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Moving Forward with Rural Broadband

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Recently, the website The Conversation, which bills itself as a forum for academic analysis, posted a fascinating article on the implications of America's changing demographics. 


Authored by two Penn State professors whose research was funded by the NIH, the article begins by noting that, "Racial and ethnic diversity is no longer confined to big cities and the east and west coasts of the United States."

 

Specifically, the authors show how this trend toward greater diversity "is not limited to urban America. Dramatic increases are evident in rural places as well." Ninety percent of rural areas in the U.S. became more diverse between 1990 and 2010, they write.

 

The points raised in their article are particularly timely given the FCC's recent vote to promote rural broadband. As demographic profiles of small towns and communities continue changing, these communities' needs change too.  This makes their need for broadband access and connection speeds comparable to urban areas especially important.

 

Thankfully, it looks like Washington understands this. Last week, the FCC unanimously approved launching the second phase of its Mobility Fund, which funds expanding wireless voice and broadband services in underserved areas. The FCC also approved the next step in its Connect America Fund auction, which supports voice and broadband service deployment in under-served high-cost areas. 

 

The Mobility Fund order provides up to $4.53 billion during the next decade ($453 million per year for ten years) to expand 4G LTE coverage to areas that lack this service. The service will have at least a median speed of ten megabits per second (Mbps), which is enough to stream HD movies.

 

Interestingly, rather than using grants, the FCC chose to distribute these funds through a "reverse auction" system.  The plan is to have wireless companies compete against each other by submitting bids on rural coverage based on the number of square miles its service will cover. Commissioner Mignon Clyburn called the new system "a framework that will bring reasonably comparable mobile service to those who have been without."

 

While the goal is laudable and the implementation seems workable, the FCC's action does raise a legitimate concern over its likelihood of success.  As FCC Commissioner Michael O'Reilly noted in his endorsement, "While I certainly want to maximize the [benefits], if the requirements are unrealistic, we run the risk that potential bidders will decide not to participate or that providers will have to return funding several years from now."

 

This sort of auction problem would not be new to the FCC.  In the 1990s, when the FCC conducted its spectrum auction for PCS services, it implanted unrealistic guidelines and as a result, more than half the licenses from that auction were later returned for non-payment. This set back U.S. development of mobile broadband for years.

 

The FCC's Connect America Fund vote also involves an incentive auction.  The Commission voted to spend nearly $2 billion in incentives for fixed and wireless rural broadband deployment.

 

But overall, the FCC has taken an important step forward to support rural broadband. Chairman Ajit Pai has made expanded broadband access for all a signature goal of his Chairmanship and this is a tangible step forward.


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