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The FCC has a new interactive map showing areas without wireless coverage and announced a reverse auction this September to award $300 million in one-time Mobility Fund award to cover the unserved areas (pdf). In the Public Notice, the FCC announced the first auction (Auction 901) to use an reverse auction, which will award licenses to the lowest cost bidder.

The map is based on data from American Roamer showing census blocks covered by 3G or better service. Auction 901 will award one-time support to carriers that commit to provide 3G or 4G voice and broadband data in areas where such services are unavailable. The auction is scheduled to begin on September 27, 2012.

These licenses are not likely to be money makers. The one-time $300 million, available in the Phase I budget, along with ongoing USF subsidies, are expected to cover the carrier’s cost. High cost rural telephone service has traditionally been subsidized by the Universal Service Fund, a line-item tax on monthly phone bills.

The FCC is reforming its universal service fund (USF), creating the broadband-focused “Connect America Fund”, while driving intercarrier compensation (ICC) rates down to zero.

The “High Cost Fund” portion of UFS paid by consumers to rural America has almost tripled in 10 years from $1.7b to $4.3b.

The FCC says that LTE at 700 MHz would likely be the most economical means of getting broadband to about 90% of unserved homes.

FCC Chairman Genachowski said, “As our new map demonstrates, millions of Americans still live, work, and travel in areas where advanced mobile networks have not been built out. Through the FCC’s Connect America Fund, we’re helping complete our nation’s wired and wireless infrastructure, which will lead to job creation, economic growth, and innovation in the 21st century.”

For the first time, the FCC has created a Mobility Fund, a Universal Service Fund pool of financing dedicated exclusively to improve voice and broadband coverage in underserved areas. Phase I of the Mobility Fund is 300 million. Phase II will provide $500 million annually for ongoing support of mobile services. This is in addition to any ongoing support provided under existing USF funds.

To determine winning bids, the auction system would use a mathematical optimization procedure to identify the set of bids that maximizes coverage in eligible census blocks without exceeding the $300 million budget. The auction system would consider all the bids submitted and determine which combination of bids covers as many eligible road miles as possible.

In reverse auctions, the winner is the company that promises to deliver services at the LEAST cost (like a bid), instead of awarding a license to the bidder that offers the most money for a license. Licenses in rural areas can be unprofitable, so the Mobility Fund provides an incentive. Reverse auctions are controversial, but they generally result in lower cost service.

Blocks eligible for support are generally smaller than the average area covered by a single cell tower,” according to the FCC. Bidder-defined aggregations would be highly flexible, and bidders could “closely configure their bids to the geographic coverage of the specific cell sites that they would upgrade or build out to provide advanced wireless service.”

Rep. Greg Walden (R-Ore.), chairman of the House telecom subpanel, says FCC studies that show a lack of universal broadband are without merit. Industry groups and Republicans, including Commissioner Robert McDowell are generally unimpressed with the FCC’s findings on the need for more rural broadband.

Proponents of the FCC’s vision say universal access to broadband stimulates the economy, enables smart grid and smart car investments, and enhances security, health, and educational opportunities.

Today, the funding for the high-cost Universal Service program, which provides affordable rural telephoney, is based on what it costs the incumbent telco to provide voice service. But providing DSL to outlying areas can be impossible or prohibitively expensive. Rural telcos are not incentivized to lower cost.

The reverse auction process would likely provide a substantial amount of funding to AT&T and Verizon, since both companies currently have wide-scale LTE deployments at 700 MHz. Will the auction process empower smaller rural carriers? Opinions differ.

The 700 MHz band is largely controlled by AT&T and Verizon, with a small sliver (the “A-Block”) owned by smaller carriers. Those carriers have complained to the FCC that the big two refuse any kind of interoperability or roaming. Consequently, competitive carriers are isolated into islands of service. Without roaming or interoperability, small carriers can be effectively killed by large carriers.

The FCC has advocated a public auction of the “D-Block”, which would provide shared public/private use of 700 MHz LTE. Congress, however, wants to give those frequencies to big city public service agencies. That means taxpayers will pay for the construction and operation of a parallel LTE network dedicated for first responders.

The FCC hopes to open UHF television frequencies below 700 MHz, from channel 31 to 51, some 120 MHz of new spectrum, for competitive bidding in the next year or two. Broadcast group owners don’t pay anything for their spectrum, but feel “entitled” due to their “public service” with news and reality shows. The FCC auctioned 52 MHz in the 700 MHz band for $19 billion, in March 2008. Perhaps 120 MHz could generate more than $50 billion.

The lower frequencies travel further and penetrate foliage better. With a 10-20 mile range, licensed (or unlicensed) white space radios may provide a cost/effective solution. But capacity constraints at 600MHz make it better match for rural users. One tower might easily cover an entire rural community but get swamped in a city with 3-5 times the density.

Walden wants to eliminate “free” (unlicensed) channels. All wireless users must pay.

Imagine if the new 600 MHz band was divided up into 2 (two) licensed, 20 MHz FDD blocks (10×2), 2 (two) licensed 10 MHz FDD blocks (5×2) and one 20 MHz TDD block, for a total of 80 mhz. For unlicensed use, 2 (two) unlicensed TDD high power blocks of 10 MHz might provide backhaul, while 1 (one) low power unlicensed TDD 20 MHz block might provide in-building hotspot access. That’s 80 MHz of licensed use (generating $40 billion) and 40 MHz of (free) unlicensed use.

Whether unlicensed use of white spaces will rip the heart out of Justice and Democracy has yet to be undetermined.

Related Dailywireless articles include; FCC Autonomy Under Fire, AT&T Competitors: No 700MHz Roaming, SF Approves Dedicated LTE Network for First Responders, Universal Service Reform Passed , FCC Reforms $4.3B USF Fund, FCC Reforms Universal Service, Will USF Funds Subsidize AT&T Buildout? White Space Legislation Goes Dark, White House: D-Block to Police/Fire, State of the Spectrum, More T-Mobile Spectrum Rumors, FCC Green Lights Lightsquared, Charlie’s Big Play, Phoney Spectrum Crisis?, Oregon’s $600M Public Safety Network Likely Killed, Oregon’s Public Service Network: $100M Over Budget, Bay Area 700 MHz Net in Altercation , SF Announces LTE First Responder Net, New York Cancels Statewide Wireless Network, M/A-COM to NY: We’re Good, FCC: Interoperability on 700 MHz Band, Riot in D Block,

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