Policy and regulation can only do so much to advance broadband deployment. Funding is needed—especially in high-cost, rural areas for which there is no strong business case for building out broadband. To address this need, the FCC established the Connect America Fund (CAF).
CAF was created under the umbrella program of the Universal Service Fund, which was established with the Telecommunications Act of 1996. CAF is a multi-year program focused on underserved areas. Broadband services under CAF are required to distribute at least 10 megabits per second for downloads and 1 Mbps for uploads. The carrier must offer at least one plan with 150 gigs per month, and service providers should offer rates that compare with suburban areas.
From the beginning, it was planned for CAF to distribute funding in two phases. Phase I began in 2012 and paid out $115 million to build out broadband in 37 states. In 2014, the FCC approved Phase II, which will award up to $198 million in annual support (a total of $1.98 billion for 10 years) to areas that are not served by broadband providers. Phase II faced numerous delays, but is now moving forward.
The auction process for CAF II will give smaller service providers a better chance to compete. While large carriers will also participate, the FCC is leveling the playing field for smaller, independent telecommunications companies, wireless ISPs, cable and satellite operators, rural telephone co-ops, and others by:
FCC Chairman Pai encouraged participation from providers of every size in the CAF II auction, saying: “The most cost-effective technology for a particular area will vary, so regardless of how you deliver connectivity, please take a hard look at participating in the CAF II auction.”
The auction will also include educational programs for interested providers.
Non-compliance measures will include increased reporting and possible withholding and/or recovery of support.
The FCC has promised that CAF II is only the beginning; in 2019, the FCC plans to continue its missions with the Remote Areas Fund for those areas still without high-speed broadband.