FCC Turns Up the Heat (and the Risk of Overbuilds) With Start of Process to Disburse $9 Billion in Broadband Subsidies Under CAF Phase II

The dog days of summer are here, but this is no time for broadband providers to escape to the shore or mountains for an extended vacation because the FCC is set to begin the process of handing out $9 billion (over five years) in subsidies to bring broadband to unserved areas.

The initial disbursements of up to $1.8 billion annually will be reserved for price cap incumbent local exchange carriers willing to deploy broadband to unserved areas. While these subsidies are supposed to be directed only to “unserved” areas, there is a risk that some of this money will be directed to areas that existing broadband providers already serve – creating a potential risk of subsidized overbuilds in such areas. Unfortunately, the burden of ensuring that such overbuilds do not occur falls upon the industry itself.

Although the FCC has diligently worked to identify areas that are, in fact, unserved, its processes remain imperfect. Therefore, to ensure that these subsidies are not used to overbuild areas already served by existing broadband providers, the FCC has initiated a process to “challenge” its initial list of unserved areas – i.e., those areas without broadband and voice service. The FCC initiated the challenge process on June 30, and has set a deadline of Aug. 14, 2014 to file any challenges.

Generally, the challenge process requires broadband providers to take several steps, including: (1) review of the FCC list of unserved areas and, if areas are already served by the broadband provider, (2) gather evidence of the provision of voice and broadband service, and (3) file a “challenge” (with supporting evidence) via FCC Form 505. A more detailed summary of the challenge process, and key strategic considerations, is available in our recent DWT advisory.

DWT attorneys have extensive experience filing these challenges. Please contact us should you need assistance with this matter.