New federal broadband subsidies will favor states spurned by incumbents

by Steve Blum • , ,

Nevada gets a second chance.

Californian communities are not likely to figure prominently in the Federal Communication Commission’s list of areas that’ll be eligible for its next round of Connect America Fund 2 broadband subsidies. That’s because the big incumbent carriers – AT&T and Frontier – exercised their right of first refusal in the last round and picked up a total of $590 million over six years in exchange for promising to upgrade most of their substandard California service territories to 10 Mbps download and 1 Mbps upload speeds. Consolidated Communications (formerly SureWest) also accepted the money offered for its small service area near Sacramento.

That means that the next round of CAF-2 money – $215 million a year for 10 years – will mostly go to states turned down last year by the big incumbents. AT&T, for example, declined $22 million for its Nevada service area. The only major incumbent to say no to CAF-2 subsidies in California was CenturyLink, which serves a few dozen homes near the Oregon border in Modoc County.

There should be some areas of California that will be eligible, though. The FCC is re-running its eligibility assessment, based on the latest availability data submitted by carriers. Since there’s some variation over time in those reports, there might be areas identified as not having access to a minimum of 10 Mbps download and 1 Mbps upload speeds that weren’t on the list last year. Some areas that were deemed too expensive last year will be eligible in the new round, on a competitive bidding basis. And there could be census blocks that were trimmed out of last year’s awards, as the incumbents were allowed to do to a limited extent.

Once the list is released, there won’t be much room to challenge it. Incumbents will have a limited ability to fight an unserved designation, but the decision will be final if the FCC says an area is served at 10 Mbps down/1 Mbps up.