By: Mike Wilson, with contributions from Hailey Farrow on behalf of CostQuest Associates.
About the 5G Fund for Rural America
The 5G Fund for Rural America (5G Fund) is one of the FCC’s efforts to provide funding to support closing the digital divide. The FCC released a Report and Order on October 27, 2020, establishing the 5G Fund, “which will make up to $9 billion available to bring 5G mobile broadband service to rural areas that would be unlikely to otherwise see deployment of 5G broadband service based upon new mobile coverage data submitted in the FCC’s Broadband Data Collection,” (FCC 5G Fund Overview).
The goal of the 5G Fund is to help ensure that Americans living in rural areas have access to the same benefits from a growing digital economy as those living in urban areas.
On September 21, 2023, the FCC released a new Further Notice of Proposed Rulemaking on for the 5G Fund, seeking comment on critical issues for the implementation of the 5G Fund.
Below is a short summary of the FCC’s new Further Notice of Proposed Rulemaking for the 5G Fund.
Overview of the FCC’s new 5G Fund FNPRM
With the recent release of the FCC’s Further Notice of Proposed Rulemaking (FNPRM) for Docket No. 20-32, relating to the 5G Fund, the FCC now seeks to bolster the record to inform the rulemaking process. Core concepts in the FNPRM surround:
- Budget – is $9 Billion enough or too much?
- How to retarget mobility funding in rural areas – such as the use of more precise Broadband Data Collection (BDC) data to support the understanding of the presence of 5G service
- The geographic units of coverage and area eligibility
- Geography and funding aggregation
- The use of reverse auctions for funding distribution and funding price metrics
- Compliance and testing
High-Level of Summary of the 5G Fund FNPRM
The FCC seeks comment on the initially proposed and adopted $9B funding amount. Is it enough to close down legacy networks and replace with 5G? Is it too much and should funding be allocated to other funding programs?
Stakeholders of all kinds are likely to not only comment on the budget for the program, but also the contribution side of the funding program.
Should the FCC end legacy funding that supports mobility? Does high-cost support in areas that will not be eligible for the 5G Fund be phased down? This would mean that USF support for mobility providers under the “identical support” regime would lose funding in their ETC areas.
Timing of phase down is impacted by the 2023 Appropriations where Congress said, “any such alternative mechanism shall maintain existing high-cost support to competitive eligible telecommunications carriers until support under such mechanism commences”. This gives cover to CETC’s for a bit more time, and pushed the FCC to define when the phase down begins, which they proposed as the Public Notice of the close of 5G Fund Phase I.
There is a view of current mobility funding in Figure 3 of the NPRM. It’s worth a look to get a better understanding of the breakout of such funding across states.
Coverage and Area Eligibility
The FCC is obligated under the Broadband DATA Act to use the BDC data to support all funding programs. However, there are unanswered questions regarding eligible areas such as Puerto Rico and USVI, and what areas are eligible by technology generation (4G or 4G/5G).
The FCC proposes to define areas eligible for the 5G Fund as those that lack unsubsidized 5G coverage, rather than areas that lack both unsubsidized 4G LTE and unsubsidized 5G coverage. This expands support areas that will be eligible.
The FCC is seeking to adopt a lower service threshold of 7/1 but will require recipients to provide tests showing median download and upload speeds of at least 35/3 Mbps.
Geography and Funding Aggregation
Fabric locations and roads are to be identified in Hex 3 resolution 9 units. This is the base unit of geography proposed for bidding. The FCC makes brief comments about the possibility of aggregating to census block groups or tracts, OR potentially aggregating into Hex 3 resolution 7 and making that the minimum aggregation. There’s lots to think about here, as a move away from grids and Census geography is a pretty big deal.
Bidding and Funding Price Metrics
The FCC proposes a support (funding) price metric based on dollars per square kilometer for eligible areas. So, regardless of how the FCC allows bidders to aggregate hexagons, the price per sqkm would determine an awarded area.
The FCC proposes something they are comfortable with, and that is in the spirit of how they run and assess spectrum auctions – using unit metrics (like MHz pop).
The big change here is that the FCC is backing away for making adjustments based on factors originally proposed in their 2020 order, where they proposed to use an adjustment factor based on a number of area-specific characteristics, including terrain and elevation, and demand-related factors, such as income, gross domestic product (GDP), and population density. The FCC now says that the adjustment factors “would not be consistent with our objective of targeting areas where people live, work, and travel”.
The metrics now proposed are likely to be based on locations, which would include road miles/segments and locations (cited as Fabric). But what is undefined, and only alluded to is where “devices are likely to be used”, which opens up a huge list of possibilities.
Compliance and Testing
The FCC points compliance and validation requirements back to the BDC. Issues relating to substantiation of coverage will remain consistent with what is required in the BDC, and that includes the use of ground tests or infrastructure data. The issue here is that there will be much more interest and challenge to these methods given the funding at stake. This will be another issue to watch as the BDC gets updated, and 5G funding is awarded and built out.