Pai FCC’s First Commission-Level Vote Targets Rural Broadband Access

On January 26, 2017, in its first action under the leadership of Chairman Ajit Pai, the Federal Communications Commission (FCC or the Commission) voted to allow the State Of NY to award up to $170 million in Connect America Fund (CAF) fuding to expand broadband access in unserved, rural portions of New York State. These federal funds will be coupled with at least $200 million in state funding and private investment.

The federal funds will be allocated as part of CAF Phase II through a competitive bidding process as part of the New NY Broadband Program.

In 2011, in the USF/ICC Transformation Order, the FCC created the Connect America Fund as a means of expanding broadband Internet access in rural areas. The fund is a targeted subsidy program that enables broadband deployment in high-cost areas where providing service wouldn’t be economically feasible for carriers absent subsidies.

The USF/ICC Transformation Order also created the Mobility Fund, which focuses on increasing mobile broadband and voice services in areas that would otherwise lack coverage.

Bridging the Digital Divide

Chairman Pai has been a longtime proponent of expanding broadband access in rural areas. In a speech in September of 2016, he laid out his “Digital Empowerment Agenda”—a series of policy priorities which revolve around spurring broadband deployment and innovation.

In this speech, he stated “there is a real and growing digital divide in this country… Americans living in the poorest counties are twice as likely to lack [broadband] access as those living in the most well-to-do. And access traces our rural-urban divide: 39% of rural Americans and 41% of those living on Tribal lands lack adequate access.”

To expand rural access, Chairman Pai proposed a three-pronged approach:

  • License Extensions: Increase wireless carrier coverage obligations in rural areas and strengthen rural broadband investment incentives by extending license terms to 15 years.
  • Mobility Fund Reform: Enter Phase II of the Mobility Fund while utilizing tech-neutral performance metrics, and reassess the fund’s overall size and specific allocations based on current needs.
  • The Rural Dividend: Set aside 10% of the money raised from spectrum auctions for rural mobile broadband deployment.
On January 24, 2017, in his first speech to FCC Staff, Chairman Pai reiterated his commitment to expanding rural access and narrowing the digital divide, claiming “[w]e must work to bring the benefits of the digital age to all Americans.”

The Rural Opportunity

Chairman Pai’s opening action sends a clear message – rural broadband deployment is a high priority for his Commission. Each year, the Universal Service Fund allocates $4.5 billion to support broadband and voice services in rural areas. Moreover, Congress is currently considering proposals to pass an omnibus infrastructure bill, and one of the proposals would seek to allocate $20 billion in funding to expand high-speed broadband access in unserved and underserved areas.

Kelley Drye’s Communications practice group specializes in federal and state universal service law, and stands ready to help interested parties understand the scope of this opportunity. Should you have any questions, please contact the authors or your regular Kelley Drye contact.