FCC Approves Final Pieces of $2B CAF II Auction

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 chairman 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.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.