Tag Archives: connect america fund

Dozens of ISPs qualify to bid on FCC broadband subsidies, hundreds more in line


Almost three hundred companies could be bidding for broadband service subsidies when the Federal Communications Commission begins auctioning off unserved rural territory across the United States. The FCC received 277 applications from companies that want to participate in the Connect America Fund program’s reverse auction, which is scheduled for late July.

Only 47 are good to go, though. The other 230 companies – including Frontier Communications – didn’t fully complete their applications, in the eyes of the FCC. They’ll have until 5 June 2018 to fix whatever problems they have.

AT&T and Verizon are in. Expanding wireline broadband service doesn’t seem to be top of mind for AT&T, though. It joined the auction via its “New Cingular Wireless” subsidiary – its mobile arm, in other words. That’s consistent with AT&T often stated intention of replacing rural broadband networks with wireless service. Verizon, on the other hand, left the door open for both its mobile or wireline companies to take part.

Comcast is represented, sorta. It owns half of Midcontinent Communications, a regional cable company based in South Dakota which submitted a complete application for the auction. Given that Midcontinent serves mostly rural and small market communities, it probably has a genuine – and limited – interest in some of the available territories.

Only one unambiguously Californian Internet service provider is on the complete list, Geolinks, a Ventura County based wireless ISP.

The auction has a lot of moving pieces. The FCC published a maximum subsidy for every remaining eligible area – i.e. where broadband service at 10 Mbps download/1 Mbps upload speeds aren’t available. Companies will, presumably, bid each other down until the lowest price wins. But, they’ll also get extra points if they propose higher speeds or better quality of service metrics. Then, all the winning bids for all the areas have to be ranked – the FCC only has about $2 billion available, versus a total reserve price of $6 billion.

The odds of every unserved community making the cut are extremely low.

Federal broadband subsidy auction doesn’t favor California


California could, in theory, get as much as $476 million in broadband upgrade subsidies from the Federal Communications Commission’s upcoming Connect America Fund (CAF) auction, but the actual total is likely to be a lot less.

Eligible broadband service providers will bid against a “reserve price” that the FCC sets as the maximum it will pay to fund broadband service at a minimum of 10 Mbps download and 1 Mbps upload speeds in (mostly) rural areas that lack it. It’s a reverse auction – providers will start with the reserve price and bid down from there.

Kern County is in line for the most money – $37 million – and Sutter County is up for the least – less than $10,000. But there’s no guarantee that either will get anything. The FCC has a total of $2 billion to hand out, against a nationwide reserve price total of $6 billion. Presumably, the reverse auction will bring that $6 billion total down, but it’s unlikely, to say the least, to go as low as $2 billion. So some, maybe most, eligible communities will be out of luck.

The eligible areas are a mixed bag. Some are classified extremely high cost places to serve, while others are part of statewide sets that incumbent telcos turned down in the last CAF round. For example, AT&T accepted $360 million in its Californian territory, but took a pass on Nevada. The FCC’s computerised process for determining eligibility produces a checkerboard effect regardless, but even so statewide batches will be more attractive to bidders than the extremely scattered extremely high cost census blocks.

Aside from 45 homes and businesses on the Oregon border in Modoc County, all of California’s eligible areas are either in the extremely high cost category, or in the equally random miscellaneous bucket. Which means we start at a disadvantage.

The auction is scheduled to begin in late July.

FCC prepares to auction off $2 billion in broadband subsidies


There’s $2 billion worth of broadband subsidies on the table at the Federal Communications Commission, and providers that are interested in competing for it have until Friday to register.

The FCC published a list of areas, primarily rural, that were left out of previous rounds of federal Connect America Fund (CAF) subsidies, mostly because it cost too much to build infrastructure there or because incumbent telephone companies didn’t accept the FCC’s offer in the last round. What those communities all have in common is that there’s no broadband service that meets its “minimum” standard of 10 Mbps download and 1 Mbps upload speeds.

What’s different this time is that the FCC is setting up a competition between companies and communities. The subsidies will be awarded via a reverse auction. There are complicated rules, but it boils down to a list of census blocks that are eligible, and a “reserve price” – effectively the maximum subsidy amount the FCC will consider spending in each area. Bidding will start at the reserve price and go down from there.

At the end of the process, some communities will eventually get broadband service upgrades and some won’t. If you add up all the reserve prices nationwide, it totals out to $6 billion, three times the available amount. Presumably, bids will come in under the cap, and something more than one-third of the eligible areas will be funded. Presumably.

Broadband speed also counts in the bidding. The FCC has a weighted bidding system that gives preference to projects that exceed the minimum. It set 25 Mbps/3 Mbps upload as the “baseline” level, with two additional tiers above it – “above baseline” at 100 Mbps down/20 Mbps up and “gigabit” at 1 Gbps down/500 Mbps up.

There are financial and technical requirements providers need to meet, in addition to the reams of bureaucratic paperwork that must be completed. Once prospective bidders have been vetted, the FCC moves ahead with the auction, which is scheduled to begin the end of July.

Trump outsources rural economic development to wireless broadband companies


U.S. president Donald Trump put privately funded wireless broadband at the top of his rural economic development agenda yesterday. In a speech to the American Farm Bureau Federation, Trump embraced recommendations made by a government task force he created to define rural economic development policy. The task force report labeled rural connectivity “essential” and “fundamental for economic development”, and leaned heavily on wireless solutions.

“The task force heard from farmers that broadband internet access is an issue of vital concern to their communities and businesses“, Trump said. “That is why today, in a few moments, I will take the first step to expand access to broadband Internet in rural America. I will sign two presidential orders to provide broader, faster—and better—internet coverage”.

Those orders direct the interior department to make some of its assets, presumably towers and wireless sites, available for broadband development purposes and generally tell federal agencies to speed up antenna installations on federal buildings.

The task force did not call for increased federal spending on broadband infrastructure. Instead, it recommended trimming back regulations, favoring wireless facilities over wireline construction, and trusting broadband service providers to get the job done…

Past efforts to connect rural America have resulted in the allocation of substantial amounts of federal funds for broadband deployment and, while such investments made important contributions, our country has not fully achieved the connectivity needed for success in the economy of today and tomorrow. Although capital investment is one aspect of bridging the divide, far too many government policies stifle network buildout. By streamlining the deployment process, allowing access to existing infrastructure, and reducing barriers to buildout, risk can be reduced and providers can be encouraged to expand networks throughout rural America.

As we modernize and reduce regulations, we should also consider the full range of means to connect rural communities, including satellite, fixed wireless, and cellular networks. These technologies can be less expensive to deploy than traditional wired networks and are rapidly improving in quality.

The focus on building wireless infrastructure with private capital –supplemented by existing federal subsidy programs, particularly the Federal Communications Commission’s Connect America Fund (CAF) – is consistent with past Trump administration positions. Its national security policy paper, released last month, similarly called out 5G infrastructure. Republicans at the FCC and in congress favor using the CAF model as a low cost, incumbent-centric method of upgrading rural broadband. And of course, FCC chair Ajit Pai generally wants to take a weed whacker to telecoms regulations.

CAF-subsidised wireless service, as deployed by AT&T and planned by Frontier Communications, will freeze rural broadband speeds at 10 Mbps download and 1 Mbps upload for a generation or more. That service level is far below the 25 Mbps down/3 Mbps up standard adopted by the U.S. agriculture department, and it’s nowhere near enough to deliver, as yesterday’s report calls for, "reliable and affordable high-speed internet connectivity [that] will transform rural America as a key catalyst for prosperity.

But Trump says it’s enough.

Report to the president of the United States from the task force on agriculture and rural prosperity, released 8 January 2018

Frontier exceeds federal expectations but understates Californian obligations


Frontier Communications put out a puzzling press release yesterday. What should have been a celebration of good news, was instead a mish-mash of misdirection and lawyerly evasions that raised more questions than it answered.

The good news is that Frontier has upgraded broadband availability for 39,000 of the 90,000 rural Californian homes it promised the Federal Communications Commission it would serve with a minimum of 10 Mbps download and 1 Mbps upload speeds, in exchange for $228 million in subsidies. That means it reached 43% of the total by the end of 2017, which is better than the 40% benchmark it’s required to hit.

Well done.

But the press release’s headline says that Frontier expanded broadband service to more than 275,000 homes. Which sounds like a lot. It also kinda sounds like those customers didn’t have any Frontier broadband service to begin with. But it doesn’t actually say that.

What it does say is that “100,000 additional households” should have been reached by the end of last year, but since federal securities law requires this sort of public statement be truthful – otherwise, executives could end up in prison – the press release doesn’t quite say it happened. The release says Frontier “is expanding” rather than “has expanded” broadband service. The tense of the verb is a get out of jail free card.

A good explanation for the press release’s weirdness can be found in the hundreds of pages of testimony, settlement contracts and, ultimately, the California Public Utilities Commission decision that allowed Frontier to buy Verizon’s wireline phone systems in 2015. That decision requires Frontier to either upgrade or extend new service to 827,000 Californian locations by 2022. Those are mostly residences, but some businesses are included too. The total breaks down further, into medium speed (25 Mbps down and 2 Mbps down), low speed (10 Mbps down/1 Mbps up), and abysmal speed (6 Mbps down/1 Mbps up) upgrades and extensions. Yesterday’s press release kinda skipped those details.

It also neglected to mention that six counties it’s required to specifically address – Modoc, Shasta, Lassen, Plumas, Siskiyou, and Tehama – haven’t been touched. Or at least that’s the way it reads – none are on its list of 15 counties where upgrades and extensions have been completed. Or rather, are being completed.

So what Frontier is really saying is that it’s hit 33% of its ultimate mandate in California and it hasn’t accomplished anything yet in the most remote corners of its service area, where the hard work will be.

Frontier beat its first hurdle of 40% completion of federally subsidised broadband builds by the end of 2017. It has to hit 60% this year, 80% next year and 100% by the end of 2020, when it also has to have reached an additional 100,000 previously unserved households. With comparable speeds. Of the rest, 400,000 upgrades/extensions need to be done by the end of 2022 and 250,000 have a less well defined deadline.

All Frontier says about that is “details will be reported to state regulators in coming months”. We can only hope those details will be shared with the public, too.

CPUC decision granting [Frontier Communications] application [to buy Verizon systems] subject to conditions and approving related settlements, 3 December 2015

Frontier punts on California broadband subsidy obligation


Frontier is bragging about how well it’s doing with the broadband infrastructure and service upgrades it promised to do, in exchange for $2 billion in federal subsidies. But not in California.

When it accepted the Federal Communications Commission’s Connect America Fund (CAF) money in 2015, Frontier agreed to deliver a minimal level of service – 10 Mbps download and 1 Mbps upload speeds – to 58,000 homes and businesses in California in exchange for a total of $228 million, paid out over six years in $38 million increments.

Those upgrades were supposed to be completed over the following five years, with 40% of the claimed territory upgraded by the end of next week – 31 December 2017. It put out a press release this week, patting itself on the back for meeting its obligations in 17 states. But California wasn’t on the list.

An email to Frontier’s public relations department asking for an update on its progress in California, or at least an explanation of why it won’t make its required deadline, went unanswered. California was one of three states where Frontier acquired systems from Verizon in 2015, and cut over in 2016. The other two states – Texas and Florida – were on the mission accomplished list, so the reason can’t be some kind of cosmic issue with the Verizon acquisition.

Since there are ten other states where Frontier also accepted CAF money but isn’t claiming to have met the 40% build out requirement – states which were not involved in the Verizon transaction – it’s more plausible that the failure is systemic in nature.

Frontier – and AT&T, which accepted CAF subsidies in California but also hasn’t claimed success – have a week to pull things together and fulfil the obligations they assumed. And then the FCC and the California Public Utilities Commission will have to verify those claims. Which might still happen. But if they can’t even reach enough of the low hanging fruit to get to 40% of federally subsidised Californian homes and businesses in two years, it will be hard to believe any promises that they’ll be willing or able to the harder work needed to upgrade the remaining 60% in the next three.

California makes AT&T’s list for limited and costly rural broadband


Taxes not included. Except in my bonus check.

AT&T says it’s official: they are launching slow, expensive wireless Internet service in rural California, and other undefined “underserved” areas, instead of upgrading ageing copper networks to modern levels. The technology is designed to support 10 Mbps download and 1 Mbps upload speeds, although there are no guarantees.

The California Public Utilities Commission, on the other hand, decided to go in the opposition direction and unanimously endorsed the higher standard of 25 Mbps down/3 Mbps up yesterday. That’ll have no effect on AT&T’s fixed wireless roll out though, whenever that actually happens.

There seems to be a different between making it official and making it real. Using the link in the press announcement, I checked a dozen locations in California where AT&T has claimed federal Connect America Fund subsidies – where its wireless local loop service is targeted – and all came back with “AT&T fixed wireless Internet isn’t in your area yet”. I got the same response when I entered the zip codes for a couple of the Texan counties that AT&T specifically called out as ready for fixed wireless service in a separate press release.

California was on a list of nine new states, bringing the total where AT&T claims to offer its 10 Mbps down/1 Mbps up wireless substitute service to 18 states.

According to Ars Technica, the base rate for the service is $70 a month, or $60 a month with a contract. AT&T isn’t disclosing the monthly rate on its website, but it does helpfully point out that the base service only includes 160 gigabytes a month. Anything over that costs $10 per 50 GB, up to $200, for a total max charge of $270 a month.

This fixed wireless service is what the California legislature voted to back with $300 million of taxpayer subsidies. Whether it happens or not depends on governor Brown, who has until 15 October 2017 to approve or veto assembly bill 1665.

AT&T uses federal subsidies to offer expensive, slow broadband


Never give a sucker an even break.

AT&T’s federally subsidised wireless Internet service is costly, compared to what wireline customers pay. The fixed wireless service has supposedly been offered in Georgia for a couple of months, and AT&T announced it was expanding it to rural customers in eight more states immediately, with nine others, including California, slated to get it by the end of the year. It’s difficult to tell whether or where AT&T is actually delivering it, though. Entering zip codes into its “Check Availability” web page gets you a “AT&T Fixed Wireless Internet isn’t in your area yet” response, even in previously launched Georgia counties.

Pricing and service levels are reasonably clear though, at least as clear as such things ever are. If you want the nominal 10 Mbps download/1 Mbps upload speeds that AT&T is required to provide where it’s getting federal Connect America Fund (CAF) money, the rack rate is $99 to have it installed and then $70 a month for the first 160 GB of data. Every 50 GB (or fraction thereof) of data over that cap will cost an extra $10, up to a a maximum overage charge of $200.

It’s costly bandwidth, compared to the standalone ADSL2-based wireline service I get from AT&T. I pay $57 a month for “up to” 12 Mbps download speed, with a 1,024 GB cap and no currently defined upload speed. Do the math: customers getting the federally subsidised wireless service would have to pay $250 per month for the same amount of data I get, at a lower advertised speed.

Signing up for bundled DirecTv service or for a term contract can bring the monthly price down, but that’s true for wireline subscribers too.

There’s also reason to question whether AT&T will actually deliver on the required 10 Mbps down/1 Mbps up service level. As is typical, the AT&T web page touting the wireless service qualifies its promise of “at least” 10/1 by adding “data speeds can vary depending upon various factors”. Right. Like trees, weather, and your neighbors streaming House of Cards on Netflix.

AT&T and Frontier Communications have scooped up the CAF money on offer in California. Frontier hasn’t provided any information yet on how or if its federally subsidised service will differ from the norm, but it’s clear that AT&T is using the money to lock rural Californians into service – for decades to come – that’s slower and more expensive than what their urban and suburban cousins enjoy.

The worse your broadband, the harder price hikes hit, FCC data says


Broadband service is getting more expensive, particularly if you’re on the slow side of the digital divide. The Federal Communications Commission just published its 2017 urban benchmark rate survey, which it uses to set prices and data caps for subsidised rural service – via the Connect America Fund, for example – as well as standards for lifeline service.

In 2016 (which is the benchmark year for 2017 rates), urban customers subscribing to packages with download speeds of 10 Mbps, upload speeds of 1 Mbps per second and a data cap of 100 gigabytes per month – in other words, the slowest and lowest service – paid $76.49 per month. That’s $7.33 more than a year before, an 11% increase. Customers with the highest end service in the survey – 25 Mbps down, 5 Mbps up and no data cap – saw their bills go up only $1.52, increasing 2% to $90.76.

As the table above shows, the lower the level of service you buy, the greater the price increase you have to bear, both on an absolute and percentage basis.

One caveat: the benchmarks are based on the prices and terms that are offered by Internet service providers, and not on the average price that consumers actually pay. In other words, customers with low end packages might be – probably are – paying less on average than the benchmark price because when presented with a choice of comparable packages, the microeconomic assumption is that they’ll opt for the cheaper one.

Urban and suburban residents in California can typically – but not always – choose between service from a cable and a telephone company, for example, so they can make that choice. On the other hand, the benchmark rate, which also factors in expensive fixed wireless prices, would be the best that many rural residents might be able to get from the single, federally subsidised provider that serves their area.

Unexpected U-turn as FCC lets New York manage broadband subsidy money

By Metropolitan Transportation Authority of the State of New York (IMG_4305_4) [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
The new federalism.

Who would have thought that the Federal Communications Commission’s first significant decision of the Trump era would be to take money originally designated for its no-incumbent-left-behind broadband subsidy program – Connect America Fund 2 (CAF-2) – and use it to top up reasonably competitive state grants, with the state calling the shots?

But that’s exactly what happened.

In 2015, Verizon turned down the CAF-2 money on offer in its wireline territory, except for the systems that it was selling to Frontier Communications, which did want it. The FCC is working on a competitive bidding process for the census blocks rejected by Verizon and others, but the State of New York asked for an exception to made, so the subsidies could go into the New NY Broadband Program instead.

On Friday, the FCC said yes.

The $170 million that would have gone to Verizon will go to winning applicants for New York’s broadband infrastructure subsidy program. The federal money will be given as a one to one match for state subsidies awarded in CAF-2 eligible census blocks, but only up to the maximum amount that the FCC originally designated for those blocks.

The FCC’s order says New York can get the job done faster than it can…

We find that New York is uniquely situated to quickly and efficiently further our goal of broadband deployment. New York has committed a significant amount of its own support—at least $200 million—to…its broadband program that is designed to be compatible with and achieve the goals of Connect America Phase II. Moreover, New York is poised to quickly implement the next phase of its program in a matter of months so that deployment of broadband of speeds that meet or exceed the Commission’s baseline requirements for Connect America can be achieved while the Commission is in the process of finalizing and implementing the Connect America Phase II auction.

Virtually all the CAF-2 money that the FCC offered in California was accepted (CenturyLink turned down $300,000 to serve 45 homes in Modoc County), so the New York decision can’t be cloned here. But the FCC has shown a new willingness to work with effective state broadband programs, rather than at cross purposes. These are interesting times.