November 20, 2014 - 3:39 pm
By Tom Wheeler | FCC Chairman

High-speed Internet access has become fundamental to modern life, whether we’re on the job, at home, or going to school. Broadband connectivity can overcome geographic isolation and put a world of information and economic opportunity at the fingertips of citizens in even the most remote communities. But the hard truth is there is a digital divide that particularly impacts rural America.

Americans living in urban areas are three times more likely to have access to Next Generation broadband than Americans in rural areas. An estimated 15 million Americans, primarily in rural communities, don’t even have access to entry-level broadband in their homes. Forty-one percent of American’s rural schools couldn’t get a high-speed connection if they tried.

The FCC can play an important role in bridging these gaps, and today, I’m circulating two items that will expand access to robust broadband across rural America.

Bringing High-Speed Broadband to Rural Schools and Libraries

One proposal would close the digital divide in rural schools and libraries by modernizing the FCC’s E-rate program. Since 1997, the program has helped connect schools and libraries to the Internet, but it’s falling short of delivering the bandwidth required for 21st Century learning. That’s particularly true in rural America, where 41% of schools lack access to the fast fiber connections required compared to 31% in urban areas.

Why does this Rural Fiber Gap exist? Fiber connection costs are much higher for rural schools and libraries. As a result, either there is no fiber, or that level of connectivity is only available at an unreasonably high price. It may not be unusual, but it is unacceptable that these realities are allowed to hurt students.

Thus, my proposal includes targeted updates to E-rate rules to help defray the high costs rural libraries and schools face in achieving high-speed Internet connectivity, particularly the one-time infrastructure upgrade costs that many simply can’t afford today. For many low-income schools and libraries the challenge is one of affordability, so my proposal also includes rule changes designed to increase the number of competitive options to these schools and libraries to ensure they have access to the most cost-effective solutions.

In July, we opened an inquiry into the future funding needs of the E-rate program. After our own analysis, as well as studies submitted to the record, we have concluded that additional investment is required to bring 21st Century digital learning to all schools and libraries. The E-rate’s budget, set in 1997 and not adjusted for inflation until 2010, isn’t up to the task. Now, we are rebooting E-rate for the digital age by proposing an increase in the size of the program to reflect the investment required to close the rural divide and keep American education competitive nationwide.

Closing this connectivity gap will require raising the E-rate spending cap. Now, let me be clear. We have looked long-term to forecast the funding needs going forward and based the spending cap on those forecasts. What will actually be spent – and the rate Americans will be asked to contribute – will vary from year-to-year. Most certainly, the contributions from Americans won’t immediately jump to the cap.

I am proposing to my colleagues that we increase the cap on what all Americans contribute to the E-rate fund by 16 cents a month for a telephone line. Let’s put that in perspective. Over the course of the year that represents one cup of coffee or a medium soda at McDonald’s.   Per year.

E-rate is funded by fees on consumers’ phone bills. I take the fiduciary responsibility to invest those contributions wisely and very seriously. That’s why we placed an emphasis on improving cost-effectiveness earlier this year. But the fact is that the E-Rate budget hadn’t received an annual inflation adjustment for 13 years.  The majority of the proposed new cap accounts for the lack of inflation adjustments, with the rest going to new growth if needed.

This is the reality: while many schools and libraries have benefitted from the E-rate program, rural and low-income schools and libraries have not shared proportionally in the opportunities. The investment I am proposing enables the FCC to fulfill its responsibility to advance digital learning in all American schools and libraries.

Bringing Broadband to Rural Americans

Beyond our schools and libraries, the Commission has been working to re-orient its universal service fund program for rural communities to support broadband networks in unserved rural areas through the new Connect America Fund. The Connect America Fund has already invested hundreds of millions to bring broadband to unserved rural communities, and is poised to invest more than $20 billion over the next five years. Today, I am circulating an Order to move the Connect America Fund forward to get these communities the connectivity they need to stay competitive in the digital world.

My proposal would bring the minimum broadband speed for receiving USF support to 10 Mbps for downloads, from 4 Mbps – the first adjustment since 2011. We need to make sure rural consumers have the service they need to support modern applications and uses as we expand networks to the 15 million unserved rural Americans. And it’s time to move forward to implement Phase II of the Connect America Fund.

Incentive Auction

We continue to make steady progress toward implementing an incentive auction of low-band spectrum, which is a critical input for rural wireless broadband network coverage.

Broadcaster participation will be key to the auction’s success. Since we released an information package last month about the unparalleled business opportunity the incentive auction represents, numerous broadcasters have reached out to us to learn more about the incentive auction. And as the Incentive Auction Task Force announced last week, we will continue our dialogue with broadcasters in field visits covering every region of the continental U.S. including larger and smaller television markets.

Marking another major milestone, we are now initiating the process by which we will develop the specific procedures to carry out the incentive auction. Later today, we will circulate the Incentive Auction Comment Public Notice (PN) for consideration by the full Commission.

In the Incentive Auction Report &Order the Commission adopted last May, the Commission established the rules and policies for the incentive auction. The Comment PN seeks public input on detailed proposals about how important aspects of the auction will work, including the methodology for setting opening prices for both the forward and reverse auction; components of the “final stage rule” which must be met in order for the auction to close; and defining impaired markets and how to set an initial clearing target.

The public input we receive in response to the Comment PN will be incorporated into a final Procedures PN that will spell out the specific procedures necessary to carry out the auction.