At the January Open Meeting, the Federal Communications Commission (“FCC”) adopted a Public Notice (“PN”) that sets July 24, 2018 as the start of the Connect America Fund Phase II auction (“Phase II Auction”) in which service providers can compete for up to $1.98 billion annually in financial support over 10 years. This will be the first time a reverse, multi-round auction is used to provide support for high-cost rural areas. The FCC also adopted an Order on Reconsideration (“Recon Order”) that resolves outstanding reconsideration petitions related to the Phase II Auction.

Many of the auction specifics were initially adopted and discussed in more detail in earlier FCC proceedings as this action is the next phase in a long-running effort to restructure aspects of the universal service fund high cost program. In the Recon Order, the FCC addresses petitions that challenged aspects of its August 2017 Public Notice establishing Phase II Auction procedures (see our prior post on the auction procedures). The key decisions from the Recon Order include

  • choosing not to reconsider the bid weight values;
  • maintaining the requirement that recipients of support must offer voice service at rates comparable to those in urban areas, including if it is a stand-alone VoIP offering;
  • allowing recipients of support to notify the FCC if there is a disparity between the number of locations the cost model estimates they need to serve and the amount actually available in eligible census blocks within a state and receive a pro rata reduction if they successfully demonstrate that they can’t meet the requirement; and
  • modifying the letter of credit requirement to provide relief in the required amount.

In the PN, the FCC outlines the final details for the Phase II Auction including relevant deadlines; applying to participate in the Phase II Auction; how to bid in the auction; and post-auction requirements for support recipients. Short form applications to be considered for eligibility to participate in the Phase II Auction can be submitted electronically from March 19 – March 30, 2018. The schedule for bidding rounds will be announced via a public notice approximately one week before the auction start. The FCC also plans to hold tutorials and a mock auction to assist interested parties with applying and understanding how the auction will operate.

Entities interested in participating in the Phase II Auction are encouraged to review not only the PN but prior FCC orders and public notices on the matter, available at the FCC’s Phase II Auction website.