FCC Plan: Faster Speeds for Rural Residents

By changing one of its operator-funding programs, the Federal Communications Commission expects to raise rural broadband's speed, encouraging operators to provide country subscribers with the same, higher Internet connectivity their urban counterparts enjoy.

That's the word from Ajit Pai, FCC chairman, according to a recent blog. Just before Thanksgiving, Pai shared his plans for the FCC's upcoming open meeting, slated for Dec. 12 from 10:30 am - 12:30 pm ET (viewable live or via webcast). In addition to 5G, robocalls and media ownership, Pai discussed changes he wants made to at least one way the FCC finances the demise of the digital divide.

This program addresses Universal Service Funds (usually collected from each mobile phone user's bill via separate line item), specifically the high-cost program that subsidizes rural carriers, also known as rate-of-return providers. These operators build broadband networks in the country's most remote and difficult to serve regions, generally serving only sparse populations over their networks, he said.

Digital Disconnection

(Source: Statista)

Private enterprises are loathe to enter these regions because they have little to no business case. As subsidized programs, the FCC must stretch taxpayer money as far as possible and ensure subsidies are sufficient to build out these networks, Pai said. In addition, subsidies must be predictable given the time it requires to design and deploy this infrastructure, he noted.

"After all, building networks is a serious long-term proposition, not a one-time whim. Unfortunately, for many, many years, the program hasn't satisfied each of these important principles," Pai said. "We're recognizing that rural Americans need and deserved high-quality services by increasing the target speeds for subsidized deployments from 10/1 Mbps to 25/3 Mbps."

The FCC will change how it compensates providers by steering them from today's incentive-based model. Rather, the commission will use a "more efficient, effective way of distributing funding to close the digital divide," wrote Pai.

Here's how the FCC expects providers to deliver on this plan:

• Agency stops telling rate-of-return carriers their allowable costs and return on investment.
• If new program is approved, rate-of-return providers can opt-in to model-based support.
• This approach delivers guaranteed revenue streams for 10 years in exchange for meeting specified buildout requirements.
• FCC will give more funding to carriers that now get model-based support and agree to attain increased buildout requirements.
• The commission plans also to increase funding for non-model-based support providers. Pai did not provide specific dollar amounts or percentages for either scenario.
• By ending "arbitrary funding cuts" and creating a long-term budget for rate-of-return providers that did not opt into model-based support, the FCC makes the rural broadband's subsidized deployment program more predictable, Pai said.

Rural operators and their vendor partners -- some of which have on-staff experts proficient in government programs and the best-suited technologies for the wide array of physical, weather and other obstacles in the countryside -- are accustomed to program changes, tweaks and endings. Will they view these changes as a gift from Santa or a holiday turkey?

Related posts:

• FCC No Longer Requires Cable Data Under Oath
• The $70B Digital Divide Conundrum
• Sprint CTO: Rural Ripe for Disruption With Fixed Wireless

— Alison Diana, Editor, Broadband World News. Follow us on Twitter or @alisoncdiana.