What Did the FCC Do to Close the Digital Divide?

Benton Institute for Broadband & Society

Wednesday, February 12, 2020

Digital Beat

What Did the FCC Do to Close the Digital Divide?

Kevin Taglang

It's budget season. Federal departments and agencies are making their funding requests to Congress for fiscal year 2021 (starting October 1, 2020 and ending September 30, 2021). And part of the ask is reporting how well an agency did achieving its FY 2019 goals. One of the primary goals of the Federal Communications Commission is to close the digital divide in rural America. On February 10, the FCC released its annual performance report, so we snuck a peek to see how the commission thinks it is doing to ensure that all areas of the country have access to broadband internet access service. 

First, we should note that the FCC approach to the problem is to develop a regulatory environment to encourage the private sector to build, maintain, and upgrade next-generation networks so that the benefits of advanced communications services are available to all Americans. Where the business case for infrastructure investment doesn’t exist, the FCC aims to employ effective and efficient means to facilitate deployment and access to affordable broadband in all areas of the country.

With all that in mind, how is the FCC doing?

How Big is the Digital Divide?

If we're going to evaluate how well the FCC is doing at closing the digital divide, we need accurate measures of how big the problem is. But, by its own admission, the FCC doesn't have reliable data.

The FCC’s 2019 Broadband Deployment Report proclaimed that the number of Americans lacking access to a terrestrial fixed broadband connection meeting the FCC’s benchmark of at least 25/3 Mbps dropped from 26.1 million Americans at the end of 2016 to 21.3 million Americans at the end of 2017, a decrease of more than 18%. The majority of those gaining access to such connections, approximately 4.3 million, were in rural America. The deployment report also showed that higher-speed services are being deployed at a rapid rate as well. The number of Americans across the United States with access to at least 250/25 Mbps broadband grew in 2017 by more than 36%, to 191.5 million, and the number of Americans in rural areas with access to such broadband increased by 85.1% in 2017.

Of course, if you were the FCC's boss (and you are) and the commission made this claim in what amounts to its annual performance review (which it is), you might well scratch your head. The FCC collects broadband deployment data from internet service providers through something called Form 477. The FCC requires fixed-broadband providers to identify the census blocks in which their service is -- or could be -- available. As a result, if a provider could serve even a single household in a census block, the FCC has counted the entire census block as being served. In a 2018 report, the Government Accountability Office (GAO) found that the FCC’s fixed broadband availability methodology overestimates broadband deployment by “counting an entire census block as served if only one location has broadband.” GAO also found the FCC data overstated deployment by “allowing providers to report availability in blocks where they do not have any infrastructure connecting homes to their networks if the providers determine they could offer service to at least one household.”

Form 477 data has been roundly criticized by Members of Congress. And Congress appears poised to pass legislation to improve its data collection. But the FCC continues to cling to Form 477 data as the most reliable and comprehensive currently available.

BroadbandNow Research released earlier this month estimates that 42 million Americans do not have the ability to purchase broadband internet access service. This research is just the latest in a number of studies that come to a huge range of estimates on broadband availability

And, as Benton Senior Fellow and Public Advocate Gigi Sohn told Congress last month, the digital divide is a bigger problem than just access to broadband infrastructure. At least 141 million people in the U.S. don’t have fixed home Internet at the FCC’s outdated 25 down, 3 up broadband definition. That’s nearly 43% of Americans. For too many people, even where broadband infrastructure is available, service remains out of reach because people can't afford the monthly bills or the cost of the devices it connects, or they don't have the digital skills necessary to make use of broadband. 

Just this week, broadband researcher John Horrigan released new analysis on broadband adoption. He finds that:

  • There are multiple reasons for non-adoption: Research spanning the past decade that investigates non-broadband subscribers finds that non-adopters cite more than one reason behind their choice. In 2010, 2015, and 2019, national survey data shows that, when offered the chance to cite more than one reason for not subscribing to broadband at home, people generally cite 2 or 3 reasons.
  • Cost is the chief reason for not having broadband: Research that rests on the notion that reasons for non-adoption are multiple uniformly finds that cost is the most important reason that people do not have broadband. At least half of non-broadband subscribers cite cost (either monthly fee or access devices) as a reason they do not subscribe when offered multiple choices, with a plurality citing cost in follow-up questions about the most important reason for non-adoption.

What Did the FCC Do in FY 2019?

Despite its lack of reliable measures, the FCC points in its performance report to a number of actions it took to close the digital divide.

Limiting Franchise Fees in the Name of Broadband

In August 2019, the FCC adopted new rules prohibiting excessive cable franchise fees and explaining that local governments may not regulate most non-cable services, including broadband Internet access service, offered over a cable system. The FCC ruled that "in-kind contributions" -- like the public, educational and government cable-TV channel slots given to local governments and school systems for programming -- must count against the cap on franchise fees local governments can impose on cable operators. "But comb through the text of this decision," noted FCC Commissioner Jessica Rosenworcel during the vote. "You will not find a single commitment made to providing more broadband service in remote communities. There is no enforceable obligation to expand broadband capacity. There is no agreement that any savings from today’s action is pushed into new network deployment. I fear this absence speaks volumes."

Reforming the Rural Health Care Program

Former-FCC Commissioner and current-Benton Institute Board Member Mignon Clyburn often notes the link between broadband and healthcare. Rural Americans face a physician shortage and limited access to health-care facilities. Rural Americans also suffer from higher rates of obesity, mental health issues, diabetes, cancer, and opioid addiction. Unfortunately, in the same communities where there are fewer doctors, there's also less broadband:

  • Counties with adequate access to primary care physicians and psychiatrists had 62 percent broadband coverage;
  • Counties with inadequate access to primary care physicians had 39 percent broadband coverage; and
  • Counties with inadequate access to psychiatrists had 49 percent broadband coverage.

The FCC's Rural Health Care Program provides funding to eligible healthcare providers for telecommunications and broadband services necessary to improve the quality of healthcare available to patients in rural communities. 

The Telecommunications Program, established in 1997, subsidizes the difference between urban and rural rates for telecommunications services.  Under the Telecommunications Program, eligible rural health care providers can obtain rates on telecommunications services in rural areas that are reasonably comparable to rates charged for similar services in corresponding urban areas.  

In August 2019, the FCC moved to reform to the Rural Health Care Program to ensure program funds are disbursed efficiently and equitably, promote transparency and predictability in the program’s administration, and strengthen safeguards against waste, fraud, and abuse. The FCC’s order also outlined program reforms to target funding to rural areas in the most need of health care services.

The FCC action gained some praise for the increasing effectiveness of competitive bidding and improving the application process and program oversight. However, the Schools, Health & Libraries Broadband Coalition (of which the Benton Institute is a member) urged the FCC to (1) reconsider the funding prioritization system for when either of the RHC funding caps are exceeded, and (2) the drastic changes to the processes for determining rural and urban rates in the Telecommunications Program. SHLB also requested clarification or modification of how Medically Underserved Area/Population designations are treated in sparsely populated counties.

When the FCC order was adopted, Commissioner Rosenworcel said, "It puts in place a new funding scheme for the Telecommunications Program that has never been tested, modeled, or assessed for its impact on the rural health facilities that rely on the program today. This creates a truckload of uncertainty for rural America. That’s not fair." Fellow-Commissioner Geoffrey Starks also had concerns, "The order does not describe or analyze the expected impact of these changes for health care providers or for the telecommunications providers who provide service to them. I have similar concerns about portions of the order that create a new system of prioritizing support requests and that adopt new rules for healthcare consortia members."

Commissioners Rosenworcel and Starks were not alone in their concerns. The entire Congressional delegation from Alaska sent a letter to the FCC cautioning against hasty adoption of an order that contains numerous prospects for unintended consequences that undermine the stability and sustainability of the program. A bipartisan group of 14 U.S. senators asked for the FCC to postpone adoption of the order saying it “fails to provide sufficient guardrails of transparency to guarantee confidence that the program will be implemented in a consistent manner.”

Taking the "E" Out of EBS

In another controversial move, the FCC in July 2019 changed its rules for the 2.5 GHz band. Thirteen channels in this band had been reserved for the commercial Broadband Radio Service (BRS) and 20 were designated for Educational Broadband Service (EBS). Only specified entities are eligible to hold an EBS license, specifically (1) accredited public and private educational institutions, (2) governmental organizations engaged in the formal education of enrolled students, and (3) nonprofit organizations whose purpose is educational and include providing educational and instructional television materials to accredited institutions and governmental organizations. Back in 1993 (when you were watching Harrison Ford clear Dr. Richard Kimble's name in The Fugitive), the FCC suspended the processing of applications for new EBS licenses and major changes to existing EBS licenses. There are 1,300 EBS licensees holding 2,193 licenses, but, as allowed by FCC rules, 2,087 licensees lease some portion of their capacity. 

The FCC's new rules allow more entities to access the spectrum and eliminate restrictions (like, you know, educational use). With almost 200 megahertz, the FCC deemed this spectrum the largest band of contiguous flexible use spectrum below 3 GHz, well-suited to providing wireless service in rural areas.

Specifically to bridge the digital divide, the FCC established a priority filing window for rural Tribal Nations to provide them with an opportunity to obtain unassigned 2.5 GHz spectrum to address the communications needs of their communities. The FCC will then make the remaining unassigned 2.5 GHz spectrum available for commercial use via competitive bidding.

In the run-up to the FCC vote, the Benton Institute ran a series of op-eds written by people who would be impacted by the decision:

Funding Rural Broadband

In its performance report, the FCC mainly touted six funding models it employed to increase broadband service in rural America:

  1. Between July 24, 2018 to August 21, 2018, the FCC conducted the Connect American Phase (CAF) II reverse auction which allocated $1.49 billion in support to be distributed over the next 10 years to expand broadband service in unserved areas in 45 states. Over 700,000 rural homes and small businesses will gain access to high-speed Internet service for the first time as a result. The CAF II reverse auction would later be rebranded as the Rural Digital Opportunity Fund (see #5 below).
  2. The FCC authorized two waves of funding over the next decade through the Connect America Fund to expand broadband in upstate New York through matching funds provided in a partnership with the state’s New NY Broadband Program. In the first wave, the FCC authorized over $39.2 million in federal funding over the next decade to expand broadband to 15,442 unserved rural New York homes and businesses. In the second wave, the FCC authorized nearly $16.2 million to expand broadband to 8,088 unserved rural New York homes and businesses. The arrangement with New York became controversial when US Senate Minority Leader Chuck Schumer (D-NY) and Sen. Kirsten Gillibrand (D-NY) accused the FCC of unfairly shutting the state out of Rural Digital Opportunity Fund support.  "The FCC's justification for this is unacceptable," said Sen Gillibrand. "New York shouldn't be penalized for helping its rural communities get online, and this proposal will only make it harder for rural residents to do just that."
  3. The FCC authorized over $4.9 billion in support over the next decade for maintaining, improving, and expanding affordable rural broadband for 455,334 homes and businesses served by 171 carriers in 39 states and American Samoa, including 44,243 locations on Tribal lands. The homes and businesses are located in sparsely populated rural areas where the per-location price of deployment and ongoing costs of providing broadband service are high, requiring support from the FCC’s Universal Service Fund to facilitate network improvements and keep rates reasonably comparable to those in urban areas. The support is targeted to smaller rural carriers, traditionally known as “rate-of-return” carriers. These carriers agreed to accept subsidies based on the FCC’s Alternative Connect America Cost Model (A-CAM) II. The FCC also authorized and directed the Universal Service Administrative Company to obligate and disburse the appropriate transition payments to 35 carriers for whom the A-CAM II support amount is less than legacy support received in 2018. The transition payments total $109.6 million over the term of support.
  4. The FCC approved allocations of $950 million in funding to improve, expand, and harden communications networks in Puerto Rico and the U.S. Virgin Islands. After communications infrastructure on the islands was devastated by Hurricanes Irma and Maria two years ago, the FCC created the Uniendo a Puerto Rico Fund and the Connect USVI Fund. To date, the FCC has provided about $130 million in additional, one-time Universal Service Fund support to assist with network restoration. With restoration work substantially complete, the FCC approved the next stage of funding to provide mid-term and long-term support to deploy fast, resilient, and reliable networks. In Puerto Rico, the FCC will allocate more than $500 million over ten years in fixed broadband support and more than $250 million over three years in mobile broadband support. In the U.S. Virgin Islands, the FCC allocated more than $180 million over ten years in support for fixed networks, and $4 million over three years for mobile networks. Fixed broadband support will be awarded through a competitive process, and support for mobile services will be awarded to providers that were offering mobile services in the Territories prior to the hurricanes.
  5. In August 2019, the FCC proposed the Rural Digital Opportunity Fund (RDOF), $20.4 billion to expand broadband in unserved rural areas. In January 2020, the FCC adopted rules to implement RDOF. The Rural Digital Opportunity Fund will focus on areas currently served by “price cap” carriers, along with areas that were not won in the CAF Phase II auction and other areas that do not currently receive any high-cost universal service support. Benton Institute Senior Fellow Jonathan Sallet wrote about concerns that RDOF will lock too many communities into 25/3 broadband service for years to come.
  6. The FCC adopted rules of the road for the upcoming transition from legacy CAF support in certain price cap areas to new, auction-based support for voice and broadband. The funds are targeted to areas where the incumbent provider-large carriers known as price cap carriers-declined a 2015 offer of CAF Phase II model-based support. The FCC order ensures that existing voice service is maintained throughout the process for customers.

Is the Digital Divide Shrinking Fast Enough?

So how's the FCC doing? 

Well, first, let's hold the FCC to its own standard. Is the private sector expanding broadband networks into previously unserved areas without government subsidies? We've seen no evidence of that and the FCC offers none now. Second, is the FCC using effective and efficient means to facilitate deployment and access to affordable broadband in all areas of the country? Here, too, the FCC appears to fail. The commission commits billions to rural broadband builds while ignoring many urban areas that still lack access (see Cleveland and Dallas as examples). Moreover, we know that the FCC's own data is so unreliable that we don't know how big the access divide actually is. 

We also know that the FCC's response to the digital divide is too limited because it focuses too much on access without much thought to broadband adoption. Research shows that the inability to afford service is what holds too many people back from adopting broadband. And, instead of making it easier for low-income people to participate in Lifeline, the current FCC seems bent on limiting the impact of its program.

What's needed, obviously, is a more comprehensive approach to closing the digital divide and making sure everyone in America can use High-Performance Broadband networks. That includes fiscally responsible subsidies for building networks in areas that are unserved or underserved today. But it also means encouraging competition so all subscribers benefit from lower prices, better services, and innovation. It means addressing affordability and adoption. And it means recognizing the instrumental roles community anchor institutions play in serving their communities, improving broadband access, and encouraging broadband adoption.

As Congress considers the budget, it must demand that the FCC do better. 

Kevin Taglang is the Executive Editor at the Benton Institute for Broadband & Society. 

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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Kevin Taglang

Kevin Taglang
Executive Editor, Communications-related Headlines
Benton Institute
for Broadband & Society
727 Chicago Avenue
Evanston, IL 60202
headlines AT benton DOT org

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