FCC to Create 5G Fund

On December 4, FCC Chairman Ajit Pai announced a plan to create what he is calling the 5G Fund. This new fund will replace the already planned $4.5 billion Mobility Fund Phase II Fund and adds another $4.5 billion. The fund has been renamed to suggest that 5G will bring faster broadband to rural America.

The original goal of the Mobility Fund II was to expand 4G LTE coverage to the most rural parts of the country where there is no cellular coverage today. While preparing to award that fund, the FCC figured out that the 4G coverage maps for the biggest cellular companies were significantly overstated. This caused the FCC to pause the Mobility Fund Phase II awards, and they are now rolling that money into this larger new fund. There are things to both love and hate about this announcement.

Some of the Things to Hate:

I hate that the 5G hype got rolled into this announcement. Consider the following from Pai’s announcement:

5G has the potential to bring many benefits to American consumers and businesses, including wireless networks that are more responsive, more secure, and up to 100 times faster than today’s 4G LTE networks. . . . We want to make sure that rural Americans enjoy these benefits, just as residents of large urban areas will. In order to do that, the Universal Service Fund must be forward-looking and support the networks of tomorrow.

That statement is incredibly misleading. The only new technology that is 100 times faster than 4G LTE is the use of millimeter wave spectrum. Millimeter wave spectrum is only faster when the transmitters are fiber-fed. This fund is not going to be used to build the fiber needed to bring millimeter wave hot spots to the most rural parts of America. That technology only broadcasts fast broadband for less than 1,000 feet, so it’s likely to never be economically viable to bring this technology to remote places. Unfortunately, the Chairman’s statement is going to make rural people think they might be getting broadband that is 100 times faster.

I also hate that Chairman Pai used this same announcement to announce that AT&T and Verizon have massively overstated their 4G coverage maps. One would expect there to be some sort of regulatory repercussion for those companies exaggerating their coverage areas. The big carriers have been accused of overstating coverage to limit how much of the Mobility Fund Phase II went to smaller carriers. Instead of punishing the big carriers, this announcement glossed over the bad behavior and instead rewards them by doubling the size of the fund. I’m guessing that the fund doubled in size to cover the areas that the carriers had erroneously claimed as having cell coverage. At the end of the day, this fund is another big dollar giveaway to the biggest carriers in the country. I know this money should greatly improve rural cellular coverage – it’s just getting a bit tiresome watching this FCC hand everything imaginable to the biggest carriers.

I also hate that this order is not likely going to require that any new fiber built using federal money be made available to others. These billions will be used to construct a lot of fiber to rural cell towers and that fiber would be a great launching point for competitiors that want to bring better broadband to rural areas. You might recall that the broadband grants that came from the stimulus program required all fiber constructed with federal funds be made available to ISPs at affordable rates. However, when money is given to the big carriers – in this program and in the CAF II program – there is no such requirement.

Some of the Things to Like:

This reconstituted fund still keeps the primary goal of the original Mobility Fund Phase II, which is to bring better cellular coverage to areas that don’t have it today. I visit rural America regularly and it’s not hard in rural places to drive out of cellular coverage. Hopefully, this fund fills many of those coverage gaps. I’m always amazed when I come upon a small community in an area with zero cellphone coverage. We talk all of the time about the broadband gap, but for many folks, there is a more fundamental connectivity gap.

I also like that some of this money will go to the smaller cellular carriers that already serve in rural America. I have faith that they’ll use the money more wisely than the big carriers. The fund will operate as a reverse auction, and I hope that the many smaller cellular carriers can win the money in places where they already have better networks than the big carriers.

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