Broadband Communities

OCT 2017

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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62 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | OCTOBER 2017 THE LAW The Connect America Fund Reverse Auction The FCC's Connect America Phase II reverse auction gives competitive providers a shot at getting USF support to build broadband networks in unserved rural areas where incumbent providers have chosen not to build. The process is complicated – at best. By Douglas Jarrett / Keller and Heckman LLP O n August 4, 2017, the FCC released its public notice and technical guidance outlining the structure and procedures for the Connect America Fund Phase II (CAF II) reverse auction ("the auction" or "Auction 903"). Up to $198 million per year for 10 years of ongoing support ("the budget") for fixed broadband networks will be available in the auction. Auction 903 has generated extensive interest among diverse groups because it is open to entities such as rural electric cooperatives, wireless internet service providers and municipalities, not only to incumbent local exchange carriers (ILECs). e areas included in Auction 903 are principally those in the 2015 statewide offers declined by the price-cap ILECs and areas included in qualified, non-winning, category 1 bids under the FCC's rural broadband experiments, subject to the FCC's final determination of eligible census blocks, as discussed on page 63. e funds declined by Verizon for New York state are being distributed in conjunction with an auction being administered by New York. Subject to several important distinctions, the auction procedures will track those followed in the 2012 mobile broadband auction and those for the next mobile broadband auction, referred to as MF-II. e outcome of Auction 903 will set an important precedent. In four years, the funding accepted by ILECs under the 2015 statewide offers – more than $1.5 billion per year – expires. If the auction meets expectations in terms of competitive bidding and deployment of broadband networks, a reverse auction may be used to disburse that $1.5 billion in annual funding. Finalizing the auction principles took years, as consensus among commissioners proved difficult to achieve. e FCC projects that the auction will be conducted in 2018, as the online bidding system is now under construction. Aspects of the proposed bidding procedures may be modified based on comments filed in response to questions posed in the public notice, but the core components will be the previously adopted weights for broadband transmission speeds and latency; a single, multiple-round reverse auction; and the budget. In the auction, bidders will compete against all other bidders looking to secure funding ("cross-area competition") and against other bidders placing bids for the same areas ("intra- area competition"). is article outlines a complicated, multistep process but does not address every aspect or permutation of the auction's principles and procedures. It is an introduction to the bidding procedures as currently envisioned and to key concepts. e public notice and the technical guide total approximately 60 pages, and the

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