A flood of funding for rural broadband

Earlier this year, Pew Charitable Trust’s broadband research initiative reported that nearly 24 million Americans, mostly in rural parts of the United States, do not have a reliable ...

High Speed Internet

Earlier this year, Pew Charitable Trust’s broadband research initiative reported that nearly 24 million Americans, mostly in rural parts of the United States, do not have a reliable high-speed Internet connection. This is after about 20 years of effort by both public and private organizations to increase broadband access. Pew is working on a comprehensive report analyzing the best practice of states in encouraging broadband.

But the federal government believes it has an important role alongside the states.  The FCC has released a flurry of funding over the summer intended to increase broadband in rural areas. 

For example, the agency authorized $4.9 billion in support over the next decade for maintaining, improving, and expanding affordable rural broadband for 455,334 homes and businesses served by 171 carriers in 39 states and American Samoa, including 44,243 locations in Tribal lands.

The support will go to smaller rural carriers, traditionally known as “rate of return” carriers, who agreed to accept subsidies based on the FCC’s Alternative Connect America Cost Model, or A-CAM. The homes and businesses are located in sparsely populated rural areas where the per-location price of deployment and ongoing costs of providing broadband service are high and require support from the FCC’s Universal Service Fund to facilitate network improvements and keep rates reasonable and comparable to urban areas.

In return, carriers must maintain, improve and expand broadband through their service areas. They must provide at least 25 Mbps downstream and 3 Mbps upstream. They will be held accountable through an enforceable schedule for delivering improved and expanded service, with the first interim deployment and expanded service, with the first interim deployment obligation occurring in 2022. 

Last week, the FCC proposed the establishment of the Rural Digital Opportunity Fund, which would allot $20.4 billion to expand broadband in underserved rural areas. More areas would be eligible for support than under last year’s Connect America Fund (CAF) Phase II reverse auction. The fund would also require faster service.

Via a Notice of Proposed Rulemaking, the FCC is asking for comment on whether to continue the expansion of broadband by using a reverse auction that builds on the CAF Phase II auction. The Rural Digital Opportunity Fund would focus on areas currently served by price cap carriers as well as areas not won in the CAF Phase II auction and those not currently receiving any high-cost universal service support.

Speaking of the CAF Phase II auction, the FCC has begun authorizing distribution of the $1.488 billion raised during the auction.  Eventually more than 700,000 unserved rural homes and small businesses will be served with broadband over the next 10 years thanks to the fund.

The first two authorization waves involved $166.8 million in funding to expand broadband to 60,850 unserved rural homes and businesses in 22 states and $111.6 million to expand service to 37,148 unserved homes and businesses in 12 states.  The majority of those locations will receive gigabit speed connections, where nearly 8,000 homes and small businesses on tribal lands will get fixed broadband service for the first time. The applications in those first two waves included the following:

  • Central Virginia Services, an electric co-op, is receiving $28.6 million to deploy gigabit connections to nearly 11,000 locations in rural Virginia.
  • NTUA Wireless is receiving $28.4 million to serve more than 7,000 homes and small businesses in tribal areas of Arizona, New Mexico, and Utah, while SW DinehNet will serve 869 tribal locations in New Mexico.
  • Co-Mo Comm, an electric co-op, is receiving nearly $22 million to deploy gigabit connections to more than 8,350 rural locations in Missouri.
  • Commnet of Nevada is receiving $23.6 million to provide service to more than 12,800 homes and businesses in 11 counties in rural Nevada.

The third wave involved $524 million to expand broadband to 205,520 unserved rural homes and businesses in 23 states. This was almost double the amount authorized in the first two rounds and serves twice as many homes and businesses. And the fourth wave of support authorized more than $121 million in new funding over the next decade to expand broadband to 36,579 unserved rural homes and businesses in 16 states.

The funding applications approved by the Commission in the third and fourth waves include the following:

  • AMG Technology Investment Group is receiving $281.3 million to deploy service to nearly 100,700 homes and businesses in rural Illinois, Iowa, Kansas, Nebraska, Oklahoma, and Texas, two-thirds of which will get service delivering speeds of 100 Mbps downstream/20 Mbps upstream, and the remainder at 25 Mbps/3 Mbps.
  • Crystal Automation Systems is receiving $27.2 million to deploy service to 17,610 homes and businesses in rural Michigan, most of which will get service delivering speeds of at least 100 Mbps downstream/20 Mbps upstream.
  • RiverStreet Communications of Virginia is receiving $32.1 million to deploy service to 13,518 homes and businesses in rural Virginia at 1 Gbps downstream speeds.
  • California Internet is receiving $87.8 million to deploy service to 11,845 rural California and Nevada homes and businesses at speeds of at least 100 Mbps downstream/20 Mbps upstream.
  • Northern Arapaho Tribal Industries, which is owned by the Northern Arapaho Tribe, is receiving $4.1 million to deploy service to 849 homes and businesses on the Wind River Reservation in Wyoming, all of which will get access to service delivering 1 Gbps speeds.
  • Tri-Co Connections is receiving $32.3 million to deploy gigabit service to more than 7,015 homes and businesses in rural Pennsylvania over its fiber network.
  • Midcontinent Communications is receiving $39 million to deploy service to 9,371 homes and businesses in rural Minnesota, North Dakota, and South Dakota, all of which will get service delivering speeds of at least 100 Mbps downstream/20 Mbps upstream.
  • Citynet West Virginia will receive $6.5 million over the next decade to deliver gigabit service over its fiber network to 898 homes and businesses in rural West Virginia.

Providers must build out to 40% of the assigned homes and businesses in the areas won in a state within three years. Buildout must increase by 20% in each subsequent year, until complete buildout is reached at the end of the sixth year.

Private industry is also getting in on the action. For example, Watch Communications and Microsoft (NASDAQ:MSFT) announced an agreement aimed at expanding rural broadband availability in Indiana, Ohio and Illinois. The partnership is part of Microsoft's Airband Initiative, which is focused on extending broadband access to 3 million people in rural America by July 2022.

Watch Communications plans to deploy a variety of broadband connectivity technologies to provide coverage, with an emphasis on wireless technologies leveraging TV white spaces in lower population density or terrain-challenged areas. The areas slated for connection include 50 counties in Indiana, 22 counties in Illinois, and most counties in Ohio.

In addition, Watch Communications and Microsoft will work together to ensure that once connectivity is available, people know how to use it and can get the training needed to participate in the digital economy, access educational opportunities and access telemedicine.

Watch Communications was a recent award winner of funds from the FCC to extend broadband services in Indiana and Ohio.

The partnership between Watch Communications and Microsoft is expected to cover:

  • More than 1 million people in Indiana, more than 440,000 of whom are in rural areas that are currently unserved
  • Approximately 2.5 million people in Ohio, more than 288,000 of whom are in rural areas that are currently unserved
  • More than 275,000 people in Illinois, more than 80,000 of whom are in rural areas that are currently unserved        
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