In an effort to improve rural broadband access, the FCC has issued a Report and Order to increase Connect America Fund (CAF) funding and raise recipients' speed requirements from 10 Mbps downstream and 1 Mbps upstream to 25 Mbps downstream and 3 Mbps upstream.
The Report and Order is intended to update the CAF programs providing support for small, rural providers - known as rate-of-return carriers - to deliver faster broadband speeds and expanded coverage in rural areas. In return for additional funding, the FCC will require providers to expand availability of 25/3 Mbps service. Updates include:
- Offering up to $67 million a year in additional support for carriers receiving funding through the CAF's Alternative Connect America Cost Model (A-CAM). The revised offer has the potential to increase by 100,000 the number of rural homes and businesses with access to 25/3 Mbps service.
- Opening a new window for carriers receiving support through legacy mechanisms to voluntarily move to model-based support through the A-CAM II offer, which is intended to incentivize deployment while reducing regulatory burdens. In return, participating carriers would be required to provide 25/3 Mbps service to all homes and businesses whose costs are fully funded through the A-CAM cost model.
- Increasing the $1.4 billion annual budget for carriers that continue to get support from legacy mechanisms by initiating an annual inflation adjustment, eliminating 2018 cuts, and setting a guaranteed floor of minimum support for each carrier. In return, legacy providers would be required to expand deployment of 25/3 Mbps service.
At the same time, the Report and Order reduces the maximum per-line subsidy in the legacy program from the current $250 to $200 by July of 2021. It also eliminates a capital expenditures allowance rule.
The Report and Order also determines that a market-based auction can best eliminate wasteful subsidies to legacy providers serving areas that are entirely or almost entirely overlapped by unsubsidized providers. Eliminating unnecessary support in such areas could save the Fund up to $12 million annually, the FCC says. The item includes a Further Notice of Proposed Rulemaking seeking comment on how to structure such an auction, as well how to address conversions to broadband-only lines and whether to include a Tribal Broadband Factor for legacy carriers.
The initial response from rural broadband providers has been positive.
In a statement, NTCA Chief Executive Officer Shirley Bloomfield said in part: "Today's action represents a watershed moment in our nation's long-running effort to promote and sustain universal service in a broadband world. More than seven years after the FCC's 'Transformation Order' first aimed to reorient federal Universal Service Fund (USF) support systems toward broadband, and in the wake of a 2016 order that took important steps toward that goal, today's landmark order delivers on much of the promise of these prior reform efforts and will hopefully put the high-cost USF program on a path for greater success and stability for years to come."
