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FCC to Delay $9 Billion Rural Broadband Push to Fix Data Flaws

Oct. 19, 2020, 9:00 AM

The Federal Communications Commission is poised to delay $9 billion in rural 5G subsidies for 18 to 24 months so it can fix mapping flaws that bar the agency from determining which areas need the service.

The holdup is the most recent delay in the FCC’s nine-year effort to pay wireless carriers to expand service to remote areas that otherwise are too unprofitable to serve.

The FCC scrapped a similar subsidy effort last year, after it found carriers’ maps exaggerated existing coverage areas, meaning locations that needed the subsidies wouldn’t have gotten them.

“It is truly unfortunate that it has taken so long,” said Carol Mattey, former deputy chief of the FCC’s Wireline Competition Bureau. “In the intervening years, obviously, consumers haven’t had service.”

The commission plans to vote Oct. 27 on an order that would create the new $9 billion effort to replace the program it scrapped. Under the order, however, the agency would wait to award funds until it evaluates new data it’s collecting on rural service locations.

“This approach won’t be the fastest possible path,” FCC Chairman Ajit Pai said in a blog post earlier this month. “But it will allow us to identify with greater precision those areas of the country where support is most needed.”

The replacement 5G program would distribute twice as many funds as its predecessor. As in the earlier effort, the subsidies would come from the agency’s Universal Service Fund, which is raised from monthly fees on consumers’ phone bills.

It will likely take until at least mid-2022 for the FCC to collect the data, putting the commission on track to start awarding the funding to carriers later that year, Mattey said.

That timeline assumes Congress appropriates the $65 million needed to fund the initiative next year, though there is bipartisan support to do so, Mattey said.

Flawed Broadband Maps

Rural areas continue to lag urban areas in mobile broadband access.

About 83% of rural Americans live in areas that have 4G LTE mobile with median speeds of 10/3 Mbps. That compares with 97% of urban Americans who have such coverage, according to the most recent FCC data.

The commission in 2011 addressed the concern by voting to establish a program that would distribute subsidies to expand rural mobile service in two phases. The agency auctioned off the first round of subsidies totaling $300 million to carriers in 2012.

It then moved forward with the larger, $4.5 billion funding phase in 2017.

For that phase, the commission relied on wireless carrier data showing areas the companies served. Smaller carriers complained that large rivals’ data overstated coverage, leaving some unconnected rural communities out of the running for subsidies.

An FCC investigation released in December 2019 validated the small carriers’ concerns. The agency concluded, however, that the data flaws did not merit enforcement actions against the companies, including T-Mobile US Inc., Verizon Communications Inc., and UScellular.

But the findings did prompt the FCC to abandon the 4G LTE program in late 2019.

“No amount of treasure is going to correct an unreliable map,” said Steven K. Berry, president of the Competitive Carriers Association, a trade group that represents smaller wireless carriers.

Companies Defend

UScellular defended its data collection process, saying it conducted the effort in accordance with FCC rules.

“We faithfully implemented the coverage map requirements as specified by the FCC with the knowledge that some of the parameters adopted by the FCC would result in overstated coverage,” Grant Spellmeyer, the company’s vice president of federal affairs and public policy, said in an email.

T-Mobile pointed to a December statement that stood behind the company’s maps. Verizon didn’t respond to a request for comment.

The FCC hopes to resolve the accuracy issue by collecting new, more precise data from wireless carriers for the new 5G program.

The process will require carriers to submit standardized mobile broadband data. Then, consumers, government officials, and other entities will be able to challenge the accuracy of the information.

Pai said in his blog that the new approach shows the FCC is “building upon lessons learned” with plans to distribute funds “based on improved mobile broadband coverage data.”

To contact the reporter on this story: Jon Reid in Washington at jreid@bloomberglaw.com

To contact the editor responsible for this story: John Hughes at jhughes@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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