Connect America Fund Phase II Auction Results

On Tuesday, August 28, the FCC released the results of its Connect America Fund Phase II auction, which awards approximately $1.5 billion of support over 10 years to bring broadband service to unserved census blocks in price cap carrier territories (available here). These census blocks were the ones the price cap carriers did not elect to serve based on the FCC’s cost model with the addition of very high-cost census blocks in their territories. Not only was this the first reverse auction to award fixed broadband support, but it used a weighting system based on broadband performance: the greater the performance and lower the latency, the more favorable a bid would be treated. This was a great sign for bids that embraced FTTH designs.

In brief, the auction was a success! There were 103 winning bids for the $1.5 billion in support to serve 75% of the total locations in the auction.  It is likely that most of the other 25% were the much higher cost locations. Almost 100% of the locations will get at least 25 Mbps downstream service, 53% will get at least 100 Mbps, and 19% will get 1 Gbps. By contrast, for model-support, price cap carriers must deploy 10/1 Mbps broadband service, and they received more than 3 times more in support. Thus, the handwriting appears to be on the wall for how future support in price cap areas will be awarded.

As for the big winners (from those that are easy to identify) three stand out. Fixed wireless providers appear to have received about 50% of the support to serve about 40% of the locations; Rural electric co-ops, which are likely to deploy fiber, appear to have won in aggregate more than 20% of the total support to serve about 10% of the locations; and ViaSat will receive about 7% of the total support to serve about 26% of locations. Verizon also won a series of bids, amounting to almost $10M in support to serve about 3,300 locations. The other winners include Cincinnati Bell, MidContinent Communications, and many rural telephone companies.

The next step in the process will for the winners that filed using the “Divide Winning Bids” process to file any assignments by September 14, 2018, and then all winners will need to file their long form applications by October 15, 2018. Additional network, operational, and financial information will need to be submitted over the next six months.

By the way, the FCC will make available much more information about the auction, including state and performance/latency combinations of bidders.  For more complete data on bidders and bids, go to:  www.fcc.gov/auction/903/.