FCC skeptical about magic wireless solutions as it sets rules for rural broadband subsidy auction

3 June 2020 by Steve Blum
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Magic radio 625

The Federal Communications Commission will push ahead with its plan to distribute $16 billion (of an eventual $20 billion total) in broadband subsidies via a reverse auction in late October. In a draft notice that will be finalised at its June meeting next week, the FCC lays out rules, procedures and standards for Internet service providers that want to submit bids for money from the Rural Digital Opportunity Fund. It also rejects a request from the California Public Utilities Commission to delay the auction for four months.

ISPs that plan to us magic radios or decrepit copper networks to deliver gigabit or other high performance level service will – correctly – face skepticism from the FCC…

While an applicant will be permitted to select the Gigabit performance tier in its application if it intends to use fixed wireless or DSL technologies…such applicants face a high burden to persuade Commission staff that it is reasonably capable of meeting the public interest obligations and thus qualified to bid for the Gigabit performance tier. Particularly for DSL services, we do not anticipate that an applicant using DSL technologies would be able to demonstrate that it is reasonably capable of offering a service that meets the Gigabit performance tier public interest obligations absent a hybrid approach that relies mostly on fiber. Likewise, given distance limitations, spectrum and infrastructure constraints, tower siting requirements, required upstream speeds, and required minimum monthly usage allowances, we expect it will be similarly challenging for a fixed wireless provider to make a case that it can offer a mass market service meeting the Gigabit performance tier public interest obligations…This is so especially for entities lacking an operational history of offering Gigabit service in rural areas. Accordingly, we expect that relatively few fixed wireless and DSL technologies will be able to meet the short-form requirements for bidding in the Gigabit performance tier.

Wireless and DSL-based bidders that want to try anyway have to submit detailed technical information, but the FCC warns them not to play games…

We remind potential applicants that they are certifying under penalty of perjury in their short-form applications that they are technically qualified to meet the public interest obligations for each performance tier and latency combination they select. The Commission may initiate enforcement proceedings against applicants that submit threadbare or wholly unrealistic technical showings.

Although eligibility is defined at the census block level, bidding will be done by census block group. A company that wins a bid for a given census block group will have to serve all the eligible locations within it. It’s a good choice from a Californian perspective. The alternative was to use census tracts, which are larger (i.e. are made up of multiple census block groups). That would have been fine for the homogenous midwestern plains, but rural California is more geographically, economically and demographically diverse and needs a more granular approach.

The final list of eligible census blocks and subsidy amounts hasn’t been published yet. Last week, the CPUC asked the FCC to disregard the long list of dubious challenges to census block eligibility submitted by ISPs that want to fence off large swaths of California from broadband upgrades so that they can continue to profit from the low performance, high cost service they offer to captive customers. The FCC is yet to respond.

The notice does a lot of other things. It details procedures for the 29 October 2020 auction and sets out a schedule leading up to it, starting with opening the registration window on 1 July 2020, and closing it on 15 July 2020. Application requirements – a short form before the auction and a long form for winners afterwards – is detailed, along with rules for the auction itself. The short form might not be all that short, though. The FCC will use it to initially “assess the likelihood that an applicant would not default”, with more intense due diligence coming after the auction.

Rural Digital Opportunity Fund phase 1 auction Procedures draft public notice, 19 May 2020