FCC Amends Rules to Expand Rural Broadband Deployment

WASHINGTON — Continuing its work to expand broadband access in rural areas, the Federal Communications Commission amended its rules to help bring high-speed internet to locations that are very costly to serve. The change allows carriers greater flexibility in planning deployment projects that are funded by the high-cost universal service support program. Under the current rules, high-cost carriers lose all universal support for capital expenses on a construction project if the average costs per location exceeds a company-specific threshold. This encouraged carriers to exclude certain high-cost homes from a project entirely, even if including those homes would be more efficient. The order amends the rule to only disallow expenses above the threshold.

The FCC’s March 2016 Rate-of-Return Reform Order limited reimbursement of capital expenditures by the high-cost program. The goal was to preserve universal service funds for more efficient projects with deployment to a greater number of lower-cost locations. Construction projects that exceed the cap were denied subsidies completely.

Under the old rules, for example, if a carrier’s average per location cap is $5,000 and a project cost $50,500 to serve 10 locations, the cost of the entire project would be disallowed. As a result, the high-cost locations might never receive broadband-capable service. Today’s change allows carriers to pay for the portion of the excess capital expenditure with their own funds, rather than disallowing support for the project altogether, while continuing to promote the efficient use of universal service.


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