Federal Communications Commission Chairman Ajit Pai is proposing a $20.4 billion rural broadband fund that could connect up to four million homes and small businesses over the next ten years.

The new program will be part of the Universal Service Fund (USF), and it will be similar to an existing USF program that began during the Obama administration. In 2015, the USF's Connect America Fund (CAF) awarded $9 billion for rural broadband deployment—$1.5 billion annually for six years—in order to connect 3.6 million homes and businesses.

Carriers that accepted the CAF money are required to finish the broadband deployments by the end of 2020. Pai's proposed Rural Digital Opportunity Fund will be the follow-on program, an FCC spokesperson told Ars. The fund would "inject $20.4 billion into high-speed broadband networks in rural America over the next decade," the FCC said.

At $2 billion a year over ten years, the fund will provide more money each year over a longer period of time than the CAF program it would replace. It will also fund higher-speed services. The CAF funding only required carriers, including AT&T and CenturyLink, to deploy broadband with speeds of at least 10Mbps downstream and 1Mbps upstream.

In November 2018, Pai said he's proposing to raise the standard for subsidized deployments from 10Mbps/1Mbps to 25Mbps/3Mbps. But the program announced today will also try to go beyond the 25Mbps/3Mbps minimum. In an email to reporters, Pai's office said the Rural Digital Opportunity Fund will "provide up to gigabit-speed broadband in the parts of the country most in need of connectivity."

The new fund is "the FCC’s single biggest step yet to close the digital divide and will connect up to four million rural homes and small businesses to high-speed broadband networks," Pai's office also said.

About 20 million Americans lack access to fixed broadband with speeds of at least 25Mbps down and 3Mbps up, according to FCC data.

ISPs will compete for funding

The new fund will distribute the money in a reverse auction, a type of competitive bidding process. If the resulting broadband deployment is similar to the previous program, it would end up providing wired broadband in some areas and fixed wireless in others.

The FCC said the home and business broadband buildout will "help support future 5G technologies," which may be a reference to the fact that mobile networks require plenty of fiber to provide bandwidth to cell sites. 5G could also become important for home broadband—Verizon has been using its early, non-standard version of 5G to deploy home Internet in limited parts of a few cities.

Last month, Pai proposed a new spending cap on the FCC's Universal Service programs that deploy broadband to poor people and to rural and other underserved areas. This could ultimately limit the amount of Lifeline subsidies that provide discounts on phone and broadband service to low-income consumers. But it shouldn't interfere with Pai's rural fund plan, because the proposed cap is higher than the USF's overall current spending.

All Universal Service programs are paid for by Americans through fees on their phone bills.

5G spectrum auction in December

Pai today also announced that a spectrum auction for frequencies to be used with 5G services will begin on December 10, 2019. This auction was already planned and will auction off licenses in the Upper 37GHz, 39GHz, and 47GHz bands. The FCC already auctioned 5G frequencies in 28GHz and has a 24GHz auction beginning on March 14.

"With these auctions, the FCC will release almost 5 gigahertz of 5G spectrum into the market—more than all other flexible use bands combined. And we are working to free up another 2.75 gigahertz of 5G spectrum in the 26 and 42GHz bands," the FCC says. The FCC is also trying to free up mid-band spectrum in the 2.5GHz, 3.5GHz, and 3.7-4.2GHz bands for 5G.

Pai and President Trump will be speaking publicly about the 5G plans this afternoon.