What We Can Expect: Federal Support for Rural Broadband Deployment

As discussion continues about Rural Broadband Deployment in New England and Nationwide, it’s useful to keep up with opportunities that exist to fund expansion from existing revenue sources.  Recently, an effort has been underway to realign support mechanisms that have to date been employed to support rural landline telephone service, deploying them instead to encourage investment in Rural Broadband deployment.  This funding, taken from a program called the Universal Service Fund, was directed to two programs: The Connect America Fund and the Alternative Connect America Model.


The Connect America Fund, Phase II

CAF II Rural Broadband Deployment Funding MapThe Connect America Fund repurposes a portion of the Universal Service Fund (“USF”) to incentivize broadband deployment among so-called “price cap” companies.  In general, price cap companies include the country’s largest telephone companies such as AT&T, Century Link, Fairpoint, Frontier, Verizon and Windstream. Phase II of this program recently awarded funds for the purpose of expanding service in areas that:

  • Are “high-cost areas” – census blocks where the cost to serve a home was between $52.50 and $198.60.
  • Currently lack Internet service faster than 4 megabits download by one megabit upload.

Providers that accept money from the Connect America Fund’s phase II (CAF II) funding must use the money to build networks that provide at least 10 megabits per second download by one megabit per second upload. This speed is easily supported by DSL, and does not meet the Federal Government’s own standard for broadband Internet, which is currently 25 megabits per second down by 3 megabits per second up.  For more information on CAF II, check out this FAQ from the FCC.

In New England, Fairpoint Communications accepted a total of $37 million from CAF II, with $13.3 million earmarked for deployment in Maine, $8.7 million in Vermont, and $4.3 Million in New Hampshire. The company is using these funds to deploy DSL service to roughly 105,000 locations across 14 states, with 35,500 of those locations in Maine, 18,300 in Vermont, and 13,000 locations in New Hampshire.

The Alternative Connect America Model

Rate of Return Areas

FCC Map depicting Rate of Return Areas.

This model allocates funds from the USF for rural broadband deployment by Rate of Return Carriers.  These include smaller companies like OTELCO and TDS Telecom in Maine, VTEL and Waitsfield Champlain Valley Telecom in Vermont, and Granite State Communications in New Hampshire, to name just a few.  Like the CAF, ACAM seeks to fund broadband deployment in high cost census blocks where costs to serve a home are between $52.50 and $198.60 and residents can’t currently get service faster than 4 megabits down by 1 megabit up.

Providers electing to receive funding under ACAM are required to build out networks that support at least the current Federal Broadband standard of 25 megabits down by 3 megabits up.  Bandwidth at this level is much harder to support using DSL technology, so a higher percentage of the providers receiving funds under ACAM will fulfill their build-out requirements using fiber to the home.   

The process of determining funding levels and distributing ACAM funds is still underway, so it’s difficult to say exactly how many New England homes and businesses may see improved broadband as a result of this program.  For its part, OTELCO expects to build fiber to the home in several census blocks in Northern Penobscot County in Maine as a result of ACAM.  Stay tuned for more information about ACAM’s potential impact on New England Broadband as work continues at the FCC!