Fixed wireless providers may soon be competing with wireline cable companies and others for subsidies to serve unserved rural areas in the Connect American Fund Phase II reverse auction. As the FCC always strives to be technology agnostic, the coming reverse auction to provide fixed internet service will be open to either wireless or wireline bidders.
“The Connect America Fund for rural broadband infrastructure is a positive step forward for the country,” said Jaime Fink, CTO and cofounder, Mimosa Networks. “Reducing the obstacles we face in deploying new wireless broadband technologies is critical as these technologies can deliver affordable low-latency, high speed connectivity to rural areas, which the FCC considers highly important.”
In the reverse of a normal auction where companies try to outbid each other for a chunk of spectrum. This contest will go to the company that says it can provide service for the least amount of money. They must provide their own spectrum or wireline assets to do so. Of course, bidders must meet certain standards for their services. They must be able to provide broadband speeds of 10 Mbps downlink and 1 Mbps uplink (10/1).
They will be bidding on clusters of eligible areas where the household do not have access to 10/1 Mbps speed service. To be eligible an area also can’t be served by a company that is already subsidized. Additionally, it has to be an area where there is a high cost to get service to the residents.
More than 24 million Americans don’t have high-speed fixed broadband, according to the FCC, which is 8 percent of the U.S. population and 30 percent of rural Americans. For example, nearly 17,500 rural homes and businesses in Minnesota are currently unserved by high-speed Internet service, according to the Union Times.
Last Monday, the FCC opened the application window for the Connect American Fund Phase II reverse auction, which will distribute nearly $2 billion to support fixed broadband. The Connect America Fund was created in 2014 as a program of the Universal Service Fund as a way to close the digital divide in rural areas.
Chairman Ajit Pai attempted to persuade small broadband operators to take part in the reverse auction and to help close the digital divide in a speech at the American Cable Association’s annual conference this week.
“I strongly encourage ACA members to take a hard look and consider competing to serve eligible areas,” he said. “Indeed, without any subsidies, you’ve already built out networks that reach 840,000 homes in areas that the FCC has identified as the most expensive to serve.” Industry publication Telecompetitor notes that cable companies were not big players when the FCC tested reverse auctions in rural areas in 2014.
“The [Connect American Fund] emphasizes efficiency. With limited resources, we need a big bang for each buck. That’s one reason we’re using a reverse auction to distribute Connect America Fund dollars. By one estimate, reverse auctions can lower the cost of connecting an area by 20 percent,” Pai said.
The auction will provide opportunities for new and existing providers using a variety of technologies, including phone companies, fixed wireless, satellite, cable and rural electric lines. Applications are due March 30 and the auction is scheduled to begin on July 24.
Mimosa’s Fink was concerned that the flexibility of the FCC’s auction rules may mean large, national carriers will bid in the auction and crowd out the small, local providers, which are better suited to serve the rural areas.
“Connect America Fund must recognize regional and small wireless ISPs,” he said. “In order to truly fulfill the intent behind the CAF fund, new dedicated wireless broadband spectrum, and a fair share of federal funding must be made available to small and regional businesses, which have the drive to connect local communities. If these inducements are reserved only for the mega-carriers, this well-intentioned initiative to provide better connectivity in rural America will amount to nothing more than a pipe-dream.”
J. Sharpe Smith
J. Sharpe Smith joined AGL in 2007 as contributing editor to the magazine and as editor of eDigest email newsletter. He has 27 years of experience writing about industrial communications, paging, cellular, small cells, DAS and towers. Previously, he worked for the Enterprise Wireless Alliance as editor of the Enterprise Wireless Magazine. Before that, he edited the Wireless Journal for CTIA and he began his wireless journalism career with Phillips Publishing, now Access Intelligence. Sharpe Smith may be contacted at: [email protected].