The FCC on Friday released rural broadband experiment funding to four entities that were provisionally awarded funding back in late 2014. The four entities – Skybeam, Consolidated Communications Networks, Delta Communications and Allamakee-Clayton Electric Cooperative – will receive a total of $11,273,764 in support to bring broadband to portions of price cap carrier territories in five states where broadband is not available today.
Some of the entities that were provisionally awarded funding previously had funding released to them , while others were rejected. The four entities announced today were not rejected but did not have funding released to them until they were able to provide certain documentation to the FCC – including an irrevocable standby letter of credit and a bankruptcy code opinion letter from legal counsel.
FCC Rural Broadband Experiment Winners
The FCC rural broadband experiments were conducted in order to gain knowledge that would help in shaping the reverse bidding process for the Connect America Fund. A reverse auction will occur in states where incumbent price cap carriers declined CAF funding in Phase 2 of the CAF program. In Phase 2 of that program, the FCC offered the price cap carriers a total of $1.7 billion annually toward the cost of bringing broadband to portions of their territory where broadband isn’t available or is available only at low speeds. The carriers have until later this month to accept or decline funding, and decisions must be made on a state-by-state basis.
If a carrier rejects funding, competitors will have the opportunity to bid to provide service in areas where the incumbent rejected the funding. The incumbent also will have the opportunity to bid in the reverse auction but, like its competitors, won’t have to bid on an entire state.
When Windstream last week accepted funding for all states in its territory except New Mexico, it ensured that the FCC indeed will need to hold a reverse auction.
Rules for the rural broadband experiments prevented bids from exceeding the model-based level of support offered to price cap carriers for an area, and the FCC was successful in attracting a sufficient number of bids meeting its criteria to award virtually all of the $100 million in funding that was dedicated to the rural broadband experiments. Winners planned to use a variety of technologies, including landline and wireless options.
Whether the FCC will achieve similar results in the actual reverse auction will be the big question for the auction, as the price cap carriers in a sense will have cherry-picked the areas where broadband economics at the FCC’s level of support made the most sense.