Verizon, others win auction to bring rural broadband to 1.7M

More than 700,000 U.S. homes and small businesses in unserved rural America will get broadband internet connectivity as part of a just-completed auction overseen by the Federal Communications Commission. Broadband service to these currently unserved areas in 45 states – the equivalent of as many 1.7 million Americans – will be subsidized in part by about $1.5 billion in federal funds over 10 years.

Improved broadband services for rural broadband has been a focus for FCC Chairman Ajit Pai since being named to the post in January 2017 by President Donald Trump. Broadband access “is going to produce tremendous benefits for those communities,” Pai said.

Two years ago, the FCC devised the auction as a way to encourage providers to deliver broadband to areas that did not have access to high-speed internet. The agency set aside about $2 billion in the Connect America Fund, which comes from the Universal Service Fund all consumers contribute to through fees on their phone and internet bills. A separate $170.4 million from that amount has been set aside for New York state’s broadband subsidy program.

More than 220 companies participated in the bidding process, a “reverse auction” in which bidders that promised to deliver the best service for the lowest amount of FCC subsidies got to serve that region. The collective bids came in about $500 million lower than expected, so that funding will be rolled into future rural connectivity efforts, Pai says.

The 103 auction winners, announced Tuesday, included many small telephone companies and internet providers, as well as a big name: Verizon. More than half (53 percent) of homes and businesses that will be covered through the auction will get download speeds of at least 100 megabits per second. All locations will get at least 25 Mbps, the FCC said Tuesday. Providers must meet performance targets, such as 40 percent of coverage for homes within the locations they bid for within three years.

Verizon Wireless recently apologized for throttling the Santa Clara Fire Department’s service for exceeding its monthly data allotment, as the California fire department used the phone while fighting the Mendocino Complex Fire this month.

Additional similar auctions are planned next year.

Pai, who spent spent two years as a Verizon lawyer before returning to government work, eventually joining the FCC under President Barack Obama, cited declining investment in low-income rural and urban areas as one of the reasons to overturn Obama-era rules preventing internet service providers from blocking and throttling content. Those so-called net neutrality rules relied on utility-style authority based on Title II of The Communications Act of 1934 and overburdened ISPs and created a marketplace that led to less investment, he argued.

Net neutrality supporters and Democrats countered that the investment declines did not happen and that repeal was really a way of removing consumer protections. One study of the largest carriers, the basis for the FCC’s claim, showed investment fell over the two-year period the rules were in effect. But analysts say that was largely because AT&T, which like other carriers, was engaged in a competitive shift that likely played a role.

Two years ago, the FCC devised the auction as a way to encourage providers to deliver broadband to areas that did not have access to highspeed internet.