Lost in the kerfuffle of the FCC's proposed rules on wireless "bill shock" was another action geared to aid mobile broadband deployments. The five-member panel voted 5-0 Thursday to move forward with a plan that will create a "Mobility Fund" to help pay for 3G and 4G mobile broadband buildouts in unserved rural areas.
The Mobility Fund, first proposed in February, is part of the FCC's national broadband plan. The national broadband plan includes specific provisions to reform the Universal Service Fund, which is intended to help fund the deployment of telecommunications services in rural America.
The FCC said that up to 4 million Americans cannot access 3G service because they live in difficult-to-cover locations, sparsely populated areas or are far from network centers. "The status quo for USF is unsustainable," FCC Chairman Julius Genachowski said. "The current program is designed to support the communications networks of the past, not the future. It is--we have to acknowledge--filled with inefficiencies. And it is poorly targeted in too many respects, with perverse incentives and the result is that millions of Americans remain unserved by broadband."
The new fund will use a portion of the USF money that Verizon Wireless (NYSE:VZ) and Sprint Nextel (NYSE:S) voluntarily gave up in 2008. The fund will use between $100 million and $300 million to finance one-time capital infusions for 3G and 4G buildouts in rural areas. Additionally, the FCC proposes a reverse auction to determine which providers get support, which specific geographic areas will receive support, and at what levels.
The FCC's notice of proposed rulemaking seeks comment on whether to make support available to any unserved area or to target support by making it available in a limited set of unserved areas, as well as what the minimum performance and coverage requirements should be.
Both Republican commissioners, Robert McDowell and Meredith Attwell Baker, expressed reservations about the fund, but said they supported its goals. Both questioned whether the fund will require an expansion in the size of the USF, which many have criticized as being bloated and inefficient.
"I think the way to look at this is that this something of an experiment," David Kaut, an analyst at Stifel Nicolaus, told FierceWireless. "What they seem to be signaling is, 'Here is a very definite need. Let's bring up the areas that don't have 3G to at least 3G, and if there's s a good 4G proposal we'll consider that.'"
Interestingly, Verizon executives recently suggested that the FCC funnel USF money--specifically that tied to the Mobility Fund--to rural carriers that enter into the operator's LTE licensing program.
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