Unanimous FCC Approves Alternative Connect America Cost Model

The agency also allocated an additional $50 million annually to the budget for model-based support and sought comment in a Further NPRM on whether to expand the A-CAM budget “to provide additional funding with an associated increase in broadband deployment obligations,” said the order. “In light of the considerable interest by rate-of-return companies in electing to receive model-based support in exchange for deploying broadband-capable networks to a predetermined number of eligible locations, we adopt a combination of measures designed to enable as many electing carriers as possible to receive model-based support, and thereby maximize broadband deployment in rural areas.” Adding $50 million to the annual budget will mean electing carriers have 569,170 fully funded locations instead of 519,791 locations, the FCC said.

The order locks in the election of carriers whose offer of model-based support is less than the legacy support they received in 2015 to maximize their contribution to the A-CAM budget and broadband deployment. “For these ‘glide path carriers,’ who accepted 45 offers of support, we maintain the original amount of A-CAM support, the $200 per location funding cap, and the associated deployment obligations,” the FCC said. The order addresses concerns raised by NTCA in a reconsideration petition “because glide path carriers cannot remain on the rate-of-return path by declining a revised offer,” the FCC said.

The agency also reduced support for the remaining electing carriers, whose original offer of model-based support is more than their legacy support. “We adjust the offer of support in a fashion that is designed to apply a reduction in the offer to all such carriers, while preserving as much of the original offer as possible for those that are lowest deployed,” the commission said. “In the Rate-of-Return Reform Order, we indicated that additional measures may be necessary if demand for the voluntary path to the model is so great that the funding per location cap would need to be set below $146.10, the maximum amount of support per location that Connect America Phase II provides to price cap carriers,” the FCC said. “As a first step," the bureau will reduce the funding cap to $146.10 per location, the agency said. “As we anticipated, however, revised A-CAM support amounts using this lower funding cap still would exceed the budget we adopt today, and therefore we direct the Bureau to further reduce support offers by varying percentages based on the percentage of locations lacking 10/1 Mbps.”

Commissioner Mike O’Rielly said in an accompanying statement that the FCC took a “reasonable” approach in the A-CAM order. “I remain cognizant of the issues that have been raised in the record to ensure that the legacy option remains a viable path for carriers and their consumers,” O’Rielly said. “As we continue to consider how to efficiently and effectively promote broadband deployment in this country, we need to make policy decisions in a holistic manner. We should carefully allocate any available funding in a way that maximizes coverage to unserved consumers regardless of the particular program or path.”

“We are pleased the FCC decided to add funding to the model and freeze the glide-path carriers, but we hope they will ultimately fully fund the rate-of-return program,” a USTelecom spokeswoman said. The order “is a great illustration of the FCC’s leadership on matters impacting rural broadband expansion,” TDS said in a news release. “This program, now approved, will result in hundreds of thousands of rural citizens receiving upgraded, broadband connections.”