Satellite companies are doing their best to make sure their technology is considered a viable option to receive Universal Service funding as the high-cost USF program transitions to focus on broadband, as evidenced by a satellite industry ex-parte this week with the FCC.
“Satellite broadband service is the most cost-effective technological solution for over 40% of the unserved households that the Commission has identified,” wrote WildBlue/ViaSat General Counsel Lisa Scalpone in an ex parte summary letter.
The FCC has previously stated that about seven million homes lack access to broadband, which would put the satellite companies’ target number at around 2.8 million households. The commission’s own research focused on a considerably lower number of about 250,000 homes that could be served most economically using satellite.
The FCC expects to set a minimum bandwidth threshold of 4 Mbps for the proposed broadband universal fund—and although some satellites do not meet that minimum threshold today, several companies including WildBlue/ViaSat should be able to meet that minimum requirement using satellites launched this year.
Some have questioned why satellite companies should receive Universal Service funding because their costs of serving each individual customer are virtually identical, regardless of where each customer is located. Terrestrial –based technologies, on the other hand, are considerably more expensive to deploy in sparsely populated rural areas or in areas with rough terrain—and the aim of the USF program traditionally has been to help cover costs in high-cost areas.
Satellite providers argue, however, that if they can obtain funding through the USF program, they will be able to deploy higher-capacity satellites and make other network upgrades sooner.
The FCC appears to be favorable to allowing satellite providers to bid in the reverse auction proposed as a means of identifying a single carrier that would provide broadband service in areas that currently cannot get broadband at speeds of 4 Mb/s. Organizers of a recent FCC workshop on Universal Service reform invited satellite and wireless providers to conduct demonstrations, but providers of fiber-based technologies were not invited—probably because the FCC views fiber as a more costly option. The same FCC study that said 250,000 homes could be most economically served using satellite also found that about 90% of unserved homes could be most economically served using wireless service at 700 MHz.
If the FCC opts to allow broadband Universal Service funding to be used for satellite broadband, it wouldn’t be the first time a government-run program has given money to satellite providers. Satellite companies also garnered about $100 million in funding through the broadband stimulus program.