Reforming Federal and State Universal Service Mechanisms to Deliver Broadband to Rural Areas United States Cellular Corporation NARUC Summer Meeting Nashville, TN July 24, 2016 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
Purpose of FCC Presentation • To provide credible data demonstrating that mobile wireless coverage in rural areas is not nearly as comprehensive as government sources indicate. • To advocate for federal universal service support mechanisms that fulfill the Congressional directive to deliver to rural Americans access to advanced services that are reasonably comparable services to those available in urban areas. • To suggest an alternative for Mobility Fund Phase II, to replace a Phase I mechanism that largely failed. 2 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
CQA Paper – Mobile Voice and Broadband Coverage • Suggests ways to measure coverage, service availability, network quality, and subscriber experience. • For broadband, most mapping sources used by the FCC use advertised speeds, or contain no speed data. • CQA’s analysis highlights stark differences in coverage, depending upon the mapping source. • 2016 Broadband Progress Report states that 87% of rural Americans lack access to 10/1 mobile broadband service. 3 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
These Findings Should Give the Commission Pause – Using Some of the Drive Test Resources Deployed for Auction 901 Verification to Audit the NBM Would Be a Useful Exercise. 4 Source: 2014 CostQuest Analysis of National Broadband Map and Mobile Pulse Data 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
Percentage Of Field Tests Meeting Advertised 10/1 Throughput Speed: Carrier X Carrier Z State Measurement Unit Mobile Pulse Mobile Pulse SD Roads 23.2% 57.1% SD Population 31.5% 58.9% SD Business Firms 28.8% 63.0% CO Roads 6.8% 18.1% CO Population 4.9% 18.6% CO Business Firms 5.8% 17.5% ID Roads 27.6% 31.7% ID Population 27.7% 24.5% ID Business Firms 24.6% 25.4% WI Roads 55.3% 60.6% WI Population 59.1% 55.4% WI Business Firms 62.5% 56.1% WY Roads 11.6% 35.4% WY Population 10.1% 25.6% WY Business Firms 8.9% 23.7% TOTAL Roads 33.0% 44.5% TOTAL Population 34.3% 32.3% TOTAL Business Firms 31.9% 32.3% 5 Sources: 2014 Mobile Pulse & CostQuest Associates Analysis 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
CQA Paper – Ongoing Support for Operations and Maintenance of Rural Mobile Networks • A tower requires 900 active subscribers at an ARPU of $56.21, for five years, to achieve positive cash flow. • Just a 6.5% ARPU reduction (<$4.00) requires 300 more subscribers to break even by year five. • Without approximately 900 active subs, support for maintenance capex and opex can be critical to keeping a cell site on-air. 6 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
Proposal for a State Broadband Grant Fund Proposal would deliver grants and matching funds to participating states. • Simple rule template for technology neutral awards, empowering states to • direct funds to areas identified as unserved or underserved. Simple scoring system and verifiable commitments required of carriers. • If FCC does not act, then a state having statutory authority could and • should adopt a BB fund within its state USF mechanism. NE, CO, NM, CA, VT, WV, ME, DE have BB fund mechanisms. 7 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
Improving Mobile Broadband in Rural Areas is a Critical National Priority • Public safety – the rise of location-based services, text and video 911, and FirstNet. • Health care – monitoring devices, video conferencing for first responders. • Internet of Things – 21 billion devices by 2020 and $15 Trillion of GDP by 2030. • Agriculture – connected machinery, livestock management, irrigation, commodity tracking. 8 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
Improving Mobile Broadband in Rural Areas is a Critical National Priority (cont’d) • Education – students increasingly using mobile to access learning materials. • Low-income households - over half use a mobile device for all communications and Internet needs. • None of these benefits will come to rural Americans unless high-quality mobile broadband is available everywhere they live, work and travel. 9 8300 Greensboro Drive Suite 1200 McLean, VA 22102 www.fcclaw.com (703) 584-8666
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