Competitive providers deploying broadband networks in rural areas will now be eligible to obtain direct subsidy support from the Federal Communications Commission (FCC) through an experimental program under the Connect America Fund (CAF). The so-called “rural broadband experiment” is designed to test the feasibility of directing subsidies to competitors, including cable operators, CLECs, and wireless ISPs, deploying last mile broadband (3 Mbps downstream/768 kbps upstream) facilities to unserved areas.
Until this point CAF support has been available only to incumbent telecom providers. This initiative marks the first time that competitive providers will be entitled to receive CAF support, and test how the agency distributes additional support to competitors during Phase II of the CAF proceeding.
The rural broadband experiment will unfold in two stages: first, an “expression of interest” stage, and second, a formal proposal stage. The first stage begins immediately, as interested providers may file a non-binding letter of interest with the FCC no later than March 7. (Note: filing an expression of interest is not a prerequisite to later filing an application for support.)
In the second stage, formal proposals/applications will be accepted by the FCC some time later this year. Many details of the program, including total proposed funding, remain unresolved. We estimate that between $50 to $100 million may be allocated for this experiment. Recipients of subsidies must obtain additional regulatory approvals (ETC designation), and comply with certain reporting requirements, audits, and potential enforcement proceedings for any non-compliance.
Additional details are available through our recent DWT Alert.