The Biden Administration’s $1.2 trillion infrastructure bill includes the Broadband Equity, Access, and Deployment (BEAD) program, designed to expand high-speed internet access across the U.S. With $42.5 billion allocated, BEAD aims to close the digital divide by bringing reliable internet to underserved areas. Despite the program’s open eligibility, the majority of the benefits are expected to go to a few large telecommunications companies, like AT&T, Verizon, and Comcast, due to their financial strength, regulatory expertise, and lobbying power. As 2024 is deemed the “year of execution” for BEAD, these industry giants are likely to secure substantial funding and enhance their broadband infrastructure, presenting significant opportunities for investors.

The BEAD Program: A Brief Overview

The BEAD program was established to address the digital divide in America by providing high-speed internet access to areas that have long been underserved. With a budget of $42.5 billion, this program is a significant component of the broader infrastructure bill, reflecting the administration’s commitment to enhancing connectivity nationwide. The primary goal of BEAD is to ensure that every American, regardless of their location, has access to reliable and fast internet services.

Funded by the Bipartisan Infrastructure Law, the Broadband Equity, Access, and Deployment (BEAD) program is a federal grant initiative designed to connect all Americans to the internet. The program facilitates partnerships between states, territories, communities, and stakeholders to build necessary infrastructure and boost the adoption of high-speed internet. BEAD prioritizes areas without internet access or those with speeds below 25/3 Mbps, as well as underserved locations with speeds under 100/20 Mbps.

Limited Beneficiaries: The Reality of BEAD

Despite the inclusive nature of the BEAD program, where any company can apply for funding, the reality is that only a select few are poised to reap the rewards. Even though programs like BEAD are open to all who apply, a large chunk of the awards end up going to just a few companies. This phenomenon is attributed to several factors that favor large national telecommunications companies.

The Dominance of Major Telecom Companies

Large telecom companies such as AT&T, Verizon, and Comcast have significant advantages when it comes to securing BEAD funds. These corporations possess the financial resources needed to invest in large-scale projects and the expertise to navigate the complex rules and regulations associated with government programs. Additionally, their influence is bolstered by lobbyists who work to sway the allocation of government funds in their favor.

Financial Muscle

One of the key reasons why large telecom companies dominate the BEAD program is their substantial financial muscle. Implementing broadband infrastructure in underserved areas requires significant capital investment, something that smaller companies often cannot afford. AT&T, Verizon, and Comcast, with their deep pockets, are well-positioned to undertake such massive projects.

Regulatory Expertise

Navigating the regulatory landscape of government programs can be daunting. The large telecom companies have extensive experience in dealing with the bureaucratic intricacies that come with such initiatives. Their ability to effectively manage these complexities gives them a competitive edge over smaller, less experienced firms.

Lobbying Power

Lobbying plays a crucial role in the distribution of BEAD funds. Major telecom companies employ lobbyists who actively work to influence policymakers and ensure that a substantial portion of the funds are directed their way. This lobbying power further consolidates their position as the primary beneficiaries of the BEAD program.

The Year of Execution: 2024

As agency officials have labeled 2024 the “year of execution” for the BEAD program, the spotlight is now on the telecom giants poised to benefit the most. Investors keen on capitalizing on this opportunity should pay close attention to AT&T, Verizon, and Comcast. These companies are not only well-equipped to secure a significant portion of the BEAD funds but also have the capability to effectively deploy these resources to expand broadband access.

Insights

1. BEAD targets underserved areas for high-speed internet expansion.
2. Large telecom companies dominate due to financial and regulatory advantages.
3. 2024 is critical for BEAD’s implementation and fund allocation.

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1. BEAD Program Goals: Aims to provide high-speed internet to underserved U.S. regions, reducing the digital divide.
2. Funding Allocation: $42.5 billion designated for broadband infrastructure under the Bipartisan Infrastructure Law.
3. Beneficiaries: Primarily large telecom companies like AT&T, Verizon, and Comcast, due to their financial resources, regulatory expertise, and lobbying efforts.

Detailed Descriptions:

• The BEAD program focuses on areas lacking sufficient internet speeds, prioritizing regions below 25/3 Mbps and underserved locations under 100/20 Mbps.
• Large telecom companies are better positioned to secure BEAD funds because of their capability to handle large-scale investments and navigate complex government regulations.
• The lobbying power of these companies plays a significant role in influencing the allocation of BEAD funds.

The Action Plan

1. Investment Strategy: Investors should monitor AT&T, Verizon, and Comcast for strategic moves related to BEAD funding.
2. Stakeholder Engagement: Smaller companies should explore partnerships with larger telecom firms to participate in BEAD projects.
3. Regulatory Compliance: Companies need to enhance their understanding of regulatory requirements to better compete for BEAD funds.

Blind Spot

The focus on large telecom companies might overlook the potential contributions and innovative approaches of smaller, regional internet providers that could offer cost-effective and localized solutions for underserved areas.

AT&T

AT&T is a major player in the telecommunications industry, with a robust infrastructure and extensive experience in broadband deployment. The company’s financial strength and regulatory expertise make it a prime candidate for securing BEAD funds. Investors should watch AT&T’s strategic moves closely as it leverages its resources to tap into this lucrative opportunity.

AT&T (T) Technical Analysis

Price Movement: The stock is currently trading at $18.35, with a recent increase of $0.34. The price has recently broken above the 50-day moving average ($17.24), indicating a bullish short-term trend. It is also trading above the 200-day moving average ($16.45), which is a positive long-term signal.

Volume: The trading volume is 30,078,215 shares. This high volume, especially on the days when the price has increased, suggests strong buying interest and confirms the bullish sentiment.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI): The RSI is at 68.92, approaching the overbought threshold of 70. This indicates that the stock is gaining strength, but it may face resistance soon if it becomes overbought.

On-Balance Volume (OBV): The OBV is 128,580,319 and has been trending upward. This supports the price increase, indicating that volume is flowing into the stock, which is a bullish sign.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More: The Stochastic RSI is at 0.939, which is in the overbought zone (above 0.8). This suggests that the stock might be overextended in the short term and could face a pullback or consolidation.

Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX): The ADX is at 26.35, indicating a strengthening trend. An ADX above 25 typically signifies a strong trend, and since the stock is rising, this trend is currently bullish.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More: The Chaikin Oscillator is at 34,913,344 and has been rising. This indicates increasing buying pressure and supports the bullish outlook.

Time-frame Signals:

• 3-Month Outlook: Buy. The stock has shown strong upward momentum, supported by high volume and positive indicators. However, watch for any signs of it becoming overbought.
• 6-Month Outlook: Hold. The stock is likely to continue its upward trend given the positive long-term indicators, but some consolidation or pullbacks may occur.
• 12-Month Outlook: Buy. The stock is above its 200-day moving average, indicating a long-term bullish trend. The overall positive sentiment and strengthening trend suggest continued growth potential over the next year.

Overall, the analysis indicates a bullish sentiment for AT&T Inc., with strong buying signals in the short and long term, but a possible short-term pullback due to overbought conditions.

Verizon

Verizon, another telecommunications giant, stands to gain significantly from the BEAD program. Known for its extensive network and innovative solutions, Verizon is well-positioned to meet the program’s goals. The company’s proactive approach to expanding its broadband services in underserved areas will likely yield substantial returns from BEAD funding.

Verizon (VZ) Technical Analysis

Price Movement: The stock is currently priced at $41.52. It has recently shown an upward trend, breaking above the 50-day moving average (40.63) and approaching the 200-day moving average (38.04). The recent price action suggests a potential bullish momentum.

Volume: The volume has shown a noticeable spike, indicating increased trading activity. This could suggest strong buying interest, often a bullish sign.

Relative Strength Index (RSI): The RSI is at 63.46, which is below the overbought threshold of 70. This indicates that the stock is in a relatively strong position but not yet overbought, suggesting there might be room for further upward movement.

On-Balance Volume (OBV): The OBV shows a steady upward trend, indicating that buying pressure is outweighing selling pressure. This supports the bullish case for the stock.

Stochastic RSI: The Stochastic RSI is at 1.000, which is at its maximum value, indicating that the stock is overbought in the short term. This could suggest a potential pullback or consolidation phase.

Average Directional Index (ADX): The ADX is at 16.49, which is relatively low. This indicates that the current trend is not very strong. Therefore, while the price is trending upward, the strength of the trend is weak.

Chaikin Oscillator: The Chaikin Oscillator is at 9,051,875, showing a strong positive value. This suggests that there is significant accumulation in the stock, which is a bullish sign.

Time-frame Signals:

• 3-Month Horizon: Buy. The stock shows bullish momentum with increased volume and a positive Chaikin Oscillator. However, be cautious of a short-term pullback as indicated by the Stochastic RSI.
• 6-Month Horizon: Hold. The current upward trend is supported by various indicators, but the ADX suggests the trend strength is weak. Holding is recommended to see if the trend strengthens.
• 12-Month Horizon: Buy. With the price above key moving averages and strong OBV, the long-term outlook is bullish, assuming the upward momentum continues.

In summary, the short-term outlook is cautiously optimistic, with a potential for some consolidation. The medium to long-term outlook is more positive, suggesting that the stock could continue to perform well.

Comcast

Comcast, with its comprehensive broadband infrastructure and strong market presence, is also set to benefit from the BEAD program. The company’s ongoing investments in expanding its network and improving connectivity align perfectly with the objectives of BEAD. Investors should consider Comcast’s potential to secure significant funding and its strategic plans for deploying these resources.

Comcast (CMCSA) Technical Analysis

Price Trend: The stock price is in a downtrend, as indicated by the declining prices and the 200-day moving average (red line) positioned above the 50-day moving average (blue line). The price recently bounced off a low near 36 and has been attempting a recovery, currently trading around 39.55.

Volume: The volume shows significant spikes, indicating active trading periods. The most recent bars show a mix of buying and selling pressure, suggesting indecision in the market.

Relative Strength Index (RSI): The RSI is currently at 52.96, which is in the neutral zone (between 30 and 70). This indicates that the stock is neither overbought nor oversold. The recent uptick from below suggests a potential increase in buying interest.

On Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV): The OBV is trending downwards, which is a bearish signal. This suggests that more volume is associated with down days compared to up days, indicating selling pressure.

Stochastic RSI: The Stochastic RSI is at 0.792, close to the overbought threshold of 0.8. This suggests that the stock might be overbought in the short term, and a price pullback could be imminent.

Average Directional Index (ADX): The ADX is at 20.09, which indicates a weak trend. An ADX below 25 suggests that the market is in a consolidation phase rather than a strong trending phase.

Chaikin Oscillator: The Chaikin Oscillator is at 9,582,757, showing a recent increase. This indicates that the stock is experiencing accumulation, with buying pressure outweighing selling pressure.

Time-frame Signals:

• 3-Month Horizon: Given the weak trend and mixed indicators, a “Hold” recommendation is suggested. The stock is in a recovery phase but hasn’t shown strong bullish signals yet.
• 6-Month Horizon: The recommendation remains “Hold” as the stock needs to show stronger trend signals and consistent accumulation for a more definitive upward movement.
• 12-Month Horizon: Depending on the company’s fundamentals and broader market conditions, a cautious “Buy” may be considered if the stock breaks above the 200-day moving average and shows sustained bullish indicators.

Overall, the stock exhibits short-term indecision with a need for clearer signals to justify a strong buy or sell position.

Remember, past performance is not an indication of future results. Always conduct your own research and consider consulting with a financial advisor before making any investment decisions.

Looking Ahead

The BEAD program within the Biden Administration’s infrastructure bill presents a compelling investment opportunity, particularly for major telecom companies like AT&T, Verizon, and Comcast. Despite the program’s inclusive nature, the financial strength, regulatory expertise, and lobbying power of these giants position them as the primary beneficiaries. As 2024 marks the “year of execution” for BEAD, investors should closely monitor the strategic initiatives and funding allocations of these telecom titans to capitalize on the potential gains from this transformative program.

Frequently Asked Questions about the Broadband Equity, Access, and Deployment (BEAD) Program