Rural Broadband

At its April 23, 2014, Open Meeting, the FCC took several actions designed to expand robust broadband offerings in rural areas. The FCC said that its plans for Phase II of the Connect America Fund (CAF) would result in a nearly 70% increase in annual support for broadband and voice service in areas served by the price cap incumbent local exchange carriers (ILECs) and would expand broadband access to an additional 5 million Americans. Over five years, Phase II of the CAF will provide nearly $9 billion to expand broadband in rural areas.



Under Phase II of the CAF, if a price cap ILEC declines the offer of support for all high-cost locations it serves in a given state, the subsidies will be made available to other providers through a competitive bidding process. To help ensure the success of the competitive bidding process, the FCC streamlined the process for allowing non-traditional providers, such as cable operators, satellite providers, and electric cooperatives, to become eligible for support.


Since 98 percent of the population in urban areas has access to fixed broadband at speeds of 10 Mbps or more, the FCC is considering whether to increase the download speed required for subsidized broadband networks from 4 Mbps to 10 Mbps. In addition, due to the rapid private sector expansion of 4G LTE mobile broadband service since 2011, the FCC is exploring whether to retarget Mobility Fund Phase II support to ensure the continued deployment and preservation of 4G LTE mobile broadband service and preservation of mobile voice and broadband service in areas that otherwise would not have such service through marketplace forces.


The FCC also addressed various issues associated with broadband investment in areas served by rate-of-return ILECs. First, the FCC modified or eliminated rules established in the 2011 ICC/USF Reform Order that are not serving their intended purpose. That Order phased-out of excessive subsidies that allowed some rural companies to charge rates vastly lower than those paid by the average consumer, whether living in rural, suburban or urban areas. The FCC agreed to ease the impact of these changes by delaying the rule until January 2015, phasing in the full impact of the rule over a multiyear period, and exempting services provided to Lifeline subscribers to ensure that consumers in rural America with fewer financial resources at their disposal will not be affected. It also adopted a Further Notice of Proposed Rulemaking proposing a Connect America Fund for rate-of-return ILECs and seeking comment on how to establish such a fund within the current budget for the program and how to provide rate-of-return ILECs with a way to transition to new forms of support.


Read the News Release here.


TMI Regulatory Bulletin Service subscribers, watch for a Bulletin when the text of the Order is released.