New York gets $170M in FCC broadband funding that Verizon turned down in 2015

Rural broadband
The government will equip 97% of New Yorkers with broadband service, with the goal of serving all New Yorkers by the end of 2018.

New FCC Chairman Ajit Pai is wasting no time putting his stamp on the regulator, leading a vote to provide up to $170 million from the Connect America Fund (CAF) to expand broadband deployment in unserved rural areas of New York state.

Verizon, which operates in New York, turned down the CAF-II funding in 2015.

The federal funding will be coupled with at least $200 million in state funding and private investment to accelerate broadband deployment and close the digital divide in these unserved areas more quickly. 

“Broadband is critical to economic opportunity and job creation,” Pai said in a statement. “This is a first step of many to fulfill my promise to empower Americans with online opportunities, no matter who they are and no matter where they live.”

This order will authorize CAF-II support in areas where applicants are selected through New York’s competitive New NY Broadband Program.

Participating carriers have to meet specified conditions to ensure broad participation and ongoing oversight. The funding that will be made available was declined by Verizon in 2015.

RELATED: New York may have to fork over $170M in CAF-II funds to other states

Not everyone is excited about the FCC’s decision to allocate the funds to New York.

The Wireless Industry Service Providers Association (WISPA) said in a statement that awarding New York state could inhibit the ability of other states to get broadband funding.

“After robust opportunity for public input, last year the FCC adopted a CAF-II framework that was truly technology-neutral and designed to harness the power of competition to deliver the most broadband to the most Americans, at the lowest overall price,” said Steve Coran, counsel for WISPA, in a statement. “Unfortunately, today’s action appears to deviate from this approach by providing disproportionate support to one state at the expense of others, which will now be competing for even less federal support.”

Coran added that WISPA is “concerned that the action will encourage additional states to make end runs to receive off-the-top” money in a manner contrary to nationwide CAF objectives.

A controversial journey

New York’s CAF-II allocation and broadband expansion effort have been a source of controversy.

In May, U.S. Senator Charles Schumer (D-N.Y.) said that New York state may have to give back over $170 million in CAF-II funding to the FCC, which would allocate the returned funds to other states.

New York was awarded $49 million annually under the CAF-II program.

After Verizon did not accept its $28 million share of the CAF-II program in 2016, Schumer said at that time that the FCC wants to make the money available to other states that need to upgrade their last mile network infrastructure.

Verizon turned down $144 million total per year for six years in CAF-II funding to expand broadband in the rural areas it serves.

Upon turning down the funding, industry pundits theorized Verizon was considering a sale of another large piece of its wireline asset portfolio.

Later that year, Verizon announced a deal to sell its wireline properties in California, Florida and Texas to Frontier Communications for $10.5 billion.

Broadening availability

The CAF-II funding will complement New York state’s $500 million Broadband Program, which aims to provide broadband with speeds of 100 Mbps for every consumer living in the state. In remote areas, the goal is to provide at least 25 Mbps speeds for residents. 

According to a post on the New York state’s website, the government will equip 97% of New Yorkers with broadband service, with the goal of serving all New Yorkers by the end of 2018.

As part of the program, 50% of homes and businesses will be addressed by round one in broadband grants and Charter’s broadband expansion effort.

Leveraging a mix of DOCSIS and FTTH technologies, a mix of telcos and cable operators like Armstrong, Frontier, TDS and The Middleburgh Telephone Company will provide broadband service to 30,000 homes that would have otherwise been left behind without service.

Over 2 million upstate New York households will get speed upgrades early this year, which the government said is “nearly two years ahead of schedule.”

Interestingly, round two of New York’s Broadband Program will address additional unserved and underserved homes and businesses, including a portion of the areas that Verizon would have served through the CAF-II program.