FCC Votes on $16B Rural Broadband Subsidy Framework

A "partially" divided FCC voted Tuesday (June 9) to establish rules of the road for the auction of $16 billion in subsidies for rural broadband buildouts via its Rural Digital Opportunities Fund (RDOF). 

The FCC commissioners and staffers gathered for a video meeting

The FCC commissioners and staffers gathered for a video meeting

The vote was technically unanimous, but the Democratic members hammered the item for giving out money before the FCC had fixed its broadband maps, so both cast partial dissents from that part. 

That came at the FCC's first virtual video public meeting Tuesday (June 9)--previously socially distanced meetings had been via teleconference. 

The money will be awarded over 10 years to providers to offer fixed voice and broadband to unserved, high-cost, areas, at speeds of at least 25/3 Mbps. 

The auction (904) is scheduled to launch Oct. 29. Short-form applications can be filed beginning July 1. That application window closes July 15. 

The public notice establishing the rules also: 1) adopts census blocks as the smallest geographic area for bidding, 2) reserves bids only for technologies proven to provide mass market retail broadband, 3) insures that bidders have the experience, the money, and the technology to meet performance requirements, and 4) adopts a multi-round, descending clock auction, which means low bid that meets performance and latency requirements wins. 

The FCC is prohibiting commonly controlled entities from filing more than one application and banning joint bidding arrangements.  

Related: Bipartisan Bill Would Goose Broadband Buildouts 

FCC chair Ajit Pai circulated the draft public notice last month. 

Pai said that in his three-plus years, closing the digital divide has been his top priority, and the FCC has gotten results. 

He said more work remains to be done and events in 2020 have driven home how important that connection is. He said the procedures for phase one of the auction will get money to areas "everyone agrees" lacks service. 

He said politically motivated calls to delay the auction miss the mark. He said the country cannot afford to wait for more granular coverage maps. "Digital opportunity delayed is digital opportunity denied." 

Commissioner Michael O'Rielly said the item put the FCC one step closer to the auction and, "hopefully," significantly expanded broadband access.  

O'Rielly said he would have preferred no upfront technology restrictions. He did say he was grateful for changing language that was prejudicial to certain providers. The FCC will also reevaluate participation conditions for the second phase of the program, said O'Rielly, something he had asked for. 

Commissioner Jessica Rosenworcel, who cast a partial dissent, said the FCC does not have accurate data so it lacks an honest picture of who has broadband and who is falling behind. She said the current pandemic and protests means that the country needs connections that support bonds between people. She said the FCC needs a real plan for broadband for all. She said job one of getting the job done is good data. She criticized the FCC for not addressing the mapping issue years ago.  

Rosenworcel said the FCC made no effort to improve the data, and is now handing out billions of dollars using maps they know is wrong. She called the item "rushed out the door electioneering." 

She called the item the wrong way to close the digital divide, and irresponsible in the bargain. She also took issue with not giving the money in places where states are already using other government subsidy money. Rosenworcel said rushing the money out was a "fatal flaw." 

FCC commissioner Brendan Carr also called it the next step to serving the hardest-to-serve. He said the FCC's broadband maps are accurate for what the FCC is doing with the first part of the auction, which is to serve the unserved.  

Commissioner Geoffrey Starks dissented in part, unhappy with the bulk of the money being handed out before the FCC gets a better hand on where broadband is. 

"I would have preferred to start with a smaller budget or shorter term of support so that the bulk of the RDOF funds could be spent after we complete the mapping overhaul that data-driven policymaking and the Broadband DATA Act require," he said. "Because this item builds on that flawed foundation, I must dissent in part." 

In August 2019, the FCC voted to propose handing out over $20 billion in Universal Service Fund (USF) subsidies for rural broadband over the next decade, money that could go to cable broadband providers as well as telecoms.   

Related: Are You Ready for the Rural Digital Opportunity Fund  

The first phase of the program will hand out $16 billion for census tracks where there is no service. In the second, $4.4 billion, plus whatever money is left over from phase one, will be available for building out partially served census tracts.  

The FCC has taken some criticism for handing out the $16 billion before it collects better broadband availability data, but Pai has pointed out that while the FCC concedes it needs better data, that is generally for areas that might show service where there is none, not where the data shows there is no service. He also points out that, in the wake of COVID-19, getting that broadband out to unserved rural areas ASAP is a priority. 

“The Fiber Broadband Association supports today’s action by the FCC to adopt procedures and a timeframe for the Rural Digital Opportunity Fund Phase I auction," said Lisa Youngers, president of the Fiber Broadband Association. "This universal service program has the potential to drive the deployment of all-fiber networks to many locations in unserved areas, giving consumers and businesses access to infrastructure essential for full participation in our 21st-century society and economy. The COVID-19 pandemic, during which broadband traffic has surged, has revealed that all-fiber network access for all Americans has never been more important. Our members remain committed to connecting Americans, both rural and urban, with all-fiber broadband and will continue to work to make this a reality.”

“ACA Connects supports today’s action by the FCC to move forward with the Rural Digital Opportunity Fund program, which will bring higher-performance broadband service to millions of unserved locations," said ACA Connects President Matt Polka. "With the RDOF, the FCC also takes another step to ensure limited government funding will be distributed more efficiently by giving providers of all stripes, including ACA Connects members, a fair and reasonable opportunity to participate in the program.

“Just as with the 2018 Connect America Fund auction, we expect many ACA Connects members will seek to take part in October’s RDOF auction. In the end, the winners will be consumers in unserved areas, who will get upgraded broadband service, and the American public, who will see government funding used more effectively.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.