Dollar SignThe state of Massachusetts has asked the FCC to release federal broadband Connect America funding to states. The funding in question was rejected by the nation’s largest price cap carriers in 2015. Granting the Massachusetts request would mean the FCC would hand over approximately $1 billion to 20 states over a period of six years, according to Telecompetitor’s estimate.

Massachusetts is one of several states served in large part by Verizon for local service. Verizon, unlike most large incumbent carriers, rejected the FCC’s initial offers of Connect America Fund (CAF) broadband funding. Accordingly, Massachusetts and other Verizon states have not received little or no federal CAF cash infusion of the sort that carriers in some other states have begun to use to help cover the costs of bringing broadband to high-cost areas where broadband is not available today.

The funding that Verizon rejected is earmarked for a reverse auction that would award the money to the network operator that offers to deploy broadband for the lowest level of support. But a better use of this funding would be to use it to complement efforts by the Massachusetts Broadband Institute to bring broadband to rural parts of the state, according to MBI and the Massachusetts Department of Telecommunications and Cable. MDTC, which represents the state in FCC matters, and the MBI made their argument in a January 9 letter to the FCC.

The letter notes that the Massachusetts legislature has authorized the MBI to invest up to $40 million in state capital funds for infrastructure in 40 communities that lack access to residential broadband service. Adding the rejected CAF funding to this budget “would maximize the efficient use of public funds and avoid any potential for duplicative build-out,” the letter argues.

Connect America Funding to States
The MBI/ MDTC request comes just a few months after the state of New York made a similar waiver petition to the FCC, asking the FCC to release rejected CAF funding to the state. The Massachusetts letter to the FCC this week asks the commission to act more broadly and to “dedicate to each state funding that matches or exceeds the state-level amount of CAF model-based support rejected by the price cap carriers in those states.” Telecompetitor estimates the total value of that funding at approximately $1 billion.

Like Massachusetts, New York is largely a Verizon state, and there, too the state has allocated its own funding to help bring broadband to rural areas. The total state-level budget for the New York program is $500 million.

In its petition, New York State argued that grant of the requested waiver “would allow the state to coordinate allocation of the CAF funding with its own broadband auction, resulting in significant benefits to New York consumers.”

Not long after the New York filing, Verizon filed comments in support of the New York proposal with the FCC, arguing that the New York broadband program is “fully consistent with the commission’s efforts to preserve and advance universal service and in fact amplifies those efforts through substantial state funding.”

FCC plans for the CAF auction would allow Verizon to bid in the reverse auction and although the carrier has not shown interest in the program in the past, that could be changing now that the company has begun to pursue fixed 5G wireless as a potential alternative to fiber-to-the-home for boosting residential broadband speeds. It’s not clear whether the company would be allowed to bid in a New York state-run reverse auction, but that would appear to be a likely possibility, considering the company’s support for the New York waiver request.