FCC’s rural broadband subsidy reboot proposes faster speeds, but performance is still a question

by Steve Blum • , , ,

Paicines pole route

Broadband service at 25 Mbps download and 3 Mbps upload speeds “is not a luxury” reserved for people who live in cities and suburbs, according to a draft FCC notice that kicks off the process of rebooting federal broadband service subsidies for rural communities. In August, the FCC plans to vote on a draft notice of proposed rulemaking that would open the door to comments and proposals – from any interested party – regarding how to spend “at least” $20.4 billion earmarked for the “rural digital opportunity fund”.

It’s a reboot of the FCC’s Connect America Fund (CAF), which mostly gave money to monopoly model telcos, such as AT&T and Frontier Communications, to provide slower service – 10 Mbps down/1 Mbps up – in California and in other states where they thought they could get a sufficient return on investment by providing upgraded rural broadband service. Subsidy rights for the remaining communities they skipped, for one reason or another, were auctioned off last year. The winners were the companies that promised the fastest service for the least subsidy dollars.

That’s a process that the FCC proposes to repeat. Broadband service subsidies would go to the lowest bidder in an eligible community, instead of automatically given to the incumbent telco. The definition of “eligible” would change, too…

Consumers’ demand for faster speeds has grown dramatically—and the market has largely been able to deliver. Speeds of 25/3 Mbps are widely available, and 25/3 Mbps is the Commission’s current benchmark for evaluating whether a fixed service is advanced-telecommunications capable. Thus, the item proposes a 25/3 Mbps service availability threshold as the basis for establishing eligible areas.

Providers would be able to bid at three speeds levels: 25/3 with a 150 monthly gigabyte cap, and 100 Mbps down/20 Mbps up and 1 gigabit down/500 Mbps up with a 2 terabyte cap. That’s similar to how last year’s CAF auction was organised, except that this time around 10/1 service would not be acceptable.

There are a couple of problems with the FCC’s proposal as it stands. The 25/3 minimum is inadequate – research done last year by the Central Coast Broadband Consortium and the Monterey Bay Economic Partnership identified 100/20 as the threshold for acceptable rural (and urban) service.

Another concern is performance. AT&T and Frontier claim to be meeting their build out requirements, but there’s a year to go before the final deadline and they’ve been evasive about details, so we won’t really know until then, at the soonest, if they’re telling the whole truth.

Last year’s auction winners in California were wireless Internet service providers (WISPs) that made very aggressive coverage and service level promises. Those, too, will have to be verified over the next few years to see if the FCC’s proposed “technology neutral” funding policy produces the desired results.