The FCC adopted an order today that establishes Phase II of the Mobility Fund.  As we have previously reported, the FCC established the Mobility Fund to provide universal service subsidies to help expand and preserve 4G LTE mobile coverage in rural areas and Tribal lands across the country.  Through Mobility Fund Phase II, the FCC announced at its public meeting today that it will provide $453 million in annual universal service support to eligible wireless providers for a period of ten years.  The FCC also plans reserve an estimated $34 million of the total $453 million of annual support for 4G LTE on eligible Tribal lands.

Although the FCC offered providers up to $350 million in one-time funding to effectuate the deployment of advanced mobile services across unserved and underserved areas through Mobility Fund Phase I, significant portions of the United States remain underserved by 4G LTE service.  The goal of Mobility Fund Phase II is to target areas that are most in need of support – any census block that is not fully covered by unsubsidized 4G LTE service with a minimum advertised download speed of 5 Mbps will be eligible for support.  Just as in the Connect America Fund (“CAF”) proceeding, the FCC will conduct a robust challenge process before the list of eligible areas is finalized by the FCC.

The $453 million in annual Mobility Fund Phase II support will be distributed through a market-based, multi-round reverse auction where bids are assessed by square miles covered in eligible areas.  The fact that the FCC will utilize square miles covered, rather than road miles covered, is a notable departure from Chairman Wheeler’s desire to measure wireless coverage by rural roads miles.  In order to be eligible to participate in the auction, wireless carriers must commit to providing mobile service with median data speeds of 10/1 Mbps, with a latency less than 100 milliseconds, at rate reasonably comparable to urban areas.  Furthermore, just like in the CAF program, wireless providers must also demonstrate a certain level of financial and technical capability to participate in the auction.

Significantly, the FCC also plans to phase down legacy support for competitive carriers, commencing the first day of the month following the close of the auction, with support ending after two years.  While this is not a surprise given the FCC’s policy stance on only subsidizing one provider in a given territory, two years is a relatively quick phase down compared to mechanisms implemented by the FCC similar contexts.

The adoption of two significant orders focused on broadband deployment only a month after Chairman Pai took the helm of the FCC is indicative of his desire to focus on ubiquitous broadband deployment across the nation, both wireline and wireless.  DWT will provide in-depth analysis of the order as well as the next steps for providers seeking to participate in Mobility Fund Phase II as soon as the text of the order is published.