Competitive broadband providers, including cable operators, CLECs and wireless ISPs, will be permitted to seek subsidies to deploy broadband networks in unserved areas under a new FCC order approved today.  Under “Phase II” of the Connect America Fund (CAF) the FCC will disburse up to $9 billion in support (over at least a five year period) to providers that deploy broadband and voice services to unserved areas.  The FCC expects this phase of the program will bring broadband to five million subscribers in rural areas.  At the outset, these funds will be available only to incumbent LECs.  However, if the incumbent LEC declines to accept this support on a state-wide basis, the FCC will make these funds available to competitors through a competitive bidding process.

Although details of the competitive bidding process are not yet known (because the FCC has not yet released the order), the agency expects the competitive bidding process will begin in 2015.  In addition, the agency is expected to streamline the process for competitors to become eligible for support by requiring competitors to obtain “eligible telecommunications carrier” designation only if they win bids for support.

The FCC will also issue a Further Notice of Proposed Rulemaking in order to tee up a number of potential changes in the near future.  Most notably, the agency is expected to propose an increase in the broadband speed standard from 4/1 Mbps to 10/1 Mbps.  We will provide further updates as additional details become available.