FCC Ups Speed Threshold for CAF

Rural Broadband Follows FCC Pattern
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The FCC will now require companies getting money from the Connect America Fund (CAF) for their broadband buildouts to deliver speeds of at least 10 Mbps downstream and 1 Mbps upstream. Previously the speed minimum was 4/1, in line with the FCC's previous definition of high speed.

That came in a vote Thursday (Dec. 11) on updating the CAF, which is the FCC's migration of Universal Service Fund subsidies for hard-to-reach or uneconomical-to-reach rural areas from telephone service to broadband.

The FCC in 2011 began the transition to broadband support and now says it will make $1.8 billion in support to larger-price cap-carriers if they are willing to deliver the new speed. They get first dibs, after which competitive carriers will have an opportunity to bid on the business in those carriers' service areas.

FCC Chairman Tom Wheeler has made it clear that 10 Mbps is the minimum table stakes for high-speed broadband, and has made extending it nationwide an FCC priority, in line with that of the President.

The item updating CAF is also:

-"Increasing the terms of support for price cap carriers from five years to six years, with an option for a seventh year in certain circumstances."

-"Providing increased flexibility in the build-out requirement, while still ensuring that support recipients are reaching out to Americans that were previously unserved."

-"Forbearing from certain universal service obligations in low-cost census blocks where price cap carriers are not eligible to receive Connect America support, as well as census blocks where the carriers face competition."

-"Requiring recipients that decline Connect America support in a state to continue to deliver voice service to high-cost census blocks until replaced through a competitive bidding process by another subsidized carrier that is required to deliver voice and 10/1 broadband."

"While we need to see the details of today’s CAF order affecting areas served by price cap carriers, we are hopeful that it maintains a workable balance between increasing speed requirements to 10 Mbps and the realities of serving these challenging areas," said John Banks, SVP of USTelecom, whose members include those price-cap carriers. "A longer term of support would undoubtedly have brought more investment, construction, jobs and broadband connections to more rural areas more quickly."

Republican FCC Commissioner Ajit Pai agreed. He said while he supported increasing the benchmark to 10 /1, "this change roughly doubles the expected costs of deployment. An appropriate counterweight would have been increasing the term of support from 5 years to 10, but the Order only increases it marginally, to 6." Pai concurred in part and dissented in part. Commissioner O'Rielly also had issues, including principally an overall cap on CAF support, and simply concurred in the item.