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First Look at Phase II CAF Auction Participants

Randy Sukow May 15, 2018

The early indications are that the Phase II Connect America Fund (CAF) auction, scheduled to begin on July 24, is attracting heavy participation. The FCC late yesterday released the names 277 companies and coalitions that have applied to be bidders, leading to what will likely be a brisk competition. Rural telephone companies and a few electric cooperatives are among those competing.

The Phase II CAF auction will distribute universal service assistance to establish broadband connectivity to unserved portions of the United States. The Commission has set aside a total of $2.15 billion for the auction, which it will distribute to auction winners over 10 years. Support will go to the lowest bidders in a reverse auction format. An online map indicates the geographic areas across the country that are eligible for CAF support.

Forty-seven of the 277 applicants have submitted completed short-form applications, according to an FCC Public Notice.  “Designation of an application as complete indicates that the applicant has provided the certifications and basic information concerning its qualifications that are required by the Commission’s competitive bidding rules and has been determined to be financially and operationally qualified to participate in the auction,” according to the notice.

A group of 230 still have additional information to submit before they are fully qualified to participate. The notice gives those companies until June 5 to refile their applications.

Several NRTC-member companies that appear on the list of completed applications, including: Armstrong Telephone Co., Pennsylvania; Central Texas Telephone Cooperative; Chariton Valley Telephone Corp., Missouri; Consolidated Telephone Co., Minnesota; Consolidated Telephone Co., Nebraska; Dell Telephone Cooperative, Texas; Halstad Telephone Co., Minnesota; Johnson Telephone Co., Minnesota; Maquoketa Valley Rural Electric Cooperative, Iowa; Mark Twain Communications Co., Missouri; Mediapolis Telephone Co., Iowa; Mutual Telephone Co., Iowa; Paul Bunyan Rural Telephone Cooperative, Minnesota; Perry-Spencer Rural Telephone Cooperative, Indiana; Plateau Telecommunications Inc., New Mexico; Red River Rural Telephone, North Dakota; Scott County Telephone Cooperative, Virginia, and Shawnee Communications, Illinois.

In addition, a “Rural Electric Cooperative Consortium” appears on the list, but there is no indication of which cooperatives are in that group. Many NRTC-member companies also appear on the incomplete application list.

A source of controversy has been the question of what types of broadband technology winning bidders will use to cover unserved areas. The auction rules are technology-neutral, allowing for any last-mile technology that meets the minimum speed and latency requirements. However, when comparing bids from participants offering differing technologies, the rules give preference to fiber-based bids with superior speed and latency performance over wireless and satellite solutions.

Many questioned whether fixed wireless and satellite companies would bother to file Phase II applications under those circumstances. FCC Chairman Ajit Pai made public appeals to both industries asking them to give the auction a try. As of now, a few fixed wireless providers appear on both the complete and incomplete application lists. The two leading U.S. satellite broadband companies, Viasat Inc. and Hughes Network Systems, appear on the incomplete list.

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