By Andy Regitsky
In a July 25, 2023, Report and Order in Docket 10-90, along with a Notice of Proposed Rule-making (NPRM) and Notice of Inquiry (NOI), the FCC adopted an Enhanced Alternative Connect America Cost Model (A-CAM) program. This model will provide a voluntary path to enable the widespread deployment of 100 Mbps download speed and 20 Mbps upload speed (100/20) broadband service throughout rural areas served by small ILECs currently receiving A-CAM support and in areas served by legacy rate-of-return support recipients. Here is the background for this decision.
In 2016, the Commission provided rate-of-return carriers a voluntary path from traditional rate-of-return universal service support, based on the carrier’s costs, to model-based high-cost support, tailored to reflect the specific characteristics of rate-of-return high-cost areas. This cost model was called A-CAM I (Alternative Connect America Cost Model No. 1).
The A-CAM model was used to establish fixed monthly support amounts over a 10-year term in exchange for broadband deployment to a pre-determined number of eligible locations. The Commission directed the Bureau to calculate support as model-estimated costs for eligible census blocks in excess of the funding threshold of $52.50 per location per month up to a cap of $200.60. Carriers were obligated to deploy broadband at speeds of at least 25/3 Mbps or 10/1 Mbps to a number of locations equal to the number of fully funded locations (i.e., locations in eligible census blocks which the model determined could be served for costs at or below the funding cap), and at least 4/1 Mbps or service on reasonable request to a number of locations equal to the number of capped locations (i.e., locations in eligible census blocks which the model determined could be served for costs above the funding cap).(Order at para. 20).
In 2018 the Commission adopted a new model offer, A-CAM II, for carriers still receiving legacy support based on historical costs, including carriers not previously eligible for A-CAM I. The Commission set the per-location cap for A-CAM II at $200. Currently, 262 companies are authorized to receive A-CAM, while 185 companies receive A-CAM II support. These ILECs receive more than $1.1 billion a year and provide 25/3 Mbps broadband service to more than one million census block locations and almost 2.7 million homes and businesses. Now, five years later, the FCC believes rate-of-return carriers can serve more customers at higher broadband speeds.
Therefore, in the Order, the agency adopts an Enhanced A-CAM support mechanism to facilitate the widespread deployment of broadband at speeds of at least 100/20 Mbps across eligible rate-of-return carriers’ service areas by the end of 2028. In exchange for the commitment to complete this deployment, the Commission will extend offers to current A-CAM carriers and current legacy support recipients within a budget totaling no more than $1.27 billion annually, or no more than $1.33 billion annually if certain conditions are met, over a 15-year term beginning January 1, 2024.
Rate-of-return ILECs must determine if they will participate in the new program by October 1. 2023. Carriers authorized for Enhanced A-CAM must serve all locations in their study areas based on the Wireline Bureau’s analysis of the latest Broadband Maps.
Carriers that choose the new support mechanism must participate in the Affordable Connectivity Program. Moreover, the higher broadband speed that will be required is consistent with the Infrastructure Investment and Jobs Act.
The Order permits each current A-CAM I or A-CAM II participant to elect, on a state-by-state basis, whether to participate in the Enhanced A-CAM program. Eligibility will also be extended on a state-by-state basis to rate-of-return carriers that are eligible to receive legacy support. Carriers that choose not to accept Enhanced A-CAM support offers will continue to receive support under the terms of their existing A-CAM authorizations or legacy rate-of-return plans.
In the NPRM, the Commission seeks industry comments on how to amend legacy rate-of-return mechanisms to align them with the current broadband deployment and support environment. Specifically, the Commission seeks comments to ensure that rate-of-return carriers are subject to a smaller reduction when the current budget control mechanisms apply. It also seeks comments regarding appropriate deployment obligations for carriers receiving legacy support when the current deployment term ends this year. Finally, it seeks comments regarding methodologies for preventing duplication of support between legacy high-cost universal service support mechanisms and funding provided by other federal and state agencies for the deployment of broadband. Comments are due 30 days after the NPRM appears in the Federal Register.
In the NOI the FCC seeks to build a record to help explore methods to ensure universally affordable and available fixed broadband services into the future, considering section 254(c)(1)’s of the Telecommunications Act’s definition of universal service as an “evolving level of . . . service, taking into account advances in telecommunications and information technologies and services.” Industry comments are due 60 days after the NOI appears in the Federal Register.
FCC Chairwoman Jessica Rosenworcel released a statement with the Order summing up the Commission’s actions.
We’re on a mission to connect everyone, everywhere in this country to high-speed broadband. That includes access in rural areas where the cost to build networks can be steep, often leaving families in these areas on the wrong side of the digital divide. The Federal Communications Commission has long played a critical role delivering communications services to remote communities across the country through the agency’s universal service programs. To meet the needs of consumers today and into the future, we are optimizing the Commission’s programs to bring higher speeds and greater bandwidth to consumers, particularly those living in hard-to-reach areas.