FCC Offers 10 Telcos up to $10 Billion Over 6 Years to Deploy More Broadband
The FCC offered 10 telcos a total of up to $10.1 billion over six years to extend broadband to almost 9 million rural residents. If the companies accept the full amount of the Connect America Fund Phase II USF money, at $1.68 billion annually, they would have to build out service of at least 10 Mbps downstream and 1 Mbps upstream by the end of 2020, the agency said Wednesday. The telcos have until Aug. 27 to decide whether to accept the CAF Phase II offers state by state, and in states where the price-cap carriers decline, "the subsidies will be offered to providers on a competitive basis," according to a commission news release and Wireline Bureau public notice (see here and here).
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Several of the telcos said they're reviewing the offers, and the requests irked NCTA because cable operators can't participate. More than 100 challenges were filed with the commission over whether thousands of individual census blocks should be eligible for CAF Phase II funding, which some said were fueled in part by attempts by companies to protect their own turf from competitors, or to be able to tap into the multibillion-dollar pot to move into other areas (see report in the Aug. 21, 2014, issue.) The money would go to areas populated by rural residents lacking any high-speed broadband, and the CAF "is tackling the rural digital divide," FCC Chairman Tom Wheeler said in the news release.
CenturyLink could get the most money if it accepted all of it and built out service, $3.09 billion over six years, followed by AT&T at $2.96 billion and Frontier Communications at $1.7 billion. Windstream could get as much as $1.07 billion, followed by Verizon at $863.4 million, FairPoint Communications at $229 million and Consolidated Communications at $83.5 million. Getting a few or several million dollars each annually would be Cincinnati Bell, Hawaiian Telcom and Micronesian Telecom. In the first round of CAF Phase I, not all the funding was accepted (see report in the Oct. 24, 2012, issue.) The FCC said that Phase I provided $438 million to expand broadband to nearly 1.7 million people.
NCTA finds it "unfortunate that the $10 billion centerpiece" of CAF "excludes cable operators and other network providers capable of providing more efficient service than the DSL providers who are the exclusive beneficiaries of this support," a spokesman said. "By offering all of the money to DSL providers to provide 10 Mbps service," the agency "perpetuates the rural broadband gaps" the commission found in its Telecom Act Section 706 report "rather than fixing them," he said.
Telcos that responded to requests for comment said they're evaluating the offers, some on a state-by-state-basis, and/or reviewing the PN, including AT&T and CenturyLink. FairPoint is evaluating the offer to serve over 106,000 locations "in terms of its expected economic benefits and costs," a spokeswoman said. "CAF Phase II is a critical next step in delivering life changing broadband service" to rural areas, Frontier CEO Dan McCarthy said in a written statement. He said the company looks "forward to participating and utilizing the resources to expand broadband infrastructure across our rural markets," after previously accepting $133.2 million for 196,000 locations.