May 6, 2019 – Rate-of-return local exchange carriers have a very important decision to make prior to June 17th: move to Alternative Connect America Cost Model (A-CAM) II support or continue to receive cost-based universal service fund support.[1] When deciding, these carriers will first analyze and compare the amount of annual support provided by each option. Then they will examine the broadband deployment obligations tied to each support option.

Let’s take a look at the A-CAM II broadband buildouts that rate-of-return carriers are currently studying as they try to come to a final decision.

In general, a carrier that elects to go with A-CAM II support must offer 25/3 Mbps broadband service to all of the “fully funded” locations in its study area by the end of the 10-year support term.[2] Fully funded locations are those locations where the model-estimated cost is above the $52.50 (non-Tribal) funding benchmark and at or below the $200 funding cap. Carriers, however, may satisfy their 25/3 Mbps service obligations by serving eligible locations that are not fully funded.[3] Carriers electing A-CAM II support also must maintain voice and existing broadband service provided as of December 31, 2018.[4]

In addition to the 25/3 Mbps obligation, carriers electing A-CAM II must offer at least 4/1 Mbps broadband service to a defined number of locations that are not fully funded (referred to as “capped locations”) by the end of the support term. Capped locations are those locations where the model-estimated cost exceeds the $200 funding cap. Carriers with a density of more than 10 housing units per square mile will be required to offer at least 4/1 Mbps to 50% of all capped locations; and carriers with a density of 10 or fewer housing units per square mile will be required to offer at least 4/1 Mbps to 25% of all capped locations.[5] The remaining capped locations will be subject to the reasonable request standard.

Carriers will have a bit of wiggle room to comply with the 25/3 Mbps buildout obligation. An A-CAM II recipient may deploy 25/3 Mbps to only 95% of its fully funded locations by the end of the term of support.[6] Those remaining 5% of locations would then shift into the carrier’s obligation to offer service to the requisite number of capped locations.[7]

A-CAM II carriers must meet 25/3 Mbps interim deployment milestones. Specifically, carriers will be required to offer at least 25/3 Mbps service to 40% of fully funded locations by the end of 2022, to 50% of the requisite number of funded locations by the end of 2023, an additional 10% each year thereafter, and 100% by 2028.[8] Any A-CAM II carrier that fails to meet any of the 25/3 Mbps deployment milestones will be subject to non-compliance measures.[9] There are no deployment milestones for 4/1 Mbps service.

Compliance with A-CAM II broadband deployment obligations will be validated at the state-level, with locations counted toward the deployment obligation only if they are located in eligible census blocks. Eligible census blocks are those blocks that are funded by the model. A carrier will be deemed in compliance with its deployment obligations if the total number of reported served locations in each required speed tier (25/3 Mbps and 4/1 Mbps) meets the total required number of locations for each tier in the state, at the time of interim and final deadlines. A-CAM II carriers must report geocoded location information to USAC’s High Cost Universal Broadband (HUBB) Portal for locations to which they have newly deployed network facilities capable of delivering broadband service meeting the required speed standard.

It’s important to note that in census blocks that are funded by the model, the FCC is not differentiating between fully funded and capped locations. This means locations served with 25/3 Mbps or 4/1 Mbps may be in any funded census block, regardless of whether A-CAM identifies them as fully funded or capped. For example, a carrier may find that it can offer 25/3 Mbps broadband service to locations in some census blocks where the A-CAM provides capped support, but only 4/1 Mbps service to some locations in a block that is “fully funded” by the A-CAM.[10] All of these served locations would be counted towards meeting the total number of locations where broadband service must be offered.

Finally, the broadband service provided by A-CAM II carriers must meet monthly usage allowance requirements and latency standards. Specifically, carriers electing A-CAM II must provide a minimum usage allowance of the higher of 170 GB per month or one that reflects the average usage of a majority of consumers, using Measuring Broadband America data or a similar data source.[11] With respect to latency, A-CAM II carriers must certify that for fully funded locations, 95% or more of all peak period measurements of round-trip latency are at or below 100 milliseconds. For any capped locations served by a non-terrestrial technology (i.e., fixed wireless), A-CAM II carriers must certify that 95% or more of all peak period measurements of round-trip latency are at or below 750 milliseconds, and with respect to voice performance, a score of four or higher using the Mean Opinion Score (MOS).[12]

Additional information on A-CAM II can be found here:

Decision Day Awaits Rate-Of-Return Carriers: A-CAM II Or Cost-Based USF

A-CAM II: A New Model Offer for “Legacy” Rate-of-Return Carriers

*****

[1] See Wireline Competition Bureau Announces Alternative Connect America Cost Model II Support Amounts Offered To Rate-Of-Return Carriers To Expand Rural Broadband, WC Docket No. 10-90, Public Notice, DA 19-372 (May 2, 2019); Wireline Competition Bureau Announces Posting Of Information Regarding Revised Deployment Obligations For Incumbent Rate-Of-Return Carriers, WC Docket No. 10-90, Public Notice, DA 19-373 (May 2, 2019).

[2] 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, Further Notice Of Proposed Rulemaking, And Order On Reconsideration, FCC 18-176, ¶ 64 (Dec. 13, 2018) (2018 Rural Broadband Order).

[3] 2018 Rural Broadband Order at footnote 135.

[4] Id. at ¶ 64.

[5] Id. at ¶ 65.

[6] Id.at ¶ 67.

[7] Id. at footnote 149.

[8] Id. at ¶ 67.

[9] See 47 C.F.R. § 54.320(d).

[10] Public Notice, DA 19-372 at footnote 7.

[11] 2018 Rural Broadband Order at ¶ 66.

[12] Id. at ¶ 66.