Cable operators are telling the FCC that if it wants to attract cable operators and other terrestrial broadband providers to its massive subsidy program for rural broadband buildouts, it should retain census blocks as the smallest biddable unit in the Rural Digital Opportunity Fund (RDOF) reverse auction.

That is the $20 billion subsidy over 10 years for building out broadband to rural areas.

The FCC has asked whether it should stick with that unit, which it used for the Connect America Fund program that has morphed into RDOF, or go to larger census tracts.

NCTA–The Internet & Television Association has suggested that if the FCC goes big, cable operator bidders may stay home. The reason is that if the FCC changed to larger, census-tract blocks, cable operators might not bid because many will be expanding their current networks and it would not be economical in some cases to have to build out huge tracts of land as it were.

That could put a thumb on the scale for satellite providers, who are generally the broadband of last resort for high-cost, hard-to-reach areas, NCTA said.

The FCC says bidding has concluded in the CAF II advanced communications subsidies auction, though it will be "a few" days before the results are made public and the winning bidders identified.

The FCC gave incumbent telcos the first shot at its Connect America Fund (CAF) funds to deliver fixed broadband to rural communities. Beginning June 24, it gave competitors a shot at those funds in round two (CAF II), though incumbents could jump back in as well.

What is being bid on are subsidy monies to provide service in census blocks in states where the price cap carriers declined the support. 

Related: FCC Approves Final Pieces of CAF II Auction

Cox, Altice USA, Verizon, Frontier and Cingular were among those approved to bid. 

FCC chair Ajit Pai had encouraged participation by cable and satellite operators, rural co-ops, rural telcos and others.

Ten price cap carriers got first crack at the subsidy money in 2015. What they left on the table is being offered to rural electric cooperatives, fixed wireless providers, cable companies, and satellite providers (the incumbent local exchange carriers who passed on it in 2015 can also bid).

There was $198 million in annual support available in the auction (or $1.98 billion for 10 years). The Phase II budget was actually $2.15 billion, but the FCC early on set aside $170.4 million to dole out via a New York State broadband subsidy program. Winners will get their funds in monthly installments over those 10 years. Winners must provide "at least one broadband and voice service at rates that are reasonably comparable to the rates for similar service in urban areas.

They also must meet various targets, including: 40 percent of the required number of locations in a state by the end of third year of support; an additional 20 percent in each subsequent year; and 100 percent by the end of the sixth year of support.

The FCC granted New York state a waiver to use the CAF II subsidies for its own competitive New York Broadband Program for providing broadband in unserved rural areas, subject to conditions to ensure "broad participation and oversight."

The FCC voted Tuesday (Jan. 30) on the final touches on its bidding framework for the $2 billion reverse auction of Universal Service Fund subsidies for broadband deployment.

It also has resolved outstanding challenges to earlier auction decisions.

The auction will commence July 24, with applications to participate due by March 30 for up to $1.98 billion over the next 10 years. FCC chair Ajit Pai encouraged participation by cable and satellite operators, rural co-ops, rural telcos, and others.

The FCC gave incumbent telcos the first shot at its Connect America Fund subsidies to deliver fixed broadband to rural communities.

Now it is giving competitors a shot at those funds, though incumbents can jump back in as well.

RELATED: FCC Identifies Targets for CAF II Funds

The FCC is simplifying bidding options and allowing for bidding by smaller companies, and won't require companies to identify every area they will serve before bidding.

The largest incumbent price cap carriers — AT&T, Verizon, CenturyLink — declined about $2 billion in Connect America Fund phase II (CAF II) support for building out broadband to high-cost (generally rural) areas, in 20 states, so the FCC is opening that pot of money up to competitors, like cable broadband providers, via auction.

All that money is coming from the Universal Service fund for high-cost, mostly rural, areas for which there is no business case for building out broadband absent that subsidy.

In February, the FCC voted to establish rules for handing out the money and sought comment on how it should structure the bidding.

The first round of comments in the FCC's Connect America Fund (CAF) rulemaking have "strayed from the statute's 'reasonable comparability' requirement," according to the American Cable Association's reply comments on the competitive bidding program.

The responses of the major telecom providers "not only ... downplay the statute, but [also discourage] many parties from participating in the auction, thereby limiting the cost-effective distribution of support,"  the ACA said.

Related: FCC Wants to Fatten CAF [subscription required]

The FCC's final weighting of CAF Phase II bids must be based on the original statute and "an evolving level or service," ACA contended in its reply to the proposed rulemaking, which encompasses Rural Broadband Experiments.  

Many of the companies responding to the FCC "tended to emphasize the need to maximize the number of locations served within the budget," according to a statement from ACA president/CEO Matthew Polka.

"The FCC should weight bids based on the statutory requirement that consumers in eligible areas receive reasonably comparable service to urban consumer preferences for broadband Internet access services over the 10-year timeframe of the program and that, to maximize participation, the deployment cost of bids in different performance tiers be normalized. Both of these factors can be determined using a methodology based on market data and are quantifiable," Polka said.

Related:FCC Approves CAF Bidding Framework for Competitive ISPs

The ACA filing urged the FCC to reject the weighting system proposed by earlier commenters.

"The FCC cannot adopt such weights because they are arbitrary and will skew the competitive bidding process," the ACA argued.  It also stressed that the weighting methodology should normalize costs among assumed technologies for each performance tier to maximize participation and to reflect consumer broadband preferences.

The ACA proposed that to maximize participation and reflect consumer preferences, weighting should account for the significant differences in costs for deploying different network technologies in different geographies among the performance tiers.

The FCC's Wireline Competition Bureau has released its 2015 broadband pricing benchmarks for incumbent eligible telecommunications carriers receiving Universal Service Fund high-cost CAF (Connect America Fund) support.

The high-cost fund subsidies incumbent telecommunications carrier phone, and increasingly broadband, service to hard-to-reach areas--rural, in particular--for which there is no business case.

The new benchmarks range from $72.40 for 10 Mbps downstream/1 Mbps upstream service with a 100 gig allowance, to $96.89 for 25/5 unlimited service. High-cost fund recipients that are subject to broadband performance obligations are required to offer service at or below the benchmark rates to qualify for the subsidies.

The FCC has signaled that 25 Mbps downstream is the new table stakes, but has not extended that to its USF subsidy floors.

The high-cost fund is part of the FCC's Connect America Fund migration of advanced telecommunications subsidies from traditional phone to voice and broadband, fixed annd mobile, at rates reasonably comparable to those of urban areas.

ILECs have fist dibs on the money, which cable operators, who compete with the ILEC's argue amounts to a sole source contract regime. Cable operators large and small have pushed the FCC to adopt a competitive bidding mechanism for the support rather than giving ILEC's a right of first refusal, after which cable operators could apply if the ILEC's opted not to apply.

The FCC has provided for competitive bidding in "limited" areas.

To check out all the speed subsidy benchmarks, click here. 

Mediacom Communications campaigned in Iowa today for a proposal to obtain government funding for a pilot program that could help bring high-speed broadband to more Iowa farms.

Dan Templin, senior vice president of the cable company’s Mediacom Business unit, appeared at the 2014 Connect Iowa Broadband Summit in Arkeny, Iowa, and plugged a proposal that’s been made by Mediacom and Deere & Co., better known as farm-equipment supplier John Deere.

In March, they pitched the Federal Communications Commission on a plan to help farmers better exploit the advanced technology of their farming equipment by spreading high-speed broadband to underserved areas of the state. At the conference today, Iowa Gov. Terry Branstad appeared with Templin (pictured at Templin’s right).

The ultimate aim is to prove the business model and use it to connect all commercial farming operations with wireless broadband services, Mediacom said.

The companies’ March proposal – seen at WC Docket No. 10-90 -- seeks $800,000 in total for pilot programs in Audubon and Carroll counties. The money as proposed would come from the Connect America Fund, which takes former Universal Service Fund money and reallocates it from phone-service support into capital for rural broadband projects. Money from Mediacom or other sources would provide at least 20% of the funding needed for the project, the company said.

Mediacom said its business-services unit is already bringing fiber-powered broadband to many rural communities across service areas with the Gigabit+ Fiber Solutions Initiative, and that the program with John Deere would drive fiber networks deeper into rural areas of the state.

“What are defined as underserved or unserved areas are increasingly non-traditional communities,” Templin said in remarks put out by Mediacom. “For example, large commercial crop operations have a number of advanced-technology machines that need high-speed connectivity to perform optimally, even in the absence of residential consumer demand. And our extensive investment and network deployment in Iowa has us best-positioned to deliver the broadband services agribusinesses require.”

In the FCC filing, Mediacom said after it extended fiber lines into the counties, it would “provide retail Wi-Fi service to farms, small businesses and residences over the distributed antenna system at speeds up to approximately 50 Mbps down by 5 Mbps up for approximately $30-80 per month. The Mediacom-provided retail WiFi would support Internet and broadband data services and voice services.

"Mediacom also would make available wholesale fiber connections to small cell multiuser equipment for use by one or more CMRS providers and co-located with the WiFi transceivers. Thus, the deployment provides the opportunity for competition in the provision of wireless broadband and voice services. Interested CMRS providers would pay approximately $5-7 per Mb per month.”

The companies said they estimate that about four and nine small cells will be deployed in the unserved census blocks in Audubon and Carroll Counties, respectively. To reach those small cells, Mediacom estimates that it will need to deploy six new fiber route miles in Audubon County and 19 new fiber route miles in Carroll County.