The Proposed 5G Fund

The FCC is seeking public comments in a Notice for Proposed Rulemaking on how to determine the coverage areas and the timing for the new $9 billion 5G Fund. The money for the 5G Fund will come out of the Universal Service Fund. The 5G Fund is aimed at bringing cellular coverage to rural places that don’t have coverage today and will award the money using a reverse auction. The FCC is proposing to award $8 billion in the first round of auctions with $1 billion awarded later.

The FCC’s attempt to spend this money already has a checkered past. The FCC tried to award $4.5 billion of this same funding in 2019 under the name of Mobility Fund II. When preparing for that reverse auction the FCC asked existing cellular carriers to provide maps showing existing cellular coverage. It turns out that the maps provided by Verizon, T-Mobile, and US Cellular were badly overstated and smaller cellular carriers cried foul. The smaller carriers claimed that the overstatement of coverage was meant to shuttle funding opportunities away from smaller cellular companies. It felt eerily familiar to just watch Frontier and a few other big telcos make similar last-minute claims about their broadband coverage for the RDOF grants.

The FCC eventually agreed with the small carriers and canceled the auction last year. The $4.5 billion in funding from 2019 was augmented by an additional $4.5 billion and reconstituted as the 5G Fund.

The FCC is asking for comments on two different options for awarding the money. The first option would award the funds in 2021 based upon the best current cellular coverage maps available. This option would only award money to areas that have never had 3G or 4G coverage. The second option would delay the auction until 2023, by which time the FCC is hoping for better maps through a process they have labeled as the Digital Opportunity Data Collection initiative.

The need for this fund is further complicated by the T-Mobile / Sprint merger. One of the merger agreements made by T-Mobile is to cover 99% of the people in the country, including 90% of those living in rural areas with 5G of at least 50 Mbps data speeds within 6 years of the merger.

There doesn’t seem to be any logical way the FCC can award this money in 2021. By definition, they’d be awarding using grant coverage using maps that the FCC openly acknowledges are badly flawed. Maybe even more importantly, at this early date the FCC can’t know where T-Mobile plans to cover over the next 6 years. If the FCC proceeds now they will almost surely be spending money to cover areas that T-Mobile is already on the hook to serve. By using flawed maps, the FCC will almost certainly miss areas that need service that T-Mobile will not be serving.

The T-Mobile merger agreement also raises a serious issue about the size of the 5G Fund. The Fund was set at $9 billion before T-Mobile agreed to cover a lot of the areas that were proposed for funding in 2019. Isn’t the $9 billion now too high since T-Mobile will be covering many of these areas?

This raises a bigger policy question. Does the FCC really want to spend $9 billion to cover the last 1% of the US population with cellular when a much larger percentage of rural homes don’t have workable home broadband? Shouldn’t some of this money now be repurposed to fund rural broadband in light of the T-Mobile agreement to cover 99% of people with cellular coverage?

Finally, FCC Chairman Ajit Pai never misses a chance to overhype 5G. In the announcement for the NPRM the Chairman was quoted as saying, “5G promises to be the next leap in broadband technology, offering significantly increased speeds and reduced latency. The 5G Fund for Rural America focuses on building out 5G networks in areas that likely would otherwise go unserved. It’s critical that Americans living in rural communities have the same opportunities as everybody else.”

What the Chairman and the carriers are  never going to say out loud is that 5G is an urban technology. All of the coolest features of 5G only work when cell sites are close together. The areas covered by these grants are the most rural cell sites in the US and will be serving only a few people at any given location. Low density sites gain almost no extra advantage from 5G, so they will effectively act like 4G LTE sites forever. It’s even unlikely that a cellular carrier would bother using extra spectrum at a cell site with only a few customers. Such cell sites need only the basic 4G LTE coverage and spectrum bands, and it’s unlikely that these areas will get true 5G, regardless of the 5G name the FCC has attached to the funding mechanism.

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