On August 29, the FCC released a Second Report and Order that officially kicked off the process of launching the 5G Fund for Rural America. The FCC says in the order that there are 14 million Americans without access to 5G, and they are going to provide a $9 billion subsidy fund to bring better rural cellular coverage. Today’s blog will look at the key aspects of the order. There is a second blog today that talks about the possible need for quick action by communities in response to this order. There will another blog tomorrow discussing some of the issues with the order.
The idea of the 5G Fund has been around for a while. The idea was floated to create a $4.5 billion fund in 2019, and in 2020 the FCC announced it would increase the fund to $9 billion and use a reverse auction. The 2020 effort came to an abrupt halt when it became clear to the FCC that the maps of coverage provided by the largest cellular carriers were highly inaccurate. The FCC has taken steps to make better maps, and cellular carriers must now report cellular coverage data to the FCC twice a year in a process that parallels the collection of broadband data that this blog has often discussed. In this new order, the FCC says that it believes the cellular maps are now adequate to enable the launch of the 5G Fund.
The funding will be awarded using a reverse auction that is only open to cellular carriers. The 5G Fund can be awarded to areas of the country that don’t have at least one carrier with a 5G mobile wireless speed of at least 7/1 Mbps, is not in an urban area, and contains at least one home or business and some portion of a road. In practical terms, that means funding for rural areas that have no 5G today (just 4G LTE) or that have 5G claimed to be slower than 7/1 Mbps. Areas that don’t have any 5G today will get extra weighting in the reverse auction.
There is a further nuance that an eligible areas can’t already be getting a benefit from an existing FCC cellular subsidy. Many folks probably don’t realize it, but there has been a rural subsidy paid to cellular providers for years from the Universal Service Fund. Mobility Fund Phase II has been providing up to $500 million per year of support to rural cellular carriers. Unfortunately, the FCC’s cellular map doesn’t identify the areas that are being subsidized.
There will likely be changes made to the existing FCC maps before an auction. For example, both T-Mobile and Dish have to meet build-out requirements due to negotiated agreements with the FCC that have not yet all been completed – the final 5G Fund map should remove areas where that will be upgraded.
Winners of the reverse auction must upgrade 40% of the area in each state by the end of 3 years, 60% by the end of 4 years, 80% by the end of five years, and 85% by the end of six years. Completion means achieving a median speed of at least 35/3 Mbps with a minimum cell edge speed of 7/1 Mbps. It also means offering at least one service that includes a minimum monthly data allowance equal to the average U.S. subscriber data usage. That’s going to mean a data cap at some amount of data usage and possibly also a limit on voice and texting.
$765 million of the fund will be reserved for tribal areas. $900 million will be used as a 10% award additive to anybody willing to guarantee the use of Open RAN technology.
Service areas will be made up of hex-9 areas aggregated into census tracts. Bidding will be done using dollars per square kilometer.
The FCC might only issue the eligible area map 30 days prior to the start of the bidding. There will be a preview map issued earlier based upon vintage BDC mapping data.