FCC Identifies Targets for CAF II Funds

The FCC has taken a big step toward is auction for up to $2 billion in broadband subsidies to primarily rural areas as it tries to close the digital divide via its Connect America Fund (phase II) of Universal Service Fund subsidies. It said this week it has identified the unserved areas that will get the money, which is collected in the form of fees levied on providers--and passed along to subscribers on their monthly bills--to help provide advanced communications to low income and hard-to-reach areas.

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, with final comments due by Oct. 18. The CAF II auction is scheduled to begin next year.

The FCC voted unanimously in August to give the go-ahead to that framework and the next phase of the CAF subsidies.

 The FCC is auctioning the CAF II money, available over 10 years, to cable and telco ISPs to build out the almost 1 million homes and businesses in the contiguous 48 states the FCC has identified as currently not served by high-speed broadband (defined as 10 mbps downstream, 1 upstream).

“Closing the digital divide is my number one priority, and through this innovative Connect America Fund auction, we are poised to take the next big step in reaching that goal,” said FCC Chairman Ajit Pai of identifying the unserved locations.  “In rural America, broadband opens the doors of opportunity by connecting remote communities to global markets, jobs, education, health care and information.”

The auction is scheduled to begin in 2018.

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.