FORVIS 2022 Telecom Benchmark Study details rising investment in rural networks

An expansion of state and federal broadband infrastructure grants helped fuel continued growth and financial stability for rural telecommunications firms nationwide last year, despite increased competition and regulatory uncertainty.

This and other takeaways are found in the 2022 Rural Telecom Benchmark Study, released today by FORVIS, a leading national accounting and advisory firm with deep experience servicing the telecommunications industry.

Based on 2016–2021 data from more than 170 rural telecommunications companies in 18 states, the report benchmarks findings against more than 20 years of financial and operational information compiled by FORVIS in previous industry studies. It is one of the largest studies of its kind in the industry.

“Two decades after the rollout of broadband services, internet revenues continue to provide growth opportunities for the rural telecom industry,” said Matt Macdonald, partner with FORVIS, and one of the report’s lead authors. “The steady growth and stability reflected in this year’s study show we’re now seeing the results of the last several years of regulatory reform that shifts reimbursement from a strictly cost-based model to one more focused on how well telecoms serve rural customers.”

Although government investment in the sector has been increasing for years, telecoms are now seeing a significant increase due to two major federal bills passed in 2021, the American Rescue Plan Act and the Infrastructure Investment and Jobs Act.

At the same time, competition from wireless providers is bringing more nontraditional players into the market, necessitating the investments rural telecoms are making in their networks, said Marty Fredericks, also an audit partner and study author.

“Expect to see a lot of construction in the next five years as this grant funding is invested and facilities continue to be upgraded to complete fiber optic networks,” Fredericks said. 

Other key findings in the study include:

• Sixty-nine companies participating in the study reported accepting federal, state and local government broadband grants in 2021, totaling $336 million. Through 2022, the median average grant was $2.5 million, with 11 companies reporting total grants accepted over $10 million each.
• The average rural network investment per line for 2021 was $17,400 per access line for the 168 small rural telecoms surveyed.
• Internet revenues now represent 23.7 percent of operating revenues at the telecoms surveys, up from 5.6 percent in 2001. Over the same period, voice revenues dropped from 16.7 to 6.9 percent of total revenues.

FORVIS has extensive experience providing tax, assurance and advisory services to the rural telecom industry. The firm has more than 440 telecommunications clients nationwide. The 2022 benchmark study draws rural clients from this list, each of which received a company-specific benchmark report.

Download the 2022 Rural Telecom Benchmark Study.