FCC's wireline bureau launches Connect America Phase II challenge process

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The FCC's Wireline Competition Bureau has initiated the Connect America Phase II challenge process for price cap territories.

Service providers, state commissions, local governments and any other interested parties are encouraged by the regulator to provide their feedback during the challenge process. The FCC has put out a list of census blocks identified as eligible for Phase II support.

Eligible service blocks fall into three main categories: (1) shown as unserved by an unsubsidized competitor; (2) "high cost" according to the adopted Connect America Cost Model, which means that the census block has a calculated average cost per location above $52.50 and below $207.81; and (3) located in price cap territories.

Any interested party has until Aug. 14--45 days from the release of the Public Notice--to file a challenge to the inclusion or exclusion of particular census blocks on the list.

"Challenges may only be based on the first criterion: whether the block is served by an unsubsidized competitor," wrote the FCC Wireline Competition Bureau in a public notice. "Challengers may argue either that census blocks served by an unsubsidized competitor were improperly included on the list, or that census blocks unserved by an unsubsidized competitor that are otherwise eligible were improperly excluded from the list."

When the 45-day challenge period is over, the FCC said that it will review each challenge and then issue a public notice outlining which challenges provided enough evidence to change the status of a census block from "served" to "unserved" status or vice versa. Then, the regulator will make its final decision on whether each of the challenged "census blocks will be treated as served or unserved by an unsubsidized competitor for the purposes of Phase II and will issue the final list of census blocks eligible."

The response to the FCC's initial CAF-II fund proposal has been mixed.

For the CAF-II fund, the FCC is offering nearly $9 billion over the course of five years to expand broadband in rural areas. Besides offering more funding, the regulator proposed that phase II should double the download speed required for subsidized broadband networks from 4 Mbps to 10 Mbps.

CenturyLink (NYSE: CTL), which does provide service in a number of rural areas, said at the time the proposal was released that it was concerned that the CAF-II program needs to create equal opportunities for all consumers.

"Our concern is that higher speeds are great, but they're going to require commensurate changes to get broadband in high cost areas where the market would not provide broadband otherwise," said Jeff Lanning, VP of federal regulatory affairs for CenturyLink, in an interview with FierceTelecom. "Basically, 10 megabits vs. 4 megabits cost more and the people that don't have 10 megabits and are in these high cost areas identified by the FCC need to be supported."

Lanning added that "we can't jump over people and fund other people because it needs to be for everybody and not create have and have nots."

For more:
- see the FCC release (.pdf)

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