Five Buckets of Federal Funding for Rural Broadband – A Primer

Conexon recently distilled a list of five buckets of federal funding for rural broadband. I’ve pulled out the basic below, I’d encourage you to check out the original article for more details.

CAF II Auction
Geographic Area: High cost census blocks unserved by 10/1 Mbps in price cap carrier (e.g., AT&T) study areas where either the price cap carrier turned down a statewide offer of funding, or a census block was part of the 1% of the country deemed too costly to fund through the offer to price cap carriers, or where a bidder in the rural broadband experiment auction provided the FCC with additional information demonstrating an interest in participating in the CAF II auction.
Process: The FCC will conduct a national, multiple round, descending clock auction in two stages in which competing bidders commit to make available to locations in census block groups voice and internet service at a level ranging from 10/1 Mbps to Gigabit service.

Omnibus Appropriations: Rural Broadband Pilot
Geographic Area: Areas where at least 90% of the households do not have access to 10/1 Mbps (a threshold which may be re-evaluated annually).
Process: TBD
The author proposes some interesting process measures.

Remote Areas Fund (RAF)
Geographic Areas: Census blocks unserved by 10/1 Mbps that do not receive a winning bid in the CAF II auction.
Process: The FCC first identified the RAF as the 1% of census blocks that, according to the Connect America Cost Model, would be the most expensive to serve. To date, no funds and no concomitant obligation has been offered to any company for serving these areas. The areas were added to the CAF II auction, with the funding for the areas capped below the cost model calculation. These areas comprise the largest part of the auction in terms of reserve price (over $4 billion) and are the most likely to remain unserved, unbid, unfunded after the auction. The FCC’s current intent is to take all areas that are unfunded in the auction, and add them to the RAF. How the FCC will attract providers to areas that attracted no winning bids is the puzzle.

CAF III
Geographic Area: High cost Price Cap Carrier service territories.
Process: In 2015, the FCC offered price cap carriers six years’ worth of funding over a five-year period to make available 10/1 Mbps throughout the high cost areas in each state. That funding ends in 2020, to be replaced by a competitive bidding process. The FCC may well use the CAF II auction format, adjusting the definition of unserved and lessons learned from the CAF II auction process.

Rate of Return and ACAM-based High Cost Program
Geographic Area: Rate of return carrier study areas.
Process: Still mostly a legacy program to support small rural telephone companies for the provision of voice service, the program has slowly been in transition as the FCC attempts various carrots and carrots approaches to tease out 4/1 or 10/1 or 25/3 Mbps service. The funding mechanisms are complex, closer to a regulatory accounting art form than a set of business decisions. In essence, this is a political program more than an economic program – more money per household than any other FCC program and more support from Congress than any other FCC program.

This entry was posted in Building Broadband Tools, Funding by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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