Another $13 million-plus in subsidies heads for hinterlands

The FCC has authorized another $13 million-plus for rural broadband buildouts as it works to close the digital divide.

Related: FCC Approves Rural Broadband Funding in 16 States

That broadband subsidy money, from the Connect America Fund (CAF) Phase II auction, is going to 66 winning bidders whose applications for the money passed muster with the Wireline Competition Bureau, Rural Broadband Auctions Task Force and Office of Economics and Analytics.

The auction last year allocated $1.488 billion with a goal of reaching 700,000 unserved homes in the next 10 years.

The winning bidders must provide "at least one standalone voice plan and one service plan that provides broadband at the relevant performance tier and latency requirements at rates that are reasonably comparable to rates offered in urban areas. The locations must be in the eligible census blocks covered by the long-form applicant’s winning bids."

Service must be offered to 40% of locations in a state by year three, then 20% more each year through year six.

Related: FCC Approves Second Wave of Rural Broadband Funds

The bidders have 10 days to pony up a letter of credit covering the first year.

One of the 66, Hankins Information Technology, had already been authorized in the May 10 tranche of bidders, but sought a waiver of the deadline because of a death in the family and eventually filed its letter of credit. 

The CAF II money is being allocated over 10 years to unserved areas in 45 states. The largest incumbent price cap carriers—AT&T, Verizon, CenturyLink—declined about $2 billion in Connect America Fund phase II (CAF II) support for building out broadband to high-cost, generally rural, areas, in 20 states, so the FCC opened that pot of money up to competitors, like cable broadband providers, via the auction. 

All that money is coming from the Universal Service fund for high-cost, mostly rural, areas for which there is no business case for building out broadband absent that subsidy. The FCC gave incumbent telcos the first shot back in 2015, though incumbents could jump back in as well, as some did--winning bidders included Verizon ($9,476,934 for 3,361 locations in seven states) and Frontier ($51,553 for 23 locations in one state), both former Bells.