Broadband: Observations on Past and Ongoing Efforts to Expand Access and Improve Mapping Data

Broadband is critical for economic, educational, and personal uses. Industry and federal investments have made broadband available to the vast majority of Americans. For example, FCC's high-cost program provides funding to broadband providers to deploy broadband in rural, insular, and high-cost areas. However, some rural areas continue to lack access due, in part, to challenges with providing service to areas where deployment costs are high and returns on investment are low.

GAO was asked to examine the current state of broadband investment and deployment. This report examines (1) industry and federal investments to deploy broadband in the United States since 2009, and (2) efforts federal agencies are making to address deployment challenges.

GAO analyzed industry and federal government data from 2009 through 2017 or 2018 (the most recent year of available data) on broadband investments and deployment; reviewed statutes and regulations, rulemaking proceedings, and FCC, RUS, and NTIA program information; interviewed federal officials; and obtained information about deployment challenges from interviews with 32 industry, academic, and consumer stakeholders, including 16 broadband providers selected to represent a range of provider sizes and types of technologies.

Telecommunications industry and federal government investments have expanded access to broadband in the United States. From 2009 through 2017, the industry made capital investments of about $795 billion, including investments in broadband infrastructure, according to U.S. Census Bureau survey data. Federal investments totaled about $47.3 billion to target broadband infrastructure for rural areas over the same time, according to data from the Federal Communications Commission (FCC), the Rural Utilities Service (RUS), and the National Telecommunications and Information Administration (NTIA). FCC's Universal Service Fund high-cost program expanded service to about 2.3 million residential and small business locations, mostly from 2015 through 2017, according to data FCC collects from providers. FCC reported that fixed broadband service was available to 94.4 percent of the U.S. population in 2018, up from 81.2 percent in 2012, although affordability and digital literacy remain barriers to adoption and use. While service availability for people in rural areas increased from 45.7 percent in 2012 to 77.7 percent in 2018, service in rural areas continues to lag behind urban areas, according to FCC's broadband availability report (see figure).

FCC and RUS have taken actions to address deployment challenges, such as taking steps to improve their ability to pinpoint where gaps in broadband deployment still exist. In August 2019, FCC proposed an initiative to change how it collects broadband deployment data, with the goal of using a new methodology to improve data accuracy and FCC's ability to target funds to locations that lack access. FCC and RUS have also coordinated on broadband deployment issues. For example, to avoid funding areas where broadband service is already deployed, agency officials regularly communicate on information about where their broadband deployment programs are funding new deployments. Continued communication and coordination on topics such as collecting and using improved data will be especially important in assuring that federal dollars are effectively targeted as agencies' efforts to improve mapping and target resources progress.

In prior work, GAO recommended that FCC improve its mapping data and RUS better manage its broadband programs. The agencies have addressed some, but not all, of the recommendations. FCC and RUS reviewed a draft of this report and provided technical comments.

The recent outbreak of the Coronavirus Disease 2019 (COVID-19), a fatal  and highly communicable disease caused by the coronavirus, across the  United States and the resulting limitation of large gatherings have  reinforced the importance of access to broadband. Many health care  systems, government entities, businesses, educational institutions,  restaurants, and other merchants have transitioned some or all  operations online to minimize interpersonal contact and help slow the  spread of the disease. Lack of access to broadband poses challenges to  accessing telemedicine, telework, remote instruction, and resources for  home schooling, as well as e-commerce. Because broadband has  become increasingly critical to economic opportunity, jobs, education, and  civic engagement, those without access are unable to enjoy the social  and economic benefits of broadband. As we have reported—and media  reports continue to highlight—people in unserved and underserved areas,  low income families, some minority groups, and tribal communities are  disproportionately affected by this lack of broadband access, often  referred to as “the digital divide.” The pandemic, in particular, highlights  this divide between those who have access to broadband to more readily  access essential goods and services and those who do not have such  access.

Over the years, the federal government has invested resources to  increase broadband access. The American Recovery and Reinvestment  Act of 2009 (Recovery Act) provided funding through grants and loans for  broadband infrastructure in order to expand access to broadband internet  service, among other things. Since the passage of the Recovery Act,  private industry has made significant investments in broadband  infrastructure in order to expand broadband services in unserved and  underserved urban and rural areas. The federal government administers  programs to invest federal funds that target rural unserved and  underserved areas through the Federal Communications Commission  (FCC), the Department of Agriculture’s Rural Utilities Service (RUS), and  the Department of Commerce’s National Telecommunications and  Information Administration (NTIA). Among these agencies’ programs, the  largest is FCC’s Universal Service Fund high-cost program that supports  broadband deployment in rural, insular, and high-cost areas and collects  data to track where broadband is available. In the past 10 years, we have  reported on these agencies’ programs and other aspects of broadband  deployment. However, despite over a decade of industry and federal  investments, about 1 in 4 people living in rural and tribal areas continue to  lack access to fixed broadband, according to FCC’s latest deployment  report.

Congress has expressed concern about the effectiveness of efforts to  close this gap, even as the gap has been a priority of FCC and other  federal agencies, as well as the subject of our prior work. For example, in  2014, we examined FCC’s efforts to increase broadband deployment in  unserved and underserved areas and we identified challenges to  providing this service, such as low returns on investment. You asked us  to review investment in broadband infrastructure and describe ongoing  federal efforts to improve broadband deployment in rural areas. This  report examines:  1.  what is known about industry and federal investments to deploy  broadband in the United States since 2009, and  2.  efforts by federal agencies to address broadband deployment  challenges.

To determine what is known about industry and federal investments, we  analyzed data from the U.S. Census Bureau’s Annual Capital  Expenditures Survey from 2009 through 2017, representing  telecommunications providers’ investments in structures and equipment.  Each year, the Census Bureau conducts a survey of a sufficiently large  sample of telecommunications providers that offer broadband service  using different technologies. We analyzed survey data from 2009—the  year of the Recovery Act’s enactment—through 2017, the most recent  year for which survey results were available at the time of our analysis.  We also analyzed disbursement data for FCC’s high-cost program, grants  and loans awarded by RUS, and grants awarded by NTIA for broadband  infrastructure over the same time. Throughout this report, investment  estimates are inflation-adjusted to 2018 dollars using gross domestic  price indices. We assessed the reliability of these data by reviewing  supporting documentation; interviewing knowledgeable Census Bureau,  FCC, RUS, and NTIA officials; and comparing data against other  analyses. We found the data to be sufficiently reliable for the purposes of  estimating industry and federal investments over time. We also reviewed  our prior reports calling on agencies to improve the information used in  measuring the impact of federal broadband programs; examined steps  that agencies took to improve such information; and reviewed information  from agencies showing the impact of federal spending.

To determine broadband deployment in urban and rural areas, we  reviewed FCC’s Broadband Deployment Reports showing broadband  availability, beginning in 2012. We omitted other available government  data prior to 2012 because they were not compatible with data presented  in FCC’s broadband reports spanning 2012 to 2018, the most recent year  for which FCC has available data. We also reviewed our prior reports on  broadband availability data to understand the difficulties in measuring  actual deployment using such data. We acknowledge that FCC’s  broadband data overstate fixed broadband availability by counting an  entire census block as served by providers that serve some, but not  necessarily all, of that block. This limitation could be particularly  problematic in areas with large census blocks. Despite this limitation, we  believe these data represent the best snapshot of fixed broadband  availability. In response to our July 2014 report, FCC began collecting  additional deployment data on new broadband service locations funded  by the high-cost program, data that we analyzed to provide information on  how that investment supports deployment. We reviewed the reliability of  the FCC broadband deployment and high-cost deployment data by  reviewing documentation about the collection and interviewing FCC  officials. We determined that the data were sufficiently reliable for the  purposes of reporting information about broadband deployment and the  impact of high-cost funds on broadband deployment.

To describe efforts by federal agencies to address broadband deployment  challenges, we reviewed relevant statutes and regulations; FCC  rulemaking proceedings; agency broadband reports; and supporting  documentation on FCC, RUS, and NTIA broadband programs. To  describe ongoing efforts to help close deployment gaps, we examined  FCC’s and RUS’s funding and mapping initiatives aimed at closing  broadband gaps. We also examined existing agreements among FCC,  RUS, and NTIA as well as administrative documentation on how they  coordinate to operate their programs. For both objectives, we interviewed  program officials from FCC, RUS, and NTIA as well as selected  stakeholders to understand challenges and efforts to close deployment  gaps. Specifically, we interviewed 32 stakeholders from the private and  nonprofit sectors to obtain their views on this issue. Stakeholders include  16 broadband providers we selected to represent a mix of companies  based on company size and location, including some of the largest  broadband providers as well as regional carriers located in rural areas,  and the type of broadband technologies (such as fiber, cable, mobile,  satellite, and fixed-wireless) to ensure we covered all relevant delivery  methods. We also interviewed eight associations representing industry or  state public service commissioners, six research entities, and two  consumer groups. Views from these stakeholders are not generalizable  but are included to illustrate various perspectives on these issues.

We conducted this performance audit from November 2018 to May 2020  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Consumers receive broadband service from telephone, cable, mobile,  satellite, and utility companies that own and operate the  telecommunications infrastructure. Fixed technologies, like cable or fiber,  can provide broadband to single locations like customers’ homes or  businesses. Mobile technologies provide internet access wherever a  customer has access to a signal. Customers connect to a mobile wireless  network through a mobile device, such as a smartphone. Internet service  that is high speed and provides an “always-on” connection, so users do  not have to reestablish a connection each time they access the internet,  is commonly referred to as “broadband.” FCC’s benchmark speed for  what constitutes “advanced telecommunications capability,” a subset of  broadband, has increased over time as consumers use the internet for an  expanding range of purposes that requires faster speeds. In 2015, FCC  set a benchmark speed for fixed advanced telecommunications capability  to 25 megabits per second when downloading and 3 megabits per second  when uploading (25 Mbps/3 Mbps). Internet service at various speeds  allows for a variety of online activities, such as those shown in figure 1. In  addition to fixed providers, satellite providers have begun meeting this  benchmark, and FCC has recognized them as a viable source of  advanced telecommunications capability. FCC has not set a similar  benchmark for mobile services.

The Federal Role in Rural Broadband Access

The federal government has emphasized the importance of ensuring  Americans have access to broadband, and a number of agencies provide  funding to subsidize broadband deployment in areas, such as rural areas,  in which the return on investment has not attracted private investment. As  we have previously reported, rural areas may have features that increase  costs of deploying and maintaining broadband networks. For instance,  low population density, low broadband adoption rates, or mountainous or  rugged terrain can make it especially costly for fixed and mobile providers  to deploy infrastructure to rural areas with an expectation of getting a  return on their investment. The Communications Act of 1934, as  amended by the Telecommunications Act of 1996, specifies that consumers in “rural, insular, and high-cost areas” should have access to  telecommunications and information services at rates that are  “reasonably comparable” to rates charged for similar services in urban  areas. Consequently, federal programs exist to support investment in  broadband deployment for high-cost areas through federal grants, loans,  and other subsidies.

The largest share of federal support comes from FCC’s Universal Service  Fund, which includes four component programs designed to ensure  access to affordable communications for schools, libraries, rural health  care providers, low-income consumers, and those in rural and high-cost  areas. The largest component of the Universal Service Fund is the high- cost program—which includes the Connect America Fund and the Rural  Digital Opportunity Fund—that targets financial support to rural high-cost  areas for the deployment and maintenance of voice and broadband- capable networks. Table 1 shows selected federal programs funding the  deployment of broadband infrastructure.

FCC has other roles and responsibilities in regulating nationwide  communications activities in addition to those identified above. FCC  collects deployment data twice a year from broadband providers in order  to better identify areas where broadband service is available. FCC,  RUS, and NTIA have used and continue to use these data to inform their  broadband programs. Furthermore, FCC and NTIA jointly determine the  amount of spectrum—a finite natural resource that makes a variety of  wireless communications possible—allocated for federal, nonfederal, and  shared use. FCC also regulates the use of licensed and unlicensed  spectrum through its regulatory process.

This report’s broad view of a decade of federal efforts to advance  broadband access builds on our prior work.

FCC Universal Service Fund. In 2014, we examined FCC efforts to  increase broadband deployment in unserved areas and identified  legal, policy, and economic concerns—for example, low returns on  investment—in deploying broadband in unserved and underserved  areas. We also examined varying approaches for financing  broadband deployment in high-cost areas, including local funding  sources and a variety of ownership structures over the infrastructure.

FCC deployment data. In 2014, we examined FCC’s efforts to reform  its high-cost program and the extent to which FCC was collecting data  to determine the effectiveness of these reforms, among other  objectives. We identified gaps in FCC’s data analysis and reporting,  including a lack of transparency and accountability of spending. We  recommended that FCC analyze how it uses its high-cost program  funding and make that analysis publicly available at least annually.  FCC has taken action to implement our recommendation to address  the lack of transparency and accountability of spending. In 2018, we  reviewed data that FCC collected from providers to describe the  locations of existing broadband infrastructure and help federal  programs identify unserved and underserved areas to target for  federal funding. We found that these data overstated broadband  access, especially in tribal lands, and recommended that FCC take  actions to improve these data. FCC concurred with the  recommendations and has begun taking action, but the agency has  not yet fully implemented any of the report’s three recommendations.

Broadband adoption. In 2015, we stated that adopting broadband at  home can provide a number of benefits, including access to  employment opportunities (searching for and applying to jobs);  education (research, web-based learning, and homework); and  services for economic and social gain (such as telemedicine and  entertainment). We reviewed federal efforts to address broadband  adoption barriers that consumers face and recommended that FCC  revise its strategic plan to more clearly state if broadband adoption is  a priority, and if so, what outcomes FCC intends to achieve, action  that the agency took the following year. We also recommended that  NTIA include performance metrics for the agency’s broadband  adoption efforts in its annual performance plan. Both FCC and NTIA  implemented these recommendations.

RUS grant and loan programs. In 2017, we assessed whether  RUS’s procedures and activities related to its broadband grant and  loan programs are consistent with leading management practices. We  found that its activities and procedures were consistent with four  leading practices and partially consistent with six leading practices.  We made five recommendations to RUS to improve management  practices for specific programs, like the Community Connect  Program. In response, RUS implemented two of the  recommendations to develop and document clear goals and  performance measures for its broadband loan and grant programs  and to establish and implement procedures to conduct a risk  assessment of each program. RUS agreed with, but has not yet  implemented, the report’s other three recommendations to: (1)  conduct periodic evaluations of completed grant projects to determine  the outcomes associated with these projects; (2) establish a timeline  for implementing a centralized internal data system for staff to use in  managing and monitoring loans and grant awards; and (3) develop,  update, and maintain complete written policies and procedures for  RUS’s programs as a way to retain and communicate organizational  knowledge internally among agency staff.

Broadband competition. In 2017, we found that infrastructure costs  and other factors can affect competition among broadband providers.  Such costs can limit competition in urban areas but more significantly  limit competition in non-urban and less populated areas. We made  two recommendations to FCC to solicit and report on the views of  stakeholders regarding: (1) how well FCC’s programs promote  broadband competition and (2) how varying levels of broadband  deployment affect broadband prices and service quality. In  response, FCC implemented these recommendations by soliciting  public comments in July 2018 to seek feedback on the effectiveness  of its actions addressing competition among broadband providers and  on how varying levels of broadband deployment affect prices and  service quality. In December 2018, FCC reported comments that it  had received from this solicitation in the first version of a biennial  report on the broadband market. In May 2019, FCC also reported  stakeholder comments related to the agency’s broadband deployment  data, including service quality data.

Tribal broadband access. In 2018, we examined challenges that  tribes face in accessing broadband services, focusing on two  particular areas: (1) tribes’ ability to obtain and access spectrum for  providing broadband and (2) tribes’ partnerships with private sector  companies and others, and the ability to obtain funding to deploy  broadband infrastructure on tribal lands. We found that tribes cited a  number of barriers to obtaining licenses for spectrum. We also found  that although tribes said partnerships with the private sector improved  access to broadband, there are few such partnerships, and that tribes  face regulatory barriers in applying for funding from RUS grant  programs. We made three recommendations to FCC to collect data  on tribal access to spectrum, analyze unused spectrum over tribal  areas, and make information about available spectrum more  accessible. We also made one recommendation to RUS to identify  and address any regulatory barriers that may impede efforts by tribes  to obtain RUS funding. FCC agreed with the recommendations, and  RUS neither agreed nor disagreed with its recommendation. The  agencies have not yet implemented these recommendations.

Industry and Federal Investments Have Reduced Broadband Deployment Gaps and Improved How Progress Is Measured, Although Some Challenges Persist

Industry Invested Billions of Dollars in Broadband

According to the U.S. Census Bureau’s Annual Capital Expenditures  Survey data, the telecommunications industry that provides various types  of broadband services—fixed, mobile, or satellite (and other)—spent an  estimated $795 billion (2018 dollars) in total capital expenditures from  2009 through 2017. Selected broadband providers that we contacted  stated that they used the majority of their capital expenditures to improve  the capability and reliability of their existing broadband infrastructure or  expand infrastructure into new areas. For instance, one provider said it  expanded wireless broadband service in Iowa and another provider  constructed new towers to transmit fixed-wireless broadband signals  across parts of Oklahoma. Some providers we contacted said that their  capital expenditures may include funds from federal broadband programs  or other items not related to broadband, such as the purchase of real or  personal property or the acquisition of other broadband companies.  Providers that we contacted offered few, if any, details about their  investments. Instead, they said that their detailed expenditures were  proprietary or they referred us to their annual reports, which contain  limited information on capital expenditures. Census data showed that  annual total capital expenditures increased from about $78 billion in 2009  to about $97 billion in 2017 (an increase of about 24 percent), with an  average annual growth rate of about 2.8 percent. See figure 2. Industry  capital expenditures for specific telecommunications sectors varied. For  example, estimated expenditures for fixed services consistently exceeded  estimated expenditures for mobile services, although mobile services  experienced a greater increase—55 percent compared to an 8 percent  increase in estimated expenditures for fixed services from 2009 through  2017.

Federal Agencies Targeted Investment for Rural Deployment and Improved Their Ability to Measure Impact

In comparison to industry spending, federal investment is much smaller,  representing about 6 percent of total industry capital expenditures.  However, this investment is critical to supporting deployment of  broadband in rural areas where industry might not otherwise invest, due  to potentially higher costs and lower investment returns. According to  FCC, RUS, and NTIA data, federal program investments totaled about  $47.3 billion (2018 dollars) to target broadband infrastructure in unserved  or underserved areas from 2009 through 2017. Of these three federal  agencies, FCC provided the largest share of support through the  Universal Service Fund’s high-cost program—which is an ongoing  program. A second agency, RUS, offered loans and grants. And NTIA  primarily funded broadband deployment through the Recovery Act,  which provided one-time funding for projects that are largely complete  and are no longer active. To illustrate:

FCC’s high-cost program. The high-cost program disbursed about  $41.7 billion (2018 dollars) in support of both deployment and  maintenance of voice and broadband-capable networks from 2009  through 2017.

RUS’s programs. RUS provided grants or loans, or a combination of  both, through a variety of funding programs. The Broadband Initiatives  Program—a Recovery Act program—awarded about $2.2 billion  (2018 dollars) in grants to industry for infrastructure projects in fiscal  year 2010. RUS’s Community Connect Grant Program—a grant  program designed to fund broadband deployment in rural areas where  such service did not exist—awarded $95 million (2018 dollars) in  grants from fiscal year 2009 through fiscal year 2017. In addition to  these grants, RUS provided infrastructure loans that recipients must  repay to the government with interest. Specifically, RUS provided  about $4.0 billion (2018 dollars) in loans to private providers through  the Broadband Initiatives Program, the Telecommunications  Infrastructure Loan Program, and the Broadband Loan Program.

NTIA’s Broadband Technology Opportunities Program,  Comprehensive Community Infrastructure projects. This  Recovery Act program awarded a one-time $3.3 billion in competitive  grants to states, municipalities, and non-profit and commercial  organizations in fiscal year 2010. Nearly all of the 116 broadband  infrastructure projects have been completed.

All three programs have used metrics to show progress in closing  deployment gaps. Specifically, FCC has a metric for locations served,  whereas RUS and NTIA measure miles of fiber-optic cable deployed, in  addition to having metrics that count particular types of locations served  or reported number of new subscribers.

FCC collects data from providers about new locations to which they  deployed broadband using high-cost program support. Deployment  data submitted by providers that receive support from FCC’s high-cost  program showed that they used those funds to make broadband  available to about 2.3-million new residential and small business  locations, mostly from 2015 through 2017. In commenting on a draft  of this report, FCC stated that this figure has increased to about 4.2- million new locations. This updated figure is based on data through  2019 that are not yet publicly available; they are expected to be  released later in 2020. Providers report these data to FCC, which are  subject to verification by the Universal Service Administrative  Company—the not-for-profit corporation designated by the FCC as  the administrator of the Universal Service Fund, including the high- cost program. As of May 2020, FCC officials said that FCC has  authorized Connect America Fund Phase II support to deploy  broadband at 25 Mbps/3 Mbps or higher to more than 631,000  locations by 2025 or sooner.

In December 2016, RUS released the final Broadband Initiatives  Program progress report, which noted that the program deployed  66,521 miles of fiber-optic cable, added 5,468 wireless access points,  and resulted in 334,830 subscribers receiving new or improved  broadband.

In December 2016, NTIA reported that the Broadband Technology  Opportunities Program resulted in the deployment of 117,072 miles of  new or upgraded broadband infrastructure. NTIA also reported that  awardees connected nearly 26,000 community anchor institutions—  such as schools, libraries, and hospitals—to broadband and provided  access to nearly 14,149 homes and businesses.

Although the agencies used metrics to show progress, the metrics used  were not always the same, making it difficult to draw comparisons among  programs.

The impact of these federal programs goes beyond the number of miles  of fiber or the number of subscribers. Although these programs promoted  the availability and use of broadband throughout the country, our prior  work found that they also stimulated economic development and created  new jobs. For example, we reported in 2012 that NTIA’s and RUS’s  Recovery Act programs had created about 9,000 full-time jobs.  Recovery Act grantees we interviewed for our prior work gave examples  of the types of economic development broadband enabled, such as  tourism-oriented businesses being better able to provide web sites and  online reservation systems. They also reported that broadband  infrastructure improved broadband speed for schools, community  colleges, and health care providers.

Several studies have attempted to measure the economic benefits of  broadband. A 2006 study prepared for the Department of Commerce  claimed to be the first attempt to quantify the impact of broadband on  economic growth. The study found that, between 1998 and 2002,  communities in which broadband was available experienced more rapid  growth in employment, the number of businesses, and businesses in  information technology sectors, relative to comparable communities  without broadband. Subsequently, other studies have attempted to  assess the economic impact of broadband. For example, a 2016 study  from the Hudson Institute found that rural broadband providers directly  and indirectly added $24.1 billion to the U.S. economy and the rural  broadband industry supported about 70,000 jobs in 2015, both through its  own employment and the employment that its purchases of goods and  services generated. About the same time, a 2016 broadband forum  sponsored by the National Science Foundation and NTIA concluded that  during the past decade, research has deepened the understanding of the  potential impacts of broadband on the economy and society. The study  made clear the need for more research on the impact of broadband. On  December 11, 2018, FCC opened the new Office of Economics and  Analytics, consisting of economists, attorneys, and data professionals to,  among other things, provide economic analysis, including cost-benefit  analysis, for FCC proceedings.

Broadband Availability Has Increased, but Measuring Deployment Has Limitations

FCC’s annual Broadband Deployment Report, which reports on  broadband deployment generally and not just deployments made with  FCC funding, states that broadband availability has increased both  nationally and for specific segments of the population, as shown in figure  3.

National: About 94.4 percent of the U.S. population had fixed  broadband service available at customer premises, such as  residences, with minimum speed of 25 Mbps/3 Mbps in 2018, up from  81.2 percent of the population in 2012.

Rural: About 77.7 percent of the rural population had fixed broadband  service available with minimum speed of 25 Mbps/3 Mbps in 2018, up  from 45.7 percent of the rural population in 2012.

Tribal: About 72.3 percent of tribal lands had fixed broadband service  available at the same speeds in 2018, up from 32.2 percent of the  tribal population in 2012.

Although these data show broadband availability increasing in a variety of  ways, the data also demonstrate that fixed broadband is still much more  readily available to urban consumers than it is available to consumers in  rural areas. FCC’s Broadband Deployment Report shows that as of 2018,  about 22.3 percent of the rural population and 27.7 percent of tribal  population did not have fixed broadband service available with minimum  speed of 25 Mbps/3 Mbps; whereas, only about 1.5 percent of the urban  population did not have fixed broadband service available at the same  speed. As we will discuss later in this report, limitations with how FCC  collects and uses deployment data from providers to measure broadband  access overstate the extent to which broadband is available, a weakness  we have pointed out and that FCC has taken steps to address.

As the availability of broadband service has increased over time, some  segments of the population continue to lag behind others in adopting  broadband, even if it is available, and therefore are unable to benefit from  it. Our prior work has shown that several factors have been, and continue  to be, barriers to broadband adoption—specifically, affordability, lack of  perceived relevance, and lack of computer skills. FCC identified these  barriers in its National Broadband Plan of 2010, and our more recent work  in 2015 showed that these three barriers persist. We found that:  the cost of a subscription for internet service and the purchase of  computer equipment was the most frequently identified barrier;  the perception that broadband does not provide enough utility relative  to its cost acted as another barrier; and  the lack of exposure to or knowledge about computers, such as by  those aged 65 or older and those with low levels of income and  education, was another barrier.

Compounding the effect of these adoption barriers is the lack of  competition. FCC has reported that competition could result in lower  prices and higher quality services from broadband providers. However,  our prior work from 2017 found that 51 percent of the U.S. population had  only one fixed broadband provider offering minimum speed of 25 Mbps/3  Mbps. According to the FCC’s 2018 Communications Marketplace  Report, that percentage has decreased to about 27 percent of the U.S.  population who had only one fixed terrestrial broadband provider offering  minimum speed of 25 Mbps/3 Mbps. In addition, FCC’s report stated  that 68 percent of the population had at least two providers and  approximately 95 percent had at least one provider. Competition in rural  areas can be particularly challenging as rural areas generally do not have  enough demand to support multiple carriers.

Federal Agencies Have Taken Action to Help Close Broadband Gaps by Modifying Funding Programs and Reforming Deployment Data

Federal Agencies Have Modified Programs to Increase Broadband Support

Over time, the types of technologies that provide access to broadband  have evolved. Federal agencies have responded by making changes to  their programs that support broadband. Specifically, FCC and RUS have  expanded which types of broadband providers are eligible to receive  support from their programs, allowing increased participation by satellite  and wireless broadband providers. Satellite and mobile broadband may  be able to overcome some impediments to access faced by other  services, such as high deployment costs and geographical barriers that  pose challenges for deploying broadband over fixed networks using fiber  or cable. In turn, this expansion of eligibility corresponds with the  shrinking gap in broadband deployment discussed previously.

In the case of FCC, the agency has taken action since the 1990s to  address technological changes related to broadband deployment. For  example, changes in communications technology and competition in the  communications marketplace led FCC to reform the high-cost program for  purposes beyond maintaining telephone service, including supporting  broadband deployment. In 2011, FCC adopted new rules that  fundamentally changed the high-cost program and expanded the program  to support broadband capable networks. Under these rules, FCC  established new funding streams within the high-cost program, such as  the Connect America Fund, which addresses fixed broadband availability  gaps in underserved and unserved areas, and the Mobility Fund, which  supports deployment of wireless networks to provide mobile broadband.

FCC also updated its regulatory framework to recognize changes in  existing technology and potential technologies in delivery of broadband.  For example, in 2016, FCC deemed geostationary satellites eligible to  participate in the second phase of the Connect America Fund.  Additionally, since 2017, FCC also recognized low and medium earth  orbiting satellites as broadband-capable technologies that may be eligible  to participate in programs after deployment. According to FCC officials,  prior to these changes, they did not consider satellite as broadband- capable due to its high signal latency and internet speeds that were  below the FCC benchmark speed, issues that recent technological  advances have improved. Similar to FCC, RUS funding programs used  to focus funding on telephone service but over time, RUS has reformed  them to provide funding for broadband infrastructure and deployment. For  example, according to RUS officials, since 1995 the RUS  Telecommunications program has only funded systems that were capable  of providing high-speed internet and now supports broadband services.

In addition to past program transformation efforts, both FCC and RUS  have proposed actions to further reform or expand their programs that  provide funding for broadband deployment. For example, in August 2019,  FCC started the rulemaking process for the new Rural Digital Opportunity  Fund. In January 2020, FCC adopted a Report and Order establishing a  framework for the fund, providing up to $20.4 billion through two funding  rounds, each providing support over overlapping 10-year periods. This  fund is the next iteration of the high-cost program, and it continues the  overarching goals of prior high-cost programs to expand service into rural  areas. The Rural Digital Opportunity Fund will focus its first round of  funding on census blocks that FCC deployment data have marked as  completely unserved, and per the FCC order will incentivize parties  participating in the program to serve tribal census blocks. Similarly, in  April 2020, FCC initiated a rulemaking to establish the 5G Fund—which  would replace the Universal Service Mobility Fund Phase II—and make  up to $9 billion available to carriers to aid in deployment of advanced 5G  mobile wireless services in rural America. In addition to FCC’s actions,  RUS officials said they are planning for future funding rounds for the  ReConnect Program after they have awarded the initial phase of funding.  As of April 15, 2020, RUS had closed the application phase for a second  round of funding under the program.

Despite federal efforts to address broadband gaps, there are still limits on  participation in some programs. For example, RUS’s ReConnect Program  offers a mix of grants and loans to incentivize broadband infrastructure in  areas not currently served by existing service providers. However, the  ReConnect Program limits eligibility to fixed and satellite broadband  providers, with mobile wireless networks ineligible for funding. In order to  participate in FCC’s high-cost program, a provider must meet FCC’s  definition of an eligible telecommunication carrier (ETC). However, our  prior work and stakeholders we interviewed for this review identified  barriers to attaining ETC status. As we previously reported, tribal entities  cited the statutory requirements applicable to ETC designation as a  primary barrier to accessing federal funds. Additionally, cable providers  we spoke with for this review also said they viewed the ETC designation  as a potential barrier to entry into the high-cost program. At present, FCC  and states have complementary authority to make ETC designation  decisions. During our 2018 review of barriers that tribes face in  supporting broadband investment, FCC officials said that most of the  carriers that were eligible for ETC designation at that time were the  telephone companies that were in existence when the 1996 Act was  enacted into law. Further, FCC officials said they determined that the  statute is clear that only ETCs may receive program support, and  therefore the agency does not have the authority to allow non-ETCs to  receive high-cost support payments. More recently, greater numbers of  companies that are not traditional telephone companies have received  ETC designation, particularly in connection with the Connect America  Fund Phase II.

In addition to the ETC designation matter described above, industry  stakeholders highlighted several other issues that can affect access to  federal support, noting that these issues may require further action by  relevant federal agencies or possible legislative action. The issues cited  included:

Technology Neutral Federal Programs: Most federal broadband  programs focused on fixed technology over other technologies, but as  described above, there have been reforms to broaden eligibility to  other providers. Even with those reforms, industry stakeholders  representing satellite and mobile service providers noted that there  are program requirements that affect one technology more than  another technology. For example, satellite providers that sought  funding through FCC’s Connect America Fund said that, after they  sought funding in 2018, FCC changed how it planned to measure  latency, a change affecting only satellite providers.

Spectrum Availability: Availability of adequate spectrum was cited  by a range of stakeholder groups we spoke with as an issue that  could affect providers’ ability to deploy services. Spectrum availability  affects many broadband services. For example, in addition to satellite  and mobile providers, fixed-wireless—a point-to-point or point-to- multipoint broadband service delivery option—is a type of fixed  broadband service often utilized in rural areas that needs spectrum to  deliver service. In its comments, FCC noted that the changes it made  to the exact testing conditions were in response to requests by satellite  providers and that the agency balanced changing expectations with the  benefits of minimizing unnecessary burdens on carriers and their  customers imposed by the testing regime.

Federal Funding Mechanisms: Some industry stakeholders we  spoke with noted that the programs’ funding requirements and the  type of federal funding mechanism utilized—such as grants, loans, or  hybrids of grants and loans—could affect a provider’s ability to access  federal funds. For example, RUS awards its Reconnect Program  funding through grants, loans, or both. Providers we spoke with noted  that for all of the funding options, the Reconnect Program requires a  lien on the funded assets. For some providers, allowing a lien against  an asset would violate stockholder agreements or other aspects of  their business. Additionally, representatives from an association  representing state public service commissions we spoke with also  stated that the FCC high-cost fund and its various funding programs  should be reviewed periodically to ensure that both the contributions  and funding outcomes are in the best interests of consumers and  providers.

Although agencies have modified their broadband funding programs to  keep up with changes in broadband services, other changes that could be  beneficial to the public would require statutory changes. The last major  overhaul to telecommunications law occurred under the 1996 Act, which  established many of the telecommunications programs that now fund  broadband deployment and established statutory constructs like ETCs,  which, as discussed above, can affect provider eligibility. Given the  significant and ongoing changes in how Americans use the internet and  the technologies that provide access to it, members of Congress have  proposed legislative actions in recent years to sustain progress in closing  the broadband deployment gap. Among the proposals were a range of  federal funding and incentives aimed at improving funding to rural areas  and addressing issues related to deployment.

FCC Has Proposed Mapping Data Reforms Aimed at Improving Federal Broadband Program Administration

As we previously reported, FCC’s definition of broadband availability can  lead to overstatements of fixed broadband availability. For instance, in  2013 FCC began collecting broadband availability data by census blocks.  The agency counts an entire census block as served if a provider reports  that it does offer—or could offer without an extraordinary commitment of  resources—service some, but not necessarily all, of the locations in the  census block. FCC has recognized that by measuring availability at the  census block level, not every person may have access to broadband in a  block that the data show as served. FCC has noted that census blocks in  rural areas tend to cover larger geographic areas than in urban areas and  providers may only deploy service to a portion of the census block.  Deployment reporting in this manner does not allow FCC to answer with  certainty questions like how many Americans have broadband available  to their homes or where it needs to target its resources. Several selected  providers and industry associations we contacted also expressed  concerns about how deployment is measured, and said the measurement  approach could make it difficult for them to make informed investment  and deployment decisions. In 2013, FCC declined to gather fixed  broadband data at a level more granular than the census block—such as  address-level data—because the agency concluded that the complexity  and filing burden on the industry would outweigh the benefit. In 2018,  we recommended, among other things, that FCC develop and implement  methods—such as a targeted data collection—for collecting and reporting  accurate and complete data on broadband access specific to tribal  lands. Subsequently in 2019, FCC began to address this  recommendation by establishing the Digital Opportunity Data Collection— a more granular, nationwide data broadband deployment collection  effort.

FCC issued a Report and Order, and Second Further Notice of Proposed  Rulemaking, on this new initiative to improve the accuracy of broadband  deployment mapping data in August 2019. This new initiative requires  fixed broadband providers to identify their service areas using free-form  geographic shapes called polygons. The polygons would identify the  presence of service with more geographic precision than the current  census-block method affords. Officials from FCC and USTelecom stated  this new mapping effort was informed in part by a 2019 USTelecom  mapping and data-collection pilot project. According to USTelecom  officials, this pilot project combined several data sources to determine  “serviceable locations,” which refers to specific locations or structures that  could need broadband. With these serviceable locations, USTelecom’s  pilot project sought to distinguish between buildings not typically needing  broadband service—such as a barn or storage shed—from a primary  residence or small business. According to USTelecom representatives, a  combination of polygons and serviceable locations data would yield a  better picture of where to target new investments in deployment to  achieve the greatest increase in access to broadband. FCC officials noted  that the impact of the polygon approach may vary depending on the  service features of each census block. Figure 4 below shows an example  of how the new polygon approach may result in improved data compared  to the census block approach currently used by FCC.

As part of the rulemaking, FCC has requested comments on several  issues, including how providers should define their polygons, and the  procedures that fixed providers should follow if their polygons are  disputed. At the time it issued the report and order, FCC had ongoing  investigations into the coverage maps of some wireless providers, and  therefore limited the new data collection obligations to fixed broadband  providers while seeking comment on how best to incorporate mobile  wireless coverage data into the effort in the future. FCC also proposed  the use of public input to help verify the accuracy of the polygons and  sought comment on whether it should discontinue the collection of census  block data if the polygon-based deployment data prove to be gathering  better deployment data once it is established. Additionally, on March 23,  2020, the Broadband Deployment Accuracy and Technological  Availability Act was enacted. The act directs FCC to issue final rules on  data collection for both fixed and wireless deployment within 180 days.  In commenting on a draft of this report, FCC noted that it is in the process  of implementing the statute, and that the statute largely affirms rules that  FCC adopted in August 2019 but differs in some respects. FCC also noted  that, while it is working to implement the requirements of the act, it is  unable to comply with all of the requirements without a further  appropriation.

This change has the potential to improve how both FCC and RUS target  deployment gaps by providing more accurate and granular information  that could better identify truly unserved areas and results in better  targeting of federal funds to those areas. As we discussed above, our  prior work has found that FCC’s current deployment data lack accuracy in  a manner that overstates where consumers have access to broadband,  which, in turn, limits federal agencies’ efforts to effectively target their  broadband funds. Specifically, our 2018 report noted that overstating  access increases the risk that unserved areas remain unserved, since  areas that deployment data show as served are not eligible for funding.  Although that report specifically looked at this risk for tribal areas, it is  potentially a concern for other unserved areas. FCC officials noted that  improved data would help inform future funding under the high-cost  program by more accurately targeting unserved areas. RUS officials told  us that they use FCC deployment data as a source for RUS mapping and  program eligibility requirements for the ReConnect Program. RUS officials  also believe that their program would benefit from more accurate  deployment data.

FCC and RUS Continue to Provide Funding while Coordinating to Avoid Overlap

While efforts are under way to improve deployment data and mapping  efforts, both FCC and RUS are continuing to move forward with their  programs for funding broadband infrastructure in underserved and  unserved areas. The lack of accurate data regarding locations that are  not served by broadband may affect the ability of these agencies’  programs to target federal funds. In particular, providers and industry  associations noted there was a risk of federal programs subsidizing  deployment into areas that already have service, at the expense of an  unserved area that does not have any service. Given this risk, FCC and  RUS each have “eligible area” validation processes that they use to  determine if areas are already being served and therefore ineligible for  federal support. Additionally, FCC and RUS have engaged in interagency  coordination efforts to keep each agency’s program staff apprised of key  dates and issues in an effort to avoid overlap between the programs.

Officials from both FCC and RUS have stated that their programs are  complementary and noted that their eligibility validation processes  reduced the likelihood of service overlaps. The agencies use different  processes to determine which geographic areas are eligible for funding,  and they share information about the results of these processes as they  are able. According to FCC officials, the agency has used a process for  validating unserved areas in connection with its support of the Universal  Service high-cost program. This validation process primarily relies on  providers verifying the Form 477 data they self-report, and then using that  data to create and publish a list of unserved census blocks prior to  awarding funding. Results from this process have informed how FCC  establishes eligible areas, such as those eligible to receive funds in the  Connect America Fund’s second phase of awards.  A similar process is  under way in connection with the Rural Digital Opportunity Fund. In an  additional step to address concerns regarding program overlap, FCC  officials noted that the Rural Digital Opportunity Fund would exclude  census blocks that have been awarded funding through the RUS  ReConnect Program.

RUS’s process to verify eligible areas includes provider participation in  the verification, as well as onsite testing and research by field staff, to  independently verify eligibility of the geographic areas in each ReConnect  grant or loan application. RUS officials said they use the publicly  available FCC data on unserved areas as a key factor in eligibility  decisions. Specifically, RUS officials said that they focus ReConnect  eligibility on areas FCC reported as unserved as of 2015 when the first  round of FCC’s Connect America Fund program was started. They also  noted that throughout the application and funding process, they seek  input from providers through public notices and emails to solicit feedback  on whether areas selected for proposed funding are already served. After  receiving provider feedback on eligible areas, RUS then deploys field staff to conduct on-location tests and other reviews as necessary to determine  if the area was unserved prior to funding.

In addition to their eligibility validation steps, FCC and RUS officials told  us they share information about where their broadband deployment  programs are funding new deployments, as well as other relevant  information related to program activity, such as the timing of program  applications and awards. FCC and RUS officials told us that they share  program information through participation in interagency meetings and  working groups that focus on broadband deployment issues and through  posting relevant program information—such as funding decisions—online.  For example, the Chief of the FCC’s Wireline Competition Bureau and the  RUS Administrator, along with other FCC and RUS staff, met in July  2019, January 2020, and February 2020 to discuss issues related to their  respective broadband funding programs, including the roll out of the Rural  Digital Opportunity Fund and second round of the ReConnect Program.  FCC officials told us that at these meetings agency representatives  discussed the anticipated timing of elements of their respective programs  and ways in which to maximize coordination and avoid overlap. Officials  from both agencies also noted there has been ongoing communication  between FCC and RUS at the staff level concerning program status and  developments through phone calls and meetings. In addition to this  ongoing coordination between RUS and FCC, representatives of FCC  and RUS also said they participate in relevant working groups through the  American Broadband Initiative, such as the Initiative’s Federal Funding  Workstream, which meets bi-weekly to discuss broadband funding and  deployment.

The range of collaboration activities undertaken by RUS and FCC staff is  especially important because both agencies have similar goals but  different timelines for moving forward with their programs. For example,  as of March 2020, FCC had the eligible area validation process under  way for the Rural Digital Opportunity Fund. Although some timelines are  still to be determined, FCC plans to start bidding on the program’s auction  phase in October 2020. At the same time, RUS was in the midst of  announcing approved projects for the first funding round of the  ReConnect Program, and it had applications open for the second round  with applications due by April 15, 2020. FCC officials noted that they plan  to maintain close coordination with RUS to reduce the likelihood of  overlap with any areas that may be deemed eligible to receive ReConnect  funding in the program’s second round. Through prior reforms of their  respective broadband programs, FCC and RUS have taken steps to try  and effectively target federal dollars to support broadband deployment  while avoiding the potential to duplicate funding in an area. Continuing  to improve collaboration and information sharing regarding eligibility and  program timelines will be critical for both agencies to achieve greater  efficiency in their program’s ability to target funds to unserved areas and  thus make progress toward closing the deployment gap.

We provided a draft of this report to the Federal Communications  Commission, the Department of Agriculture’s Rural Utilities Service, and  the Department of Commerce’s National Telecommunications and  Information Administration for comment. FCC and RUS provided  technical comments, which we incorporated as appropriate. NTIA had no  comments.

We are sending copies of this report to the appropriate congressional  committees, the Chairman of the Federal Communications Commission,  the Secretary of the Department of Agriculture, the Secretary of the  Department of Commerce, and other interested parties. In addition, the  report is available at no charge on the GAO website at  https://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or vonaha@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix II.

Appendix I: U.S. Broadband Providers’ Capital Expenditures

Another estimate of capital expenditures by USTelecom—a broadband  industry association—uses a different scope and methodology than the  U.S. Census Bureau’s Annual Capital Expenditures Survey. The  association reports total capital expenditures for U.S. broadband  providers, as shown in table 2.

USTelecom’s data include expenditures from fixed (wireline), mobile  (wireless), and cable companies. Its primary source of data are publicly  traded companies’ financial statements filed with the Securities and  Exchange Commission. USTelecom also makes estimates for companies  that do not report financial information publicly. Its data exclude some  companies, such as satellite providers, telecommunication resellers, and  electric utilities. USTelecom publishes estimates annually for advocacy or  research purposes. Its capital expenditures data differ from the Census  Bureau’s Annual Capital Expenditures Survey estimates for  telecommunications industry in scope, methodology, and timing, among  other things. For instance, the Census Bureau’s survey is broader in  scope. Specifically, in addition to the types of companies USTelecom  includes in its data, the Census Bureau’s survey data include satellite  providers, resellers, and other telecommunications providers.

In addition, the Census Bureau collects data through a survey instrument  from both publicly traded and privately held companies across the United  States. It makes statistical inferences about the capital expenditures for  the entire telecommunications industry, whereas USTelecom collects  data mainly from financial reports for a defined set of providers and  makes estimates for companies that do not report financial information  publicly. Moreover, USTelecom typically releases its capital expenditure  data within a year after companies release their financial data while  preliminary survey results from the Census Bureau are made public about  2 years after companies report and data reliability assessments occur and  the final revised results are made public about 3 years after companies  report. In addition to the USTelecom and Census Bureau estimates,  investment firms, such as Goldman Sachs and UBS, also estimate or  may report industry capital expenditures for selected publicly traded  companies providing broadband service.

Appendix II: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Andrew Huddleston (Assistant  Director); Steve Martinez (Analyst in Charge); Oluwaseun Ajayi; Michelle  Bacon; Carl Barden; Melissa Bodeau; Hannah Laufe; Dan Luo; Malika  Rice; Sandra Sokol; and Betsey Ward-Jenks made key contributions to  this report.

The telecommunications industry and the federal government have spent hundreds of billions of dollars to expand broadband across the U.S. While broadband is available in most urban areas, about 1 in 4 people in rural areas lack access, according to recent data.

In 2019, the Federal Communications Commission and Department of Agriculture started new, multi-year broadband support programs intended to increase access in rural and tribal areas to reduce this digital divide. The FCC proposed a new mapping effort to target funding where it’s most needed. Coordinating the agencies’ work to avoid overlap will be critical to closing access gaps.

[Text updated to correct data on rural access.]