BROADBAND SUPPORT AND FUNDING OPPORTUNITIES:

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Adele Lewis
6 years ago
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CANNON Partner AVONNE International BELL Trade Associate Communications HENRY T. KELLY J.

1 BROADBAND SUPPORT AND FUNDING OPPORTUNITIES: THE LATEST ON THE MOBILITY AND CONNECT AMERICA FUNDS JOHN J HEITMANN Chair & Partner Communications KATHLEEN W. CANNON Partner AVONNE International BELL Trade Associate Communications HENRY T. KELLY J. BRADFORD Partner CURRIER Associate Communications Communications DAVID E. FINK Partner Media and Entertainment ROBERT I. STEINER Partner Litigation

2 Agenda Mobility Fund Phase II Connect America Fund (CAF) Phase II New York CAF Order Executive & Legislative Items of Interest

3 Background Connect America Fund (CAF) established under 2011 USF/ICC Transformation Order 2011 reform consisted of CAF (High cost support) Mobility Fund Both funds designed with two phases

4 Mobility Fund Overview Background Available Support/Reverse Auction Process Provider Eligibility/Application Winners Obligations Legacy Support Phase Out FCC Next Steps

5 Background 2011 reforms put focus on mobile broadband Mobility Fund Phase I provided $300 million in onetime support Delays in Phase II led to freeze at 60% support levels 2016 FCC study shows 1/5 of US (excluding AK) does not have unsubsidized 4G LTE Study shows 3/4 support distributed to areas with 4G LTE coverage

6 Available Support/Reverse Auction Process $4.53 billion budget over 10 years ($340 million reserved for Tribal lands) Final budget still TBD finalized after completion of challenge process and final eligible areas list Geographic bidding based on square miles, aggregated into census blocks/tracts (address rural coverage gaps) Eligible areas determined by Form 477 carrier coverage reports and USAC high-cost disbursement data Support limited to one provider per area Restriction on auction collusion/communications

7 Provider Eligibility/Application Any provider can apply File short-form application with basic information Must be an ETC to receive support But can obtain designation after auction Must have access to spectrum necessary to provide service FCC approvals in advance Must certify that technically/financially qualified to provide service Can enter into partnerships to meet obligations, but winning bidder receives support and is responsible for compliance

8 Winners Obligations Long Form Application Letter of Credit and Legal Counsel Opinion Letter Offer plan meeting minimum baseline performance requirements Median Speed: 10 Mbps (download) / 1 Mbps (upload) Latency: 90% latency of 100 ms or less Data Allowance: comparable to mid-level plans offered by nationwide providers Rate: comparable to similar service plans offered in urban areas

9 Winners Obligations Buildout Obligations 40% coverage across all supported areas by year three 60% coverage across all supported areas by year four 80% coverage across all supported areas by year five 85% coverage across all supported area by year six Reasonable Colocation/Data Roaming Reporting/Audits Performance Defaults

10 Legacy Support Phase Out Two Years Areas ineligible for Phase II First 12 months: 2/3 legacy support Next 12 months: 1/3 legacy support After 24 months: no support Areas eligible for Phase II If no winner, ETC receiving minimal level of support continues to receive such support until further FCC action (five-year limit) If no winner, ETCs receiving more than minimal level of support undergo same phase down as ineligible areas

11 FCC Next Steps Release list of presumptively eligible areas (soon) Finalize challenge process (coming months) Two options Different deadlines, evidentiary showings, and response burdens Comments due by April 12 th, replies due April 27 th Conclude challenge process (January 2018) Commence auction early 2018

12 Connect America Fund (CAF) Phase II Auction Overview Background Auction Details Eligibility and Application Winners Obligations Next Steps

13 Background Phase I Phase II State-level Cost Model Support Competitive Bidding/Auction

14 Auction Details Performance Tiers Tier Speed Usage Allowance Bid Weight Minimum 10/1 Mbps 150 GB 65 Baseline 25/3 Mbps 150 GB or U.S. Average* 45 Above Baseline 100/20 2 TB 15 Gigabit 1 Gbps/500 Mbps Nearly $2 billion total in support available for 10 year period Low and high latency measures 2TB 0 Only census blocks lacking 10/1 Mbps service from any provider will be eligible areas for bidding, with some exceptions. Minimum bidding area is a census block group containing one or more eligible census blocks

15 Bid Comparison Formula S = 100 X B/R + T + L Example: Reserve Price: $1000 Bid A: $500, Minimum, Low Latency S = 100 X (500/1000) = 115 Bid B: $700, Baseline, High Latency S = 100 X (700/1000) = 140 Bid C: $900, Above Baseline, Low Latency S = 100 x (900/1000) = 105 Winner

16 Eligibility and Application Any provider can apply Two stage application filing process Pre-auction short-form application with basic information Winners file long-form application after the auction Must be an ETC to participate and receive support

17 Winner Obligations Long-form application Interim Deployment Obligations 40% of the requisite number of locations in a state by year three 60% of the requisite number of locations in a state by year four 80% of the requisite number of locations in a state by year five 100% of the requisite number of locations in a state by year six Required deployment to at least 95% of funded locations in each state where they are receiving support. Annual Progress Reports

18 Additional Issues Auction Next steps: Notice on remaining auction mechanics Remote Areas Fund - Funding reserved for high cost areas that remain unserved after auction

19 NY CAF Order New York granted $170 million from Connect America Fund Federal funds combined with at least $200 million in state and private funding Competitive bidding through New NY Broadband Program CAF will match NY funds up to a cap NY may award preferences to bidders with certain speeds, usage allowances, and latencies Winners can obtain ETC designation after award Winners must meet CAF service obligations

20 Executive & Legislative Items of Interest Executive 2018 Budget Blueprint Chairman Pai Digital Empowerment Agenda Commissioner Clyburn Solutions #2020 Legislative MOBILE NOW Act Senate Democrat Infrastructure Proposal

CONTACTS JOHN J HEITMANN Chair & Partner

Phone: (202) 342-8503 abell@kelleydrye.com J.

21 CONTACTS JOHN J HEITMANN Chair & Partner Communications Phone: (202) jheitmann@kelleydrye.com AVONNE BELL Associate Communications Phone: (202) abell@kelleydrye.com J. BRADFORD CURRIER Associate Communications Phone: (202) bcurrier@kelleydrye.com

Summary of USF & ICC Reform Order & NPRM MOSS ADAMS LLP 1

Summary of USF & ICC Reform Order & NPRM MOSS ADAMS LLP 1 CAF & ICC REFORM ORDER & FNPRM Connect America Fund (CAF) and Intercarrier Compensation (ICC) Reform Order and FNPRM o Approved October 27, 2011