FCC Draft Order Will Dole Out Another $300M in Expanded CAF Phase I Support, Officials Say
Another $300 million round of Connect America Fund Phase I money is set to be doled out, as outlined in an order circulated Wednesday by FCC Chairman Julius Genachowski, agency officials said. The order would maintain the existing benefit of $775 per location for unserved homes available in the first round of Phase I funding last year, while extending eligibility to additional homes that have low-speed Internet such as legacy 1.5 Mbps service, officials said. Those locations will be eligible for an amount somewhat lower than $775, they said. Funding will be available exclusively in areas where no unsubsidized competitors offer service, officials said.
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The order declines to adopt the “second-mile” fiber proposal originally proposed by ILECs and teed up in the NPRM, officials said. That proposal would have let carriers build second-mile fiber to neighborhoods to increase broadband speeds. A commission official said the new funding would “catalyze new private investment,” pointing to major telcos such as CenturyLink, Windstream and Frontier that have said they will match funding one-to-one with new private investment.
Only $115 million was accepted by ILECs in the first round of Phase I funding, and several members of Congress asked the commission to relax restrictions on the use of the money and offer more flexibility (CD Feb 12 p2). Price-cap carriers had asked the commission to broaden its approach to determining unserved areas eligible for Phase I support.
"Generally it is very good news for the price-cap ILEC community that there is a draft order that will finally get that second year of CAF phase I money out there,” said Genny Morelli, president of the Independent Telephone and Telecommunications Alliance. “There’s been a whole lot of advocacy” over the past six months on this issue, she said. Cable and fixed wireless had asked the commission to expand Phase I eligibility to more than just ILECs.
The changes in parameters to the CAF I program will help allow price-cap carriers to accept more money, Morelli said. Letting that money be used for underserved locations -- not just unserved locations -- is “very helpful,” she said. But it’s “somewhat disappointing” that the commission won’t allow carriers access to the full $775 per location in areas where they are upgrading service, she said. “We had urged the commission to allow us the $775, whether it be for upgrading or providing service to unserved locations,” especially since price-cap carriers had presented evidence that $775 is too low, she said.
By providing at least some funding for lower-speed areas, the commission hopes not just to reach those homes, but also homes that were dial-up only but perhaps not economically viable for telcos to build to in the first round, commission officials said. The agency expects hundreds of thousands of unserved homes to be covered by the order, officials said.
The American Cable Association has for months urged the commission not to award support in areas where cable operators have already used private capital to build broadband networks, said Ross Lieberman, ACA vice president-government affairs. “Based on recent reports about the circulated Order, it appears the Commission is earnestly trying to ensure the program serves their broadband deployment objectives in an efficient manner,” Lieberman said by email. The association will “reserve judgment on whether they have found the right balance” until more details are available, he said.
"CenturyLink is pleased that the FCC has circulated an order that could bring the benefits of broadband to more rural American homes and businesses -- a goal we have long shared with the commission,” said Melissa Newman, senior vice president-federal policy and regulatory affairs. “We are optimistic that this order will be adopted and will help bring economic and educational opportunities to more rural Americans.”