Policy Brief

The Effect of Satellite and Wireless on Rural Universal Service Policy

Subsidies for rural broadband are unnecessary, reduce competition and undermine private infrastructure investment

  • The National Broadband Plan set an objective of universal access to data speeds of at least 4Mbps.
  • Technological innovation has resulted in a dramatic increase in competition for the supply of data and voice service in rural areas.
  • It is now possible to obtain 3Mbps or faster rates of data transfer practically anywhere, either over 4G cellular wireless, or over satellite. The National Broadband Map, commissioned by the Federal Communications Commission, shows that more than 99.9 percent of Americans have access to some form of broadband with download speed in excess of 3 Mbps. In many rural areas, such services can be delivered at significantly lower cost than through new cable or fiber lines.
  • In addition, many rural homes without cable or fiber can obtain relatively high-speed wired broadband through DSL over existing copper lines.
  • The National Broadband Plan universal service objective has thus been met and no more subsidies are needed.
  • Continuing to subsidize the deployment of wired broadband in rural areas through the Connect America Fund and other programs undermines the incentive of cost-competitive firms to invest in infrastructure, harming competition and likely reducing the proportion of people who are able to access higher speed broadband.