site at the NTCA’s 2023 RTIME Conference in beautiful San Diego, California. Our guest today has more than 20 years of experience in business finance related to the telecommunications industry. She’s an expert on evaluations for ILEC and CLEC operations, wireless operations, and cable TV systems.

She’s developed financial analysis, forecasting, budgets, and feasibility studies for various clients and providers over the years. Her work has also included traditional loan programs, RUS Broadband, and the RUS Community Connect Grant Program. She’s worked directly with the FCC during several spectrum auctions and has helped numerous providers secure new licensing.

She’s been heavily involved in securing grant funds for broadband providers in unserved and underserved areas in numerous states and federal grant programs.  She spoke yesterday on the same topic here at RTIME. Welcome to the Broadband Bunch, Kristy Szabo from Vantage Point.

Kristy Szabo:

Good morning. Thank you.

Brad Hine:

It’s great to have you here. It’s been a while since we’ve been onsite since COVID. All of a sudden, now we have these great opportunities to come onsite and interview everybody at these conferences. But before we get into the meat of your session yesterday, tell us a little bit about your career and what led up to where you are now at Vantage Point.

Kristy Szabo:

Good topic. I’ve been with Vantage Point. Just hit my 17-year anniversary there. Prior to that, I was in banking. I did a lot of lending, financial analysis, loans, and all that type of stuff. When I came on board with Vantage Point, my background was not telecom related, so I had a lot to learn. I jumped in and was kind of deemed a special projects person.

If anything new was coming out, I jumped in. Tried to get a good understanding of the nuances of it, the rules, and the requirements, and really got very passionate about that. Because we are working with companies, clients, and providers … Whether it’s telecom, your traditional provider, or your non-traditional provider. The excitement when we go through an application and they get the funding, they get announced as an award.

I sometimes wonder if I get more excited than the company. It’s like, “Yes! They got it.” It’s been evolving. In the industry that broadband telecom is, over the past 17 years, it’s been a fire hose of changes and new entrants coming in. We’ve got electric cooperatives providing at municipals, communities, and our traditional telephone providers. It’s been a crazy ride, but it’s been awesome.

Brad Hine:

Never a dull moment. Especially, recently, it seems.

Kristy Szabo:

Exactly. With COVID. And in my presentation yesterday, I got to talk about all the fun stuff with all these dollars coming out of the pipe. What’s really unfortunate is it was the pandemic that hit for everyone to understand that a good broadband connectivity connection at home, at the office, isn’t a luxury. It’s definitely a necessity.

We saw that. A lot of our traditional telecom providers had seen that a while ago and had invested in their main IoX, but we had all of these rural areas where they had no connectivity. You hear the old tale of families having to go to, whether it’s a McDonald’s or some parking lot where they have free wifi, so their kids could do their homework.

And it’s like, man. In Mitchell, South Dakota, where Vantage Point is based and where I’m at, we’ve been blessed. We’ve had a provider that had invested in fiber going back to 2004, 2006. My kids didn’t have to suffer when that hit. But talking to people … was a struggle. The funding is just coming out of everywhere to get broadband out there.

HOW THE INTERNET HAS BECOME A UTILITY

Brad Hine:

Very smart. As you said, I grew up in the Southeast United States.  In the winter, your gas goes out, so your heat is out. You put a blanket on and a coat on. Two days later, it’s fixed and you’re fine.

But a parallel example is if I’m without my internet connection for 15 minutes, I’m picking up the phone and I’m speaking to somebody.

I was looking through one of my apps on my phone. I think we have 37 different things connected to the internet wirelessly in my home. We’ve heard so many stories from rural broadband folks about the struggles they’ve been through even before COVID. But when COVID hit, I think we can safely say this is an essential service at this point.

Kristy Szabo:

It is. It’s considered one of the other utilities that you get. You see communities where if someone is wanting to move into that, one of the first questions they have is, “Do I have fiber to my home? Do I have a good broadband connection?” That’s going to be a huge economic piece for any community.

HOW TO PREPARE TO SECURE FUNDING

Brad Hine:

Let’s jump into your session yesterday. Talk a little bit about what you communicated to your audience here in the ballroom here.

Kristy Szabo:

Yes. It was the opening session and it was focused on broadband directors for the companies that are here at the RTIME event. A lot of seasoned directors who’ve heard this, but there are a lot of new directors that maybe just don’t … You hear about it. You hear, “Free money,” and while free money is great, it’s being educated about what the “Gotchas,” are with the funding.

It was a short session. It was about 45 minutes long, and I could talk, so it could have been a lot longer. But it’s good. Because it’s prompting the question. After the presentation, several comments came up and asked, “What do you mean by that? What do I do here?” The main focus was right now with the Infrastructure Investment Jobs Act coming out. $65 billion coming out strictly for broadband. One way or the other. It was kind of a high-level view of the $65 billion. You hear about it. Where are these dollars going?

The big push is broadband equity. The BEAD money that’s coming out. That is all driven by maps. Talking about, “We need to be diligent to make sure our mapping is right.” Because we want to, protect our area if we’re currently serving it. Or making sure if another provider is claiming that they’re serving it, and they’re not, that that gets corrected so those locations can get the funding to get broadband access to them.

Talked about that. The timeline that we’re hitting. With BEAD, we’re looking at … By June 30th, we’re going to see what the state-by-state allocations are. Of the $42.5 billion that’s for BEAD, how much is each state going to get that they’re going to have to work with? That’s been a big push right now at the state level, where the states are wanting to get as much money as they can.

We want to get as much as we can, but it’s making sure that providers are in tune with that as well to make sure that they’re helping play that part. It was a conversation with the directors. Your fiduciary duty for your company is to make sure that your company is on top of this. Transitioned as well as some of the other funding. Capital Projects Fund. We’ve got $10 billion there. A lot of the states currently have been awarded those funds. We’ve got $4.5 billion awarded. Talking about that.

The USDA ReConnect. We’re in our fourth round of funding. Round five is hopefully a couple of months away. All these dollars are coming. Make sure you’re prepared, so you can benefit from that as well. It’s the conversations that they should start having at the board table if they haven’t already. Because the one thing that I hate and I really struggle with is an application window opens up and we’re maybe two or three weeks in. They’re talking to their neighbors and it’s like, “Hey. We want to do an application. Can you help us?”

Some of these applications are pretty intense as far as what’s required. Not having that pre-planning done at the board level, the company level, and then wanting to jump in with an application … We have to say, it’s going to be very tight. You’re probably not going to be able to get an application done. I have a hard time saying no, but there are some times when you just have to.

Because you’re not going to put in a solid application. So it’s talking to the board. Making sure that they’re prepared for when these windows open. That they can take advantage of it. When I say take advantage, be prepared to submit an application to benefit the communities that are outlying or where they’re serving today.

Brad Hine:

And so, this is a first-time experience for a lot of these folks. They don’t know what they don’t know.

Kristy Szabo:

Correct.

Brad Hine:

Talking to a few folks last week on The Broadband Bunch, was interesting. Because they said, “The clock really starts ticking when we get our money.” But from what you just said, the clock does not start ticking there. It started also ticking when they were filling out their application. Actually, maybe even before that.

Kristy Szabo:

Correct.  The key is strategic planning

Brad Hine:

Can you talk a little bit about how these providers might prepare several phases before they receive the money?

Kristy Szabo:

And that’s what we’re doing is talking to the boards and the companies. Now is the time. You hear the word, “Strategic plan.” You need to have your strategic plan. But really, that’s what it is. What is your short-term growth? What is your long-term growth? Where do you want to be? How many areas around are you wanting to potentially serve? Are there additional opportunities down the road from you a little bit further? But you’ve got the opportunity.

Looking at the big picture. Coming up with where you want to be, where want to go. And then, we have that. We kind of know what you’re looking at from a network capital cost of what the assets are going to cost. The fiber, the electronics, or whatever you’re going to be building. Running the feasibilities. We know we want to build out into the neighboring community and it’s going to cost us $10 million.

From financial feasibility … I’m an accounting person, so I push that. How much grant funding are you going to need to make this a feasible project for you? Doing that planning, so when the funding application windows open up, they are prepared. We can start day one or before starting to build some of that storyline piece. But then, in a lot of these programs, we already have a good understanding of what some of the requirements are going to be post-award.

Understanding, “How are you going to be able to build it?” There’s a procurement component. You have to go out and get bids for the contractors or who you’re going to buy your material from. Prevailing wage. Davis-Bacon. Strong Labor Standards. Cybersecurity plans. There are a lot of these components that have been built into because it’s federal funding.

We must make sure that we’re compliant, and we hear, “2 CFR 200,” which is our federal register rules. Those aren’t really going to change. It’s making sure that companies are prepared, they understand the 2 CFR, because they are going to be held accountable to those rules as well.

JOURNEY FROM BANKING TO TELECOM

Brad Hine:

We mentioned earlier that the foundation for all of your work at Vantage Point came from your years in the banking industry. You’d spent some time there sharpening your pencil, getting ready to be in the telecommunications industry. Talk a little bit about those experiences and how they led to Vantage Point.

Kristy Szabo:

Oh my gosh. That was a long time ago. I started out of college. Right into banking. I think a lot of it for me is understanding the lending components. Because a lot of these grant programs that we’re seeing now have a matching requirement. If a company is needing to get a loan, understand the financial metrics of what a lender is going to require.

I built off of that knowledge going forward, because some companies may not have ever borrowed or done that. To walk through what I learned from those days … Part of it too is just the customer relational piece because it’s more than just the numbers on the paper. But it’s also how you talk to your neighbor, talk to the relationships. And so, I gleaned a lot of that from my role at the bank. And that carried over.

Brad Hine:

That’s fascinating. Because you’re already having to train people to help manage finances. You must have loved spreadsheets.

Kristy Szabo:

I love spreadsheets. I did a presentation a couple of years ago. I’m a numbers geek, so that’s what I referred to. A couple of people, it’s like, “Oh my gosh. You are a numbers geek.” I like my spreadsheet. It’s kind of quirky.

Brad Hine:

There are fun patterns that you can follow to come to a new resolution that will lead to all the planning and the education that you’re giving your customers today.

Kristy Szabo:

Correct.

DIFFERENCES BETWEEN PRIVATE AND PUBLIC FUNDING

Brad Hine:

I wanted to ask you a little bit about the difference between private and public funding, where that comes from, where that emanates from, and maybe some of the second parts of that. Some of the macroeconomic issues that we run into trying to manage things like inflation, staffing requirements, cost of everything in the market.

Kristy Szabo:

Private versus public funding. Obviously, private, you’re not as restricted as far as having to go out and get a competitive bid. If you’ve got a contractor that you always work with, you don’t have to get approval. You just go out and purchase it. You’ve got a little more flexibility that way. Federal funding. Obviously, we want to make sure those dollars are going to qualified entities who understand how to build and operate a broadband network.

There are requirements. There are rules and restrictions in place. Some people may say that’s a little too oversight of the funding, but it’s there in a place. It’s a matter of how you navigate it. But some component that isn’t going to change, regardless of its private or public funding, is inflation. It’s supply-demand. Go back to your basic economics class in college. There’s a huge demand to get broadband out to these entities. We have seen a crazy increase in inflation costs.

Regardless of how you’re funding that, we’re going to see that impact. Some of the other components that are more on the federal funding and the public funding are more of the strong labor standards, where you’re looking at the prevailing wage. Depending on what state, what county you’re in, and that prevailing wage, Davis-Bacon could have anywhere upwards of a 50% increase on your labor component to get that network build-out.

And so, that’s one conversation that we have as we’re looking at these programs. What’s the impact of that going to be on your project cost? Are you looking at a $5 million project? Or is that prevailing wage going to double that? Does it make sense to go after that federal funding if you’re required to follow that? It’s a deep conversation that you can have on what that impact is going to be.

Industry Trends

Brad Hine:

I appreciate that overview. As you’ve been talking to folks at the conference and obviously in your daily work … What are some of the bigger challenges that you’re seeing with these groups other than what we’ve already talked through? Is there anything specific that you’re seeing in the industry that’s a trend?

Kristy Szabo:

Probably, a trend is the time to be able to get it built. That’s another thing that we talk about is, “What’s the requirement to get the project constructed and built and up and running?” We are seeing lead times for labor contracting crews of upwards of close to almost two years. Depending on where you’re at. Just because of the shortage.

It’s one thing if you’re committing to do a huge project and you’ve got a two-year timeframe to get it done. Are you going to be able to get that done within that time, based on the supply issue of not having it readily available? Shirley Bloomfield in the opening session here talked about some of the partnerships that they’re working with on some of those vendors. It’s encouraging that something is in process.

Brad Hine:

That’s great. That’s important. Because obviously, there’s a timeline that some of these funds set as a deadline. The money needs to be used and all the documents need to be completed by then. Clearly, that’s going to push some of those timelines too.

Kristy Szabo:

Correct.

LEARNING, TEACHING, AND HELPING IN UGANDA

Brad Hine:

Well, on a lighter topic. I wanted to go back. Something that I had spoken to one of your coworkers on. To shift this just a little bit, I heard about last year you were involved in a women’s leadership conference in Uganda. Was that related to broadband and telecom?

Kristy Szabo:

Well, it was mixed. It was an opportunity that I will forever be very grateful that I got to participate in. Our marketing director and I, Jacki Miskimins is her name. Very close friends. She had gone the year prior with Larry Thompson, who is Vantage Point’s CEO.

Very passionate about being able to basically assist and help. Uganda is not a matter of … We went over there and we built houses or we had hands-on construction. It was an opportunity for us to go over and learn from the Ugandan people how they are thriving with so little. It was a very humbling experience for me.

And so, this trip we took in early October and it was mixed. Larry Thompson and another one of our IT data guys went over and they did work. They had hands-on. They put up and got the wireless routers all established at the high school. It’s through AsOne Ministries. They’ve got different locations in a high school and the internet connectivity was not very good. They spent the whole time setting up the school, hooking it up, hands-on. But they engaged the students to help them.

It wasn’t a matter of, “We’re going to do it. You guys watch.” They had the students hooking up wires. It was pretty awesome. But then, Jacki and I led a women’s conference. So it was a three-day session. We learned, I think, more from them. There was a language barrier, but not a significant language barrier. Because we learned to communicate just with the passion that they have. We were there for nine days. Probably, the worst part of that trip was the 16-hour flight.

Brad Hine:

Did you fly to Joburg, and then you flew … Or did you fly direct there?

Kristy Szabo:

No. We flew to Qatar.  And then, to Entebbe. And then, we took a crazy van drive over to Namayamba, where we were at. It was amazing.

Brad Hine:

Sounds like you need to publish an article on your experience for that.

Kristy Szabo:

Oh my gosh. It would be good. I want to go back and I hope I can go back.

Brad Hine:

Well, let The Broadband Bunch know if we can help you with any of that too. We can help get the word out. That sounds fascinating.

Kristy Szabo:

Oh my gosh. It was very cool.

Brad Hine:

I wanted to focus on something else too, because I know your years in the industry and the credibility that you’ve put together from your banking experience up through your telecom experience. I’m sure you’ve worn a couple of dozen hats too at Vantage Point as they’ve grown.

But you’ve received the Spirit of Vantage Point Award, which is your dedication to community service. I think that’s the highest award your company gives. Congratulations.

Kristy Szabo:

Yes. Thank you. Yes. Vantage Point is a great company. I am so blessed to work there, but they do like to see that we give outside the walls. I had done this before I started at Vantage Point A feel like my life has been very blessed. I’ve got three boys. They’re all grown. My youngest is a freshman in college, so they challenged me, but they’re great kids. And it’s been quite the life.

And so, I feel like I need to give back. Not just reap everything, but also give. And so, the Spirit of Vantage Point Award, it’s given to a person we have to nominate. You nominate your peers, for those who go above outside the office. It’s not just when you’re wearing the Vantage Point logo, but it’s in your personal life. I said I hate saying no. I hate saying no.

When I get asked to involve, it’s like, “I would love to do that.” Outside of the office, I’m involved with the Life Quest Foundation Board, which is a facility that helps mentally challenged people. I’m on the foundation board for that. Passionate about those. Mitchell has been a great community to employ those people and is very supportive.

Also, very involved with my church. Now that my son is a freshman in college. I’m no longer part of the after-prom party committee, but I was part of the after-prom committee. It’s just a variety of things that I love to do outside the office.

Brad Hine:

That’s great. Well, we appreciate your dedication to the community. We know at The Broadband Bunch that broadband has a lot to do with building that community.

Kristy Szabo:

It’s huge.

Brad Hine:

That tightness of your group, we’ve experienced it a ton. We appreciate the mission that you’re on with Vantage Point. Trying to connect these unserved and underserved communities.

Kristy Szabo:

Yes. Thank you.

Brad Hine:

Well, before we end on The Broadband Bunch today, we always ask a question to somebody. It’s a bit of a shock for some, but it’s called our Back to the Future question. And it’s very simple.

If you were able to get in your time machine, your DeLorean, and go back earlier in your career before you started this whole journey … Or even before you started at Vantage Point. Is there something that you could go back and whisper in your ear and give you a clue or a tip that you wish you would’ve known back then?

Kristy Szabo:

I think probably one of the things I would tell my younger self, whatever time it is, “Don’t sweat the small stuff.” When I look at my earlier career, there were so many little things that I just focused and dwelled on. Looking back, it’s like those weren’t really that important. Focus on the things that are important.

Brad Hine:

Keep your eye on the big picture.

Kristy Szabo:

Exactly. Just looking at my career, I think that my bio needs to update, but I’m not going to say how many years I have had between the bank and Vantage Point. I told you 17 years at Vantage Point. Going back, it’s the last probably 10 years when I’ve really been able to let go of that. I think I’ve let myself just embrace and grow.

Brad Hine:

Very wise.

Kristy Szabo:

If I can say that about myself. But looking back, and reflecting, it’s been an amazing few years.

Brad Hine:

Wise thoughts.

Brad Hine:

Well, as we end today with The Broadband Bunch, I want to thank you again. Thanks to our audience. If they want to get in touch with you, anyone listening wants to get in touch with you or with Vantage Point, how can they do that?

Kristy Szabo:

My contact information is directly on the Vantage Point website, so vantagepnt.com. Under the Leadership, we have a variety of leadership staff. I’m on there. My email address is probably a great way, and I’m also on LinkedIn. Just search for Kristy Szabo.

Brad Hine:

Excellent. Thanks again, Kristy, for being with us today.

Kristy Szabo:

Yes. Thank you very much. I’ve enjoyed the opportunity.

Brad Hine:

And to everybody at The Broadband Bunch and all of our listeners, I won’t say goodbye. I’ll just say, so long.