April 23, 2021 – The FCC’s Wireline Competition Bureau has issued a Public Notice which recognizes Point Broadband Fiber Holdings, LLC’s authority to receive all Connect America Fund (CAF) Phase II auction support awarded to Crystal Automation Systems, Inc d/b/a Casair not already disbursed as of September 2020.[1] Casair’s voice and broadband service obligations are also subsumed by Point Broadband.

Casair was a winning bidder in the CAF II auction. It was authorized by the Bureau in July 2019 to receive a total $27.2 million in CAF II support over ten years to provide broadband service in Michigan.

Pursuant to an Asset Purchase Agreement, Point Broadband purchased Casair’s broadband network assets in West Central Michigan. including fiber infrastructure, microwave facilities and existing customer service agreements. Notably, this deal also included Casair’s CAF II benefits and obligations.

Point Broadband and Casair filed a Section 214 application even though neither carrier is a telecommunications carrier – both are broadband and VoIP providers and the deal involved only assets used to provide those services.[2] At the time, however, both companies were certified as a competitive local exchange carriers and Eligible Telecommunications Carriers (ETCs) in Michigan. Because of this, and because the transaction involved $27 million in universal service funding, they filed a 214 application. Here is an explanation of their thought process on the matter:

Notwithstanding the fact that both companies are nominally designated as “telecommunications carriers” under their current ETC certifications, the voice services that they are providing are not currently regulated as common carrier services under Section 214 of the Act and the FCC’s rules. The facilities and customers changing hands do not involve carrier voice services but broadband Internet connectivity, which the Commission has expressly found not to fall within the scope of Title II regulation. As Commissioner O’Rielly has recently observed, “the process for obtaining FCC broadband subsidies should make clear that a company designated an ETC by virtue of being a USF auction winner is not therefore a Title II telecom carrier.”[3]

Nonetheless, based on some uncertainty regarding the Commission’s requirements, out of an abundance of caution and based upon consultation with Bureau staff, the Applicants are submitting this request for approval to solicit FCC review and a determination whether a Section 214 asset assignment approval may be required. If such approval is deemed necessary, the Applicants request that it be granted on an expedited, streamlined basis, as further described below. If no such approval is needed, the Applicants request that this Application be promptly dismissed with a brief explanatory note that no prior FCC approval is required for this asset sale.[4]

The Bureau approved the transaction in September 2020.

Thereafter, the Bureau and the Universal Service Administrative Company (USAC) reviewed Point Broadband’s letter of credit, Bankruptcy Code opinion letter, and financial and technical qualifications. The Bureau ultimately determined Point Broadband satisfies the criteria to be authorized to receive CAF II auction support. Of course, in exchange for funding, Point Broadband assumes Casair’s defined broadband deployment obligations and voice and broadband service obligations for the State of Michigan. Point Broadband must offer qualifying voice and broadband service to 17,610 qualifying locations as of December 31, 2025, and must comply with all other CAF II auction obligations and requirements. 

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[1] Transfer Of Connect America Fund Phase Ii Auction Support To Point Broadband Fiber Holdings, LLC; WC Docket No. 10-90, Public Notice, DA 21-466 (Apr. 23, 2021), https://ecfsapi.fcc.gov/file/0423234604202/DA-21-466A1.pdf.

[2] Domestic Section 214 Application Filed for The Assignment of Certain Assets of Crystal Automation Systems, Inc., d/b/a Casair to Point Broadband Fiber Holding, LLC, WC Docket No. 20-261, Application For Consent To Assignment Of Assets (Aug. 11, 2020), https://ecfsapi.fcc.gov/file/10812668611902/Section_214_Assignment_Application-Casair%20to%20PBFH%20(8-11-2020).pdf.

[3] Point Broadband / Casair Application at 3.

[4] Point Broadband / Casair Application at 4.