[1st-mile-nm] Upcoming CAF Reverse Auction Puts (Windstream NM) Up for Grabs for Broadband Funding

[Richard Lowenberg]

Upcoming CAF Reverse Auction Puts Markets in 20 States Up for Grabs for 
Broadband Funding

9/1/15 by Joan Engebretson

http://www.telecompetitor.com/upcoming-caf-reverse-auctions-puts-markets-in-20-states-up-for-grabs-for-broadband-funding/

Now that the nation’s largest price cap telecom carriers have announced 
their decisions on broadband Connect America Phase II funding, a portion 
of locations targeted in the program will be teed up for a reverse 
auction expected to occur in 2016. Carriers had until last Thursday to 
indicate, on a state-by-state basis, whether or not they planned to 
accept funding to cover some of the costs of bringing broadband 
connectivity to locations in their local service territories that cannot 
get broadband today.

While most carriers accepted funding for most states, about 10% of 
funding remains unclaimed. The FCC plans to award that funding through a 
reverse auction that will be open to the incumbents and to competitors, 
with funding going to the company that offers to deliver broadband for 
the lowest level of support.

According to information provided by the carriers and by the FCC, 
locations that will be the focus of the reverse auction are in the 
following carriers’ local service territories (relevant to this list):

Windstream, New Mexico

Fairpoint, Colorado

(See article for all other providers and states)

CAF Reverse Auction Plans
Companies winning funding in the reverse auction are expected to request 
a lower level of funding than what was offered to the incumbent 
carriers, noted Doug Jarrett, a partner in law firm Keller and Heckman 
LLP, in a recent article in Broadband Communities Magazine. That could 
be a realistic assumption based on what happened with the rural 
broadband experiment program that the FCC conducted in unserved areas of 
price cap territories. In that program, a wide range of companies 
offered to provide broadband at a lower level of funding than the FCC 
model calculated.

In the reverse auction, carriers will not have to bid to provide service 
throughout an entire state. Instead they will be able to bid on smaller 
geographic areas. According to Jarrett’s article, the bidding unit will 
likely be on either a census block or census tract basis.

That raises the possibility that some areas targeted in the Connect 
America Fund Phase II program but rejected by the incumbent might not 
find a bidder willing to offer service at the target level of support. 
According to an FCC order adopted in December, those areas will be 
covered through a remote area fund. Details of that fund have not yet 
been resolved, but likely would involve serving those areas with either 
satellite broadband or broadband wireless.

As Jarrett explained on a follow-up phone call with me yesterday, any 
carrier winning CAF funding through the reverse auction will be required 
to offer voice as well as broadband service. That means that if the 
incumbent is not the winner in the reverse auction, it could essentially 
find itself out of business in auctioned territories.

Of course not every current customer may want to switch to the auction 
winner for broadband and/or voice service. But if all the incumbent has 
left is a dwindling voice business, it may want to formally pull out of 
the area – and as Jarrett pointed out on our phone call, the December 
2014 FCC order gives incumbents that option.

As Telecompetitor noted in a recent blog post, that means we could see 
some new carriers of last resort as a result of the reverse auction.  As 
Jarrett noted in his Broadband Communities article, the FCC’s decision 
to reclassify broadband earlier this year means that auction winners 
will be subject to the “federal and state regulations, filing 
requirements, FCC fees and contribution obligations… applicable to 
telecommunications carriers.”


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Richard Lowenberg, Executive Director
1st-Mile Institute     505-603-5200
Box 8001, Santa Fe, NM 87504,
rl at 1st-mile.org     www.1st-mile.org
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