The FCC issued a public notice yesterday stating that it is “ready to authorize” $140 million in rural broadband funding for a portion of the entities that had winning bids in the Connect America Fund CAF II auction. The commission is still reviewing required information submitted by auction winners and said other winners that meet all requirements to be deemed “ready to authorize” will be included in a future public notice.
Entities on the “ready to authorize” list have 10 business days to submit additional information, including a letter of credit from a “bank that is acceptable to the commission,” before their funding will be fully authorized, the FCC notes.
The CAF II auction, completed in August, awarded a total of $1.488 billion in funding over 10 years to help cover the cost of bringing broadband to areas where the service is not available today. There were just over 100 winning bidders (103), but some bids were won by consortiums comprised of multiple individual entities, yielding a total of 134 entities now on tap to receive funding, according to yesterday’s public notice.
CAF II Auction Winners
Verizon and Hawaiian Telcom, along with several rural telcos and electric cooperatives and other entities, were on the list of “ready to authorize” entities released yesterday. That list includes a detailed breakdown of winning bids for each entity, and that information sheds some light on Verizon’s winnings.
Verizon in 2015 turned down $95.5 million offered by the FCC to bring broadband to portions of states in its local service territory where broadband was not already available. As a result, those areas were included in the CAF II auction, which awarded funding to bidders that offered to deploy broadband at the lowest level of support.
Incumbent price cap carriers such as Verizon that turned down funding for their entire service area within a state had the opportunity to bid on targeted areas within a state in the CAF II auction. Verizon participated in the auction on that basis and won a total of $9.5 million. In addition, the carrier won $12 million in CAF funding in a separate auction, completed prior to the CAF II auction, for portions of New York state. The state of New York awarded Verizon an additional $70 million in that auction.
We don’t know how extensively Verizon bid in the CAF II auction, but yesterday’s list reveals that the carrier won at least some funding for virtually every state in its local service territory that was included in the auction, including Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island and Virginia.
Rural electric cooperatives made a strong showing in the CAF II auction, including some that bid as part of a consortium but already have been deemed “ready to authorize” on an individual basis. Other winners in the CAF II auction not yet deemed “ready to authorize” are satellite broadband provider ViaSat and Frontier, along with some less familiar names that nevertheless were big winners, including Wisper and Nextlink.
Rules for the CAF II auction were based, in part, on what the FCC learned from the Rural Broadband Experiments program that preceded the CAF II auction. One of the lessons learned from that auction was that the initial letter of credit (LOC) requirements were extremely difficult for some smaller broadband providers to meet. The FCC relaxed those rules somewhat for the CAF II auction, and whether those changes have resolved the previous problems should become known soon, as entities that the FCC is “ready to authorize” seek to get appropriate LOCs.
An FCC spokesman told Telecompetitor that if any CAF II winners are not able to gain full authorization, the funds associated with their bids will be rolled over into the next CAF auction, which will include areas that did not receive a winning bid in the CAF II auction.