Category Archives: Regulation – What is it Good For?

Have We Given Up on Expanding Rural Cell Coverage?

The number one concern I hear from most rural counties today is no longer broadband connectivity, but the availability of cellular connectivity. While there may be a few exceptions, I don’t know of any rural counties that have good cellular coverage. All that differs among counties is the degree to which they have poor coverage.

At one point, the FCC had a plan to subsidize more rural cell towers that it labeled as the 5G Fund for Rural America. In August 2024, the FCC adopted preliminary auction rules for distributing up to $9 billion to support new rural cell towers, while also issuing an NPRM that asked for industry feedback on several issues related to the new plan. This was going to be funded out of the Universal Service Fund, in what seems like a replacement use for the second round of RDOF that never happened.

Chairman Carr dissented from the 2024 FCC order, saying that he supported the idea of a reverse auction to build more rural cell towers, but he thought it was premature to announce the new plan until the FCC knew more about the disposition of the $42.5 billion in BEAD grants. He thought it was vital that any new rural towers have access to fiber.

Several big things have happened since August 2024. BEAD got delayed when the new administration completely changed the rules and made the states start over. The FCC has also decided to reexamine the Universal Service Fund from top to bottom, and if you read between the lines, the agency doesn’t seem to be a big fan of ongoing rural subsidies. Congress is also supposedly examining a major rework of the Universal Service Fund and said recently they should be able to propose specific legislation soon.

But the biggest change is that there is suddenly huge amounts of money being poured into creating a satellite-based cellular industry. The folks behind that effort are making claims that D2D (direct-to-device) technology will solve the rural cellular issue since everybody will have cell coverage. There are a lot of players suddenly in this space. Not surprisingly, SpaceX / Starlink already has hundreds of satellites in orbit and was recently approved to launch 15,000 satellites. AST SpaceMobile is partnering with AT&T and Verizon. Globalstar originally pioneered Apple’s SOS emergency test service and was recently acquired by Amazon, which recently applied for licenses for 5,105 satellites. Lynk Global has partnered with more than 45 cellular companies worldwide. EchoStar and Viasat have also announced plans to enter the market.

Today’s blog asks if the FCC is now assuming that the commercial sector will take care of the rural cellular issue so they can wash their hands of the issue. I find D2D to be intriguing, but there are still a lot of unanswered questions about D2D’s ability to substitute for local cellular service:

  • Are the D2D providers really aiming to compete where there is no coverage today? SpaceX just paid an astonishing $8 billion for 800 MHz spectrum from Grain Management that is intended for D2D service. But this spectrum is intended to be used at terrestrial towers to reach customers, with the backhaul for the service provided by satellite. This might create a new cellular competitor in urban and suburban markets (or this might be more intended to bring competition to parts of the world where cellular is the only broadband technology). But this application won’t reach any rural customer who is already within range of a cell tower.
  • Can’t Work Indoors. A cellphone transmits at under 0.5 watts of power – the maximum power level set by the FCC. Cell signals lose from 50% to 90% of the signal strength when passing through a wall. While that usually is enough power to reach a cell tower located within 2-3 miles of your house, it’s probably never going to be enough power to reach a satellite.
  • Receiver Limits. Starlink is now achieving data speeds up to 300 Mbps download for home broadband. However, speeds will be far less for an outdoor cellphone due to the tiny size of the antennas. Receivers for Starlink range from 11.75 X 15.7 inches for the Starlink Mini to 22.7 X 20.1 inches for the higher-performance receiver. The typical cellphone has a receiver of around 6.5 X 7 millimeters, meaning that even the Starlink Mini receiver has 2,600 times more surface area for receiving a signal from the satellite than a typical cellphone.

It’s already clear from early tests that this technology is wonderful for providing a connection to 911 for somebody who is outdoors. It seems to work for voice calls. But that’s a far cry from this being a technology that would make rural cell coverage equivalent to urban cell coverage. It’s hard to see this supporting websites and videos, and even so, only outdoors. I fear D2D will deliver ‘good-enough’ connections to allow regulators to decide they don’t need to deal with the issue of rural cellular coverage. But folks who live in rural areas will understand the differences and won’t have much better coverage than they have today.

Courts Invalidate USAC

The Fifth Circuit Court of Appeals ruled last week that the FCC had exceeded its statutory authority  years ago when it established the Universal Service Administrative Company (USAC) to administer the Universal Service Fund.

The case in front of the court involved Consumers’ Research, which challenged the latest FCC calculation of the contribution factor used to establish the fee that telcos pay into the fund. Consumers’ Research had also challenged the FCC’s authority to establish USAC to administer the fund.

To provide some context, Congress established the Universal Service Fund (USF) in the Telecommunications Act of 1996. At that time, after some debate, the FCC decided that establishing a neutral non-profit was the best way to protect the operation of the USF from the impact of politics. It’s hard to understand the Court’s ruling, because USAC never acts on its own and is fully under the control of the FCC. The company is funded out of the fees collected to operate the USF. The FCC has always been free to audit USAC or to change the rules on how it operates.

In day-to-day practice, USAC is truly an administrator. The FCC still establishes the rules for every use of funds. This includes a variety of programs like the E-Rate program for schools and libraries, various programs to support communications for rural health clinics and hospitals, various subsidies that support rural broadband like RDOF and CAF II, and the Lifeline subsidy program that provides a small discount for broadband or cellphones.

USAC doesn’t establish the rules for any of these programs but is tasked with making sure that fund recipients are following the rules established by the FCC, including the ability for USC to audit USF participants. USAC’s primary day-to-day responsibilities are to collect fees to fund the program and to disperse the funds to participants in the various programs.

What does this ruling mean? The FCC has to first decide how it wants to respond to the court ruling. It’s been reported in the press that the FCC says the ruling goes into effect in two months if the agency doesn’t  appeal the ruling. If the FCC appeals the ruling, the most routine outcome would be a court ordering business as usual until that appeal can be heard. It’s not certain that the FCC will appeal the case, and if it doesn’t, things get messy very quickly.

The FCC would have to somehow try to take over USAC functions. The agency is not staffed to do so, which would likely result in chaos. It probably wouldn’t be easy, or even possible, for the FCC to somehow absorb USAC staff.

The companies that pay into the USF would be in limbo because the collection process would be disrupted. I picture legal challenges and confusion and possibly lawsuits related to whether telcos owe fees to the FCC, the federal Treasury, or to nobody. Disbursements from the fund would quickly be disrupted. That would be a major problem for the many entities that draw payments from the $9 billion annual fund. It’s hard to picture what happens when schools can no longer pay their broadband bill or ISPs suddenly stop receiving RDOF or other subsidies. Millions of people would likely lose their monthly billing discounts from Lifeline. USAC also has extensive audit powers, and it’s not clear that the FCC could insert itself into existing audits.

The only alternative to the above chaos would be if Congress quickly stepped in to provide some way to keep the USAC functions going. That sounds like a huge challenge in a lame duck session during the holidays. Stay tuned, because this could turn into something extremely messy.

Is Regulation Still Shaping Competition?

I was recently reading some older regulations related to copper, and this reminded me how regulation was used for many years to shape competition, or to be more precise, regulation was used to protect monopoly providers from competition. It got me to ask the question if regulation is still doing the same thing.

Telephone and related services were heavily regulated since the early days. Some states regulated telephone service as early as the 1870s, at a time when some cities saw a mad confusion of competitive copper wires being constructed like the picture on this blog in downtown Pratt, Kansas. Federal regulation of telephone began with the Mann-Elkins Act in 1910, which classified telephone companies as common carriers. In the 1913 Kingsbury Commitment, AT&T agreed to interconnect with independent telephone companies. In 1934, the Communications Act of 1934 moved telephone regulation into the newly formed FCC. States regulated telephone rates until the early part of this century, when most states backed out of the ratemaking role. The FCC and states together regulated massive parts of the telephone industry, and some of those regulations remain, but are dying with the dismemberment of copper networks. Telephone regulation is fading away with the death of copper networks. VoIP has largely been deregulated for years, although a few grant programs have required grant recipients to offer voice.

Cable companies began to be built in the 1960s and 1970s and were largely unregulated at first. Many cities and some states regulated cable companies through franchise agreements in order to stop a profusion of cable companies trying to get into the rights-of-way. The federal government stepped into cable regulation in 1984 with the Cable Communications Policy Act that explicitly recognized the authority of local governments to manage cable franchises and solidified cable companies as exclusive monopolies.

There is a lot of sentiment to deregulate cable companies to put them on the same footing with streaming providers. Cable companies would love to get out of regulations that force them to always carry local broadcast TV stations. Cable companies would really like to demolish the standard where they pay hefty franchise fees to use local rights-of-way that are greater than other users of the same facilities. It’s likely that cable regulations will eventually die as the percentage of the people who buy linear cable TV continues to decrease.

Broadband has only ever been saddled with minor regulation, although you would think they are regulated heavily by listening to the biggest ISPs. There has never been any attempt to regulate rates, although there are regulations related to consumer billing rights, privacy, and things like broadband labels.

So what’s left? Cell carriers are not heavily regulated outside of the rules that define how they can use any particular slice of spectrum. There are minor regulations related to consumer protection, and public safety considerations like Kari’s Law. The cell carriers didn’t need any regulatory approval to launch the massive FWA home broadband business, and just started to do it without any FCC approval.

Satellite companies are regulated in terms of the orbits they are allowed to use and the frequencies they can use to communicate between satellites and Earth. But there is very little regulation of the broadband products they offer, and the FCC and the Space Bureau have recently blessed using satellites for direct-to-device cellular service.

The one interesting place where regulation still rears its head is in the way that federal agencies decide how to spend federal broadband funds. The act of picking winners and losers took a serious turn when NTIA declared that satellite broadband was equivalent to terrestrial broadband. Declaring satellite to be equivalent to terrestrial technologies is a convenient way for NTIA to brag that they have finally solved the rural digital divide. NTIA has also decided that any electric cooperative that wants BEAD funding must submit to FCC pole attachment rules, A move in the opposite direction from light-touch regulation.

After thinking about it, I conclude that other than in the world of grants, there is almost no effective regulation in place today that favors one technology over another. Folks in the industry tend to focus on programs like BEAD that get a lot of press but forget that the locations covered by BEAD are a tiny fraction of the total homes in the country. For everything other than grant-funded networks, the trend seems to be toward reduced regulation over time.

New BEAD – Much Ado About Nothing

In my opinion, the BEAD grant program has been a rolling disaster since it was introduced. We saw how a good grant program works when the Capital Project Fund program operated by Treasury quickly dispersed infrastructure money and put it to use. Both programs were authorized around the same time, yet most of the projects funded by CPF are completed, or will be soon since a few projects got an extension until next June.

By contrast, BEAD construction has barely started. There are numerous reasons for BEAD delays, with the most recent delay when NTIA lost a year when it switched to the Benefit of the Bargain rules that drastically halved the funding awarded for infrastructure.

One of the original elements of the BEAD legislation was that money that wasn’t spent on infrastructure would be rolled into what the legislation termed non-deployment funds, which were intended to support broadband functions that supplemented and aided broadband. Many states expected to spend most or all of their BEAD funding on infrastructure, but after the Benefit of the Bargain, there is now over $21 billion of non-deployment. NTIA has been promising for the last year that it would issue guidance to states on when and how that funding can be used. NTIA held listening sessions earlier this year and asked for public input about how to best use the non-deployment funds.

To the surprise of nobody who has been following the BEAD trainwreck, NTIA pulled a fast one with the non-deployment funds. Rather than giving guidance on the $21 billion of non-deployment funds, NTIA has instead determined that some tiny portion of the non-deployment funds can now be used to build more infrastructure. That sounds really good on paper, because who’s not in favor of building more infrastructure?

As you might expect, because this is BEAD, the new grant process is complicated. First, NTIA is developing a list of eligible locations for the new funding. Some of these will come from ISPs that have already refused to accept the first round of BEAD. But it’s hard to think NTIA will find many other meaningful unserved locations. The agency has already claimed victory several times over the last year, saying that BEAD has basically solved the rural broadband gap – so NTIA doesn’t believe there are any pockets of locations that were missed by the original BEAD.

Once the list of locations is published, there is a tight time frame for states to deal with the new BEAD round. States will have 30 days to validate the locations. Next, each state would have to hold another quick map challenge process. As a reminder, the map change process was probably the most dysfunctional part of the original BEAD process – anybody who took part in the map challenges knows it was a disaster, end to end. After the map challenge, states have to submit their final locations to NTIA for approval, after which the states can hold a 90-day supplemental bidding round. I’m sure that NTIA will want to review tentative awards before they are made. States will then have to contract with grant recipients for the new awards. That likely means modifying existing BEAD lines of credit, and who knows what else. It’s hard to see this entire process playing out in less than a year, particularly since there are several steps that include an NTIA review and approval. It’s hard to see any of this new BEAD money being freed to ISPs until sometime into 2028.

All of this is a very convenient delaying tactic for NTIA, since it takes NTIA off the hook for providing guidance for the bulk of the non-deployment funds until the new infrastructure spending has been completely resolved through signing contracts with grant winners.

There is another little twist to consider in that infrastructure awards will be made at the average cost per location from the first round of BEAD. By definition, since all states have made awards for satellite broadband, the new BEAD average award will be lower than what was originally awarded for fiber. Add to this the fact that inflation has made it more expensive to deploy any terrestrial broadband technology, and I doubt that many fiber ISPs will be willing to take new awards a year from now at lower levels than the Benefit of the Bargain grants.

I titled this blog Much Ado About Nothing, because that’s what I expect out of it. I have a hard time seeing any meaningful numbers of locations getting infrastructure in the process, meaning only a small fraction of the non-deployment funds will be used in this process.

I’m hoping this will be my last blog on BEAD, because the process has grown too obtuse to keep writing about. This seems like a scheme for NTIA to delay any discussion about using the $21 billion of non-deployment savings for several more years. I expect most ISPs to ignore this new process, but states are going to be obligated to try to make the awards to somebody. Wouldn’t it be ironic if this ends up making new grants to the satellite providers at a much higher amount per location than what they accepted with the original BEAD? My inner conspiracy voice wonders if that’s the real intention of the new rules.

SpaceX Wants to End Rural Subsidies

SpaceX has now told the FCC multiple times that the agency should begin the process of phasing down and eliminating all rural high-cost subsidies from the Universal Service Fund. The company filed comments asking for the end of subsidies in FCC Docket 26-96, which is looking at reforming the High-cost fund for an all IP Future, and in Docket 10-90 that was looking at Universal Service Fund reform. In both filings, SpaceX says that its proliferation of low-orbit satellites means that rural subsidies are obsolete and are no longer needed. The company characterizes anybody who disagrees with it as a “subsidy-dependent incumbent”. SpaceX goes on to argue that the money currently spent on rural subsidies should be redirected to programs that lower the cost of broadband for low-income families.

It’s an interesting policy question that raises more questions about satellite broadband than it does about the rural companies that are receiving broadband subsidies. For example, the CAF II subsidy is being provided by a number of rural ISPs who use the subsidy to justify building and maintaining rural fiber, similar to what was done with the FCC RDOF.

I think the SpaceX request raises multiple policy questions. First, is satellite really providing broadband? Earlier this decade the FCC declared that Starlink was not providing broadband when the agency canceled the $885 million award Starlink had won in the RDOF reverse auction. At the beginning of this year, Ookla said that only 45% of Starlink customers were meeting the FCC’s definition of broadband at 100/20 Mbps. But Starlink’s speeds have been slowly improving, and will be boosted over the next five years as the company replaces the current V2 satellites with the new V3 satellites that provide 10 times more download capacity and 22 times more upload capacity.

As I have argued many times, the FCC’s 100/20 Mbps standard is no longer a reasonable definition of broadband. Recent data from OpenVault showed that 43% of U.S. households now subscribe to speeds faster than 500 Mbps download and 70% of homes subscribe to speeds of 200 Mbps or faster. It’s hard to look at these statistics and think that 100 Mbps is still an adequate definition of a good download speed. However, the real issue for satellite broadband is the upload speed. A large percentage of the homes cited by Ookla as having fast download also get far faster upload speeds than 20 Mbps. Fiber overbuilders are mostly providing symmetrical data speeds, meaning gigabit upload speeds. Cable companies across the country are upgrading the upload path and are delivering speeds of 50-100 Mbps at a minimum, and in some networks, gigabit upload speeds. The whole country learned during the pandemic that 20 Mbps upload is not adequate to support more than one user at a time – something the FCC has steadily ignored.

Another issue raised by the SpaceX request is whether Starlink provides a good substitute for voice service. Much of rural America lives in areas with little or no cellular service. The companies that receive high-cost subsidies all must pledge to offer voice service so that rural residents have access to 911. SpaceX argues that anybody with a satellite broadband connection can buy VoIP. That’s a true statement, but it raises two more policy questions of availability and affordability.

The companies receiving high-cost funding agree to service every home and business in their footprint. It’s pretty clear that Starlink can’t make that claim. While the company won’t disclose the number of homes it can serve in any given geography, there are examples, like last year’s Burning Man, where Starlink got overwhelmed by too many customers in a rural area.

I think the most important factor is affordability. Starlink’s price of $130 per month is a lot higher than other rural broadband options. Companies that receive high-cost support sell broadband for a lot less than $130, but more importantly, will sell voice-only to customers who don’t want broadband. It’s not reasonable that a rural household that can only afford voice and not broadband should have to spend $130 per month for satellite service.

In my mind, Starlink has to offer a different set of products if they want to declare that they can match the benefits that companies that receive high-cost funding bring to customers.

  • Starlink needs faster upload speeds, which it probably will eventually get as it phases in the V3 satellites.
  • Starlink would have to be able to serve everybody in a geographic area if it wants to see the subsidies end in a given area. I can envision a regulatory test similar to the one that cable companies have used to get regulators to declare a market to be competitive. High-cost subsidies should only stop in an area where every customer in the area could be served by a satellite instead.
  • Finally, Starlink would have to be a lot cheaper. If SpaceX wants to see the rural high-cost subsidies ended, it should offer lower broadband prices in those markets, including a really low-cost connection for voice only.

Fixing the Broadband Maps

There is a lot of talk about improving the FCC broadband maps. I published a blog a few weeks ago that described a bill passed by the Senate that would require a new review of the FCC broadband maps. The bill is labeled the Modernization, Accountability, and Planning (MAP) for Broadband Funding Act.

I’m all for changes that would create an accurate broadband map. But I’m fairly certain that the FCC is not going to consider making the changes that would actually improve the maps. The biggest problem with the current maps is that speeds claimed by ISPs are sometimes far different than what is being delivered. Fixing that would require the FCC to actually look at what’s in the maps and challenge ISPs that exaggerate speeds. I can’t imagine the agency adopting new rules that would saddle itself with that responsibility.

There is an existing tool that could be used  to compare claimed speeds to actual speeds. Ookla records millions of speed tests across the country for all ISPs. The FCC could buy the Ookla speed test records to compare against ISP claims. With AI and other new analytic tools, it wouldn’t be hard to compare Ookla speeds to FCC claimed speeds.

If speed tests were considered, ISPs would instantly yell that speed tests aren’t accurate enough to use to judge them. In many ways, they would be right. People often take speed tests when their broadband isn’t performing right. There are lots of homes where speeds are slower due to WiFi issues. A computer sitting close to the WiFi router will show faster speeds than a computer at the other end of a home. Many customers subscribe to lower speed tiers, which, by definition, don’t show the capability of the ISP.

But when large numbers of speed tests are used correctly, they are a valuable tool for understanding an ISP’s real performance. I’ve been lucky enough to work with counties that have purchased the full Ookla speed data set. Those tests provided them with enough data to do meaningful comparisons.

One of the things I learned in working with speed test datasets is that you must concentrate on the fastest speeds rather than average speeds. Doing so eliminates most of the concerns I discussed above. If an ISP claims data speeds of 100/20 Mbps to the FCC, but there are no speed tests over the course of a year that hit that speed, the ISP is exaggerating speeds. This kind of analysis can be used to ferret out exaggerated speed claims. This also worked in both directions – I’ve often seen faster speeds than the speeds claimed to the FCC, which means the ISP is underreporting speeds.

Speed tests can also be used to test broadband coverage claims. I was working with one county where a WISP was claiming coverage over more than half of the geography of the county. The Ookla speed test data for that ISP showed only a single speed test over the course of a year. It was clear that the WISP’s coverage claims were aspirational, not actual, and the County was able to use the Ookla results to challenge the broadband maps in the first BEAD map challenge. Without the Ookla tests, the County could not have made a map challenge, because the NTIA challenge rules wanted the County to find customers using the ISP in question and convince them to take speed tests. It’s obviously impossible to test an ISP that is not actually present.

Speed tests show all sorts of other interesting facts about ISP coverage. I’ve written several times in the past about how the speed for FWA cellular wireless quickly diminishes with distance from the tower. An FWA carrier might be delivering 300 Mbps to a customer within a short distance of a tower, but after a mile, speed drops to 100 Mbps. By two miles speed drops to 50-75 Mbps, and at three miles drop to the range of 25 Mbps. Most FWA speed claims in the FCC map will show 100 Mbps across the entire area around a tower, and much of that speed claim is overstated.

The FCC already spends a lot of money annually trying to get the mapping fabric right. But it’s pretty clear that the FCC doesn’t look at the speed data claimed by ISPs. The only time the FCC uses this data is when it published its annual report to Congress about the state of broadband. The FCC benefits by overstated maps since they tell a better story than what’s really available in rural America. If the FCC really wants to get serious about broadband mapping, why not buy the Ookla data twice per year to compare to claimed speeds?

Using Unlicensed Spectrum for D2D

The FCC recently adopted a Notice of Proposed Rulemaking that asks if it makes sense to give satellite providers access to unlicensed WiFi spectrum to support Direct-to-Device cellular service. The NPRM specifically looks at the use of 2.4 GHz and 5.8 GHz. The NPRM specifically rejected the idea of using 900 MHz for satellite service.

The FCC seems all-in on the idea of satellite cellular service and has taken a number of steps recently that favor this budding industry. However, Commissioner Anna Gomez, the only Democratic commissioner, voiced concern about how using this spectrum might affect the many devices that rely on WiFi spectrum today.

It seems like a valid concern. WiFi has turned out to be the most important and valuable spectrum we have. The whole broadband world seems to run off WiFi modems in homes and businesses. We have outdoor WiFi hotspots to provide outdoor broadband access. WISPs largely rely on WiFi spectrum to deliver fixed wireless broadband to rural homes.

It’s easy to understand why the FCC would consider this. The agency is facing huge demand for spectrum from multiple industries. Cellular carriers want more spectrum to get ready for the upcoming introduction of 6G. Cellular carriers also need to feed the rapidly growing FWA home broadband industry. Satellite companies have an insatiable demand for spectrum since they envision eventually launching hundreds of thousands of broadband satellites. And now, the satellite cellular companies want to blanket the Earth with competing networks to deliver outdoor cellular service, and the Direct-to-Device (D2D) carriers have already requested approval to launch tens of thousands of satellites to provide outdoor cellular service. There are more requests for spectrum than what is available, so the FCC seems willing to raid the public WiFi bands to support a new industry.

This is not the first time that the FCC has allowed others to share WiFi spectrum. A number of years ago, the FCC allowed cellular carriers to use WiFi spectrum in busy markets. I recall a report from university students in Chicago who had documented that cellular usage of WiFi had killed outdoor WiFi on their campus. I don’t know if cellular companies are still dipping into WiFi now that they have been able to get more spectrum, but this was a failed effort that favored the carriers over the normal users of WiFi.

What seems to be different today is that the FCC is unabashedly pro-satellite. They seem to be giving satellite companies everything they ask for. It’s not unusual for regulators to make it easy for new technologies – the FCC took a hands-off approach to the creation of the Internet. But there seems to be a lot of risk in allowing satellite companies to broadcast WiFi from space. This idea is clearly favoring satellite carriers over WISPs.

I talked to several wireless engineers about the proposed use of WiFi spectrum, and they all voiced concerns. The satellites would blanket the countryside with new WiFi spectrum. The engineers told me that it is impossible for this to be completely neutral for a WISP. Every outdoor receiver will perceive the new use of the spectrum as interference. They said there was no way to tell how bad this might be without trying it, and that sounds like a scary experiment if it turns out that the impact is severe. It’s easy for the FCC to allow a new use of spectrum, but it’s unlikely that it would be undone quickly if there is a problem.

This is out of character for the historically slow and cautious approach that the FCC has always taken with spectrum ideas. And that’s even more the case when we’re talking about WiFi spectrum, which has proven its value many times over.

Where Are the Missing BEAD Locations?

It seems that almost everybody I’ve talked to in the last week is wondering what NTIA is up to when the agency said that non-deployment funds can be used to serve locations missed by the first round of BEAD grants. The common question I’m being asked is where NTIA and State Broadband Offices are going to find more BEAD-eligible locations. It’s a great question.

I can only think of three sources of locations for that were missed by BEAD the first time around. One group of locations are the ones being turned back to State Broadband Offices when BEAD awardees decide not to accept a BEAD grant. The broadband offices have been trying to find other ISPs to take these locations at the original award price. But I already know of several examples where there are no takers – at least at the dollar level of BEAD that was awarded after the Benefit of the Bargain round. Perhaps NTIA will loosen the purse strings a bit to allow for higher awards for some of these locations. I’ve also hear speculation that unclaimed BEAD locations will all go to satellite.

This option is risky for NTIA. The first time an offer is made to a new ISP that is higher than the original award, ISPs everywhere are going to be clamoring for more money. One of the cooperative associations recently made that request. I can foresee lawsuits arising if NTIA allows increases in funding for some locations but not others.

Another potential source of locations comes from each update of the FCC mapping fabric, when new locations are added to the FCC map. Some of these are new construction, and others are corrections of the fabric. I can’t imagine that is a whole lot of places in this category, but there are always going to be some with each new map. What’s not being talked about is that with every release of a new fabric, there are also locations that are being removed from BEAD. NTIA is quietly whittling away at the BEAD grants that have already been awarded, and almost everybody I know with a BEAD grant is seeing some reduction in eligible BEAD locations.

The only other source of new BEAD locations I can think of would be from fixing the many errors introduced in the BEAD map challenge process. The only word I can use to describe the map challenge process is ludicrous. NTIA created a set of rules to challenge the BEAD maps that were impossible to comply with. I know counties, cooperatives, and other ISPs that made numerous claims to the map challenge that were denied. Many of these challenges tried to add legitimate locations that were missing from the fabric.

A much larger number of challenges tried to add locations where an ISP was falsely claiming speed capabilities of 100/20 Mbps or faster that were overstated. A successful speed challenge required a local government to find actual customers of suspect ISPs and get them to take a complicated series of speed tests at defined times and intervals. That whole process was largely unachievable, particularly when the map challenge process was rushed through. In my opinion, the folks who designed the map challenge rules were either completely out of touch with the real world, or else the process was rigged on purpose to hold down the number of BEAD-eligible locations. I’ve seen some credible estimates that there are at least a million locations that were incorrectly thrown off the BEAD map. My own back-of-the-envelope estimate, which is admittedly based only on work in about twenty counties, is that this could be more than two million locations.

I can’t imagine a process where NTIA reopens the map challenge with challenge rules that work. I could see that process dragging out for a year.

There is an easier way to do a map challenge, which would be for NTIA to buy the entire Ookla speed test database of actual speed tests and compare it against ISP speed claims in the fabric. I’ve already written a future blog about how that might work. But I suspect this would lead to lawsuits and chaos as ISPs fight to not get overbuilt with BEAD grant funding.

My gut reaction when I heard this announcement is that won’t amount to a hill of beans. I talked to several people who think this announcement is just another way for the NTIA to put off the announcement of how they will spend the remaining $22 billion in nondeployment funds. NTIA had promised to make that announcement before the end of summer – which is next week. I sure hope this was not that announcement, because I don’t think there is any hidden stash of BEAD-eligible locations that will use more than a tiny amount of the nondeployment funds.

The Consequences of Shutting Copper Networks

AT&T and Verizon (and now the newly purchased Frontier) have continued with their big push to shut down copper networks. There are good reasons to finally walk away from this obsolete technology. Copper networks are largely far past the end of economic life and are rotting on the poles. Vandalism is rampant since the price of copper is making it attractive for people to rip down copper for the resale value. A large majority of customers who have a good alternative have fled the copper networks, so there are fewer people each year on the remaining copper networks.

But there are still good policy reasons for not tearing down the networks. For many rural households, a telephone landline is the only way to reliably reach 911 or to make the daily calls needed to connect to doctors, banks, and other necessities of daily life. The FCC and state regulators have all said they support tearing down copper as long as customers have an equivalent alternative for voice. And that’s where the rub comes. The Internet is full of stories of people who have lost their copper with no alternative available. Unless a telco is replacing copper with fiber, they generally tell customers to change to wireless broadband. Everybody who lives in rural America knows that cell coverage is poor or nonexistent in much of rural America. But the lack of cell coverage doesn’t seem to be a deterrent for the big telcos that want to get rid of the copper.

People can always change to Starlink, assuming they live in a place where they don’t have to cut down a bunch of trees or put up an expensive tall pole to receive service. But this means replacing a $30 landline bill with a $130 Starlink bill. Even then, a customer has to be sophisticated enough to subscribe to a WiFi calling service through a web connection and worry about losing 911 when power goes out.

I recently read an article on Medium by Bruce Kushnick that points out another motivation for the big telcos to tear down copper. When a telco eliminates the last copper infrastructure in a state, it is theoretically no longer subject to Title II traditional regulation. The FCC and courts have rules that broadband and voice services carried across all other technologies are subject to Title I regulation as an information service.

This is a big deal that is not being talked about. Carriers subject to Title II regulation are required to offer just and reasonable rates. Title II carriers are subject to strict rules about protecting customer information. Title II carriers are subject to all sorts of rules for things like having specific rules about when and how a customer can be disconnected for nonpayment. Title II carriers are subject to mandatory obligations to interconnect with other carriers.

If a telco can change to become regulated by Title I rules, all of these regulatory obligations would go away. If a big telco could get every single customer off copper in a state, they’d have a good case to make that they are no longer subject to any Title II regulation. I’m positive that this is where AT&T and Verizon are headed. They would probably have to petition a state to make the change, but in most states they will win their argument.

An argument that can be made that smaller telco that has fully converted to fiber could petition to walk away from Title II regulation today. I haven’t heard of anybody who has tried this because there are still advantages to sticking with Title II regulation. Small telcos aren’t ready to cavalierly walk away from the ability to interconnect with other carriers. Many small telcos don’t want to lose the ability to participate in various subsidy programs funded by the Universal Service Fund or from similar State funds.

But if AT&T or Verizon are successful in walking away from Title II regulations, even if it’s only in a few states, then I expect we’ll see smaller telcos doing the same thing, particularly if the FCC guts the High Cost as it is contemplating. It’s odd that the whole Title II regulatory scheme is so closely aligned with copper, but that alignment is going to be challenged when the big telcos no longer have any copper.

FCC to Examine USAC

In its August meeting, the FCC adopted a Notice of Proposed Rulemaking titled Maximizing Efficiencies in Universal Service Administration Company (USAC) that looks at changing the rules governing USAC, the Universal Service Administration.

USAC is a non-profit corporation that was formed by the FCC after passage of the Telecommunications Act of 1996, which created the Universal Service Fund. The FCC decided to create USAC to administer the fund in order to shield the day-to-day operations of the USF from politics and the changes that always come after a change in administration. USAC has a single purpose, which is to operate the Universal Service Fund under guidelines established by the FCC and approved by the FCC.

The Universal Service Fund has been somewhat controversial since its formation. However, most of the controversy comes from the direction that the FCC gives to USAC. For example, USF is funded by fees levied against interstate revenues for voice services. Over the years, as the amount of voice services has dropped, the percentage of the fee levied against voice has increased. But this can’t be blamed on USAC since the FCC determines who should pay into the fund. There are many critics who don’t like the programs funded by the USF. But again, these programs were established by the FCC and not by USAC.

Chairman Brendan Carr issued a separate statement that said, “It has been nearly three decades since the FCC designated USAC—the Universal Service Administrative Company . . . In all of that time, there has never been a comprehensive review of USAC’s functions or organization.”

That’s not entirely true. In May 2023, Senator Ted Cruz asked the General Accountability Office (GAO) to examine USAC to see if the company is properly administering the USF. The GAO audit gave high grades to USAC.

The NPRM is a comprehensive review of USAC. The NPRM considers the following:

  • It asks for public comments on ways the agency can be more efficient.
  • The NPRM asks if there should be changes in the USAC appeal process when USAC accepts or denies challenges from USF recipients.
  • It asks if USAC should have a shot clock for some processes to force a decision to be made within a set amount of time.
  • Probably the most important part of the NPRM, and the likely reason for this docket, is a lot of questions to the public and proposed changes in the way that USAC audits USF recipients, and how the company handles fraud. Over the years, USAC and the FCC’s Enforcement Bureau have uncovered instances of fraud in the E-Rate, Rural Health, High-Cost, and Lifeline programs.
  • The NPRM asks if there should be an operational cost cap. It cites the company’s operating budget for 2025 at more than $266 million.
  • USAC uses subcontractors, and the NPRM asks for public comment on whether the subcontractors are knowledgeable.
  • The NPRM asks if there are better ways for USAC to report its annual results to the FCC.
  • The NPRM asks if the number of USAC board members should be reduced from the current size of 20 members, and if meetings must be held in Washington, DC rather than virtually.

The USAC audit is part of the FCC’s overall examination of the Universal Service Fund. The agency is separately examining individual components of USF like E-Rate, the High Cost Fund, and Lifeline.