Mobility Fund

Description

On October 14, 2010, the Federal Communications Commission proposed creation of a new Mobility Fund to provide one-time support to accelerate our nation's ongoing efforts to close gaps in mobile wireless service.

Mobile wireless providers have expanded and upgraded their networks so that third generation, or "3G," services are now widely available. But despite providers' efforts, millions of Americans still live, work, and travel in areas where these advanced services are unavailable. The Mobility Fund proposed in this NPRM will help improve coverage in these areas for current-generation or better mobile wireless service, which may include 4G mobile broadband service.

The NPRM proposes to support the Mobility Fund using a portion of USF funding voluntarily relinquished by Verizon Wireless and Sprint. Those funds had been helping support service in areas that, at least in some cases, were being served by other mobile carriers. Under the Mobility Fund, a portion of these funds will instead be distributed on a one-time basis using a market-based mechanism to target consumers in areas without advanced mobile services, ensuring that America gets the most bang for the USF buck.

The NPRM proposes:

• To use $100 million to $300 million from the USF to create the Mobility Fund.
• To identify the areas unserved by 3G mobile wireless services.
• To use a reverse auction - in which the potential providers of services in identified areas without 3G service compete for support from the Mobility Fund by proposing the lowest amount of USF support they would require to serve areas that are currently unserved - to determine which providers get support, which specific geographic areas will receive support, and at what levels.

Issues

The NPRM also seeks comment on:
Whether to make support available to any unserved area in the nation or to target support by making it available in a limited set of unserved areas.
Minimum performance and coverage requirements that should be established for the service to be supported by the Mobility Fund.

I. Overall Design of the Mobility Fund

Drawing on some of the USF support voluntarily relinquished by Verizon Wireless and Sprint Nextel and reserved by the Commission, the Mobility Fund would make available non-recurring support to providers to deploy 3G or better networks where these services are not currently available.

1. Size of the Mobility Fund

The FCC proposes to use $100 million to $300 million in USF high-cost universal service support to fund, on a one-time basis, the expansion of current-generation mobile wireless services through a new Mobility Fund. Prior voluntary agreements by Verizon Wireless and Sprint Nextel to surrender USF high-cost support will likely make several hundred million dollars available annually that can be used for other USF purposes without increasing the overall size of the high-cost fund.

2. One Provider Per Area

The FCC proposes that only one entity in a given geographic area receive Mobility Fund support.

3. Auction to Determine Awards of Support

The FCC proposes to use a competitive bidding mechanism to determine the entities that will receive support under the Mobility Fund and the amount of support they will receive – that is, the Commission proposes to award support based on the lowest bid amounts submitted in a reverse auction. Such a mechanism, the FCC believes, should allow the market to reveal the costs of providing expanded access to advanced mobile services in unserved areas.

4. Identifying Unserved Areas Eligible for Support

The FCC proposes to identify unserved areas on a census block basis and, because individual census blocks are so small, the Commission proposes to conduct bidding to offer Mobility Fund support in unserved census blocks grouped by census tracts.

The FCC seeks comment on various methods it could use to distribute Mobility Fund support among unserved areas, including ways to target support to places that significantly lag behind the level of 3G coverage generally available nationwide.

The FCC also seeks input on on whether it should reserve funds for developing a Mobility Fund support program targeted separately to Tribal lands that trail national 3G coverage rates

5. Performance Requirements

a) Coverage Requirement
The FCC proposes to establish a coverage requirement that will ensure that Mobility Fund support is put to the purpose for which it is intended – to expand coverage in unserved areas. The Commissions asks: "Should we require 100 percent coverage? Or would it be appropriate to require a level of coverage of between 95 and 100 percent of the resident population of census blocks deemed unserved in order to balance our goal of expanding service with concern that excessively high costs to serve a few residents in an area might deter providers from bidding to cover areas otherwise well suited for Mobility Fund support?"

b) Service Quality and Rates
As detailed in connection with proof of deployment requirements, supported networks would demonstrate their quality of service by proving that they have achieved particular data rates under particular conditions. The FCC proposes that these data rates be comparable to those provided by networks using the basic functionality of High Speed Packet Access (HSPA) or Evolution-Data Optimized (EV-DO). The FCC would not, however, require that supported parties use any particular technology to provide service. Instead, the FCC proposes to use widely deployed technologies to define a baseline of performance that any supported network must meet or exceed.

Should supported networks be required to provide data rates comparable to 4G networks? Alternatively, should supported networks be required to present a path to 4G service?

The FCC seeks comment on how to implement, in the context of the Mobility Fund, the statutory principle that supported services should be made available to consumers in rural, insular, and high-cost areas at rates that are reasonably comparable to rates charged for similar services in urban areas. Given the absence of affirmative regulation of rates charged for commercial mobile services, as well as the rate practices and structures used by providers of such services, how can parties demonstrate that the rates they charge in areas where they receive support are reasonably comparable to rates charged in urban areas? What should the FCC use as a standard for “reasonably comparable” and “urban areas” in this context? What should be the consequence of failing to make the required showing?

c) Deployment Schedule and Proof of Deployment
The FCC proposes that recipients be required to meet certain milestones for the provision of service in each unserved census block in a tract in order to remain qualified for the full amount of any Mobility Fund award. For example, it could require that recipients achieve fifty percent of the coverage requirement within one year after qualifying for support. The FCC seeks comment on this proposal and on appropriate coverage percentages and time periods for such a milestone. Are there critical factors that should be taken into account in establishing timetables for rollout in different areas, such as weather conditions or limited construction seasons?

Parties supported by the Mobility Fund must provide 3G or better mobile coverage in specific areas previously deemed unserved by 3G. The FCC proposes that parties satisfy their performance requirement by proving that they have deployed a network covering the relevant area and capable of meeting certain minimum standards. The Commission proposes that data from the drive tests conducted after construction and optimization of the network be used to determine whether these requirements have been met.

II. Mobility Fund Eligibility Requirements

The FCC proposes the following eligibility requirements for those seeking support from the Mobility Fund:

1) a provider must be designated (or have applied for designation) as an ETC, pursuant to Section 214(e) of the Communications Act of 1934, as amended (“Communications Act” or “Act”) for the area in which it seeks to provide service;
2) a provider must have access to spectrum capable of 3G or better service in the geographic area that it will serve; and
3) a provider must certify that it is financially and technically capable of providing service within the specified timeframe.

The FCC also seek comment on other eligibility requirements for entities seeking to receive support from the Mobility Fund/

III. Reverse Auction Mechanism

1) Basic Auction Design

The FCC believes a reverse auction, in which potential providers or sellers of a defined service or other benefit compete to provide it at the lowest price, can be a relatively quick, simple, and transparent method of selecting parties that will provide a benefit at the lowest price and of setting the price those parties should be paid.

The FCC proposes to use a single-round reverse auction to award Mobility Fund support because it is simple and because the FCC expects bidders for Mobility Fund support to be well acquainted with the costs associated with providing access to advanced mobile wireless services in the areas they propose to cover, and to bid accordingly.

2) Bidding Process

Bids for Mobility Fund support would state the dollar amount of support sought per each unit associated with the unserved area(s) in those census tracts covered by the specific bid submitted. In addition, based on the FCC's proposal to award support to only one provider per area, the Commission proposes that a Mobility Fund auction would select at most one winning bidder per census tract. After bidding closes, in order to select winning bidders, the auction mechanism will rank bids based on the per-unit bids from lowest to highest and calculate the running sum represented by those bids and the number of units in the unserved areas covered by those bids. If there are any identical bids – in the same per-unit amounts to cover the same tract or tracts, submitted by different bidders – that only one such bid, chosen randomly, be considered in the ranking. the auction would identify winning bidders starting with the bidder making the lowest per-unit bid and continue to the bidders with the next lowest per-unit bids in turn, provided that support had not already been assigned for that census tract, so long as the running sum based on the units in the identified unserved areas covered by the bids does not exceed the available monies.

4) Information and Competition

Applicants competing for support in the auction would be prohibited from communicating with one another regarding the substance of their bids or bidding strategies. Information available in short-form applications or in the auction process itself might also be used to attempt to reduce competition. Accordingly, the FCC would adopt rules providing it with discretion to limit public disclosure of auction-related information.

5) Auction Cancellation

The FCC would retain the discretion to delay, suspend, or cancel bidding before or after a reverse auction begins under a variety of circumstances, including natural disasters, technical failures, administrative necessity, or any other reason that affects the fair and efficient conduct of the bidding

IV. Post-Auction Process, Administration, Management, and Oversight of the Mobility Fund

The Universal Service Administrative Company (“USAC”), a subsidiary of the National Exchange Carrier Association (“NECA”), is the private not-for-profit corporation created to serve as the Administrator of the USF under the FCC’s direction. USAC would administer the Mobility Fund in accordance with the applicable terms of its current appointment as administrator, and subject to all existing Commission rules and orders applicable to the USF Administrator.

Mobility fund support would be disbursed in three installments -- Each party receiving support would be eligible for 1/3 of the amount of support associated with any specific census tract once its application for support is granted. A party would receive the second third of its total support when it files a report demonstrating coverage of 50 percent of the population associated with the census block(s) deemed unserved that are within that census tract. A party would receive the final third of the support upon filing a report that demonstrates coverage of 100 percent of the resident population in the unserved census block(s) within the census tract.

Read the entire proposal

Comment due date: 12/16/2010

Comment reply due date: 01/18/2011