FCC sets up rich exurb versus poor rural, urban debate over broadband subsidies

by Steve Blum • , , , ,

Should low income areas be first in line for broadband subsidies? That’s a question that both the Federal Communications Commission and the California Public Utilities Commission are asking. The CPUC is considering giving priority for California Advanced Services Fund infrastructure grants to communities where median household income is at or below $49,200 a year.

The FCC floated that same idea last week. In the course of approving limits on allowable expenses for some subsidised rural broadband projects, it decided to take the next step and ask for public comment on possible approaches: giving eligible consumers a theoretical choice of providers through a voucher system, adding household income to the criteria for picking eligible areas, or even basing federal subsidies on a state’s ability to pay…

For example, should we target support not only to high-cost areas but low-income areas as well? Should we adopt means-testing within the high-cost program? Either approach could target support where it is needed most by focusing only on areas or consumers with lower household income. Should we award support for high-cost areas through a portable consumer subsidy or voucher? Would a voucher system increase the choices available to consumers? Should we target support to States with less ability to fund the deployment of broadband in rural areas? How should we identify States that are most in need of support, and how can we do so while avoiding perverse incentives? Are there other alternatives we should consider?

Two commissioners, who are usually on opposite sides of issues but sometimes find common ground, both support a means-tested approach to subsidies. Mignon Clyburn and Michael O’Rielly – democrat and republican, respectively – began pushing for it last year.

For them, the question boils down to whether taxes on phone service – specifically earmarked for rural broadband subsidies – paid by people living in low income, urban areas should go towards upgrading broadband service in high income exurbs or resort communities. The FCC is asking the public to offer suggested answers.