How the FCC is Bringing Broadband to Rural America

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Earlier this year, the Federal Communications Commission found that broadband deployment in the United States – especially in rural areas – is failing to keep pace with today’s advanced, high-quality voice, data, graphics and video offerings. Over half of all rural Americans lack access to broadband service with 25 megabits per second (Mbps) for downloads and 3 Mbps for uploads. Moreover, rural America continues to be underserved at all speeds, the FCC found: 20 percent lack access even to service at 4 Mbps/1 Mbps, down only 1 percent from 2011, and 31 percent lack access to 10 Mbps/1 Mbps, down only 4 percent from 2011.

In the 2015 Broadband Progress Report, the FCC found that:

The existence of these unserved areas may be attributable, at least partially, to the cost of building infrastructure over long distances in areas with low population density, as well as the lower incomes and higher rates of poverty and unemployment in rural versus urban areas. This translates into fewer revenue generating opportunities for service providers and ultimately affects their incentive to build broadband networks. Other obstacles to deploying broadband infrastructure include lack of access to key inputs, such as utility poles, conduits, rooftops, and rights-of-way. These challenges raise costs, limit competitive entry, reduce service quality and negatively impact businesses and consumers. These factors likely impact industry decisions about when and where to enter the market, and what services to deploy. Congress directed the Commission to remove barriers and establish conditions that will encourage rapid and ubiquitous deployment.

The FCC’s 2015 Broadband Progress Report pointed to future efforts to bring robust broadband to rural America, noting Phase II of the Connect America Fund which would provide nearly $9 billion to expand broadband to five million Americans living in rural areas within the next five years. [The creation of the Connect America Fund, you may recall, was a key recommendation of the National Broadband Plan.] In April, carriers were offered $1.6 billion in support from the Connect America Fund. August 27, 2015 was the final day for these carriers to decide whether to accept the offer of support from Phase II of the Connect America Fund; their decisions made headlines:

• CenturyLink Accepts Nearly $506 Million in Annual Support from Connect America Fund to Expand and Support Broadband for Over 2.3 Million Consumers in 33 States
• AT&T Accepts Nearly $428 Million in Annual Support from Connect America Fund to Expand and Support Broadband for Over 2.2 Million Rural Consumers in 18 States [for more on AT&T's decision to accept CAF support, see AT&T and Verizon CAF Plans for Rural Broadband Heading in Two Different Directions]
• Consolidated Telecom Accepts Nearly $14 Million in Annual Support from Connect America Fund to Expand and Support Broadband for Nearly 50,000 Rural Consumers in Six States
• Cincinnati Bell Accepts $2.2 M for Rural Broadband in Kentucky & Ohio

In all, ten telecommunications carriers have accepted $1.5 billion in annual support for rural broadband deployment from the Connect America Fund, which, together with the carrier’s own investment, will expand broadband to nearly 7.3 million rural consumers in 45 states nationwide and one U.S. territory over the next few years.

The FCC’s 2015 Broadband Progress Report estimated that 8.3 million Americans in rural areas do not have access to broadband service at 4 Mbps/1 Mbps. Carriers receiving Connect America Fund support must build out 10 Mbps/1 Mbps broadband to 40 percent of funded locations by the end 2017, 60 percent by the end of 2018, 80 percent by the end of 2019, and 100 percent by the end of 2020. Although the Connect America Fund will support speeds below 25 Mbps/3 Mbps, the FCC believes the funding stimulates broadband development in areas that today lack access. And although recipients of high-cost universal service support are required to offer a minimum of 10 Mbps/1 Mbps, they may offer service at higher speeds, and in some locations, the FCC expects they will do so.

“Today we are taking a significant step forward in narrowing the rural-urban digital divide,” said FCC Chairman Tom Wheeler. “Access to modern broadband is critical to life in today’s society. The financial support provided by American ratepayers through the Connect America program is an investment in the future of our rural communities that will pay dividends for all Americans for years to come.”

Carriers accepted all but ~$175 million of Connect America Fund support. In states where carriers have declined support, the subsidies will be awarded by a competitive bidding process.

What’s Next: Broadband Opportunity Council Report

When President Barack Obama traveled to Cedar Falls, Iowa earlier this year, he identified access to high-speed, affordable broadband as a top national priority. His message back to the government was just as clear: Where there is an incentive we can provide to spur investment, we’ll create it. Where there is red tape we should cut, we’ll cut it.

In March, President Obama created the Broadband Opportunity Council, directing all federal agencies to think creatively and develop new ways to promote broadband investment, deployment, and competition. The President gave this effort a five-month deadline. In April, the Broadband Opportunity Council issued a Request for Comment seeking public input to inform the deliberations of the Council. The overarching questions:

• How can the federal government best promote coordination and use of federally-funded broadband assets?
• What regulatory barriers exist within the agencies of the Executive Branch to the deployment of broadband infrastructure?
• Are there specific regulations within the agencies of the Executive Branch that impede or restrict competition for broadband service?
• How can communities and regions incentivize service providers to offer broadband services, either wired or wireless, in rural and remote areas?
• What can the federal government do to make it easier for state, local, and tribal governments or organizations to access funding for broadband?

The Council collected public comment through June 10 and, just this week, delivered a report on that input to the White House. The White House announced that, on September 21, it will be sharing a formal report and recommendations to improve broadband across the country. That announcement is likely to set the agenda for the next phase of government-led efforts to ensure robust broadband reaches everyone in the U.S.

We'll update you when we see the report and, as always, see you in the Headlines.