Increasing broadband coverage not only supports rural communities through access to the internet, improved job opportunities and enhanced access to services such as telemedicine and educational materials, it is also a boon to service providers looking to tap into new markets. Fortunately for both parties, the FCC’s campaign to bring internet to large rural parts of the U.S. is finally beginning to come to fruition.
In 2013, it took the first tentative steps via an initiative designed to kickstart the digital revolution in underserved areas. Earlier this year, it took the final steps towards Connect America Fund II, and bidding for federal funding to create new broadband infrastructure in rural communities begins on July 24, 2018. Ladies and gentlemen, get your bids ready.
Connect America, now
The Connect America Fund II (CAF II) holds more than $2 billion in its coffers. The FCC plans to distribute these funds to broadband providers over the next ten years in an effort to spur better coverage of underserved areas. The FCC is executing its plan via reverse auction, so providers get to bid on the areas and tasks that the agency is planning to serve. (The agency has developed a map of its target areas so providers can see areas of interest and plan how they can address consumer needs.)
Providers bid on groups to serve specific census blocks. To apply, broadband providers must take part in a detailed, two-step process. The short form application is the first step, which must include demonstrable experience in providing service and three years of supporting financial documentation.
After bidders are selected from the short form application pool, they will need to generate the paperwork for the long form application, which includes a letter of credit from a qualified bank, as well as additional information about the service provider’s qualifications. Successful bidders will need to provide annual accountability reports and attain specific benchmarks to remain in the program.
Funding America’s internet
What really happens after CAF II is anyone’s guess: Government programs have a tendency to start well and finish poorly, but that does not mean that will happen for this broadband initiative. There are numerous highly motivated broadband providers who could successfully deliver on their promise to bring internet to underserved areas.
There are also equally motivated interests that do not necessarily have free-market competition as a core part of their business. And not all of the issues would be on the service side, either. There are already challenges cropping up at the FCC, where agency officials are haggling over specific interests, such as delivering broadband to tribal lands.
Other rural broadband funding programs are also making inroads. For example, the Rural Utilities Service (RUS) is charged with distributing $600 million in grants and loans to entities interested in connecting underserved communities. The Remote Areas Fund is designed to help promote service in the most expensive census blocks that fail to obtain providers under CAF II. There is also the CAF III, which is the continuation of a process the FCC started in 2015 to support providers that were targeting high-cost areas, and the rate-of-return and ACAM-based High-Cost Program, which supports smaller phone companies in rural regions.
Access for all
Speedy, reliable internet access is vital to creating strong, well-connected communities. There is still opportunity for both large telcos and smaller broadband providers. As the federal government steps up assistance for broadband delivery, expect to see increasing numbers of providers throwing their hats into the arena. Competition is good for customers, and it is great for America.