The FCC adopted a notice of proposed rulemaking (NPRM) today that seeks comment on previously established plans to use a reverse auction process to award funding to cover some of the costs of making 5G service available in areas where it isn’t available today. The commission also asked whether the $9 billion budget previously established for the 5G Fund is sufficient and sought comments on other issues.
Plans for the 5G Fund were originally made in 2020, at a time when there was less public support for providing funding to boost communications services in high-cost rural areas. The $9 billion budget was based in large part on the amount of funding that was already going to mobile providers to support service in rural areas.
The FCC did not have accurate data at that time that confirmed the location of available mobile and fixed broadband services. Accordingly, the commission opted to wait to conduct the auction until the updated broadband data collection process was completed, as it now has been.
The NPRM adopted at today’s monthly FCC meeting seeks comments on a proposal to limit eligible areas to resolution-9 hexagons that have broadband serviceable locations and/or roads and that lack unsubsidized 5G service.
Those hexagons are part of the H3 geospatial indexing system. H3 is an open-source GIS dataset that overlays the glove with hexagonal cells at various resolutions. Resolution-9 hexagons have an average area of .105 kilometers.
The draft NPRM seeks comment on how to aggregate eligible areas to minimum geographic areas for bidding.
According to an FCC fact sheet included with the draft NPRM, the commission also proposes the use of a bidding and support price metric based on dollars per square kilometer for eligible areas, and proposes not to use a previously adopted adjustment factor. Alternatively, the commission is seeking comments on the use of the number of locations and/or road miles in the eligible areas.
According to the draft NPRM, the FCC is also seeking comments on other issues, including:
- whether to treat the release of the public notice announcing the close of a 5G Fund Phase 1 auction to be the point at which support under the 5G Fund commences and the phase down of legacy mobile high-cost support in areas that are ineligible for 5G Fund support begins; and
- whether the 5G Fund should be used to encourage the deployment of open radio access network (O-RAN) technology.
Reverse Auction Plans
The FCC apparently is still proposing a two-phase reverse auction, as the fact sheet in the draft NPRM references more than one phase.
Reverse auctions award funding in an area to the provider that commits to deploying service at the lowest level of government support. Some stakeholders have been skeptical about reverse auctions in the wake of the Rural Digital Opportunity Fund (RDOF) auction, which had a budget of $20.4 billion to be distributed using two separate auctions.
The budget for the first auction was $16 billion. The commission received winning bids for $9.2 billion and ultimately awarded only about $6 billion after a high percentage of defaults. In view of that situation and other government broadband funding programs established since the RDOF auction, some stakeholders do not expect a second RDOF auction to occur.
A key concern about the RDOF auction was that providers didn’t have to report several key financial metrics until after the auction, which is a departure from the approach typically used in spectrum auctions. Hopefully, the industry and the agency have learned from the RDOF auction and will craft rules for the 5G Fund auction to address the earlier auction’s pitfalls.