Program will push expansion into uncovered, unprofitable regions, but is it worth the big sticker?

At a time when the federal government's spending is being increasingly scrutinized, the U.S. Federal Communications Commission has announced a new plan to pour almost a third of a billion dollars into the telecom industry.  The handouts will be delivered to U.S. telecommunications firms which bring 3G service within 2 years or 4G service within 3 years to underserved/uncovered regions.

Technically the new funding isn't all that new.  The creation of the "The Mobility Fund" marks the long awaited, long overdue revamp of the Universal Service Fund (USF), a Clinton-era program that was designed to increase land line phone service to rural areas of the U.S., which carriers refused to serve due to undesirable profit potential.

Today with land lines going the way of the T. rex, The Mobility Fund represents the USF's digital makeover.

The fund's targeted regions included large swatches of land in the American Rockies, including large parts of Idaho, Nevada and Washington state.  Alaska is another target for wireless expansion.  Under the FCC rules carriers will "bid" on the grant contracts in a reverse auction.  The contract will be rewarded to the carrier who agrees to provide the lowest cost service to customers if multiple carriers submit proposals for a region.

Bidding will run from June 27 to July 11, with the FCC announcing winners at the end of the $300M USD in targeted Phase I funding grants.  Winners must provide service to 75 percent road miles in the "census tract" for the region.

Just because the new plan doesn't create new government spending doesn't mean that its big sticker price won't provoke controversy and debate.  Some question whether the government should use taxpayers money while "playing wireless Santa Claus".

Alaska Highway
The new FCC Mobility Fund will reallocate existing dollars to pay for mobile network expansion in neglected areas such as the picturesque highways of Alaska. [Image Source: Planetware]

FCC Chairman Julius Genachowski counters such criticisms, stating, "For too many, dead zones in mobile coverage are too common, and today's action will help close those gaps.  By using market-based mechanisms, we'll ensure more gaps in mobile coverage are closed, and that every dollar is spent wisely and efficiently."

Under the plan, $500M USD will be provided each year in coming years to boost deployment and service speeds.  The FCC has also promised $50M USD to provide low-cost wireless services to Native American reservations.

Wireless technology is a key objective for President Obama, who has sought to overhaul outdated funding programs and free up spectrum via repurposing of government channels and special auctions.

Source: FCC [press release]

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