Microsoft's ambitious goal of connecting 23 million rural Americans within 5 years hinges on access to certain empty broadcast channels, known as white space, to deploy low-cost, high-speed mobile broadband. But Microsoft will have to fend off at least two industries that are skeptical of plans to use the particular airwaves — and are actively lobbying the FCC to push back on Microsoft's ideas.

Why it matters: Extending broadband service to rural areas has been a persistent challenge. There's a renewed focus on getting service to areas too remote or costly to reach with traditional fiber or wireless service, boosted by the possibility of broadband funding in a White House infrastructure package.

"Last year's election underscored for the entire nation that there's a important segment of the population that feels neglected and left behind," Microsoft President Brad Smith told Axios. "We certainly asked ourselves whether we should be doing more in rural America than we were. We studied the problem more and concluded that now is a time when the market can be accelerated and do it in a way that the cost to closing the broadband gap can be reduced dramatically."

Wary of Microsoft's approach:

  • Broadcasters don't like the idea of Microsoft getting free access to airwaves without a license. "Microsoft's a $540 billion market cap company," said Dennis Warton, EVP at National Broadcasters Association. "If Microsoft wanted broadcast spectrum, it could have gotten it the old fashioned way by actually bidding on it. That's what other telecom companies did, instead of asking for a free-loader gift from the government."
  • Hospital groups use some of these airwaves to connect machines like cardiac and fetal monitors. They are concerned that sharing those frequencies with other unlicensed devices will interfere with remote monitoring of hospital patients.

Smith said he thinks its time all the parties discuss options and "listen to each other more" to solve the rural broadband problem. "Someday broadcasters may want to take advantage of white space as well."

How white space works: The FCC set aside some slivers of airwaves to remain open for "unlicensed" devices and services, similar to WiFi. The airwaves can carry signals across long distances and can penetrate walls, making them ideal for providing wireless broadband service in rural areas. When a special database locates available channels, an antenna beams the broadband signal as far as a 10 miles. Consumers would be able to connect to broadband through a special dongle attached to their device.

Other possible hurdles:

  • Microsoft see's Trump's trillion-dollar infrastructure package as a huge opportunity for targeted federal broadband investment, but whether it materializes is a big open question.
  • Microsoft wants to enter revenue-sharing agreements with small telecom providers in rural communities. But these firms, often family-owned and serving a few thousand customers, are risk-averse and slower to be able to invest in this kind of new technology.
  • Microsoft is pitching states on matching capital investment costs, but many state governments are already pretty strapped for cash.

Lowering costs: Microsoft is far from the only firm interested in taking advantage of white space technology. Google has long been as strong proponent as well. Hardware and chip companies have also been involved in the R&D, and mass production of devices is key to bringing costs down. "We have to shift from the mindset that this is a $60-80 billion problem nationally, to thinking about it being an $8-12 billion challenge," Smith said.

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