The FCC has released a Public Notice providing guidance and illustrative examples of calculating Alternative Connect America Model (A-CAM) final deployment obligations and support recovery if an A-CAM recipient does not meet its final deployment obligations. Carriers that are currently receiving Legacy USF have until Wednesday, July 17 to elect the A-CAM II offer, so the guidance comes at a time when many companies are finalizing the evaluation of their offer if they have not already done so. During the course of the A-CAM II evaluation, many questions came up about buildout completion and calculating final milestones, which this Public Notice attempts to answer.
Clients also are reminded that the FCC seeks comments on two items related to A-CAM carriers’ buildout requirements and that JSI will be filing group comments on both matters. To ensure that a mechanism is in place for A-CAM companies who find that the requisite number of locations simply don’t exist in their service areas, the FCC is seeking comment on applying the CAF Phase II auction winners’ “true-up” mechanism to A-CAM carriers in which support would be reduced commensurate with the reduction in number of locations. Comments are due July 19. The FCC also is seeking comments on a Petition for Clarification and Declaratory Ruling filed by two Iowa companies looking for clarification on counting home-based businesses in the HUBB. In its group reply comments, JSI will be supporting the Iowa companies’ petition and NTCA’s recommended changes to USAC’s Frequently Asked Questions. Reply comments are due July 25. More details on both are available in our July 12th e-Lert.
The following points were covered in the latest Public Notice:
- Companies that do not meet their A-CAM I or A-CAM II final deployment obligations will be subject to support recovery by the FCC. The FCC will recover the percentage of support “that is equal to 1.89 times the average amount of support per location received in that state” over the support term for the relevant number of locations that were not deployed, plus 10% of the carrier’s total relevant high-cost support over the term for the state.
- The “relevant number of locations” is the total amount by which the company failed to meet its buildout requirement, adjusted by the 5% flexibility rule, described below.
- The “total relevant high-cost support” is the carrier’s base amount of A-CAM support, not including transitional glide-path support amounts.
- A-CAM I and A-CAM II carriers should pay close attention to their final buildout milestone numbers, because most recipients will have two or three milestones to independently meet by deploying at least the required speed or greater to the specified number of locations. The guidance states that an excess number of locations in, for example 25/3, can be applied toward a lower speed requirement, but not vice versa.
- A-CAM I has milestones for 25/3, 10/1, and 4/1 Mbps
- A-CAM II has milestones for 25/3, 4/1 Mbps and Tribal, if applicable
- The Tribal Broadband Factor for A-CAM II reduced the funding threshold for certain census blocks in Tribal areas and raised the funding cap. A-CAM II electors that received a Tribal Broadband Factor adjustment must separately meet the Tribal deployment obligations in the A-CAM II in addition to the regular deployment obligations for the rest of the funded service area.
- The FCC afforded A-CAM I and II recipients with the “5% flexibility” rule for meeting their buildout requirements for fully funded locations. Support recipients can deploy to 95% or greater of their fully funded locations and be “deemed compliant.” However, a company can still face reductions in support for some of the remaining locations. This is because the remaining percent of fully funded locations would shift from fully funded to capped locations, which then are allocated between 4/1 and reasonable request. To explain, this “5% flexibility” rule applies separately to the 25/3 and 10/1 categories for A-CAM I companies and separately for 25/3 non-Tribal and 25/3 Tribal categories for A-CAM II companies, so each category on its own must reach at least 95% of the required number. Support recipients must treat the remaining number of locations as capped locations, which means that a certain number of the remaining locations will be required to meet the 4/1 standard with the rest as reasonable request. This allocation is based on the same density formula used to allocate the initial capped locations between 4/1 and reasonable request. For example, if an A-CAM II company is obligated to provide 25/3 to 200 non-Tribal locations, with 100 locations allocated equally to 4/1 and reasonable request, the company can deploy 25/3 to 190 locations and be “deemed compliant.” However, the remaining 10 locations will be allocated as five to 4/1 and five to reasonable request. If the company does not deploy to the five 4/1 locations, then the support paid over the 10 years for those locations will be subject to refund.
JSI encourages clients who are electing A-CAM II to consider this guidance and be aware of deployment obligations and how to calculate support adjustments in the event the final buildout obligations are not met. To discuss how this guidance might impact your A-CAM support, if you are concerned about meeting deployment obligations based on this guidance, or you are seeking further clarification on any of these points, please contact a member of our team by clicking the button below.