USF High-Cost Program: Best and Realistic Timelines

According to the FCC’s most recent report, nearly fourteen million Americans lack any access to fixed broadband. In an effort to remedy this, in 2011, the Commission established the Connect America Fund (CAF) within the USF high-cost program to provide federal common service support to private service providers serving high-cost parts of the nation. While progress has been made to implement various parts, thanks to the great work of staff, there hasn’t been a sense of urgency in the Commission due to a lack of energy and commitment to complete the hard tasks that remain. Sadly, unless something significant adjustments, unserved Americans will have to wait actually longer to get access to broadband.

Like numerous, I was pleased that, at recent Congressional hearings, Chairman Wheeler provided additional insight on the timeline intended for CAF reforms to Members of the home and Senate who want to see quicker progress, as I have advocated for over a year. It’s especially good news to hear the Chairman promise to complete a CAF not just for the larger rate-of-return (ROR) carriers but also for the smaller ROR carriers by the end of this year and also to hold a CAF Phase II auction for price cap areas next year. I take him with his word that he intends to try to meet his commitments. The problem is that will, when I mapped out the techniques that would need to occur to meet these promises, it became obvious that it’s extremely unlikely that the Commission will be able to adhere to that schedule. Many of the person actions and program steps are interconnected. For instance, it seems unlikely that the Commission would set up a CAF for very small ROR carriers without knowing which carriers will opt-in to a CAF ROR model.

Outlined below in chart form is what I believe to be the “best case” timing scenario for each CAF item, assuming that CAF will be the top priority for staff in the Wireline Competition Bureau (WCB) and the Wi-fi Telecommunications Bureau (WTB) and that there is stakeholder consensus on any excellent issues. In reality, however , WCB is focused on other complex, high-profile problems including net neutrality, mergers, exclusive access, Lifeline, inmate calling, plus forbearance, and WTB is focused to the broadcast incentive auction, among other things. Although it is true that there are teams within every Bureau still dedicated to CAF, several members have been assigned to these various other issues, and upper management will have to work on other projects as well. Accordingly, I’ve also presented a more “realistic case” scenario that acknowledges both these resource constraints, as well as a lack of general opinion on certain CAF components, including the CAF Phase II auction. To provide clarity for all those interested, I do not really believe that the Commission still intends to implement a CAF Phase II Mobility Fund, and so it is not an accident that it is excluded in the realistic version.

Notably, these are just the steps needed to adopt Commission rules as at present contemplated. After the Commission acts, it is going to still take months for financing to flow, and it will be many years before some unserved consumers may sign up for new broadband service.

I hope to be proven wrong about the timeline. In fact , I would welcome suggestions for ways to streamline and accelerate the remaining tasks. However it is important that all stakeholders understand the procedure and likely timing of reforms so that we can have that debate.

As a result, whenever people start to discuss changing, modernizing or updating the current communications statute, one area that concerns my mind is the USF high-cost program. And it wouldn’t necessarily take a lot of effort to generate tremendous improvement. All that is needed would be to set deadlines plus milestones for the Commission to act to the existing parts in a timely manner. That simple step – combined with a mandate to not increase the overall costs on American consumers – would likely have a demonstrable impact on broadband deployment in countryside America.

Best Case Realistic Case
2Q 2015
  • Make CAF Phase II offers to price cover carriers
  • Make CAF Phase II offers to price cover carriers
3Q 2015
  • Cost cap carriers accept or drop CAF Phase II offers
  • Adopt Voluntary Path to the particular Model for rate-of-return carriers
  • Adopt CAF Phase II Auction Order
  • Price cover carriers accept or decline CAF Phase II offers
4Q 2015
  • Rate-of-return carriers make selection
  • Adopt CAF intended for non-model rate-of-return carriers
  • Adopt Voluntary Path to the Model intended for rate-of-return carriers
1Q 2016
  • Adopt Mobility Fund Phase II Rules
  • Rate-of-return carriers create election
2Q 2016
  • Adopt CAF Phase II Auction Methods PN
3Q 2016
  • Adopt Mobility Fund Phase II Procedures PN
  • Adopt CAF Phase II Auction Order
4Q 2016
  • Hold CAF Phase II Auction
  • Adopt CAF for non-model rate-of-return service providers
1Q 2017
  • Analyze CAF Phase II Auction results to determine scope of Remote Areas Account
  • Hold Mobility Fund Phase II Public sale
  • Adopt CAF Phase II Auction Procedures PN
2Q 2017
  • Adopt Remote Areas Account Order
3Q 2017
  • Hold CAF Phase II Auction
4Q 2017
  • Analyze CAF Phase II Auction results to determine scope of Remote Areas Account
1Q 2018
2Q 2018
  • Adopt Remote Areas Account Order

Key Terms:

Connect America Fund Phase II : will provide support in areas served by price cap carriers, either to the incumbent carriers based on patterned costs or to competitive bidding those who win through a reverse auction.

Connect America Fund for Rate-of-Return Carriers : will provide support to rate-of-return service providers. Some may elect to receive assistance based on modeled costs (under the particular “Voluntary Path to the Model”). May include a separate Alaska plan.

Mobility Account Phase II : intended to offer support in areas lacking 4G service.

Remote Areas Fund : intended to provide support in areas that would be extremely costly to serve making use of traditional wireline technologies.

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