Rural Telcos Clamor for FCC Broadband Experiment Funding

Dozens of rural telcos submitted “expressions of interest” to the FCC in filings this week, indicating they would love to accept some of the money the agency is prepared to dole out for rural broadband experiments. The agency voted 5-0 earlier this year to approve IP technology transition trials, including rural broadband experiments (CD Jan 31 p1). Interest in participating in these projects has so far dwarfed interest in participating in service-based experiments. That effort has seen only a few applicants.

Some requests were more detailed than others. Many telcos and some rural electric co-ops said they would need several million dollars to connect hard-to-reach locations to fiber. Others submitted multi-page applications describing their unique challenges and technical assistance needed. The combined total money requested goes far beyond the $50-100 million contemplated by the FCC in its IP Transition Order. Republican Commissioner Mike O'Rielly expressed concern Thursday about the cost, and about duplicating rural broadband efforts already underway within the commission and in Congress.

"We have not yet determined the amount of money that will be made available or the specific criteria that will be used to analyze proposals,” an agency spokesman told us. “This is the first step, in addition to responses to a Further Notice of Proposed Rulemaking attached to the January order asking about funding level and selection criteria.” That FNPRM noted that the Connect America reserve account has an ending balance of $1.68 billion as of the first quarter of 2014, with $1.45 billion of those funds already accounted for. “Should we make available $50 or $100 million or some other amount in total support for experiments?” the further notice asked. The agency will release an order later this year laying out the exact amount of money available, “after learning from these expressions of interest and the responses to the FNPRM,” the spokesman said.

Vernon Communications in Wisconsin wants $6.7 million to build fiber-to-the-premises to 619 locations within six months after construction begins. But some applicants didn’t know how much their projects would cost. Wood County telco in Wisconsin asked for an unspecified amount of funding to provide voice and 100 Mbps broadband service to 671 underserved high-cost areas. NineStar Connect in Indiana wants to build out voice and 100 Mbps broadband service to homes in three counties, and 6 Mbps/2Mbps wireless broadband to homes in another county, but “is unable to estimate the construction costs and amount of funding needed” because the unserved high-cost census blocks “have yet to be identified,” it said (http://bit.ly/1hQjUH2).

The Volunteer Energy Cooperative, which provides electrical service to southern states around Tennessee, owns 175 miles of fiber optic lines to connect their substations, and also jointly owns 100 miles of fiber with Windstream. It proposed deploying fiber-to-the-premises to end users in portions of five counties, targeting several thousand residences and several schools and fire departments, at a cost of about $4 million. “VEC would be prepared to break ground immediately after receiving notice of funding for this experiment,” and could “begin serving end users within approximately six to eight months,” it said (http://bit.ly/1hQjQpX).

O'Rielly is concerned the broadband pilot projects might send money toward projects already underway. The Farm Bill allocates up to $50 million over five years to the Department of Agriculture to create a Rural Gigabit Network Pilot Program, he said in a blog post Thursday. “I worry how the new experiments will fit together with the high-cost universal service reforms that the FCC already adopted in 2011 and, despite my best efforts, I have not received an adequate explanation to date,” he said. It’s also unlikely that the proposed experiments will succeed with one-time funding, he said. “The FCC should rethink the need for these experiments."

Not every town simply clamored for money; one also sought technical assistance. Estes Park, near the Rocky Mountain National Park in Colorado, has Internet service that becomes “largely unusable during tourist season” (http://bit.ly/1dw0aH4). The park itself experiences “spotty service,” which can be “critical during search and rescue operations,” it said. The town has plenty of dark fiber strands transmitting bandwidth, but distributing that bandwidth to “topographically challenged” locations is the problem, it said. “Technical assistance is required,” it said. That includes analysis regarding the current state of fiber optic technology, assistance in integrating fiber optic cable, microwave and traditional Wi-Fi technology for the community, and assistance in extending solar and wind power to help serve increasingly remote areas, it said. An initial $36,000 grant from the Connect America Fund would help hire consultants and fund travel to communities “from which we can learn,” the town said.

Still others didn’t explicitly ask for a specific amount, but simply stated how much additional funding would be needed to complete a project. Hal Womble, CEO of the Meriwether Lewis Electric Cooperative in Tennessee, said it wants to invest in bringing fiber to the homes of its 35,000 members across 2,000 square miles (http://bit.ly/1fbBobQ). “Our members have repeatedly asked for broadband because they know that just as electricity brought a new, better way of life 75 years ago, FTTH can do the same today,” he said. Money for the fiber core and pilot projects have already been covered by the cooperative, but it would need a “one time capital infrastructure investment” of $60 million, he said. The South Central Indiana Rural Electric Membership Corporation said it would need around $40 million to help connect nearly 20,000 homes and businesses that are currently under-served.

"When you dangle out an open ended offer to express interest, you can expect to get a combination of genuinely innovative projects and con artists,” said Harold Feld, senior vice president at Public Knowledge. The question for the commission will be how to structure projects in a way that is “affordable and produces real and genuine data in ways that can be replicated,” he said. “The challenge is how do you keep an eye on this and keep it from being a rip-off?”