With this headline, “Connect America Fund Offers Carriers Nearly $1.7 Billion to Expand Broadband to Over 8.5 Million Rural Americans,” a dispute over $16M would seem like a rounding error. It is a rounding error, unless you are in a place that can’t receive broadband. Making it even worse is if the $16M is to fund areas that not only already have broadband, but that have fiber to the home (FTTH), gigabit-capable broadband.
Co-Mo Connect and United Services, A Subsidiary of United Electric Cooperative, Inc., are making this argument in an Application for Review (PDF) submitted to the FCC on April 29th. They are asking for,
“a full Commission review of the Order by the Wireline Competition Bureau, which denied their CAF Phase II challenges of certain census blocks in Missouri where they provide voice and broadband services.”
United Services and Co-Mo Connect had earlier challenged the FCC’s conclusion that Connect America Funds will be necessary to build out broadband to 1,023 census blocks that they already serve. Note, the FCC reported approximately 180k challenges, nationwide (a summary of the challenge process is here).
In the above interview, Randy Klindt, General Manager for Co-Mo Connect, estimates that the cost of providing CAF to the areas already served by Co-Mo Connect and United Services to be approximately $16 million.
As background, both United Services and Co-Mo Connect began providing FTTH broadband, telephone and video services in the census blocks that the FCC deemed as “unserved” beginning as early as 2011. Further, United Services received a stimulus grant and loan for a build out completed in late 2013 for their very rural service territory (<3 homes per mile).
As Klindt points out, with this action the FCC will effectively fund areas on an ongoing basis that have already been given one-time monies by Federal agencies for broadband.
In its press release, the FCC indicates a couple of simple criteria for when CAF Phase II funding can occur:
“Funding in Phase II is targeted to census blocks (a) where the cost of providing service according to our cost model exceeds $52.50 a month, and (b) that are not served by unsubsidized competitors offering service at speeds of at least 4 Mbps downloads/1 Mbps uploads.”
The websites of both Co-Mo Connect and United Services indicate they have networks capable of delivering 1 Gb/s and with consumer pricing (not cost) for broadband of less than $50 per month. With $16M per year at stake, it seems like a prudent investment for the FCC to dig a little deeper to confirm that service isn’t already available in these census blocks.