FCC Offers Incentives for 500-plus Rural Carriers To Provide Faster Broadband

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The FCC took steps Thursday that it says could result in one million rural homes getting faster broadband service.  Specifically, the FCC’s Wireline Competition Bureau extended offers of broadband subsidies to 516 rural “rate-of-return” companies in 46 states through a predictable cost model, rather than the current legacy system, which dates to the era of voice-only service. The FCC voted to make this offer in December.

In return, these carriers would be required to deploy broadband on a defined schedule over the next decade at speeds of at least 25 Mbps download/3 Mbps upload to homes and businesses fully funded by the model. If all carriers opt in to the offer, they will be required to deploy broadband to at least 1,126,082 homes and businesses.

The obligation to deploy high-speed broadband will increase even for those carriers that don’t accept the offer of model-based support. Under prior rules, legacy carriers were only required to deploy 10/1 Mbps broadband to 115,441 locations. As a result of the Commission’s December vote, the bureau has increased those obligations so that legacy carriers will be required to deploy 25/3 Mbps broadband to at least 600,535 locations.  

The FCC modernized its support for rate-of-return companies through the use of the Alternative Connect America Cost Model, or A-CAM, to determine support. The model calculates support required to provide service census block-by-census block and delivers that support over a 10-year term, with a defined buildout schedule. Building on the success of the first A-CAM offer, the action taken Thursday provides carriers that initially elected to remain on the legacy system, an opportunity to switch over to the model.

Rate-of-return carriers receive approximately $2.4 billion each year of the FCC’s $4.794 billion in universal service support for rural broadband, and of that, the 262 companies that have already elected A-CAM support, get approximately $607 million per year.  Carriers currently receiving legacy support have 45 days to opt in to yesterday’s A-CAM offer.

“The steps the FCC took in December that are being implemented [now] will give providers choices on how best to obtain the support needed to improve and sustain broadband access in the deeply rural areas they serve,” said NTCA–The Rural Broadband Association CEO Shirley Bloomfield. NTCA is still evaluating the details, but hopes the options and measures announced Thursday will give many of its members, “even more opportunity to bring even better services to rural America,” she said.

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May 3, 2019

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