Last Week in Tech Policy #67: One Policy, Universal Service?

(by Galen Pospisil, Colorado Law 2L)

For most of the 20th Century, a single company provided telecommunications services in the United States. Under the slogan “one policy, one system, universal service,” AT&T provided local and long distance telephone service at uniform prices to almost every home and business in America.

Today, hundreds of companies provide telecommunications services under individual pricing policies. And yet, the goal of universal service remains.  Policymakers face the challenge of ensuring that all Americans have access to telecommunications services without the intricate system of regulated rates that the Bell System relied upon.

To that end, the Federal Communications Commission (FCC) oversees the Universal Service Fund, a multi-billion dollar program to support the deployment of telecommunications services to all Americans.  High Cost Support, also known as the Connect America Fund, is the portion of that program used to support deployment of telecommunications services in high cost (often rural) areas.  This summer, the Commission will take an important step towards its goal of Universal Service via the Connect America Fund (CAF) Phase II Auctions.

The Connect America Fund works as follows to fund deployment of broadband in high cost areas:

  1. Identify which census blocks that do not have access to broadband of at least 10 Mbps/1 Mbps, provided by an unsubsidized competitor;
  2. Offer an initial amount of support to traditional price-cap carriers that have infrastructure in that state; and
  3. If the price-cap carrier in the relevant area passes on the Commission’s offer of support, offer support to any carrier willing to deploy broadband in the area via a competitive auction.

This summer’s Phase II  auction will address step 3 of that process.  The Commission has already identified those census blocks where it believes that broadband is unavailable and offered support to price-cap carriers offering service in those area.s

At stake: $1.98 billion in public funds over 10 years for providers who offer to provide broadband in the Commission’s selected census blocks.

The Commission has adopted deployment milestones to insure that those receiving money actually build out their networks as intended.  By the end of the third year of support, the winning provider must offer service to 40% of locations.  In each subsequent year, the provider must offer service to an additional 20% of locations, capping out at 100% of locations in the sixth year of support.  With bidding for support beginning on July 24, 2018, one could imagine that broadband will finally reach every home and business sometime around 2025 based upon the Commission’s deployment schedule.

Or will it?  In February 2018, the Commission released a new version of its National Broadband Map, a comprehensive survey of broadband availability based upon data provided by internet service providers.  Almost immediately, however, the Commission’s new map drew criticism for overstating the deployment of broadband.  The reason?  The map’s raw material, FCC Form 477, allows broadband providers to report a census block as served as long as they offer service to at least one location within the census block.  Census blocks range in size from the size of a city block to thousands of square miles depending upon the population density of the area.

Form 477 data overstates broadband availability in precisely those rural areas most in need of broadband deployment.  Broadband providers report providing service to one house and from the FCC’s perspective, the whole county has access to broadband.  The Connect America Fund Phase II auction will rely on the same Form 477 data as the National Broadband Map, potentially leaving millions of Americans without access to broadband even after the Phase II deployments are completed. With flawed data, even the Commission’s detailed and well designed CAF Phase II program may not result in Universal Service.