The federal government is about to spend more than $120 million on subsidies that, rather than improving rural connectivity, will make tens of thousands of families worse off.

These funds are part of a 2018 federal program intended to expand rural broadband access called the Connect America Fund phase II (CAF II) reverse auction. The program, in which Internet access providers competed for subsidies, will distribute nearly $1.5 billion over the next 10 years to connect unserved rural residents. But in some communities, the auction may do more to widen the digital divide than diminish it.

While some winning bidders committed to building out high-speed fiber optic networks, satellite company Viasat will rake in more than $120 million in subsidies to continue providing inadequate geostationary satellite connectivity to rural households that are clamoring for something better. Not only does satellite Internet access offer slower speeds, greater latency, and less reliability for a higher cost compared to other technologies, but Viasat’s subsidies are making those areas ineligible for future broadband funds, deterring other providers from building truly high-quality networks. Instead of bridging the digital divide, the process will relegate certain communities to satellite Internet access while others receive ultra-fast fiber and do nothing more than deepen the fissure.

Mo’ Money . . .

The Connect America Fund (CAF) is a multi-phase subsidy program that supports improved connectivity in rural, high-cost areas as part of the Federal Communications Commission's (FCC’s) Universal Service Fund. The most recent phase of the program, the CAF phase II reverse auction, auctioned off regions to providers using a complicated formula that prioritized bids for low subsidy amounts and high-quality service.

Previous rounds of CAF mainly subsidized the large incumbents, such as AT&T and CenturyLink, but for the reverse auction, the FCC opened participation to other entities, including non-traditional providers like electric cooperatives. Eligible areas included rural locations where the incumbents had previously refused subsidies (and the accompanying commitment to expand Internet access).

Viasat was one of the largest winners in the CAF II reverse auction...

On May 30th, New Hampshire Governor Chris Sununu signed SB 170, a bill local community leaders had watched for more than a year. The measure will allow municipalities to bond for publicly owned Internet network infrastructure. Advocates, local elected officials, and citizens have been seeking the authority for years. SB 170 may raise some questions as it's implemented, but the bill is significant because it symbolizes this state's decision to expand local authority for broadband investment, rather than limit the power of local communities.

Read the final version of SB 170 here.

A Better Measurement

As we reported more than a year ago, SB 170 sought to make changes in existing law by allowing local communities to bond for Internet infrastructure. The bill sat in committee until last November, when it was amended and picked up again. The final version of SB 170 allows communities to bond for projects that will connect premises that don’t have access to broadband as defined by the FCC — 25 Mbps download and 3 Mbps upload.

Should the definition of broadband at the FCC increase to faster speeds, so will the definition as it applies in New Hampshire. This is a welcome approach as big ISPs around the country have in recent years tried to convince state legislators to reduce the speed definition of broadband in state legislation. Many is the time well-meaning or well-funded state lawmakers decided to use the incumbent-dictated 10 Mbps / 1 Mbps or even 4 Mbps / 1 Mbps in order to appease the likes of AT&T or CenturyLink. Some states, such as New Hampshire, are realizing that such slow thresholds translate into very little investment into the type of Internet access residents and businesses need. Other states can learn from New Hampshire...

Hey, Minnesota communities, are you looking for funding sources for your broadband project? If yes, and you plan on applying for a Minnesota Border-to-Border Development Grant Program, you should be getting your ducks in a row. The application period is fast approaching - July 3 through September 11.

For the 2017 grant period, the state legislature allocated $20 million to the program to expand broadband service in unserved or underserved areas of Minnesota. As a way to help you sort through the application process, the Minnesota Office of Broadband Development will be hosting several webinars early in the application period.

Dates and times for the webinars are:

Monday, June 26, 
11 a.m. to 1 p.m. (Central Time)

Friday, July 7, 
11 a.m. to 1 p.m.

Monday, July 10, 
11 a.m. to 1 p.m.

Wednesday, July 12, 
11 a.m. to 1 p.m.

Sign up for the webinars and get the details on eligibility, the process, and resources at the Office of Broadband Development website.

Nestled in a valley in the Colorado rockies, the city of Montrose has voted overwhelmingly to reestablish local authority over whether to build a municipal fiber network. With nearly 20,000 people, Montrose does have cable service from Charter and DSL from CenturyLink but neither service is meeting local needs.

Virgil Turner, Director of Innovation and Citizen Engagement for the City, joins us in episode 95 of the Community Broadband Bits podcast. We discuss the need for a better network and how the big cable and telephone companies have failed to meet local needs.

Montrose has all options on the table as it now plans to engage the public and determine how to move forward with possible investments to improve their access to the Internet.

View our other posts on Montrose here.

Read the transcript from this episode here.

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Thanks to Valley Lodge for the music, licensed using Creative Commons. The song is "Sweet Elizabeth."