Policy & Funding

FCC Auction to Fill in Rural Broadband Gaps

• By Dian Schaffhauser
• 08/22/17

The Federal Communications Commission (FCC) recently announced that it would open an auction next year to address gaps in broadband services around the country. The Connect America Fund Phase II auction (otherwise known as "Auction 903") will award up to $198 million annually for 10 years to service providers that commit to offer deliver 10 Mbps-caliber voice and broadband services to fixed locations in unserved high-cost areas. This project is mop-up work left from funding not issued in a previous Phase II competitive bidding process because none of the winners wanted it; it represents about 23 million people living in rural areas.

The auction is scheduled to begin in 2018. This will be the first auction, according to an FCC public notice, to award ongoing high-cost universal service support through competitive bidding in a "multiple-round, reverse auction." In a reverse auction, instead of buyers raising their bids to win the goods, they underbid each other in subsequent rounds to come in with the lowest bid.

The FCC is still working out the details of the auction, such as who will be qualified to participate, how bids will be submitted and how they'll be processed to determine the winners and assign the amounts they'll win. The agency's hope is that providers will pursue a strategy of aggregating geographic areas in which to construct networks. The current thinking is that census block groups will be used as the minimum geographic area for bidding. These each contain about 39 census blocks, of which about 300,000 are currently eligible (out of a nationwide total of about 11.2 million). However, that approach might change after the FCC evaluates public commentary on its plans.

According to coverage on MeriTalk, Microsoft could be a contender. In July the company issued a whitepaper with its "best ideas for a new national rural broadband strategy." As Microsoft President Brad Smith wrote in a blog article about the whitepaper, the plan his company proposes would use "TV White Spaces," the unused spectrum in the UHF television bands, for reaching those individuals who live in communities with a population density of between two and 200 people per square mile. Those in areas with less density would receive satellite coverage; those in higher density areas would gain access to fixed wireless and limited fiber to the home. Smith's estimate of the cost: $8 billion to $12 billion — "roughly 80 percent less than the cost of using fiber cables alone, and ... over 50 percent cheaper than the cost of current fixed wireless technology like 4G."

"As a country," wrote Smith, "we should not settle for an outcome that leaves behind more than 23 million of our rural neighbors. To the contrary, we can and should bring the benefits of broadband coverage to every corner of the nation."