FCC announces $20 billion rural broadband program

The Federal Communications Commission has established a new program to expand broadband build-out in rural areas. The Rural Digital Opportunity Fund, which would replace the Connect America Fund, will give out $20.4 billion in subsidies for broadband network construction over the next decade, Jon Reid reports for Bloomberg Law. Money for the subsidies would come from the agency's Universal Service Fund, which consumers fund through fees on monthly phone bills. The subsidies would be distributed through a reverse auction to broadband providers.

"The first phase of funding, $16 billion, will go to areas where FCC data shows all buildings lack broadband service. The remaining $4.4 billion will be allocated later, based on more precise location data, to connect unserved buildings near structures that may already have service," Reid reports. "The agency’s two Democratic members criticized the commission for allocating most of the funds without using the more precise data."

Broadband maps are based largely on data self-reported by major carriers; carriers have incentive to exaggerate their rural coverage so they can qualify for rural subsidies. Moreover, an area counts as "covered" if only one household has high-speed internet. The FCC voted last August to require broadband providers to submit more in-depth data, but FCC Chair Ajit Pai "said the agency couldn’t afford to wait for the more accurate broadband data collection when so many rural Americans continue to lack broadband access," Reid reports.

The two Democratic commissioners also criticized the plan for barring funds from going to states, including New York, that already spend a significant amount of their own money on expanding rural broadband. Pai said such exclusions were necessary to get the money where it is needed, Reid reports.

In addition to this broadband fund, the FCC is working on a $9 billion subsidy program to bring 5G wireless to rural areas.