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The pandemic years triggered significant rounds of funding for broadband infrastructure. The surging demand for telecom, combined with new drill shortages due to global supply chain, created an unprecedented demand for used HDD equipment, especially for small to mid-sized drills.

The "covid effect" lasted several years, bringing our used inventory down to record-breaking lows, and driving prices up to head-shaking levels. Even 4000-hour drills were getting six-figure prices, and folks were dragging dusty old equipment out of the garage to sell it, or even to use it since nothing else was available.

Today, the situation is very different. We have 53% more inventory than we did at this time last year. And when we specifically look at drills under 30,000lbs, typically used for telecom work, we have 125% more in inventory.

Why the big change?

There are several reasons, including many economic and market factors - here's just a few: OEMs have resolved supply chain issues and are steadily manufacturing new goods again. Some folks are trading up, or cashing out equipment they aren't using. There's also been a trend of ultra low-bidding jobs which has driven away some contractors, and, of course, there's the perpetual labour shortage of crews to run the drills. Lastly, the pace of some fiber buildouts has slowed down¹.

But another reason is that stimulus money isn't hitting as fast as we anticipated². Even Elon Musk has posted on X about his frustration with the delays³.

There's lots of grant money coming. 97 Billion has been pledged over a hundred different programs⁴; it's an exciting time for our industry. The big one - 42.5 Billion dollar BEAD (Broadband, Equity, Access & Deployment) is one of several broadband infrastructures stimulus programs that are rolling out. Over a year ago, we found out how much money each state will get but, so far, it's been a game of hurry up and wait. While some BEAD money has begun to flow, along with other broadband-related stimulus money, the main funds haven't fully hit yet and probably won't until 2025 or beyond.

There's a lot of pressure on BEAD winners to spend grant money right away BUT some obstacles will slow things down⁵:

• Grants can't be awarded in a State until a broadband office has lined up an ISP to reach every underserved passing
• Lingering Supply Chain issues
• Permitting
• "Make-Ready" ie - pre-work to poles, locating existing utilities
• Environmental studies
• Complicated paperwork and reporting
• Costs for all of the above

I predict that the heaviest BEAD construction is going to be in 2026, meaning these pre-construction issues will hit in 2025 Doug Dawson, CCG Consulting

What do the next few months look like?

Most experts predict the bulk of the stimulus funding is at least a year away. Contractors are still busy, but perhaps without the backlog they've experienced in the last few years. Meanwhile, the surge in used equipment inventory definitely means we are past the "covid effect". We appear to be in a bubble as we wait to see what the coming months will bring in terms of market and industry changes, and hopefully, funding approvals.

When the dam bursts, we may experience another round of unprecedented equipment demand; a "stimulus effect". This will certainly have an impact on the used market again, but not exactly the same as covid years. Manufacturers are geared up and ready. But after the current surplus of inventory gets sold, we will, once again, see increased demand for used equipment, and along with that, increased prices.

Have stimulus delays impacted your equipment buying or selling decisions? Let me know! Send your comments to renee@hddbroker.com

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References:
¹ https://www.lightreading.com/fttx/2023-in-review-some-us-fiber-builds-slow-down
² https://www.fierce-network.com/broadband/heres-lowdown-whats-going-bead
³ https://broadbandbreakfast.com/musk-carr-zing-white-house-over-bead-delays-costs/
⁴ https://www.nokia.com/networks/rural-broadband/us-government-broadband-funding-opportunities/infrastructure-funding-explained/
⁵ https://potsandpansbyccg.com/2024/07/01/bottlenecks-for-bead-construction/