Rural Digital Opportunity Fund

The  Universal Service Administrative Company (USAC) submitted projections of demand and administrative expenses for federal universal service support mechanisms for the fourth quarter of 2023. The Federal Communications Commission's Wireline Competition Bureau, in consultation with the FCC's Office of Managing Director, previously directed USAC to carry forward up to $211.50 million in unused funds from prior funding years to the extent necessary to satisfy funding year 2023 Rural Health Care program demand.

Charter Communications has frequently talked up the pace of its rural deployments, reaching 68,000 subsidized rural passings in the second quarter (Q2) of 2023. CFO Jessica Fischer said the Charter has a “tremendous opportunity” to expand its footprint to rural areas. Charter was one of the largest winners in the Rural Digital Opportunity Fund (RDOF) auction, and Fischer noted progress in those builds “has been going quite well” in terms of pace and penetration.

In rural areas, many large internet service providers (ISP) offer voice-over-IP. Nathan Smith, Director of Economics and Policy at Connected Nation said, “It’s likely that a lot of [Broadband Equity, Access, and Deployment (BEAD)] sub-grantees will add voice for an additional revenue stream." However, the BEAD Notice of Funding Opportunity does not require grant applicants to offer voice service, though the actual grants will be made by state governments who set their own rules. Ciena’s Solutions Marketing Senior Adviser Vinicius Santos expects some state broadband offices to ask applicants

LICT completed its spinoff of Michigan Broadband on August 31, 2023. The spinoff company is now known as MachTen. LICT, a rural broadband consolidator with operations in several states, withdrew from the Rural Digital Opportunity Fund (RDOF) program due to “substantial cost increases and other significant changes within the organization since we first participated and won in the RDOF public auction.”

Highline completed the construction of “The Thumb” service area, now offering fiber broadband to over 8,000 households in Sanilac, Tuscola, Lapeer, and St. Clair (MI) counties. Highline’s 823-mile fiber optic network was built with a combination of private investment backed by ITC Capital Partners and the Federal Communications Commission's Rural Digital Opportunity Fund (RDOF) grant program. While representing 14% of Highline’s total RDOF location commitment, Highline was able to complete this geographic portion of the network in two years rather than by the end of 2027.

The Congressional directive in the Telecommunications Act of 1996 is for the Federal Communications Commission (FCC) to ensure that there be specific, predictable, and sufficient Federal and State mechanisms to preserve and advance universal service. The dilemma is that the source of Universal Service Fund (USF) programs is end user (i.e. retail) revenues from international and interstate wireline and mobile services, as well as revenue from providers of interconnected Voice over Internet Protocol (VoIP) services.

A tour of the remaining United States Digital Divide from a home in Quincy (CA) to an unserved farm in Newton (NC) to a home in Troy (AL).  These locations (and more) are from a random sample of BEAD-eligible unserved and underserved locations that are not part of the Federal Communications Commission's Rural Digital Opportunity Fund (RDOF) or Alternative Connect America Model (A-CAM) programs. 

We could theoretically reach 94% of the Unserved and Underserved locations nationally. We only miss 750,000 locations. The biggest misses by percentage are Iowa (61% of Unserved and Underserved), Idaho (66%), Illinois, Kansas, and California (all 71%), Minnesota (76%), and Colorado and Nebraska (about 80%). I find it helpful to think about this as a simple math problem: how far the money might go can be estimated by multiplying the number of locations that need service times the average cost to serve them. There are 11.9 million Unserved and Underserved locations nationally.

As what we can do with the internet has expanded, so too has the way we connect, and how we use it—at home and on the go. In the United States today, it has become the norm for a majority of households to have two types of subscriptions to the internet—mobile data for their phone and fixed (and for the most part) wireline service for their residence. Over 75 percent of households whose annual incomes exceed $50,000 have cellular data and wireline broadband subscriptions. For households below that level, 44.7 percent have both types of subscription plans.

Municipal leaders are on the front lines of the digital divide, responding to the needs and concerns of the communities they serve.