The Federal Communications Commission is making another $2.15 billion available for rural broadband projects, and it’s trying to direct at least some of that money toward building services with gigabit download speeds and unlimited data.
The FCC voted for the funding Wednesday and released the full details yesterday. The money, $215 million a year for 10 years, will be distributed to Internet providers through a reverse auction in which bidders will commit to providing specific performance levels.
“We now adopt an auction design in which bidders committing to different performance levels will compete head to head in the auction, with weights to take into account our preference for higher speeds over lower speeds, higher usage over lower usage allowances, and low latency over high latency,” the FCC said. Prices should be “reasonably comparable to similar offerings in urban areas,” the FCC said.
Bidders can obtain money by proposing projects meeting requirements in any of four performance tiers. There’s a minimum performance tier that includes speeds of at least 10Mbps downstream and 1Mbps upstream, with at least 150GB of data provided each month. A “baseline” performance tier requires 25Mbps/3Mbps speeds and at least 150GB a month, though the data allotment minimum could rise based on an FCC metric that determines what typical broadband consumers use per month.
The next tier up requires 100Mbps/20Mbps with unlimited data. Finally, there is a “Gigabit performance tier” that requires download speeds of at least 1Gbps and upload speeds of at least 500Mbps, with unlimited data.
While ISPs that commit to gigabit speeds may have a leg up in the auction, there isn’t any guarantee that the funding will go toward gigabit projects. It all depends on the bidders. There is no set amount of money earmarked for each performance tier, an FCC spokesperson told Ars.
The money comes from the Universal Service program’s Connect America Fund, which draws from surcharges on Americans’ phone bills to pay for rural Internet service. In another Connect America Fund disbursement, the FCC last year provided 10 large carriers with a total of $9 billion over the next six years. The FCC also has plans to provide $20 billion over 10 years to the nation’s smallest carriers.
This week’s vote on the so-called “Phase II auction” seeks to fill in the gaps in 20 states where large carriers have not accepted funding, targeting census blocks that lack at least 10Mbps/1Mbps service. The Phase II auction also seeks to bring broadband to additional areas “with extremely high deployment costs,” the FCC said.
Carriers that commit to building projects in the Phase II auction will have to complete 40 percent of the build out within three years, 60 percent within four years, 80 percent within five years, and 100 percent within six years.
FCC Chairman Tom Wheeler said the auction format will maximize efficiency. “Ultimately, the power of competitive bidding will hopefully spark robust broadband deployment and quality service offerings across rural America in the most cost-efficient way possible,” he said.
The FCC adopted rules that will make it easier for “new entrants like wireless Internet service providers, small-town cable operators, and electric utilities to participate,” Commissioner Ajit Pai said.
No auction date has been set yet, as the FCC still plans to take public comment on specific auction procedures, including how best to weigh bids so that rural consumers “receive the highest quality broadband service possible within our finite universal service budget,” Wheeler said.
All five commissioners voted to support the order at least in part, but Commissioner Michael O’Rielly submitted a partial dissent. The FCC shouldn’t have adopted a gigabit performance tier, he said.
“I would not have included a gigabit tier,” O’Rielly said. “Reasonable comparability is about ensuring that rural consumers receive service that does not lag too far behind what a substantial majority of consumers are subscribing to in urban areas. Adding a tier that is significantly above market reality provides a nice soundbite, but it is a distraction from the effort to connect the maximum number of people with the limited dollars available under our budget.”