At its May 25, 2016, Open Meeting, the FCC adopted a Report and Order establishing some of the rules that will govern the reverse auction for Connect America Fund (CAF) money to bring broadband service to census blocks unserved by broadband delivering speeds of 10 Mbps downloads/1 Mbps uploads in 20 states where the price cap carriers declined last year’s CAF Phase II offer.  The auction will also include locations across the country with extremely high deployment costs. 

The Order sets key requirements for successful bids in the auction, including:

• Four technology-neutral service standards, with bidder flexibility to designate either low or high latency for each
• A $215 million budget for support annually
• Network build-out requirements: 40% three years after authorization, 60% after four years, 80% after five years, and 100% by six years
• An application process for auction participants, designed to encourage broad participation from a range of providers
• Reporting requirements
• A framework for a Remote Areas Fund auction to address those areas that receive no winning bids in this auction

The four technology neutral standards are:

• A minimum performance tier that requires bidders to commit to provide broadband speeds of at least 10 Mbps downstream and 1 Mbps upstream (10/1 Mbps) and offer at least 150 gigabytes (GB) of monthly usage.
• A baseline performance tier that requires bidders to commit to provide at least 25 Mbps downstream and 3 Mbps upstream (25/3 Mbps) and offer a minimum usage allowance of 150 GB per month, or that reflects the average usage of a majority of fixed broadband customers nationwide, using Measuring Broadband America data or a similar data source, whichever is higher.
• An above-baseline performance tier that requires bidders commit to provide at least 100 Mbps downstream and 20 Mbps upstream (100/20 Mbps) and offer an unlimited monthly usage allowance.
• A Gigabit performance tier that requires bidders commit to provide at least 1 Gigabit per second (Gbps) downstream and 500 Mbps upstream and offer an unlimited monthly usage allowance.

The Order includes a Further Notice of Proposed Rulemaking seeks comment on several specific procedures for the Phase II auction, including how to apply weights to the different levels of performance adopted in the Order, measures to achieve the public interest objective of ensuring appropriate support for all of the states, and measures to achieve the public interest objective of expanding broadband on Tribal lands. 

 The FCC said that a forthcoming Public Notice will seek comment on other auction procedures that must be resolved in order to conduct the auction.