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Notes from the Sandbox - The Rural Broadband Experiment Auction Results

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Author: 
Jonathan Chambers
Chief, Office of Strategic Planning and Policy Analysis

Recently, the FCC released a full list of bidders in the Rural Broadband Experiment auction, collected information from the low bidders on that list, and released a notice providing an opportunity for those who bid to indicate by January 6 their interest in continuing with the Rural Broadband Experiment and participating in a future auction. Over the past year, I have often been asked what we sought to learn from this experiment. Let me answer that by starting with a little history.

For decades, Universal Service – access to telephone service for all – has been an obligation of telephone companies and federal funding has been provided to help meet that obligation. In 2011, the FCC decided to move to a competitive bidding process to award ongoing support to serve rural and high cost areas in certain circumstances. The FCC has become skilled at running auctions. But the auctions we typically run are spectrum auctions, and a Universal Service reverse auction is a different animal.

So, the Rural Broadband Experiment was designed to answer questions about auctions for Universal Service funding. How should such a bidding process be structured? Who would participate? Would incumbent telephone companies cross into neighboring service territories? Would other types of entities step in – cable companies, satellite broadband, electric utilities? What types of technologies would be proposed? What amount of support would be requested? What happens if the FCC's cost model, which we are currently using to allocate universal service funding, is used to set a reserve price? Is competitive bidding for universal service funds scalable to the nation? What happens in areas where there are no bids?

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