FCC chair Ajit Pai says he plans to propose pulling the plug on the $4.5 billion Mobility Fund Phase II program and instead create a 5G Fund that would put up to $9 billion toward Universal Service Fund support for 5G mobile wireless in rural areas to help close the digital divide. 

He plans to circulate a notice of proposed rulemaking to that effect early next year, according to an FCC official speaking on background,

The $9 billion will be given out over a decade and is about $450 million per year more than the Universal Service Fund (USF) Mobility Fund allocation. The extra money will also come from USF. The official said there appeared to be enough to cover the increase.

The FCC will target rural areas that will be less likely to get 5G absent that support.

FCC: More CAF II Bidders Authorized for Rural Bucks 

The FCC has been migrating its phone subsidy program to broadband, and is now going to migrate its Mobility Fund Phase II (MF-II) subsidy program to focus on the next generation of that wireless technology. That's because the FCC said the carrier data that was supposed to help the FCC target that Mobility Fund money could not be relied on. 

That new 5G rural subsidy will be in the form of a reverse auction, which means bidders vie for money according to how inexpensively they could get the job done while meeting various service benchmarks. 

The chairman said at least $1 billion of that fund would go toward precision agriculture, which has also been an avowed priority of President Trump. 

The Phase II Mobility fund was to have gone to 4G LTE in unserved areas, but a report the FCC has just released found that data submitted by providers to help the FCC target those funds were not sufficiently reliable to proceed with that Mobility Fund Phase II. 

"Specifically, FCC staff conducted thousands of speed tests to measure network performance and concluded that the MF-II coverage maps submitted by certain carriers [it named Verizon, U.S. Cellular, and T-Mobile] likely overstated each provider’s actual coverage and did not reflect on-the-ground experience in many instances," the FCC said. 

The report recommended pulling the plug on the Phase II program and issue an enforcement advisory on submitting bad data.  

An FCC official said the chairman does not intend to take enforcement action against the carriers because there was not a sufficiently clear violation of a specific rule or sufficient evidence to establish that the coverage overstatement was deliberate

“5G has the potential to bring many benefits to American consumers and businesses, including wireless networks that are more responsive, more secure, and up to 100 times faster than today’s 4G LTE networks,” said chairman Pai in a statement. “We want to make sure that rural Americans enjoy these benefits, just as residents of large urban areas will. In order to do that, the Universal Service Fund must be forward-looking and support the networks of tomorrow. 

"Moreover, America’s farms and ranches have unique wireless connectivity needs, as I’ve seen across the country. That’s why I will move forward as quickly as possible to establish a 5G Fund that would bring next-generation 5G services to rural areas and would reserve some of that funding for 5G networks that promote precision agriculture. We must ensure that 5G narrows rather than widens the digital divide and that rural Americans receive the benefits that come from wireless innovation.” 

National Association of Tower Erectors (NATE), whose members will be helping build out that rural 5G, was pleased with the plan.

“NATE applauds FCC Chairman Pai for his leadership and initiative for unveiling a plan to establish a $9 billion fund that will play a critical role in helping close the digital divide and ultimately make 5G wireless services a reality in rural America,” said NATE executive director Todd Schlekeway. “This new fund is great news for NATE member contractors who will be playing a major role working alongside the wireless carriers to deploy the infrastructure, equipment and technology essential to enabling next-generation connectivity to all corners of the United States." 

“The FCC’s new 5G Fund would be an important investment to deliver next-generation wireless technology to rural areas," said Senate Commerce Committee Chairman Roger Wicker (R-Miss.). "I am particularly encouraged that the new fund would expand the availability of precision agriculture,” Wicker said. “I am glad to see that Chairman Pai has made this a priority and intends to dedicate additional resources to reach underserved areas more effectively.”

"With its latest announcement to deploy 5G in rural America, the FCC continues its smoke and mirrors show to cover up the poor state of broadband deployment in the nation," said Michael Copps, former FCC chairman and Common Cause special adviser. "First, many parts of the country -- both urban and rural -- lack 4G or any type of wireless connectivity at all. The FCC has systematically failed to address the wireless broadband needs of many communities but chooses to put the cart before the horse with another announcement on 5G. Second, the FCC buries the real story in its announcement -- wireless carriers have greatly exaggerated their coverage maps, helping paint an inaccurate picture of who has access to broadband. Third, the agency is seemingly not providing any new funding to deploy 5G."