April 28, 2022 – During its May 19, 2022 open meeting, the Federal Communications Commission (FCC) will vote to approve a Notice of Proposed Rulemaking (NPRM) on the Alternative Connect America Cost Model (A-CAM) program. If adopted, the NPRM will seek public comment on a proposal submitted by the ACAM Broadband Coalition asking the FCC to establish an Enhanced A-CAM program, and related issues. A draft version of the A-CAM NPRM was released with the FCC’s tentative agenda for the open meeting.[1]

Background – Universal Service A-CAM Program

As part of broad, fundamental reforms to the universal service fund’s (USF) high-cost support mechanism, in 2016, the FCC adopted a process allowing certain rate-of-return ILECs to voluntarily switch to model-based USF support.[2] Rate-of-return carriers that opted in to the A-CAM receive USF support in exchange for meeting defined build-out obligations.[3] The FCC extended multiple offers to elect cost model support, resulting in multiple iterations of the A-CAM program (A-CAM I, Revised A-CAM I, and A-CAM II), all of which have different constraints, support levels, and deployment obligations.[4] Currently, there are 19 carriers in A-CAM I (support term ends in 2026), 243 carriers in Revised A-CAM I (support term ends in 2028), and 185 carriers in A-CAM II (support term ends in 2028).[5]

The ACAM Broadband Coalition’s Petition For Rulemaking – An Enhanced A-CAM Program

In November 2020, a handful of carriers that receive A-CAM support – the ACAM Broadband Coalition – filed a petition for rulemaking requesting that funding under the FCC’s A-CAM program be extended at current levels for an additional six years – 2029 through 2034.[6] In exchange for lengthening the funding term, the ACAM Coalition proposed new 100/25 Mbps broadband deployment obligations beginning in either 2022 or 2025. Other general details of the plan, as originally proposed by the ACAM Coalition, included voluntary participation, decreased number of locations receiving lower speeds, and no alterations to the A-CAM program’s current framework or annual budget.

Then, in December 2021, January 2022, and February 2022, the ACAM Broadband Coalition proposed further modifications to its ACAM Enhancement Plan.[7] The proposed modifications “would increase buildout obligations for 90 percent of eligible locations to a minimum speed of 100/20 Mbps and the remaining 10 percent of eligible locations to a minimum speed of 25/3 Mbps.” However, these modifications would require one substantial change to the Coalition’s original proposal – implementing the proposed modifications would require a significant increase in the yearly ACAM funding level for each year of the revised program, from $1.087 billion to $1.474 billion (assuming all ACAM companies participate).

The FCC’s Draft A-CAM NPRM – Enhanced A-CAM Program Deployment & Service Obligations

The FCC’s draft NPRM breaks down into two sections: (1) Issues related to the ACAM Broadband Coalition’s proposal; and (2) proposals to improve administration of the USF high-cost program. The information below summarizes the issues teed up for comment on creating an Enhanced A-CAM program that are related to deployment and service obligations.

Enhanced A-CAM Deployment & Service Obligations

The ACAM Broadband Coalition has proposed that carriers electing Enhanced A-CAM support deploy to 100 percent of eligible locations identified by the FCC’s Broadband Serviceable Location Fabric – a.k.a. the FCC’s new broadband maps. This breaks down to 90 percent receiving broadband service with speeds of at least 100/20 Mbps and the other 10 percent receiving at least 25/3 Mbps service.

Comment is sought on this proposal.

In contrast, should carriers be required to deploy at least 100/20 Mbps to all eligible locations? Or should carriers be required to deploy to all locations where deployment of this level of service is not cost prohibitive.

In either scenario, should carriers electing Enhanced A-CAM be required to serve 100% of unserved locations in their study areas, including unserved or underserved locations in currently ineligible census blocks?

Should carriers with changes in their study area boundaries since the development of the cost model also be required to serve locations in eligible census blocks that are newly within their study area boundaries?[8]

If Enhanced A-CAM funds 25/3 Mbps broadband service, when should those carriers be required to identify which specific locations will receive only 25/3 Mbps service?

Would some obligations result in double support where recipients receive Enhanced A-CAM to improve speed to 25/3 Mbps and then could apply for BEAD Program funds to deploy 100/20 Mbps broadband to those same locations?[9]

New FCC Broadband Availability Maps & Enhanced A-CAM

The Broadband DATA Act generally requires the FCC to use its new Broadband Data Collection maps when awarding new broadband funding. Accordingly, the FCC has tentatively concluded it “will use the new fixed deployment maps when making any new award of funding to an A-CAM provider.”[10]

How should the FCC’s new fixed deployment maps be applied to determine eligible areas and deployment obligations for the Enhanced A-CAM program?

The Broadband DATA Act also requires the FCC to accept challenges to both the Fabric and the availability maps. Challenges will have set timeframes and occur regularly to help improve all subsequent versions of the Fabric and the FCC’s broadband availability map.

When for the purposes of the Enhanced A-CAM should the FCC establish the post-Fabric locations?

Should the FCC allow for a period of challenges to the fixed deployment reflected in the maps before relying upon them to award funding?

Can the FCC establish a different deadline for resolution of challenges associated with Enhanced A-CAM locations? If so, how long should challengers and providers have to resolve challenges before the FCC awards funding?[11]

Penalty For Not Meeting Enhanced A-CAM Broadband Deployment Obligations

Under current A-CAM (and high-cost support rules), the Universal Service Administrative Company (USAC) will recover an amount of support from A-CAM participants that do not meet their final deployment obligations – “the percentage of support that is equal to 1.89 times the average amount of support per location received in the state for that carrier over the term of support for the relevant number of locations plus 10 percent of the eligible telecommunications carrier’s total relevant high-cost support over the support term for that state.”[12]

Should the general noncompliance penalty rule be applied to Enhanced A-CAM participants?

On the other hand, is a stricter penalty more appropriate, given that the Fabric and Broadband Data Collection may permit the Enhanced A-CAM program to rely on a more accurate location count?

Measuring Full Compliance Of Enhanced A-CAM Broadband Deployment Obligations

The ACAM Broadband Coalition proposes that Enhanced A-CAM carriers be considered in full compliance with their deployment obligations if they deploy to 95% of their required locations. For certain reasons, this is what the FCC allowed for the A-CAM I and II programs. However, for Enhanced A-CAM carriers, the FCC expects that the new broadband Fabric will ensure that the location counts are more accurate than previous data, and there will be no deployment obligations for locations that are not fully funded.

The FCC proposes not to extend the same kind of location count flexibility to Enhanced A-CAM carriers.

Nonetheless, are there reasons why a buffer of this type may be appropriate or necessary under Enhanced A-CAM?

Would a smaller buffer (i.e., one that considered Enhanced A-CAM carriers to be in full compliance if they deployed to 99% of their required locations) be sufficient to protect the FCC’s interests in full deployment? How would this comport with our goal of creating enforceable commitments?[13]

Leveraging Other Federal Broadband Funding Programs, Duplicative Funding, & Enhanced A-CAM’s Impact On BEAD Program

One issue the FCC has zeroed in on is how to create an Enhanced A-CAM program that works well with Federal broadband funding programs, especially NTIA’s forthcoming Broadband Equity, Access, and Deployment (BEAD) Program.[14]

How can the FCC leverage the existing, supported networks of A-CAM carriers to swiftly meet current legislative requirements and goals while avoiding duplicative support across programs and maximizing the efficient use of universal service funds?

How can the FCC efficiently implement and sequence an Enhanced A-CAM program so that it works in concert with NTIA’s BEAD Program?

How can specific Enhanced A-CAM proposals be implemented consistent with Congressional intent expressed through the Infrastructure Act and other legislation, as well as programs at other agencies?

The FCC notes that “[w]ith other agencies’ ongoing broadband initiatives, including NTIA’s BEAD Program, there is the potential for two providers to receive funding from different sources to deploy broadband to the same locations.”[15] Comment is sought on how the FCC can avoid such overlap in the Enhanced A-CAM program to maximize broadband deployment to unserved and underserved locations. Comment is also sought on sequencing the Enhanced A-CAM with the BEAD Program.

Should the FCC require Enhanced A-CAM carriers to make binding commitments regarding specific locations based on the Fabric after it is created? Should any such binding commitments include an obligation to deploy at least 100/20 Mbps broadband service for all or some percentage of those specific locations?

Should the FCC instead require carriers to commit to deployment at particular speeds at the census block level?

If the BEAD Program requires full deployment by the end of a particular year, should Enhanced A-CAM likewise require full deployment by the end of that same year or even sooner?

Should the FCC proceed with Enhanced A-CAM commitments before BEAD Program allocations? Should the FCC instead refrain from acting on the Enhanced A-CAM proposal until after the BEAD Program has awarded funding? What are the impacts of these options?

Finally, should the FCC require, as a condition of accepting Enhanced A-CAM support, that carriers coordinate with the states in which they are receiving support to mitigate the risk of duplicative funding?

Enhanced A-CAM Interim Broadband Deployment Milestones

The ACAM Broadband Coalition proposes that Enhanced A-CAM participants meet interim deployment milestones before the final milestone of 100% of locations – 100/20 Mbps broadband service to at least 30% of eligible locations by the end of the second year after the program begins, with an additional 10% of eligible locations each subsequent year until meeting the final obligation of deploying 100/20 Mbps service to 90% of eligible locations.

Would these particular interim deployment milestones be appropriate if the FCC were to adopt the eight-year deployment timeframe the Coalition has proposed?

What interim deployment milestones would be appropriate if the FCC were to require deployment in four years, such as in the BEAD program, or a different timeframe?

Should the FCC require deployment to the same number of additional locations each year?[16]

To eliminate administrative complexity, the FCC has tentatively concluded that any new interim milestones, for carriers that elect Enhanced A-CAM support, would supersede those associated with A-CAM I and A-CAM II. Comment is sought on this tentative conclusion.[17]

If the FCC were to retain the existing interim milestones for carriers electing Enhanced A-CAM support, is there a way to simplify deployment milestones in a way that is both fair and ensures regular progress?

Should Enhanced A-CAM participants be subject to the same mechanisms for withholding support as A-CAM I and A-CAM II participants for failing to meet interim deployment milestones?[18]

Coordination Of Enhanced A-CAM Deployment Obligations With BEAD Program.

The FCC notes that the ACAM Broadband Coalition has proposed that carriers electing Enhanced A-CAM support meet the proposed deployment obligations set forth above by the end of the eighth year under the enhanced program. Comment is sought on the ACAM Coalition’s proposal and whether the FCC should adopt a timeframe aligned closer to the BEAD Program, which generally requires buildout in four years after subgrants are made.[19]

To minimize administrative complexity and prioritize higher-speed broadband deployment, the FCC tentatively concludes that any carriers electing Enhanced A-CAM support would be subject only to the final deployment obligations associated with Enhanced A-CAM support, which would supersede existing A-CAM I and A-CAM II final deployment obligations. Comment is sought on this proposal.[20]

Performance Testing For Enhanced A-CAM Participants

Carriers receiving high-cost USF support must annually test and report the speed and latency of a random sample of locations to which they have deployed broadband using support. A-CAM I carriers have begun the required performance testing, while A-CAM II carriers are currently required to conduct pre-testing.

Comment is invited on whether the existing performance testing requirements applicable to A-CAM I and A-CAM II carriers should continue to apply to Enhanced A-CAM carriers, or whether any improvements to the testing requirements should be made.[21]

Affordability – Enhanced A-CAM Affordable Monthly Broadband Plan

In the Draft A-CAM NPRM, the FCC asks whether it should require Enhanced A-CAM participants to demonstrate that they are offering affordable broadband services.

Should the FCC require providers electing Enhanced A-CAM to offer an affordable option to subscribers meeting certain criteria—for example, subscribers who are eligible for Lifeline or Affordable Connectivity Program (ACP)? Should the FCC establish a maximum retail rate for such households? If so, how should that maximum retail rate be set?

Should there be any minimum performance characteristics for the affordable option (e.g., minimum download and upload speeds, usage allowances and maximum latency)? Comment is sought on this approach, how to implement it, and how the FCC should determine the appropriate characteristics.

How should the affordable option be priced to customers eligible for the ACP or Lifeline subsidies? What other interactions between an affordable option, the Lifeline program, and the ACP should the FCC consider?

Alternatively, should the FC require carriers to offer at least one affordable broadband option to all subscribers receiving service supported by Enhanced A-CAM, regardless of the subscriber’s income or any other qualification?

If the FCC requires an affordable option, should it be available only to households within the A CAM-eligible areas, or would any qualifying household within the ACAM carriers’ footprints be eligible?[22]

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[1] Connect America Fund: A National Broadband Plan for Our Future High-Cost Universal Service Support, WC Docket No. 10-90; ETC Annual Reports and Certifications, WC Docket No. 14-58; Telecommunications Carriers Eligible to Receive Universal Service Support, WC Docket No. 09-197; Connect America Fund – Alaska Plan, WC Docket No. 16-271; Expanding Broadband Service Through the ACAM Program, RM-11868; Notice Of Proposed Rulemaking, FCC-CIRC2205-02 (Apr. 28, 2022) (Draft A-CAM NPRM), https://docs.fcc.gov/public/attachments/DOC-382821A1.pdf.

[2] 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 (Mar. 30, 2016). In the 2016 Rate-of-Return Reform Order or Order, the offer to receive A-CAM support was not available to any rate-of-return ILEC that had deployed 10/1 Mbps broadband service to 90 percent or more of its eligible locations in a state, based on FCC Form 477 data as of the date of release of the order.

[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 (Aug. 3, 2016), https://docs.fcc.gov/public/attachments/DA-16-869A1.pdf.

[4] See 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 (Dec. 13, 2018).

[5] Draft A-CAM NPRM at ¶ 11.

[6] Expanding Broadband Service Through the ACAM Program, RM No. 11868, Petition For Expedited Rulemaking (filed Oct. 30, 2020), https://ecfsapi.fcc.gov/file/103051469192/ACAM%20Broadband%20Coalition%20Petition%20Final.pdf.

[7] Letter from Genevieve Morelli, ACAM Broadband Coalition, to Marlene H. Dortch, Secretary, FCC, RM-11868 and WC Docket No. 10-90, at p. 1 (Feb. 17, 2022); Letter from Genevieve Morelli, ACAM Broadband Coalition, to Marlene H. Dortch, FCC Secretary, RM No.11868, WC Docket No.10-90 (Jan. 19, 2022), https://www.fcc.gov/ecfs/filing/1011948411718; Letter from Genevieve Morelli, ACAM Broadband Coalition, to Marlene H. Dortch, FCC Secretary, RM No.11868, WC Docket No.10-90 (Dec. 17, 2021), https://ecfsapi.fcc.gov/file/12171799321573/12.15.21%20Ex%20Parte%20WCB.pdf.

[8] Draft A-CAM NPRM at ¶ 25.

[9] Id. at ¶ 26.

[10] Id. at ¶ 27.

[11] Id. at ¶ 28.

[12] Id. at ¶ 29.

[13] Id. at ¶ 30.

[14] Id. at ¶ 22.

[15] Id. at ¶ 31.

[16] Id. at ¶ 32.

[17] Id. at ¶ 33.

[18] Id. at ¶ 34.

[19] Id. at ¶ 35.

[20] Id.

[21] Draft A-CAM NPRM at ¶ 36.

[22] Id. at ¶ 37.