Carriers that receive support from the Connect America Fund (CAF) will be required to deliver minimum broadband speeds of at least 10 Mbps downstream/1 Mbps upstream under CAF Phase II rules adopted unanimously by the FCC.

The CAF Phase II order constitutes one of three broadband-related items that appeared on the agenda of last Thursday’s monthly FCC open meeting. In addition to requesting comment on incentive auction procedures that would  put additional broadband spectrum in the hands of the nation’s wireless carriers, the FCC also adopted rules by a 3-2 margin that boost the universal service fund E-Rate program by $1.5 billion annually, with the goal of expanding wireless broadband connectivity to the nation’s schools and libraries.

Approving the Phase II order by a unanimous vote marked by two partial dissents, the FCC said the new rules would ensure that customers of wireline rural carriers supported by the CAF would receive access to broadband connectivity that equates to the broadband access of 99% of Americans residing in more populous areas. The new 10 Mbps/1 Mbps threshold more than doubles the previous download standard of 4 Mbps set by the FCC in 2011. To accommodate the higher speed standard, and to ensure that CAF funds are targeted more efficiently toward the expansion of rural broadband, the order also (1) increases the term of CAF support for “price cap” carriers from five to six years, (2) provides more flexibility in broadband network build-out requirements, and (3) forbears from enforcing certain universal service fund (USF) obligations in low-cost areas where price cap carriers are ineligible for CAF support.

USF recipients that decline CAF support in a given state will be allowed to deliver voice service to high-cost census blocks until a competitive bidding process takes place through which another subsidized carrier would be selected to deliver voice service and broadband connectivity in accordance with the 10 Mbps/1 Mbps threshold. CAF recipients that fail to meet FCC standards would be subject to certain penalties, and the order modifies existing USF distribution rules to curb waste and ensure funds are allocated more equitably to small carriers. Observing that the CAF II order “will target universal service subsidies to places where there is not an adequate business case for broadband,” AT&T applauded the FCC vote as “a significant milestone.”