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Summary

On November 20, 2018, the US regulator, the FCC, announced a proposal to increase minimum rural broadband speeds to 25Mbps download and 3Mbps upload speeds (25Mbps/3Mbps). This would bring rural communities in line with the minimum speeds of urban areas and thereby reduce the urban–rural broadband gap that currently exists.

The FCC's proposed minimum rural broadband speed will future-proof the telecoms infrastructure

In the US, broadband forms part of the scope of universal service goals, as it falls within the "advanced telecommunications services" under Section 254 of the Telecommunications Act of 1996. This ensures that access to such services is made available across all regions of the nation, especially to low-income consumers and those in rural and high-cost areas, at prices that are reasonably comparable to those provided in urban areas. All telecoms services providers are expected to make an equitable and nondiscriminatory contribution to universal service. The FCC has set out funding mechanisms and minimum speeds in its universal service regulatory orders. Until now, this has included minimum speeds of 25Mbps/3Mbps in urban areas and 10Mbps/1Mbps in rural areas. On November 20, 2018, the FCC proposed to raise the minimum broadband speed in rural areas to 25Mbps download speed and 3Mbps upload speed. This would bring these areas in line with the minimum broadband speed in urban areas. These higher speeds better reflect the needs of modern households, which are increasingly connected and adopting services that require high-bandwidth connections.

The increase boosts speeds in areas that receive broadband through government-subsidized programs such as the Connect America Fund (CAF), which funds networks in less populated areas. However, the increase in minimum broadband speed will only be applied to new networks and not existing infrastructure. The increase in speed is part of the wider reform of universal service subsidies for broadband that will be proposed by the FCC at its next meeting in December. There will also be other incentives introduced to encourage ISPs to increase the speeds of existing networks.

The FCC has put considerable effort into improving broadband coverage and speeds, but there is still a considerable urban–rural divide. Deploying broadband to connect the vast geographic area of the country has been challenging for the US government. By the end of 2016, urban areas saw 97.9% coverage with speeds of 25Mbps/3Mbps. In rural and tribal areas, the broadband deployment for the same services were at 69.3% and 64.6% for the same period, respectively. It is clear that the market cannot rely on market forces to deliver ubiquitous high-speed broadband without regulatory intervention. Raising the minimum speed in rural areas should ensure this gap is reduced.

The US is not the only country to look at increasing the minimum speeds of the broadband universal service obligation (USO); however, globally there is inconsistency in how regulators are thinking about the needs of their citizens. Some have only limited the obligation to basic broadband, whereas others, such as the US, have a more future-proof vision. The US minimum speed is far higher than most other countries – in the UK, the USO for broadband will increase to 10Mbps by 2020, Spain's minimum speed is set at 1Mbps, while Finland has set the minimum speed at 4Mbps.

Appendix

Further reading

Universal Service Obligations for Broadband, TE0007-001038 (August 2016)

US (Country Regulation Overview), GLB005-000057 (July 2018)

Author

Sarah McBride, Analyst, Regulation

sarah.mcbride@ovum.com

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