Another FCC Giveaway

The FCC just voted implement a plan to give up to $4.53 billion dollars to the cellular carriers over the next ten years to bring LTE cellular and data to the most remote parts of America. While this sounds like a laudable goal, this FCC seems determined to hand out huge sums of money to the biggest telecom companies in the country. This program is labeled Mobility II and will be awarded through an auction among the cellular companies.

As somebody who travels frequently in rural America there certainly are still a lot of places with poor or no cellphone coverage. My guess is that the number of people that have poor cellphone coverage is greater than what the FCC is claiming. This fund is aimed at providing coverage to 1.4 million people with no LTE cellphone coverage and another 1.7 million people where the LTE coverage is subsidized.

Recall that the FCC’s knowledge of cellphone coverage comes from the cellphone companies who claim better coverage than actually exists. Cellphone coverage is similar to DSL where the quality of signal to a given customer depends upon distance from a cellphone tower. Rural America has homes around almost every tower that have crappy coverage and that are probably not counted in these figures.

My main issue with the program is not the goal – in today’s world we need cellphone coverage except to the most remote places in the country. My problem is that the perceived solution is to hand yet more billions to the cellular carriers – money that could instead fund real broadband in rural America. Additionally, the ten-year implementation is far too long. That’s an eternity to wait for an area with no cellular coverage.

I think the FCC had a number of options other than shelling out billions to the cellular companies:

  • The FCC could require the cellular companies to build these areas out of their own pockets as a result of having taken the licensed spectrum. Other than Sprint, these companies are extremely profitable right now and just got a lot more profitable because of the recent corporate tax-rate reductions. The FCC has always had build-out requirements for spectrum and the FCC could make it mandatory to build the rural areas as a condition for retaining the spectrum licenses in the lucrative urban areas.
  • The FCC could instead give unused spectrum to somebody else that is willing to use it. The truth is that the vast majority of licensed spectrum sits unused in rural America. There is no reason that spectrum can’t come with a use-it-or-lose it provision so that unused spectrum reverts back to the FCC to give to somebody else. There are great existing wireless technologies that work best with licensed spectrum and it’s aggravating to see the spectrum sit unused but still unavailable to those who might use it.
  • Finally, the FCC could force the cellular carriers to use towers built by somebody else. I work with a number of rural counties that would gladly build towers and the necessary fiber to provide better cellphone coverage. It would cost the cellular carriers nothing more than the cell site electronics if others were to build the needed core infrastructure.

This idea of handing billions to the big telecom companies is a relatively new one. Obviously the lobbyists of the big companies have gained influence at the FCC. It’s not just this FCC that is favoring the big companies. Originally the CAF II program was going to be available to everybody using reverse auction rules. But before that program was implemented the Tom Wheeler FCC decided to instead just give the money to the big telcos if they wanted it. The telcos even got to pick and choose and reject taking funding for remote places which will now be auctioned this summer.

That same CAF II funding could have been used to build a lot of rural fiber or other technologies that would have provided robust broadband networks. But instead the telcos got off the hook by having to only upgrade to 10/1 Mbps – a speed that was already obsolete at the time of the FCC order.

Now we have yet another federal program that is going to shovel more billions of dollars to big companies to provide broadband that will supposedly meet a 10/1 Mbps speed. But like with CAF II, the carriers will get to report the results of the program to the FCC. I have no doubt that they will claim success even if coverage remains poor. Honestly, there are days as an advocate for rural broadband that you just want to bang your head against a wall it’s hard to see billions and billions wasted that could have brought real broadband to numerous rural communities.

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