Sometimes you just need a practitioner to give the 10,000 foot view of what’s going on when policy and technology combine. I’m thankful to Brent Christensen (from MTA) for his time today giving me the low down on A-CAM.
I’ve talked a lot about CAF 2 funding from the FCC – $85 million a year for 6 years going to Price Cap Carriers (big guys such as CenturyLink, Frontier and Windstream ).
For Rate of Return providers (mostly smaller providers, often in rural areas) the FCC has come up with another plan. Providers can choose to reduce their rate of return OR apply for A-CAM funding:
- Reduce the rate of return means going from 10.25 percent to 9.75 percent over the next few years.
- The A-CAM option is available for providers where less than 90 percent of their service can access broadband at 10 Mbps down and 1 Mbps up and/or receive less than $200 per loop. A-CAM funding is for 10 years.
For most folks it’s a numbers game – can you make more by applying for A-CAM funding or going with strict cut in rate? For some folks, it’s a stability issue. They’ll take a reduction in support for the certainty over 10 years.
The deadline to apply for A-CAM funding was November 1, 2016. They received $160 million more than they had budgeted; they had budgeted for just over $1 billion. So, the FCC is trying again with a round two of applications. In fact that application should be available soon. The providers will have 30 days to respond. The FCC is hoping to be done with the process by the end of the year – in part I’m sure due to political changes.
So many questions still remain.
Why are they funding 10/1 access when they define broadband as 25/3? The reason is to help the folks who have no service. But this stuff is difficult for community leaders, policy makers and really anyone outside the industry to understand without using multiple speed definitions for broadband (10/1 vs 25/3).
Why the continuation of uncertainty? We’re asking providers to continue to make long term investment – albeit with government support. But the uncertainty can be as difficult as the financial pinch.
The biggest question – what will be the impact of political change on this and other broadband funding and regulation?