Survival of Small Providers Depends in Part on Policy Decisions: CCA Chief

“Whether we have carriers in some of these rural markets, at the end of the day, comes down to being a policy decision,” Donovan said. “In much of the country, if these carriers go away, then there will not be the same density of towers” and coverage will be lost. The nation will lose the commitment that small carriers have to serving their communities, he said.

Reauthorization of FCC auction authority “is really setting the stage that there are going to be additional auctions” and “is encouraging for our members,” but the rules matter, Donovan said. CCA members want updated bidding rules and incentives for small carriers, he said. They want “a meaningful chance to walk away with spectrum wins” and continue to advocate for smaller geographic licenses.

Donovan said FCC Chairman Brendan Carr understands rural carriers and the issues they face, including on spectrum. Carr “also wants to make sure that the FCC has successful auctions, and it’s no secret that there are fewer carriers overall” who could bid. With “fewer players at the top level,” there aren't as many potential bidders without smaller players, he said. Carr also wants to ensure that spectrum sold in auctions is fully used, Donovan added.

One potential concern is that if a new band comes online and national carriers don’t bid, there may not be “the equipment ecosystem necessary to deploy that spectrum,” he said. “Is it going to be in handsets?” That concern is growing as the “gulf" between small and large carriers widens, he said. “A small carrier isn’t going to be in the same position to go to Samsung or Apple or Qualcomm or anyone and say, ‘Pretty please, put this band into all the devices'” or in network equipment.

Still unclear is what EchoStar’s sale of spectrum to AT&T and SpaceX (see 2509090036) will mean for spectrum demand and future auctions, Donovan said. CCA hasn’t taken a stand on either transaction, and “we need to wait and see what’s filed and dig into some of the details, not only to see what could give members pause but what creates opportunities.” The deals are two of the biggest proposed in many years, he noted.

Some smaller carriers have had difficulty keeping up with data demand, especially in markets where they’re offering fixed wireless, Donovan said. “It’s a mixed bag -- different carriers have different spectrum portfolios.” Most CCA members serve sparsely populated markets, but with pockets that are more densely populated, he said.

5G Fund Questions

Donovan said he’s hearing little about the 5G Fund, which commissioners approved in August 2024, with a dissent by then-Commissioner Carr. The order established a multi-round reverse auction to pay out up to $9 billion to bring voice and 5G mobile broadband service to rural areas of the U.S. otherwise unlikely to see 5G (see 2408290022). In view of the Carr dissent, changes are likely, Donovan said.

One of the biggest issues that has emerged with the 5G Fund is whether it can be used not only to build new towers but to support the continuing operation of existing ones, Donovan said. Some of the towers have become “unprofitable to the point of being almost unsustainable as roaming as a business case for rural carriers has gone away almost entirely.”

Carolina West and Appalachian Wireless have filed petitions at the FCC seeking waivers that would allow them to receive supplemental high-cost universal service support to pay for operations (see 2508120047), Donovan noted. Based on what CCA members are saying, “they may be the first two to file such waivers, but they are far from unique.” The hope is that the 5G Fund can be tweaked to pay operating costs in uneconomic areas, he said.

Rising Costs

CCA members also face some challenges from tariffs and rising costs, Donovan said. “The price of everything from electronics to steel to energy affects their business operations.” When companies are operating on a “really tight margin, anything that squeezes it further” makes it more difficult for small providers to survive, he added.

Some CCA members are pursuing BEAD funds to offer fixed-wireless broadband, but the rules are different in each state, Donovan said. “There is interest, but it really does vary pretty dramatically state by state.” Members were relieved that the USF survived a challenge at the U.S. Supreme Court, but questions about the future of the fund remain, he said.

In addition, Donovan said he's optimistic about a recently relaunched congressional working group to study a legislative revamp of the USF (see 2508010051). The lawmakers who "are leading this effort are serious about getting something done,” he said. “This isn’t just a messaging exercise,” but “passing laws is hard, and it seems particularly hard in the current climate.”