Last week, the Federal Communications Commission (FCC) formally adopted a draft order aimed at supporting the buildout of robust wired broadband networks in underserved rural areas. The Commission created the Rural Digital Opportunity Fund, which targets up to $20.4 billion over ten years for investment in high-speed broadband networks. In addition to narrowing the digital divide, these networks could help facilitate the adoption of Internet of Things (IoT) devices, autonomous vehicles, and connected cities (or towns) in more remote and hard-to-reach areas.

With so much attention paid to spectrum allocation and the 5G rollout, it is easy to forget the critical role wired networks play in supporting the Internet of Things, which often requires high bandwidth and lower latency. In areas lacking the wired infrastructure necessary to support high-speed broadband, connectivity challenges can severely limit the utility of IoT devices. That’s why the FCC’s Rural Digital Opportunity Fund Order is relevant not only to internet service providers and rural consumers but also to stakeholders in the IoT ecosystem.

The FCC’s order, among other measures, sets forth the following major directives:

• Establishing the Rural Digital Opportunity Fund, which will use competitive bidding to allocate up to $20.4 billion over ten years to support broadband networks in underserved areas;
• Increasing the minimum speed to 25/3 Mbps from the 10/1 Mbps benchmark used in prior rural buildout initiatives; and
• Prioritizing support going to areas entirely lacking even 10/1 Mbps broadband, as well as rural Tribal areas.

The New Rural Digital Opportunity Fund.

The core of the FCC’s plan is the creation of the Rural Digital Opportunity Fund itself, which will assign annual financial support for a ten-year term to companies that offer voice and broadband support to all eligible homes and small businesses within specified geographic areas. The Commission will select support recipients through a competitive bidding process, giving priority to companies offering higher speeds, greater usage allowances, and lower latency. This competitive bidding process will also take place in two phases. Phase I, which the FCC expects to commence this year, will allocate up to $16 billion and will target census blocks that FCC data deems “wholly unserved” with broadband at speeds of 25/3 Mbps. Phase II will assign at least $4.4 billion to locations in census blocks that FCC data demonstrates as only partially served, as well as any areas not won in Phase I.

Increasing the Minimum Speed to 25/3 Mbps.

The FCC is also focusing on providing higher network speeds and lower latency to these areas. The FCC’s order increases the minimum download/upload speeds for subsidized broadband deployments from 10/1 Mbps—which was the minimum required for participation in the Connect America Fund—to 25/3 Mbps, harmonizing it with the definition of “advanced communications services” that the FCC adopted in 2015. This increase could help level the playing field between rural and urban areas and pave the way for adoption of IoT devices in areas where they have previously failed to gain traction.

Prioritizing Support to Unserved Areas.

Because insufficient network speed is fatal to the effectiveness of IoT devices, the lack of broadband support in rural areas creates geographic “dead zones” where the IoT sphere essentially ends. The Commission’s order aims to open up these areas for rural users, as Phase I of the auction focuses on entirely unserved locations. It also emphasizes connectivity on Tribal lands, which historically have fallen on the wrong side of the digital divide.

Dissents.

The Commission’s two Democratic members supported the overarching plan to create the Fund and do all that can be done to close the digital divide. They made partial dissents, however, to raise certain concerns. For example, Commissioner Starks expressed concern that Phase I funds would be allocated based on “bad data,” referencing ongoing concerns over the FCC’s mapping data as to where broadband is, and is not, built out. Commissioner Rosenworcel, who also partially dissented, commented that the 25/3 Mbps speed tier may soon be obsolete and stated that the minimum network speed should have been set higher.

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The Rural Digital Opportunity Fund Order is the latest FCC action aimed at strengthening the nation’s wired broadband infrastructure. The increased connectivity spurred by these investments could broaden the market for IoT devices in areas where they previously could not function.