FCC Released Phase II Plans for the Connect America Fund


Chairman Pai of the FCC is proposing a Public Notice to initiate the pre-auction process for Connect America Fund Phase II.

The Connect America Fund (CAF), also known as the universal service High-Cost Program, is an FCC program to expand voice and broadband services for areas where they are not normally available.  Currently, Phase II of this project is in place.  This Phase provides local telephone companies to subsidize the costs of building new network infrastructure or to provide upgrades to communities where voice services and broadband are lacking.

The Universal Service Fund and Innovative Communications Corporation (USF/ICC) transformation order created the Connect America Fun.  It reformed and modernized universal service and the inter-carrier compensation system.  It supports a price cap provided through a combination of new forward-looking models of the cost of constructing modern multi-purpose networks.  Extremely high-cost census blocks nationwide would be eligible for the Phase II auction.

The Public Notice focuses on the winning bidders budget of $198 million in annual support for 10 years.  Using competitive bidding will allow the program to move forward to sufficiently support the deployment of these service-expanding networks.  The deployment must offer commercially at least one voice and one broadband service meeting for the relevant service requirements to the number of locations.  The bids will be accepted according to four service tiers.  These are focused on speed and usage allowances as well as high and low latency.  The bidding will be decided by this formula:

S=100xB/R+T+L

The formula represents S as the bid’s score, B as current bid price, R as reserve, T as weight assigned to the bid’s associated tier of service and L as weight assigned to its associated latency.

The notice will create minimum geographic area for bids using census blocks to allow for better franchise or license area.  This is accomplished using short-form and long-form application, reserve prices, and bidding procedures.  So far, larger companies that have accepted Phase II of the CAF have added service to 3.6 million homes and business in 45 states including the Northern Marina Islands.  The map attached to this link shows where providers have accepted and will receive CAF Phase II support.  Companies that have accepted the phase have six years to plan and provide for communities.