2018 Connect America Fund Phase II Auction Results

Purpose: To Expand Broadband To Over 700,000 Rural Homes And Businesses

Auction Allocated $1.5 Billion To Close the Digital Divide

The FCC CAF II reverse auction closed with an award of $1.5 billion to build broadband in rural America. This funding was awarded to 103 recipients that will collect the money over ten years. The funded projects must be 40% complete by the end of three years and 100% complete by the end of six years. The original money slated for the auction was almost $5 billion, but the reverse auction reduced the amount of awards and some census blocks got no bidders.

Overall, the auction will spread $1.5 billion of government funds to benefit companies serving 713,176 rural homes.

  • Over 135,000 rural households will be getting fiber.
  • Another 387,000 homes will be getting broadband of at least 25 Mbps, mostly using fixed wireless
  • The remaining 190,000 homes will be getting the same satellite option they already have today.

The FCC claims that 713,176 rural homes will be getting better broadband, but the** real number** of homes with a benefit from the auction is 513,000 since the auction funded Viasat to provide already-existing satellite broadband to 190,000 homes in the auction.

The FCC claims that

  • 19% of the homes covered by the grants will be offered gigabit speeds,
  • 53% will be offered speeds of at least 100 Mbps and
  • 99.75% will be offered speeds of at least 25 Mbps.

These statistics have me scratching my head. The 19% of the homes that will be offered gigabit speeds are obviously going to be getting fiber. I know a number of the winners who will be using the funds to help pay for fiber expansion. I can’t figure what technology accounts for the rest of the 53% of homes that supposedly will be able to get 100 Mbps speeds.

As I look through the filings I note that many of the fixed wireless providers claim that they can serve speeds over 100 Mbps.

It’s true that fixed wireless can be used to deliver 100 Mbps speeds. To achieve that speed customers either need to be close to the tower or else a wireless carrier has to dedicate extra resources to that customer to achieve that speed – meaning less of that tower can be used to serve other customers. I’m not aware of any WISPs that offer ubiquitous 100 Mbps speeds, because to do so means serving a relatively small number of customers from a given tower. To be fair to the WISPs, their CAF II filings also say they will be offering slower speeds like 25 Mbps and 50 Mbps.

The FCC exaggerated the results of the auction by claiming that any recipient capable of delivering 100 Mbps to a few customers will be delivering it to all customers – something that isn’t true. The fact is that not many of the households over the 19% getting fiber will ever buy 100 Mbps broadband. I know the FCC wants to get credit for improving rural broadband, but there is no reason to hype the results to be better than they are.

I also scratch my head wondering why Viasat was awarded $122 million in the auction. The company is the winner of funding for 190,595 households, or 26.7% of the households covered by the entire auction. Satellite broadband is every rural customer’s last choice for broadband. The latency is so poor on satellite broadband that it can’t be used for any real time applications like watching live video, making a Skype call, connecting to school networks to do homework or for connecting to a corporate WAN to work from home.

Why does satellite broadband even qualify for the CAF II funding? Viasat had to fight to get into the auction and their entry was opposed by groups like the American Cable Association. The Viasat satellites are already available to all of the households in the awarded footprint, so this seems like a huge government giveaway that won’t bring any new broadband option to the 190,000 homes.

It’s easy to compare this to the original CAF II program that gave billions to the big telcos and only required speeds of 10/1 Mbps.

  • That original CAF II program was originally intended to be a reverse auction open to anybody, but at the last minute the FCC gave all of the money to the Big Telcos. One has to imagine there was a huge amount of lobbying done to achieve that giant giveaway.

  • Most of the areas covered by the first CAF II program had higher household density than this auction pool, and a reverse auction would have attracted a lot of ISPs willing to invest in faster technologies than the Telcos. The results of this auction show that most of those millions of homes would have gotten broadband of at least 25 Mbps instead of the beefed-up DSL or cellular broadband they are getting through the Big Telcos.

WASHINGTON, August 28, 2018 — Over 700,000 rural homes and small businesses will gain access to high-speed Internet service for the first time through the Federal Communications Commission’s Connect America Fund Phase II auction, auction results released today show, and 53% of 713,176 locations will have service available with download speeds of at least 100 megabits per second.

The auction allocated $1.5 billion in support to be distributed over the next 10 years to expand rural broadband service in unserved areas in 45 states. A total of 103 providers won support from the Connect America Fund to expand broadband in rural areas where, absent this funding, this type of broadband expansion and ongoing service would not be economically feasible.

The auction gave providers the flexibility to use any broadband technology to meet the FCC’s buildout and performance standards for fixed service. The auction design included a weighted preference for service with higher speeds, higher usage allowances, and lower latency.

  • 19% will have 1.000 megabits per second
  • 53% of all homes and businesses served with support from the auction will have broadband available with download speeds of at least 100 megabits per second.
  • 711,389 locations—all but 0.25%—will have at 25 Mbps service or higher

Although the 713,176 locations assigned had an initial reserve price of $5 billion over the next decade, the final price tag to cover these locations is now only $1.5 billion.

Providers must build out to 40 percent of the assigned homes and businesses in a state within three years of becoming authorized to receive support. Buildout must increase by 20 percent in each subsequent year, until complete buildout is reached at the end of the sixth year.

The Connect America Fund Phase II auction is part of a broader effort by the FCC to close the digital divide in rural America. In addition to the funding that will provided by this auction, the Commission is working toward

  1. A $4.53 billion Mobility Fund Phase II auction to expand 4G LTE wireless coverage throughout rural America.
  2. Connect America Fund is in the midst of providing over $9 billion over a six-year period for rural broadband in areas served by large carriers.

See below the results of the Connect America Fund Phase II auction by state. A separate table below lists winning bidders.

State Total Assigned Support Winning Bidders Locations Assigned
AL $5,384,813 2 9,354
AK $0 0 0
AR $51,988,094 5 16,048
AZ $28,400,478 3 7,285
CA $149,026,913 5 51,682
CO $17,405,627 5 11,001
CT $0 0 0
DE $1,336,400 2 1,343
FL $5,032,841 1 9,859
GA $6,264,362 1 13,815
HI $18,160,638 1 3,936
IA $54,287,717 7 16,759
ID $14,320,176 3 10,921
IL $99,729,909 9 32,124
IN $29,117,494 6 24,530
KS $46,798,657 7 13,817
KY $3,120,985 3 4,609
LA $4,649,962 2 5,221
MA $13,388,288 4 6,644
MD $10,219,148 3 7,418
ME $4,713,986 1 4,098
MI $33,892,020 5 21,451
MN $38,863,791 16 11,979
MO $254,773,118 11 95,130
MS $5,484,606 2 13,899
MT $9,193,477 2 6,598
NC $679,130 1 368
ND $7,226,602 2 1,603
NE $41,117,139 4 8,900
NH $0 0 0
NJ $1,621,782 1 510
NM $26,232,783 5 12,452
NV $29,322,147 4 14,235
NY $0 0 0
OH $13,186,434 3 6,420
OK $113,599,114 12 70,727
OR $13,730,297 2 10,479
PA $56,831,061 5 54,812
RI $475,303 1 165
SC $233,490 1 80
SD $5,086,429 2 927
TN $8,457,337 5 3,290
TX $82,420,436 4 35,933
UT $6,330,099 2 3,817
VA $108,923,613 5 39,896
VT $0 0 0
WA $19,943,507 4 16,644
WI $4,709,505 4 7,789
WV $11,997,199 3 7,962
WY $30,652,957 7 16,646
Total $1,488,329,864 713,176

Note: Alaska, New York, Puerto Rico, and the U.S. Virgin Islands were not included in the auction.