AT&T and Others Fight Against Higher Speed Tiers in FCC Subsidy Fund

Internet service providers (ISPs) and telecom companies, including AT&T, Frontier, Windstream, and their industry lobbying group are fighting the higher speeds set for the Federal Communication Commission’s rural subsidy program to get better broadband in rural communities.

The FCC’s plan for rural areas sets 25Mbps download and 3Mbps upload as the minimum baseline tier. The FCC also has set two supplementary speed tiers that will also be funded: an “above baseline” tier of 100 Mbps download and 20 Mbps upload; and a “gigabit performance” tier of 1 Gbps download and 500 Mbps upload. However, providers are protesting the “above baseline” tier (100 Mbps/20 Mbps). Providers are fighting to have the FCC lower the upload speed requirement (20 Mbps) in the above baseline tier or to create a supplementary tier between the baseline and “above baseline” tiers. Ars Technica reported that “[c]ompanies pushing lower standards are trying to ensure that ISPs offering much slower speeds can get a large slice of that federal funding without making significant network upgrades.”

The providers filed their proposed changes with the FCC stating the “above-baseline” tier should have an upload speed of 10 Mbps instead of 20 Mbps. The providers added a presentation to enhance their case. AT&T also filed to add a 50 Mbps download/6 Mbps upload tier to “encourage broadband deployment to as many locations as possible” and the FCC “should reject proposals to over-emphasize more costly tiers.” AT&T is attempting to encourage the distribution of more funds to providers who supply slower Those opposed to the FCC’s increased broadband speeds have argued that the increased speeds would not benefit consumers and do not follow traffic flow, which favors downloading; thus, faster uploading speeds are unnecessary. The Rural Digital Opportunity Fund replaces the Connect America Fund (CAF), which primarily funded 100Mbps/20Mbps (equivalent to the new “above baseline” tier); thus, the ISPs’ proposed changes would be slower than what has been previously funded by the CAF. 

The FCC is dedicating $2 billion per year for the next ten years, for a total of $20.4 billion to subsidize the cost to bring rural American communities modern broadband and speed. The funds will be distributed “in a reverse auction to ISPs that agree to provide service in rural areas at the required speeds to at least 4 million homes and small businesses.” The fund will be paid for by Americans via phone bill fees. Chairman Pai said the fund will “provide up to gigabit-speed broadband in the parts of the country most in need of connectivity.” It is “the FCC’s single biggest step yet to close the digital divide,” said Chairman Pai. The Rural Digital Opportunity Fund is an effort to help the 20 million Americans that do not have access to fixed broadband speeds of at least 25Mbps download and 3Mbps upload obtain those broadband speeds. However, consumers are often shown the highest speeds they could possibly get, therefore, ISPs could implement slower speeds for consumers.

Groups representing smaller ISPs urged the FCC to reject slower speed because the prior CAF Phase II auction included a 100Mbps/20Mbps tier. NCTA and ACA stated, “[i]t would be remarkable ‘backsliding’ indeed from the CAF Phase II auction to adopt lesser standards – such as lower upstream speeds or entirely new, lower speed tiers – for an auction that will be conducted at least two years later and will distribute funds into the early 2030s. Rather than closing the digital divide, USTelecom’s proposal will only widen it.” NCTA and ACA wrote that the proposed slower standards would not comply with Federal universal service law.

It is unclear when the FCC will finalize the fund’s auction details and broadband speeds.