FCC Chairman Ajit Pai continues his never-ending battle to bring workable broadband service to rural areas of our country with the release of a draft Report and Order (Order) in Docket 19-126. The Order would establish a new two-stage universal service support mechanism—the Rural Digital Opportunity Fund.

Pai anticipates the Commission will approve the Order at its January 30, 2020 meeting. In a January 9th News Release, the agency described the new Fund, which would be the largest dollar amount ever targeted toward closing the digital divide:

The Fund would be established using competitive bidding to target up to $20.4 billion over ten years to support up to gigabit speed broadband networks in areas that lack access to 25/3 [download/upload] Mbps broadband service and connect the most Americans in a cost-effective manner;

It would allocate up to $16 billion in Phase I for support targeting census blocks that Commission data show are clearly unserved by 25/3 Mbps broadband service and at least $4.4 billion in Phase II for unserved locations in partially served census blocks and areas not won in Phase I;

The Fund would encourage the deployment of networks that will stand the test of time, including those providing gigabit connections, by:
 

Increasing the minimum speed to 25/3 Mbps from the 10/1 Mbps used in the Connect America Fund Phase II auction;

Prioritizing support for services with faster speeds and low latency;

And once the reverse auction hits the clearing price, allocating support in each area to the bidder in the faster speed tier when there is more than one bid to serve that area;

The Fund would require winning bidders in Phase I to offer the supported broadband and voice service to all eligible homes and small businesses within the awarded areas, subsequently identified by the Wireline Competition Bureau;

It would prioritize support going to areas entirely lacking even 10/1 Mbps broadband as well as rural Tribal areas.

The dollars for the Fund will be allocated through a multi-round, reverse, descending clock auction that will favor faster services with lower latency and encourage intermodal competition. Funds will be allocated in two phases. Phase I will target those areas that current FCC data confirm are wholly unserved; and, Phase II will target unserved locations within areas that data demonstrates are only partially served, as well as any areas not won in Phase I.

According to the Commission, by relying on a two-phase process, it can move quickly and hold an auction this year for those areas it already knows are currently unserved. It would also ensure that remaining rural areas are not left behind by holding a second auction once it identifies any additional unserved locations through improvements in its broadband deployment data collection.

The Commission support for the Rural Digital Opportunity Fund will last for ten years. This is the same support schedule that was used in previous Connect America Fund CAF) auctions and encouraged robust participation.

The agency rejects requests from some parties arguing that the new Fund should wait until it has better data than the awful Form 477 data used today. It claims that this would be a meaningless delay since even with flaws in the current data, the areas of the country with no broadband service have been positively identified.

The Commission adopts interim service milestones for the Fund that are based on those it adopted for the CAF Phase II auction for monitoring progress in meeting deployment obligations. It will require support recipients to commercially offer voice and broadband service to 40 percent of the Connect America Cost Model (CAM) calculated number of locations in a state by the end of the third full calendar year following funding authorization, and 20 percent each year thereafter.

Finally, to ensure that support recipients are meeting their deployment obligations, the FCC adopts the same reporting requirements for the Fund that it adopted for the CAF Phase II auction. Thus, it requires Fund support recipients to file annually location and technology data in the HUBB at the same time and to make the same certifications when they have met their service milestones.

Let us hope the new Fund will provide the broadband service needed so urgently in rural areas. As Pai wrote in his January 8th blog:

The Rural Digital Opportunity Fund has the potential to transform the lives of millions of our fellow citizens in rural America and revitalize parts of our country that are currently being left out of our digital economy. That's why I hope that my colleagues will join me on January 30 in supporting this bold initiative.