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Round-Up for the Week of October 5-9, 2020

On October 27, the Federal Communications Commission is expected to vote to create the 5G Fund for Rural America, a new program supported by the Universal Service Fund. The 5G Fund will replace the FCC's existing Mobility Fund which has been used to support deployment of 4G LTE networks in rural, insular, and high cost areas of the country. The FCC will distribute up to $9 billion in universal service support to bring mobile voice and 5G broadband service to rural areas of the country. The deployment of networks capable of providing this 5G service undoubtedly will be expensive. Most providers are still in the early stages of deploying 5G networks, focusing mainly on urban areas; the 5G Fund aims to ensure deployment reaches sparsely-populated areas that may not offer obvious economic incentives for private investment. Here's a brief look at the proposal FCC commissioners will consider this month.

I. Maps Before Networks

The FCC is deciding to delay any 5G Fund support until it has new, more precise, verified mobile coverage data collected through its Digital Opportunity Data Collection. The FCC will determine the areas eligible for support in the 5G Fund Phase I auction based where new mobile coverage data submitted in the Digital Opportunity Data Collection show a lack of unsubsidized 4G LTE and 5G broadband service by at least one service provider. 

An FCC staff investigation found an overstatement of 4G coverage data. Therefore, the FCC now expects that data from the Digital Opportunity Data Collection effort will show that the number of areas unserved by unsubsidized 4G LTE will be greater than the Commission originally estimated. The number of areas unserved by 5G will likewise be substantial.

II. How the 5G Fund Will Work

The 5G Fund for Rural America will award support to 5G carriers through a competitive reverse auction in two phases. Phase I will target $8 billion in support nationwide to all eligible rural areas that lack unsubsidized 4G LTE and 5G broadband service. $680 million of support will be reserved for service to Tribal lands in the initial phase. Phase II will focus support to specifically target the deployment of technologically innovative 5G networks that facilitate precision agriculture. Phase II will have at least $1 billion, supplemented with any unawarded funds from Phase I. Support will be dispersed monthly to reverse auction winners over a 10-year period.

To be eligible for 5G Fund for Rural America support, a carrier need not be an eligible telecommunications carrier (ETC) prior to the auction process; the FCC is allowing a 5G Fund auction winning bidder to be designated as an ETC after it is announced as a winning bidder for a particular area. [State regulators generally determine which carriers are ETCs.] A 5G Fund auction-winning bidder will be required to obtain an ETC designation from the relevant state commission that covers each of the geographic areas in which that carrier won support within 180 days after the release of the public notice announcing winning bidders.

Any 5G Fund applicant must have exclusive access to licensed spectrum with sufficient bandwidth in an area that enables it to satisfy the applicable performance requirements in order to receive 5G Fund support for that area. The applicant must also certify that it is financially and technically qualified to meet the 5G Fund public interest obligations and performance requirements within the 10-year support term in the geographic areas for which it seeks support. A carrier should have been providing mobile wireless voice and/or mobile wireless broadband service to end user subscribers for at least three years prior to submitting its application to participate in the 5G Fund auction. 

III. Public Interest Obligations and Performance Requirements

Winning auction bidders will have to fulfill broadband public interest obligations that will require competitive ETCs receiving legacy high-cost support for mobile wireless service to provide mobile, terrestrial voice, and data services that comply, at a minimum, with 5G-NR technology. [5G NR (New Radio) is a new radio access technology (RAT) developed by 3GPP for 5G mobile networks. It was designed to be the global standard for 5G networks.] Legacy support recipients use an increasing percentage of their support toward 5G service. And competitive ETCs receiving legacy high-cost support must meet specified coverage requirements until such legacy support begins to phase down or otherwise ceases. At a later date, the FCC will develop specific 5G broadband service deployment coverage requirements and service deployment milestone deadlines for each legacy support recipient, taking into consideration the amount of legacy support the carrier receives. Each ETC receiving high-cost support already has an existing public interest obligation to offer broadband service throughout its subsidized service area.

Each competitive ETC receiving legacy high-cost support for mobile wireless services must now use an increasing percentage of its legacy support toward the deployment, maintenance, and operation of voice and broadband networks that support 5G service meeting the performance requirements. Specifically, legacy support recipients must use at least one-third of support for those purposes by the end of the first calendar year after the effective date of these requirements and at least two-thirds of its legacy support by the end of the second calendar year. All support must be used for such purposes by the end of the third calendar year and every year thereafter.

To ensure that 5G Fund support recipients meet their public interest obligations to provide 5G service in areas where they receive support, the FCC will adopt:

• interim service deployment milestones requiring a 5G Fund support recipient to offer 5G service meeting established performance requirements to at least 40% of the total square kilometers associated with the eligible areas for which it is authorized to receive 5G Fund support in a state by the end of the third full calendar year following authorization of support; to at least 60% of the total square kilometers by the end of the fourth full calendar year; and to at least 80% of the total square kilometers by the end of the fifth full calendar year; 
• a final service deployment milestone that requires a 5G Fund support recipient to commercially offer 5G service that meets the established 5G Fund performance requirements to at least 85% of the total square kilometers associated with the eligible areas for which it is authorized to receive 5G Fund support in a state by the end of the sixth full calendar year following authorization of support; and 
• a requirement that a 5G Fund support recipient demonstrate by the end of the sixth full calendar year following authorization of support that it provides service that meets the established 5G performance requirements to least 75% of the total square kilometers within each of its individual biddable areas.

5G Fund service performance requirements include: median speeds of at least 35/3 Mbps, minimum cell edge speeds of at least 7/1 Mbps, and round-trip latency of 100 milliseconds or less. Providers must offer at least one service plan that includes a data allowance corresponding to the average United States subscriber data usage.

The FCC will require that all legacy high-cost and 5G Fund support recipients offer 5G service at rates that are reasonably comparable to rates they offer in urban areas. (For both voice and broadband services, the FCC considers rural rates to be “reasonably comparable” to urban rates if rural rates fall within a reasonable range of urban rates for reasonably comparable voice and broadband services.) The FCC says it will conclude a wireless carrier is fulfilling the requirement that its rates are reasonably comparable if

• it is offering the same rates, terms, and conditions (including usage allowances, if any, for a specified rate) to both urban and rural customers, or
• one of its stand-alone voice plans and one service plan offering data are substantially similar to plans offered in urban areas.

Where a legacy high-cost or 5G Fund support recipient does not serve urban areas and therefore cannot demonstrate that it is offering reasonably comparable rates based upon its own offerings, the FCC will require the support recipient to identify the carrier and specific rate plans upon which it is basing its compliance certification so that the FCC can verify that its rates are reasonably comparable. In that case, the FCC will require that the support recipient submit corroborating evidence of reasonably comparable rates from the web page or other marketing materials of the other mobile carrier that does serve urban areas.

Each competitive ETC receiving legacy high-cost support for mobile wireless service will be required to file an initial report of its current service offerings in each of its subsidized service areas detailing how it is using legacy support. Such information will include an indication of the highest level of technology deployed, a target date for when 5G broadband service meeting the performance requirements the FCC adopts today will be deployed within the subsidized service area (for any service area in which 5G has not been deployed), and an estimate of the percentage of area covered by 5G deployment meeting the adopted performance requirements (for any area in which 5G has been deployed). The report will also include infrastructure information on the cell sites that the carrier uses to provide mobile service within each subsidized service area in a standardized template. (This information will be treated as confidential.)

The FCC promises to terminate support payments to mobile competitive ETCs receiving legacy high-cost support that fail to comply with their public interest obligations and performance requirements.

IV. When Will Rural America Get 5G?

As noted above, the FCC is scheduled to vote on -- and approve -- the 5G Fund for Rural America on October 27. But it will be some time before the fund starts supporting rural 5G network deployment. First, the FCC must collect data on current wireless network reach in the U.S. So, although this decision may offer some hope for rural areas, people living there are left just imagining what 5G can do for them.

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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