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Phases Out CAF Program

Draft NPRM for Rural Digital Opportunity Fund Sets 2-Step Reverse Auction

The FCC would use two reverse auctions to distribute $20.4 billion in funding over the next decade through a Rural Digital Opportunity Fund (RDOF) that Chairman Ajit Pai announced at the White House in April (see 1904120008), per a draft NPRM released Thursday. The new USF program (in docket 19-126) would help deliver broadband service tiers of at least 25/3 Mbps to rural communities unserved and underserved. The draft circulated Wednesday; commissioners will vote on it at their Aug. 1 meeting (see 1907100072).

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The method is similar to the ones used recently in the Connect America Fund program (CAF I and CAF II), which it will phase out. In the new RDOF program, the first $16 billion would be auctioned to providers bidding on areas wholly unserved by high-speed broadband. After that, the remaining $4.4 billion would go to rural areas partially unserved. Successful bids would win 10-year terms. Under the reverse auction, the RDOF would weight bidders on other metrics in addition to cost, such as by performance tiers and whether latency is low or high. The program would drop the 10/1 Mbps tier from the previous USF rural broadband programs entirely and favor gigabit access over 25/3 Mbps or 100/20 Mbps service. The agency would seek comment on giving credit to bidders for tribal communities to incentivize service to these underserved areas.

America's Communications Association is grateful Pai "is moving this along," said outside counsel Tom Cohen of Kelley Drye. The FCC recognizes the value of using a reverse auction to award support, he said.

NTCA is optimistic the draft NPRM is a sign the FCC is moving quickly on the RDOF, said CEO Shirley Bloomfield. It's important to start the process, she said. Between bidding, awards, planning and the time it can take to build a network, it could be close to a decade before some of the new networks are fully deployed, she added. She said in some parts of North Dakota, Montana and Idaho, providers may have only four months out of the year where it's practical to construct a network.

Better broadband mapping in rural areas will be closely tied to helping fill in the spaces where the service isn't available (see 1906280059). Bloomfield said "it would be a shame to wait to have a perfect map" to proceed with the RDOF reverse auctions, especially since generating the maps is an ever-evolving process: "Don't let the perfect be the enemy of the good."

Price cap carriers might no longer get right of first refusal to participate. CEO Claude Aiken of The Wireless ISP Association said that would be "a great thing" and would move distribution of government spending closer to a market-based approach. Bloomfield said price-cap carriers have had plenty of opportunities to serve rural communities with broadband builds and upgrades through the use of USF money, and if they haven't done so, they might not be ready to commit to those areas.

Auction participants should be well vetted so the FCC doesn't have to pull resources later and do additional auctions if a provider withdraws several years into a network build contract, Bloomfield said. She supports favoring fiber whenever possible: "We should be putting resources into things we know can provide speed." Aiken prefers a technology-neutral approach. He said giving too much preference to high-speed tiers accessible only with fiber is costly and would reduce the number of customers that could be served overall. Aiken said some small businesses lack the ability to compete in the reverse auctions if they must provide letters of credit. Providing a performance bond instead would make it easier for smaller entities to compete, he said.