TDS has been taking every opportunity to talk up the FCC Alternative Connect America (A-CAM) program and why the company is so excited about a possible extension to the program, even as the U.S. gets set to award an unprecedented $42.5 billion for the BEAD rural broadband program. Telecompetitor talked by Zoom with TDS Senior Vice President of Corporate Affairs Andrew S. Petersen today to get more details.
“A-CAM has been absolutely revolutionary for improving our hardest-to-serve rural areas,” said Petersen.
TDS is rather unique among publicly held broadband providers in that it is eligible to participate in the A-CAM program, which was available only to rate of return carriers, most of which are small rural incumbents. The program is only open to incumbents, and also excludes price cap carriers such as AT&T, Verizon, Lumen, and Frontier.
Back in 2018, the rate of return carriers were offered the choice of remaining on the traditional high-cost Universal Service Fund program, which covers some costs of providing service in rural areas based on embedded costs, or moving to the A-CAM program, which offers funding based on a cost model and has more ambitious broadband deployment goals.
TDS opted for the A-CAM program and, as Petersen explained, the company said it would make service at speeds of at least 25/3 Mbps available to 75% of its service area and the remaining 25% would get 10/1 Mbps service.
While those are unambitious speed targets today, they were in keeping with the goals of other rural broadband funding programs at that time, such as the Connect America Fund (CAF) program.
The escalating need for faster broadband compelled TDS and other stakeholders to ask the FCC to extend the A-CAM program for an additional six years and raise the deployment speed target to 100/20 Mbps, which would match the speed target of the upcoming BEAD program. And while only locations lacking service at speeds of 10/1 Mbps were eligible for the current A-CAM program, the rules for the new program would call for locations lacking 25/3 Mbps service to be eligible.
The amount of funding available to participating providers would be based on a cost model and, according to Petersen, TDS would receive a bit more money than it does today.
TDS would deploy fiber broadband to achieve the required 100/20 Mbps service, he said. And with fiber in place, the company would offer speeds considerably higher than 100/20 Mbps.
Today, the company is deploying fiber speeds of 8 Gbps symmetrically.
Petersen noted that A-CAM participants have a strong track record of meeting commitments and that the FCC provides close program oversight.
Added Petersen, “We believe A-CAM [projects] can be built faster than BEAD projects.”
His comments echoed what we heard from another TDS executive in March and from a third exec on the company’s fourth quarter earnings call on Friday, prompting Telecompetitor to reach out to Petersen for more details.
It’s worth noting that TDS also may prefer the A-CAM option because the company would not have to compete against other providers for funding as it would have to do under BEAD program rules.
Looked at another way, though, not amping up the A-CAM program could create a big headache for the FCC. The reason is that, if the agency doesn’t extend the A-CAM program with the new rules, some of the projects that the A-CAM program is currently funding could be eligible for BEAD funding in just a few years.
BEAD program rules place top priority on unserved areas, defined as those lacking 25/3 Mbps service. But if a state has funding remaining after allotting money for unserved areas, it can direct money to upgrade underserved areas, defined as those lacking service at speeds of 100/20 Mbps.
That means that areas currently being upgraded to 25/3 Mbps service through the A-CAM program could be considered underserved and eligible for BEAD funding in just a few years, requiring whoever wins BEAD funding for an area to upgrade it again.
Petersen estimates that 160,000 locations in TDS’s local service footprint would be eligible for A-CAM funding if the rules were updated as the company hopes. The company hopes the FCC will opt to do that soon, perhaps at the June commission meeting, Petersen said.
Updated to correct the spelling on Petersen’s name