Niche Market Opportunity – Rural Broadband

The proposed $1.2 trillion physical infrastructure bill, which the Senate passed and is awaiting House action, should contain many expanded opportunities, some of which will be niche markets, for electrical distributors. Being able to take advantage of it, proactively, will require a focused effort, as recently highlighted in this ElectricalTrends article.

One of the areas is expanded funding for rural broadband.

This is an example of a niche market and, perhaps, one that only a few electrical distributors can take advantage of as it requires access to the right customers, the right suppliers / products and the right skill set.

The opportunity was mentioned in the recent WESCO earnings call with the mention of the Federal Communication Commission’s $20 billion Rural Digital Opportunity Fund.

This recent article in MDM shares information on the opportunity. Highlights include:

• It’s a 10-year fund
• Users (hence distribution customers) are internet service providers, utilities, and municipalities (which is why it becomes a niche opportunity and is probably viable for a limited number of distributors)
• $9.2 billion was awarded by the FCC last December with another $311 million to be released soon.
• The focus is on high-speed broadband, and hence fiber.

While this is an opportunity for WESCO given its strength in the utility market and Anixter played much in the utility and networking space, other distributors such as Sonepar’s operating company Irby, Graybar, and Border States are some of the other electrical distributors that are active in the utility space. Other independents that are rurally based and may have the resources to pursue opportunities (and maybe the lines and knowledgeable staff) include Van Meter, Crescent, Elliott Electric, Dealers Electric, Mayer, and some others.

The key is calling on local rural co-ops as well as cable providers. Some of the rural electrical coops are involved in broadband (click here for more information on electric co-ops.)

As mentioned, Irby does play in this space and is, in fact, a major player in the utility distribution space. (We don’t know if this opportunity was serviced by Irby on its electrical side or by Irby’s utility group.)

A recent article highlighted their role in connecting 10,000 locations in rural northeast Arkansas with Craighead Electric Cooperative Corporation and its subsidiary empower.

Empower has used CAFII (Connecting America Fund, Phase II) funds to help fund its buildout.

According to the article, “Orchestrated by Irby, we collaborated with DZS to develop a number of custom solutions, such as managed Wi-Fi, wireless mesh networks and remote-control management of access devices,” said Jeremiah Sloan, Chief Operating Officer of empower, who led the communications upgrade projects that deployed fiber throughout Craighead Electric’s service area and infrastructure, enabling access to smart grid technologies and broadband-related services throughout the cooperative’s membership.”

The strategy was implemented by DZS ( DZSI), a global leader in optical and packet-based mobile transport, broadband connectivity, and software defined networking solutions

And speaking of CAF, this fund has awarded $1.49 billion over 10 years to provide broadband and voice services to over 700,000 locations in 45 states. To see where service providers won support, click here. (hint – not much opportunity in the eastern one-third of the country or the upper Midwest.)

Takeaways

A few takeaways:

• There are opportunities in niche markets.
• There is government funding supporting niche areas. They key is digging for them.
• While WESCO and Irby can allocate dedicated resources to focus on either government or utilities, the key is talking to customers (even integrators (companies like DZS) and understanding your local market.
• You need access to the right lines to pursue certain opportunities.

We’ll see more of this if the infrastructure bills pass. And if you want some light bedtime reading, review the previously passed COVID stimulus bills. There are nuggets that can be explored / exploited to promote projects and create opportunities.