FCC $18B Subsidy Will Expand Rural Broadband

John Lister's picture

The FCC is to give more than $18 billion to broadband companies to expand rural provision. The subsidies will cover the next 15 years.

The funding is part of the "Enhanced Alternative Connect America Cost Model." It's based on the rationale that broadband access benefits society, but that private businesses don't consider it financially worthwhile to build networks in rural areas. That's because these locations require more cabling but with fewer potential customers.

The FCC has consistently reasoned that it's more efficient to subsidize private broadband carriers to expand their networks, rather than for the government to build the networks itself.

The new subsidy package will cover two main areas. In around two million locations, the money will cover maintaining and improving existing networks. In another 700,000 locations it will cover new network installation, which must be in place within four years. (Source: fcc.gov)

100 Mbps Minimum

In both cases, the service offered to the public will need to be at least 100 Mbps for downloads and 20 Mbps for uploads to qualify for the subsidies. That's above the FCC's official definition of broadband as 25 Mbps download/3 Mbps upload which it uses to measure national broadband provision and as a threshold for considering whether anti-competitive measures are harming consumers.

The FCC says it will coordinate with other funding programs to stop carriers double-dipping with multiple subsidies for providing service to the same location.

Consumer Charges Uncertain

The official announcement of the funding doesn't make any mention of how much the carriers can charge consumers when they provide the service. That could be an issue given that they will inherently have a monopoly when they first complete the networks.

There's also some controversy over whether fixed-line broadband is the best target for public subsidies to improve rural connectivity. The FCC has previously been skeptical about subsidizing alternative methods such as the Starlink satellite Internet technology. (Source: theregister.com)

What's Your Opinion?

Is this a smart use of public money? Is 100 Mbps a suitable minimum threshold for home broadband? Would it be better to target connecting every home, even at slower speeds?

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