FCC Approves Up to $100 Million for Rural Broadband Experiments
The FCC approved 5-0 Friday spending up to $100 million on rural broadband experiments as part of the Connect America Fund (CAF), as was expected (CD July 11 p1). Officials said the order gives the FCC the chance to test for the first time the viability of using competitive bidding to award recurring support for people living in high-cost areas.
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The order provides $75 million to test construction of networks offering speeds of 25 Mbps for downloads and 5 Mbps for uploads, far higher than the current CAF standard, said a news release (http://bit.ly/1jyVvcW). The FCC is setting aside $15 million to test interest in delivering service at 10 Mbps upstream/1 Mbps downstream in high-cost areas and another $10 million to test that service level in extremely high-cost areas. The FCC said wireless providers, electric utilities and other players will have a shot at getting funding. The rules provide a 25 percent bidding credit for tribal areas.
Carol Mattey, deputy chief of the Wireline Bureau, said the experiment should help the commission “test out” how to best award funding under Phase II of the CAF program. The use of the auction takes FCC discretion out of the equation, choosing winners and losers purely based on their bids, she said.
"Any business starts with a trial before going to scale,” said FCC Chairman Tom Wheeler. “That’s what we're doing here today."
The experiments should provide “valuable data” as the FCC finalizes a bidding process for awarding funds, said Commissioner Mignon Clyburn. “In many ways, this is unchartered territory but I believe this is a wise course and is reflective of good governance to conduct the experiments and collect data,” she said. “Today, we take a creative look at making sure broadband reaches rural America,” said Commissioner Jessica Rosenworcel. “We experiment."
Commissioner Mike O'Rielly questioned the level of spending, saying $100 million “is far more than it costs to run a simple test.” Proposed upload and download speeds are also too high, given “there are parts of the country that remain completely unserved today,” he said. O'Rielly also questioned the extent to which the FCC can provide adequate oversight of all who receive money through the program. “If the past has taught us anything, it is that running a broadband network, particularly in high-cost, low-density areas, is not easy,” he said.
Commissioner Ajit Pai said he’s pleased that winners will be determined based on a numerical score rather than through a “more discretionary and subjective process.” Pai said he sought other changes that did not make it into the final version. “I would have preferred to structure the auction in a multi-round format so that bidders could evaluate their competition and adjust their bids accordingly,” he said. “Instead, we will have a single-round auction, which places the onus on bidders to estimate beforehand how much competition there will be and what to bid."
The Competitive Carriers Association questioned whether the rules create a bias against wireless carriers taking part in the experiments. “Making the vast majority of funding contingent on achieving speeds that are several multiples higher than those required of price-cap carriers in receiving CAF Phase I funding makes little sense,” said CCA President Steve Berry.