Inflation has taken a toll on ambitious state and national plans for expanding access to high-speed internet service, causing funding for the projects to lose purchasing power.
And while proponents say it’s time to double down on support for the projects, a state representative sees it as an opportunity to rein in the spending.
At a project site near Colton, Golden West Telecommunications CEO Denny Law said the price of fiber-optic cable has gone up 15-50% since 2018. He said higher fuel prices and rising wages are also taking a toll.
“All of those things flow through to increase the price of the broadband deployment,” Law said.
Mike Young is the chief operating officer of South Dakota-based ANCO Underground, a contractor that installs utility infrastructure. Young said pandemic-related supply chain issues have resulted in six- to eight-month backorders on new equipment.
“Which makes it difficult for a contractor to forecast around,” Young said.
And in some instances, the cost of that equipment “is going up by about 4% a quarter – that’s 16% in a year,” Young said. “If inflation doesn’t slow down, it will continue to have an impact on our bottom line.”
Young said that’s all having an impact on the company’s ability to bring broadband to places like the Black Hills, where cutting through rock to bury fiber-optic cable is an already expensive endeavor, requiring help from state and federal government funding.
“These subsidies can offset that to help close the digital divide out there,” Young said.
Law said Golden West Telecommunications is deciding whether to moderate the size and scope of projects. He’s optimistic that Congress and the Federal Communications Commission will refill broadband funding pools. Law said these projects could not happen without subsidies, and D.C. delivering “will allow companies like Golden West to continue with this for years ahead.”
Source: mitchellrepublic.com
Photo Credit: gettyimages-artqu
Categories: South Dakota, Equipment & Machinery, Government & Policy