The FCC's Tribal and Remote Areas Broadband Programs: What's Wrong with this Picture?

Posted: 1 Apr 2014

See all articles by Heather Hudson

Heather Hudson

University of Alaska Anchorage - Institute of Social and Economic Research

Date Written: March 31, 2014

Abstract

During the past five years, the FCC has introduced several new funding programs targeting remote and tribal (indigenous) regions, and other programs that provide significant funding for these regions. The objectives of these programs are to increase broadband access in remote and indigenous areas, and in some cases, to empower tribal organizations and other new entrants to become providers of broadband facilities and services.

These programs include the recently established Office of Native Affairs and Policy (ONAP), and Connect American Fund (CAF) programs including the Rural Mobility Fund, Tribal Mobility Fund, Remote Areas Fund, and the Broadband Lifeline Pilot Program. In addition, the E-rate and Rural Health Care universal service funds provide significant support for these regions.

This paper presents a preliminary assessment of these programs, including participation by targeted entities, populations served or to be covered, and funds expended or committed. The analysis is based primarily on data and experience from Alaska, but also includes information from other rural and tribal regions. Programs analyzed include:

Mobility Fund Reverse Auctions: Two Alaska carriers won subsidies to provide mobile broadband in rural Alaska in phases 1 and 2 of the Mobility Fund reverse auctions. There was no competition among carriers to serve these regions. The paper examines the prices paid per pop, and the utility of the reverse auction model when there are no competitive bids.

Broadband Lifeline Pilot Program: Although ONAP sought participation from carriers serving tribal regions and included outreach to Alaska, no carriers serving Alaska submitted proposals. The paper examines reasons for this lack of participation based on interviews with Alaska carriers.

E-Rate: Alaska continues to be a major beneficiary of the E-rate program. From 1998 through 2012, Alaska schools and libraries received finding commitments totaling $330.9 million. Of course, Alaska’s land mass is huge and its rural communities small and isolated, and therefore costly to serve. Nevertheless, in 2012, Alaska ranked 14th among the states in total E-rate funding with $45.8 million, while 47th in population. The paper examines reasons for Alaska’s high levels of funding compared to other states with significant tribal and remote regions.

Rural Health Care: From 2008 through 2012, Alaska received $318.6 million from the Rural Health Care fund. This is the largest allocation to any state in both absolute terms and in funding per capita, and reflects not only expansion of services covered, but growing gaps between urban rural connectivity prices on which the subsidy is based. The paper examines the impact of a formula based on differentials between rural and urban prices for connectivity in the context of continuing lack of rural competition combined with increasing urban competition.

The paper also addresses potential barriers to entry in new Connect America Fund programs. For example, participation in these programs requires certification as an Eligible Telecommunications Carrier (ETC). No new tribal entrants in Alaska and few new entities across the U.S. have become certified as ETCs. The paper discusses strategies to increase participation such as modification of requirements or waivers.

The paper concludes with recommendations to address identified policy and regulatory issues for rural and tribal broadband programs based on the above analysis, with the goal of improving future participation, cost-effectiveness and impact of these programs. These recommendations could also apply to the new Remote Areas Fund, which will allocate up to $100 million per year, but is still under review and has not yet been implemented.

Keywords: rural, remote, tribal, indigenous, broadband

JEL Classification: O22, O33

Suggested Citation

Hudson, Heather, The FCC's Tribal and Remote Areas Broadband Programs: What's Wrong with this Picture? (March 31, 2014). 2014 TPRC Conference Paper. Available at SSRN: https://ssrn.com/abstract=2418692 or http://dx.doi.org/10.2139/ssrn.2418692

Heather Hudson (Contact Author)

University of Alaska Anchorage - Institute of Social and Economic Research ( email )

United States
4154200871 (Phone)
4154200871 (Fax)

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