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FCC seeks help to revamp the Connect America Fund

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The FCC on Monday put a number of changes on the table to rework Phase I of the Connect America Fund (CAF), including the definition of "underserved" areas and how to best allocate the remaining $185 million in broadband funds.

Last year, the FCC introduced the CAF as a way to modernize the Universal Service Fund (USF) and intercarrier compensation (ICC) programs by redirecting funds to focus on expanding broadband availability to over 18 million consumers who live in "price cap" areas that currently get no broadband service.

One of the problems that have plagued these communities from getting broadband is that it has been far too expensive to build the necessary facilities (fiber and DSLAM) equipment to deliver service in areas where the density of homes and businesses are low.  

"Broadband has gone from being a luxury to a necessity for full participation in our economy and society--for all Americans," the FCC said in an earlier statement about the CAF.

As it starts to implement Phase II of the CAF, the FCC has asked for comments on CAF Phase I rules. The FCC said it has advocated to expand the definition of unserved areas so that CAF Phase I funds were being used to provide services that met the minimum broadband speed requirement it set.

In addition, the regulator wanted feedback on proposals for the next round of Phase I funding "including tying funding to the construction of second-mile fiber, tying funding to the estimated costs of deployment in an area, and maintaining the $775 per unserved location metric."

Interested parties have until Jan. 28 to send comments and until Feb. 11 for reply comments.

In 2012, a number of service providers, including CenturyLink (NYSE: CTL), FairPoint (Nasdaq: FRP), and Frontier (Nasdaq: FTR), were awarded CAF funding to expand broadband services in their territories.

However compelling the CAF program is, it hasn't been without controversy. CenturyLink and Windstream (Nasdaq: WIN), for example, only accepted portions of the CAF funds they were eligible for. One of the key issues for these telcos was the rule that the regulator would support $775 per household.

CenturyLink only accepted only $35 million of the $90 million for which it was eligible to deploy broadband service to 45,000 homes in rural areas that are deemed "unserved." At that time, the telco said that restrictions on the initial round made "further deployment uneconomic."

Likewise, Windstream only accepted $653,000 of the $60.4 million it was offered, citing the limitations of the CAF I rules.

Windstream said that while it "has aggressively invested its own capital in its broadband network over the past 10 years, there are very few areas in its territory that can be served for $775 or less in government support, as required by the CAF-1 rules."

For more:
- Court House News Service has this article

Related articles:
UPDATED: CenturyLink gets $35M in FCC CAF funding for broadband expansion
FairPoint gets $2M CAF grant to extend broadband service in Vermont
Frontier secures $72M Connect America loan to expand broadband reach
FCC's Connect America Funding initiative leaves 13 states in the cold

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