Tag Archives: connect america fund

FCC approves new broadband subsidy and data collection programs, but each ignores the other

by Steve Blum • , , ,

The Federal Communications Commission will be asking for comments on its plan to spend, at first, $16 billion and eventually $20 billion on rural broadband subsidies, with a minimum speed requirement of 25 Mbps down and 3 Mbps up. It’s also moving ahead with a new broadband availability data collection process, based on electronic map files, rather than spreadsheets. The two initiatives were approved at yesterday’s FCC meeting.

Both democratic commissioners – Jessica Roseworcel and Geoffrey Starks – objected to the republican majority’s blind acceptance of broadband availability data submitted by Internet service providers as a basis for deciding where subsidies should be spent.

Rosenworcel said in a statement that the new subsidy program relies on the same bad data as the old Connect America Fund program…

There’s something fundamentally wrong here. We do not start with maps. We do not start with data. In fact, take a look at the draft rulemaking before us and it barely mentions the fact that we have a separate proceeding we are voting on today involving maps.

In fact, this rulemaking rushes past that effort and simply proposes a successor to our existing Connected America Fund, distributing $16 billion dollars before any new data comes before this agency. Before any new maps are developed. I understand the impulse to move fast. I know that we should be working at warp speed to get modern communications to too many places that have waited too long for digital opportunity. So let’s do it. But let’s commit to doing it right.

This is putting the cart before the horse.

The new availability data collection process should eventually result in more accurate maps, but there’s no firm timeline for it to get underway. Rosenworcel’s objections are a good example of another big problem with it: collecting the data is one thing, but getting agencies to upgrade their systems and their analytical skills to effectively use it is a problem that’s yet to be solved.

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.

Don’t expect fast rural broadband from AT&T or Frontier, lobbyists tell CPUC

Ernestine

Judging from presentations made by AT&T and Frontier Communications lobbyists at a California Public Utilities Commission workshop on Monday, the companies have no plans for significant upgrades to rural broadband service, comparable to urban improvements, despite taxpayer subsidies. Which doesn’t bode well for a $2 trillion infrastructure spending deal announced yesterday in Washington, D.C.

Rural broadband infrastructure was one of the few specific items that came out of a meeting yesterday between president Donald Trump, house speaker Nancy Pelosi and senate democratic leader Chuck Schumer. But there’s good reason to wonder whether the $2 trillion promised for broadband infrastructure for “our great farmers and rural America”, as Trump’s press secretary put it, will be spent in a useful way.

On Monday, Ross Johnston and Charlie Born, staff lobbyists for AT&T and Frontier Communications respectively, talked about ongoing efforts to upgrade infrastructure using federal Connect America Fund (CAF–2) subsidies. While repeatedly ducking direct questions from commissioner Martha Guzman Aceves and others about what their employers are doing (as did lobbyists for Comcast and Charter Communications) they made it clear that the best they’ll commit to is the slow 10 Mbps download and 1 Mbps upload (10/1) speeds required by the Federal Communications Commission. Which they won’t have to deliver consistently, according to FCC specs.

Johnston said AT&T is working to upgrade 141,000 rural Californian homes and businesses to 10/1 service by next year’s CAF–2 deadline, but more than half of those customers – 84,000 locations in 40 counties – will be stuck with low capacity fixed wireless links, instead of improved wireline connections. Born didn’t mention Frontier’s plans to do the same, but he likewise wouldn’t promise anything better than 10/1, even though he claimed the company is deploying advanced VDSL and fiber technology that should be capable of much faster speeds.

The CAF–2 program was designed by the FCC to funnel subsidies to incumbent telcos, at least to the extent that they were interested in taking the money. It is apparently the blueprint for a new $20 billion rural broadband program vaguely announced by FCC chair Ajit Pai during his moment in the oval office sun a couple of weeks ago. Although Pai embraced the higher 25 Mbps down/3 Mbps up standard adopted by the federal agriculture department last year, it’s by no means certain that any new money would go towards service at even that level.

Pai promises $20 billion for rural broadband, but offers little hope for meaningful change

by Steve Blum • , , ,

It makes for good headlines for a slow Friday at the white house, but so far that’s about all that’s resulted from a $20 billion pledge to support rural broadband development. Federal Communications Commission chair Ajit Pai joined president Donald Trump to hype 5G plans and spectrum auctions, and tossed in a new rural broadband initiative at the end.

Sorta.

Pai’s “Rural Digital Opportunity Fund” is just the next reboot of the long standing Connect America Fund (CAF) subsidy program, that similarly poured billions of dollars into rural broadband projects, according to a story by Jon Brodkin in Ars Technica

The new program will be part of the Universal Service Fund (USF), and it will be similar to an existing USF program that began during the Obama administration. In 2015, the USF’s Connect America Fund (CAF) awarded $9 billion for rural broadband deployment—$1.5 billion annually for six years—in order to connect 3.6 million homes and businesses…

At $2 billion a year over ten years, the fund will provide more money each year over a longer period of time than the CAF program it would replace…

In an email to reporters, Pai’s office said the Rural Digital Opportunity Fund will “provide up to gigabit-speed broadband in the parts of the country most in need of connectivity.”

Arguably, CAF caused many of the problems that Pai now says he wants to solve. The program was custom designed to funnel taxpayer money to big, incumbent telephone companies, who, in return, promised to deploy slow speed, low capacity service – 10 Mbps download and 1 Mbps upload speeds, often via bandwidth-limited fixed wireless systems – by the end of next year.

There’s no indication that the FCC’s telco-centric approach will change, or that subsidised rural broadband service will be significantly better than what’s been deployed in the past. There are tight restrictions on how USF money can be spent and who can get it. The game was rigged by telecoms companies a long time ago and the problem is only getting worse.

Promising “up to gigabit speed” service doesn’t really promise anything. Last year, Pai embraced the 25 Mbps down/3 Mbps up standard adopted by the federal agriculture department, but even that is mired in the past – homes and businesses need access to speeds of 100 Mbps down/20 Mbps up just to keep up with current demand.

FCC embraces 25 Mbps down/3 Mbps up standard for faster rural broadband

by Steve Blum • , , , ,

The biggest, by far, broadband service and infrastructure program in the U.S. is the Federal Communications Commission’s Connect America Fund, which is handing out $3 billion$590 million in California – over the next decade. It’s been paying that money to Internet service providers – mostly incumbent telephone companies – who promise to provide a minimum service level of 10 Mbps download and 1 Mbps upload speeds.

That standard is about to be raised to 25 Mbps download and 3 Mbps upload speeds for some telephone companies because, an FCC draft decision says, “we recognise that access to 25/3 Mbps broadband service is not a luxury for urban areas, but a necessity for all”.

Just so.

It’s good news, and the republican majority on the FCC deserves credit for putting it on next month’s meeting agenda: approval is a virtual certainty. It’s a big step in the right direction, but it’s not mission accomplished yet.

In its draft, released just ahead of the Thanksgiving holiday, the FCC proposes to offer additional money to telephone companies that fall under the “rate of return” rules, if they upgrade their broadband infrastructure to support the 25/3 standard. There are different scenarios for how they might qualify for the extra money, and doing so is largely optional – the FCC would still subsidise 10/1 service.

“Rate of return” telcos are those that are still regulated based on costs and a particular return on their investment. The two biggest telcos in California – AT&T and Frontier Communications – do not fall into that category. They operate under the newer and inappropriately named “price cap” rules that let them charge as much as they want for broadband service (there are limits on telephone service charges, but not so strict that it makes a significant difference). A third, mid-sized telco in the Sacramento area, Consolidated Communications, is similarly unregulated, as is CenturyLink, which serves a few dozen homes along the Oregon border in Modoc County.

Small, rural telephone companies are regulated by the California Public Utilities Commission under the “rate of return” rules, though, and the new FCC incentives would apply to them.

The FCC said its decision to begin raising the standard was “informed by our recent auction to award universal service support in eligible areas”. In that auction, ISPs submitted bids to provide a particular level of service in return for a particular subsidy, with higher speeds and better quality getting preferential treatment. According to the FCC, 99.7% of the homes and businesses getting subsidised service as a result will be able to get 25/3 speeds or better.

The FCC’s move matches an earlier decision by the federal agriculture department to raise the minimum standard for its rural broadband subsidy programs to 25/3.

We are not so lucky in California, though. AT&T, Frontier, Comcast, Charter Communications and other big telecom companies paid key lawmakers tens of thousands of dollars each, and hundreds of thousands of dollars in aggregate, this past legislative session. In return, lawmakers approved a $300 million broadband subsidy program, courtesy of Californian taxpayers, that lowered California’s minimum acceptable broadband speed to 6 Mbps down and 1 Mbps up.

California WISPs win $149 million in FCC broadband subsidy auction

by Steve Blum • , , ,

Internet service providers – most, if not all, wireless – will get $149 million in federal subsidies to serve 52,000 homes and businesses in California over the next 10 years. The Federal Communications Commission’s Connect America Fund (CAF 2) auction ended this week. Bidders competed for money to provide broadband service in census blocks bypassed by the main CAF 2 subsidy round in 2015.

Although California didn’t proportionately have as many census blocks and locations on the table as some other states, it came out very well in the bidding, gaining 10% of the total money on offer. The FCC hasn’t released the list of census blocks auctioned off though – all we know so far is the name of the companies, the total dollar amount and the total number of subsidised locations, plus the range of technology and service levels options that the companies might have offered.

Three of the companies are wireless Internet service providers – Cal.net, Geolinks and Hankins Information Technology – and a fourth, Viasat, is a satellite broadband company. Frontier Communications also grabbed a little cash for a couple dozen locations, but it’s not clear what type of technology they’ll be using. They told the FCC that one of their options in California is to deliver Internet service via fixed wireless facilities, but exact details haven’t been posted yet.

Cal.net’s service area centers on Mother Lode counties, and Geolinks is based on the central coast. But that doesn’t mean that’s where the money is going – they could have submitted bids anywhere in California. Hankin is a relatively new and unknown company based in southern Santa Clara County.

Subsidised service levels haven’t been published, either. All three WISPs included “baseline” service – 25 Mbps download/3 Mbps upload speeds – as an option. Cal.net also listed “minimum” – 10 Mbps down/1 Mbps up – and “above baseline” – 100 Mbps down/20 Mbps up – as possibilities, and Geolinks put “above baseline” on its list too. Frontier filed in all four categories, including “gigabit” – 1 Gbps down/500 Mbps up. Viasat only ticked the “baseline” category, albeit with high latency.

The scorecard reads…

Cal.net, $51 million for 21,000 locations.
Geolinks (aka California Internet), $83 million for 11,000 locations.
Hankins Information Technology, $2 million for 1,000 locations.
Frontier Communications, $52,000 for 23 locations.
Viasat, $14 million for 19,000 locations.

FCC lowers rural speed standard to 8 Mbps down, 800 Kbps up

by Steve Blum • , , ,

Internet service providers who get Connect America Fund subsidies from the Federal Communications Commission have to use the money to deliver service at a minimum of 10 Mbps download and 1 Mbps up load speeds, in most cases – effectively all cases in California so far. Last week, the FCC defined what that standard really means: subsidised carriers have to run quarterly speed tests that show they’re hitting 80% of the required speed, 80% of the time. As the FCC explains in its order

For example, if a carrier receives high-cost support for 10/1 Mbps service, 80 percent of the download speed measurements must be at or above 8 Mbps, while 80 percent of the upload speed measurements must be at or above 0.8 Mbps.

The required testing process is reasonably rigorous. ISPs can choose the method they use, but the tests have to be run during peak usage times – defined as 6pm to midnight – and measure speed and latency all the way from a customer’s home to (or through) an FCC server, and back. So subsidised ISPs – primarily AT&T and Frontier Communications in California – will be held responsible for their middle mile capacity as well as the final hop to subscribers. Customers have to be randomly selected, but AT&T and Frontier are only obligated to test 50 locations each, although it could end up being more, particularly for Frontier, because it does business in California under subsidiary companies.

It’s not unreasonable to expect a network that’s specced at 10 Mbps down/1 Mbps to deliver 8 Mbps down/800 Kbps up most of the time. But it’s also reasonable to expect a company that’s accepted taxpayer subsidies to deliver service at 10 Mbps/1 Mbps to build enough overhead into its system so it can meet its obligations, most of the time. Unfortunately for rural California, the FCC chose the latter.

Few Californian ISPs make the cut for FCC rural broadband subsidy auction

by Steve Blum • , , ,

At least 13 Internet service providers with some kind of presence in California qualified for the upcoming federal rural broadband subsidy auction that’s scheduled for next month. The Federal Communications Commission released the final list of qualified bidders in the Connect America Fund auction round yesterday. Nationwide, a total of 220 companies qualified, and 57 were axed.

None of the ISPs on the list are obligated to bid for rural territory in California. The FCC didn’t release any information on which states the companies are interested in. On the other hand, any of the 220 qualified companies might be interested in serving California. Or already be here – it’s possible I missed some when I went through the list.

The two major incumbent telcos – AT&T and Frontier – can participate. Frontier was apparently able to overcome its low financial rating, which was one of the FCC’s qualification criteria. AT&T is represented by its mobile unit, which is a good indication that it doesn’t plan to expand its wireline network in rural California, with or without subsidies. But you knew that. They’re joined by Consolidated Telephone, which has a small service area around Sacramento.

Comcast and Charter Communications aren’t participating, but two second-tier cable companies are on the list, Cox Communications and Suddenlink’s parent Altice. So are two satellite companies, Viasat and Hughes Network Systems.

Verizon and Windstream qualified as bidders. Verizon is major mobile carrier, and both companies offer various services to businesses in California, but neither is likely to be looking this way when the auction begins. Verizon unloaded its Californian systems on Frontier two years ago, and Windstream has little or no infrastructure here.

The remaining four are all wireless ISPs: Cal.net, Conifer, Geolinks and DigitalPath.

The auction includes a mix of mostly rural census blocks around the U.S. that weren’t included or claimed in the initial subsidy grab in 2015. It’s a reverse auction – the FCC has set a maximum subsidy it’s willing to offer in any given area, and ISPs bid down from there. The available money almost certainly isn’t enough to cover all the areas on the table, so some will be left out.

Dozens of ISPs qualify to bid on FCC broadband subsidies, hundreds more in line

by Steve Blum • , , ,

Almost three hundred companies could be bidding for broadband service subsidies when the Federal Communications Commission begins auctioning off unserved rural territory across the United States. The FCC received 277 applications from companies that want to participate in the Connect America Fund program’s reverse auction, which is scheduled for late July.

Only 47 are good to go, though. The other 230 companies – including Frontier Communications – didn’t fully complete their applications, in the eyes of the FCC. They’ll have until 5 June 2018 to fix whatever problems they have.

AT&T and Verizon are in. Expanding wireline broadband service doesn’t seem to be top of mind for AT&T, though. It joined the auction via its “New Cingular Wireless” subsidiary – its mobile arm, in other words. That’s consistent with AT&T often stated intention of replacing rural broadband networks with wireless service. Verizon, on the other hand, left the door open for both its mobile or wireline companies to take part.

Comcast is represented, sorta. It owns half of Midcontinent Communications, a regional cable company based in South Dakota which submitted a complete application for the auction. Given that Midcontinent serves mostly rural and small market communities, it probably has a genuine – and limited – interest in some of the available territories.

Only one unambiguously Californian Internet service provider is on the complete list, Geolinks, a Ventura County based wireless ISP.

The auction has a lot of moving pieces. The FCC published a maximum subsidy for every remaining eligible area – i.e. where broadband service at 10 Mbps download/1 Mbps upload speeds aren’t available. Companies will, presumably, bid each other down until the lowest price wins. But, they’ll also get extra points if they propose higher speeds or better quality of service metrics. Then, all the winning bids for all the areas have to be ranked – the FCC only has about $2 billion available, versus a total reserve price of $6 billion.

The odds of every unserved community making the cut are extremely low.

Federal broadband subsidy auction doesn’t favor California

by Steve Blum • , , ,

California could, in theory, get as much as $476 million in broadband upgrade subsidies from the Federal Communications Commission’s upcoming Connect America Fund (CAF) auction, but the actual total is likely to be a lot less.

Eligible broadband service providers will bid against a “reserve price” that the FCC sets as the maximum it will pay to fund broadband service at a minimum of 10 Mbps download and 1 Mbps upload speeds in (mostly) rural areas that lack it. It’s a reverse auction – providers will start with the reserve price and bid down from there.

Kern County is in line for the most money – $37 million – and Sutter County is up for the least – less than $10,000. But there’s no guarantee that either will get anything. The FCC has a total of $2 billion to hand out, against a nationwide reserve price total of $6 billion. Presumably, the reverse auction will bring that $6 billion total down, but it’s unlikely, to say the least, to go as low as $2 billion. So some, maybe most, eligible communities will be out of luck.

The eligible areas are a mixed bag. Some are classified extremely high cost places to serve, while others are part of statewide sets that incumbent telcos turned down in the last CAF round. For example, AT&T accepted $360 million in its Californian territory, but took a pass on Nevada. The FCC’s computerised process for determining eligibility produces a checkerboard effect regardless, but even so statewide batches will be more attractive to bidders than the extremely scattered extremely high cost census blocks.

Aside from 45 homes and businesses on the Oregon border in Modoc County, all of California’s eligible areas are either in the extremely high cost category, or in the equally random miscellaneous bucket. Which means we start at a disadvantage.

The auction is scheduled to begin in late July.