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ACA: FCC’s CAF Bidding Rules Need To Encourage Small Cable Participation

PITTSBURGH, July 22, 2016 -  The Federal Communications Commission, in seeking to use a weighting formula for the Phase II competitive bidding process, has the opportunity to use Connect America Fund (CAF) support to bring high performance broadband service to unserved locations.  But, to do so, the FCC must seek to maximize participation by bidders and reflect the higher performance broadband service that urban consumers are electing to receive.

"ACA's proposed weighting methodology reflects two fundamental principles.  First, the law requires that rural consumers should have access to broadband service that is reasonably comparable to what urban consumers are taking.  Second, because higher performance technologies require new deployments, the FCC should create an apples-to-apples comparison by equalizing deployment costs.  By accounting for both of these factors, the FCC will help ensure that unserved consumers receive the broadband service they need and that federal universal support is distributed efficiently," ACA President and CEO Matthew M. Polka said.

In adopting its rules, the FCC choose not to structure the competitive bidding process so that the lowest cost, lowest performance networks would be more likely to prevail.  ACA supports that approach.  

In the Further Notice of Proposed Rulemaking (FNPRM), the FCC seeks to provide to eligible areas with "the highest quality service while making efficient use of universal service funds," and it has structured a competitive bidding process where applicants will bid simultaneously to deploy broadband service with different performance characteristics.  To compare these bids, the FCC is seeking comment on establishing a methodology to weight each tier of performance and level of latency.  Putting in place the correct "weighting formula" for the competitive bidding process therefore is critical.

ACA appreciates the difficulty of that task and it provides the following factors, based on sound legal and economic foundations, that should be taken into account for any weighting methodology:

1.      Consumer Preference for Speed and Data Usage:  For each performance tier, the weight should reflect consumer preferences for speed and data usage in urban areas over the ten-year timeframe of the program;

2.      Consumer Preference for Latency:  The weight should reflect consumer preferences in urban areas for the two tiers of latency;

3.      Deployment Costs:  The weighting methodology should normalize costs among assumed technologies for each performance tier to encourage maximum participation, thereby ensuring support is provided efficiently and consumer preferences are reflected in bidding results.

About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 750 smaller and medium-sized, independent cable companies who provide broadband services for nearly 7 million cable subscribers primarily located in rural and smaller suburban markets across America.  Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business.  For more information, visit http://www.americancable.org/

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