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The Federal Communications Commission’s Wireline Competition Bureau (WCB) has officially extended 217 revised offers of Alternative Connect America Cost Model (A-CAM) support, along with revised deployment obligations, to rate-of-return carriers that accepted A-CAM support in 2017.[1] Each revised offer is based on support up to $146.10 per-location, meaning locations with costs above $52.50 will be funded up to a per-location fund cap of $146.10. Each carrier’s revised state-level offer of model-based support and associated data is available for review on A-CAM Report 11.0. Carriers have 45 days – until June 21, 2017 – to accept their revised offers.

Another Offer of Revised A-CAM Support

Rate-of-return carriers that voluntarily transitioned to cost model regulation will receive USF support derived from the A-CAM over a ten-year period.[2] In exchange for support, these model-based rate-of-return carriers must offer at least 10/1 Mbps broadband service to a specific number of locations in their study areas where the model determines the average cost is above the funding benchmark and below the funding per location cap, and they have to offer at least 25/3 Mbps service to a subset of those “full funded” locations. When it was adopted, the A-CAM was set to provide support to all locations in a rate-of-return study area where average deployment costs are above a $52.50 funding benchmark, with support being capped at $200 per-location. Only a certain subset of all rate-of-return carriers were eligible to move to the A-CAM

A-CAM eligible carriers received offers of support in August 2016,[3] but the total amount of support and transition payments for carriers that chose to move to the model exceeded the A-CAM’s 10-year budget by more than $160 million annually, forcing the FCC cut total offered support. The A-CAM funding cap was first reduced to $146.10 per location, and because the revised amounts still exceeded the budget, the FCC cut support offers (and associated deployment obligations) further by varying percentages based on locations in a carrier’s study area lacking broadband service at speeds of at least 10/1 Mbps.[4] In December 2016, a total of 191 rate-of-return carriers received 228 revised offers of A-CAM support,[5] and in January 2017, 182 carriers accepted 217 of those revised offers in 39 states.[6]

Based in part on extensive advocacy by A-CAM carriers calling for additional funding of $200 per month, per location,[7] the Commission, in the recent 2018 Rate-of-Return Reform Order and FNPRM, directed the WCB to make another revised offer of A-CAM support to those carriers that accepted revised offers in 2017.[8]

Second Revised Offers of Support: $146.10 Per-Location Funding Cap

The revised state-level offers of A-CAM support are based on a $146.10 per-location funding cap. More specifically, under this second revised A-CAM offer, all locations with costs above $52.50 will be funded up to a per-location cap of $146.10. Each carrier’s deployment obligations have been adjusted to reflect the additional support.

Each carrier that has been extended a second revised offer of A-CAM support can review the amount along with their deployment obligations by downloading A-CAM Report 11.0. The excel spreadsheet report also shows the amount of annual support that would be provided over the 10-year term, the total number of funded locations in census blocks that are eligible for support, the number of eligible locations that are fully funded, the number of eligible locations that are capped, and the specific number of locations where the recipient will be required to offer 25/3 Mbps service, 10/1 Mbps service, 4/1 Mbps service, and service upon reasonable request.

Carriers have 45 days – until June 21, 2017 – to make a decision. To accept a second revised offer, a carrier must submit a letter signed by an officer of the company confirming that the carrier elects the revised model-based support amount as specified in Report 11.0, and commits to satisfy its updated deployment obligations. Carriers must submit their letters to the WCB at ConnectAmerica@fcc.gov. Those carriers that decline the second revised offer will continue to receive current support amounts and be subject to current deployment obligations.

Will All Carriers Accept The Second Revised Offer Of Support?

Carriers that elected to move to the A-CAM did so for a few reasons. Most receive more annual USF support under the A-CAM than they did under cost-based rules. But the A-CAM provides something that can be more beneficial than extra USF support – regulatory certainty. Since 2011, uncertainty has clouded rate-of-return carriers decision-making. For many of those carriers that work off of the updated cost-based rules, regulatory uncertainty is still causing major problems. But for A-CAM carriers, this is not the case. A-CAM carriers will be locked into a definite amount of annual support for the remainder of the A-CAM’s term.  The A-CAM has defined buildout obligations, so each carrier should have a good idea of the deployment commitment it is getting itself into. This certainty allows carriers to engage in well-planned decision-making. Look for most, if not all carriers to accept the second revised offer of support.

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[1] Wireline Competition Bureau Announces Offers Of Revised A-CAM Support Amounts To 217 Authorized A-Cam Companies To Expand Rural Broadband, WC Docket No. 10-90, Public Notice, DA 18-465 (May 7, 2018).

[2] See Connect America Fund, WC Docket No. 10-90, ETC Annual Reports and Certifications, WC Docket No. 14-58, Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92, Report and Order, Order and Order On Reconsideration, and Further Notice Of Proposed Rulemaking, FCC 16-33, ¶¶ 17-79 (2016).

[3] Wireline Competition Bureau Announces Support Amounts Offered to Rate-of-Return Carriers to Expand Rural Broadband, WC Docket No. 10-90, Public Notice, DA 16-869 (2016).

[4] Connect America Fund, WC Docket No. 10-90, Report And Order And Further Notice Of Proposed Rulemaking, FCC 16-178, ¶ 7 (2016).

[5] Wireline Competition Bureau Authorizes 35 Rate-Of-Return Companies To Receive More Than $51 Million Annually In Alternative Connect America Cost Model Support And Announces Offers Of Revised A-Cam Support Amounts To 191 Rate-Of-Return Companies To Expand Rural Broadband, WC Docket No. 10-90, Public Notice, DA 16-1422 (2016). There was one exception to the FCC’s revised A-CAM offers. There were no revised offers for 35 carriers that received offers of model-based support that were less than the amounts of legacy USF support they received in 2015. Instead, the FCC locked these carriers into their original offers of A-CAM support, the $200 per location funding cap, and their original deployment obligations. These 35 “glide path carriers” accepted 45 offers of support. Id. at ¶ 7.

[6] Wireline Competition Bureau Authorizes 182 Rate-Of-Return Companies To Receive $454 Million Annually In Alternative Connect America Cost Model Support To Expand Rural Broadband, WC Docket No. 10-90, DA 17-99 (Jan. 24, 2017) (A-CAM 2nd Authorization PN).

[7] See Letter From Michigan A-CAM Companies to Marlene Dortch, FCC Secretary, WC Docket No. 10-90 (Dec. 7, 2017); Letter From Mississippi A-CAM Companies to Marlene Dortch, FCC Secretary, WC Docket No. 10-90 (Dec. 7, 2017). Other letters were submitted by A-CAM companies in Ohio, Pennsylvania, Alabama, Virginia, Colorado, Wisconsin, Oklahoma, and Minnesota.

[8] Connect America Fund, WC Docket No. 10-90, ETC Annual Reports and Certifications, WC Docket No. 14-58, Establishing Just and Reasonable Rates for Local Exchange Carriers, WC Docket No. 07-135, Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92, Report and Order, Third Order On Reconsideration, and Notice Of Proposed Rulemaking, FCC 18-29, ¶66 (rel. Mar. 23, 2018).