FCC Draft Bidding Weights for CAF II Fixed Auction Spark Flurry of Proposals
A draft FCC order on a planned Connect America Fund Phase II reverse auction of subsidies for fixed services includes proposed bidding weights for broadband performance tiers that were largely a "placeholder" to generate discussion, industry officials told us Friday. If so, the tactic appears to have worked, as industry parties submitted numerous proposals for weighting the tiers this past week in docket 10-90 before sunshine restrictions took effect. Commissioners are scheduled to vote Thursday at their meeting, led by Chairman Ajit Pai.
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“I think they’re shooting for 3-0," said Mike Jacobs, ITTA vice president-regulatory affairs. He said the "placeholder" bidding weights were designed to spark "a flurry of activity" and discussion. "I think there's a strong chance it’ll be 3-0," said another stakeholder. The FCC didn't comment.
There's broad agreement that higher-speed (and lower-latency) services should be favored over lower-speed (and higher-latency) services, which would be assigned larger weights in a reverse auction in which low bids are favored. The question is by how much -- the bigger the weight differential, the bigger the advantage. The FCC plans four tiers: minimum (above 10/1 Mbps), baseline (above 25/3 Mbps), above baseline (100/20 Mbps) and gigabit (1 Gbps/500 Mbps), with the first two having usage allowances of at least 150 gigabytes per month and the latter two having unlimited usage.
“We understand the chairman has proposed an approach that would establish a 60-point gap between the slowest and fastest tiers," said Wireless Internet Service Provider Association counsel Stephen Coran of Lerman Senter. "WISPA believes the gap should only be about 25 points, with the biggest bang being for the 25/3 Mbps tier. That is the tier that is ‘reasonably comparable’ to broadband services in urban areas.” The draft order would weight the 10/1 Mbps tier at 60 points, the 25/3 Mbps tier at 40 points, the 100/20 Mbps tier at 20 points and the gigabit tier at zero, stakeholders told us.
Forty small cable providers joined the recent calls of fiber-oriented electric/telco providers seeking a strong FCC preference for higher-speed tiers. "All of us operate near areas eligible for funding in the Phase II program, and we believe that with this support we can expand our high performance wireline networks cost-effectively into these nearby unserved areas -- and even into more distant, non-contiguous areas," said the cable provider filing posted Friday. "We will not have an incentive to participate in the competitive bidding process unless we have a reasonable chance of winning against bidders proposing to offer lower performance services using alternative technologies. ... If the weights are fair and balanced, we will participate; if they favor lower performance technologies or incumbent providers, we will not be able to justify incurring the costs to engage in the process."
AT&T backed a USTelecom proposal that would keep the weighting differential between the tiers relatively small so the higher-speed tiers don't get a big advantage. "The Commission’s goal should be to reach as many of these consumers as possible with a reasonable level of broadband," said an AT&T filing on a meeting with aides to Commissioners Michael O’Rielly and Mignon Clyburn. "But setting weights that favor 1 Gig deployments will leave more than half of these consumers untouched by CAF II support and with little hope of ever being served. This cannot be the right result...”
“We're very hopeful the FCC will adopt a technology neutral approach," said Jennifer Manner, Hughes Network Systems senior vice president, whose company opposes fiber-oriented proposals. "It's all in the details." ViaSat Associate General Counsel Chris Murphy said the FCC should focus on promoting the baseline 25/3 Mbps tier.
“A broadly dispersed approach is the better technological platform for future upgrades and broader availability of fiber,” said USTelecom Senior Vice President Jon Banks. He added: “That the Pai commission has two universal service support items on the agenda shows they really are focused on narrowing the digital divide.” The FCC is also slated to consider a Mobility Fund auction order at the meeting.