Broadband providers interested in deploying service to parts of 20 states could have until March 30 to apply to participate in a reverse auction that will award funding for those deployments. The proposed deadline is included in a 100-page public notice that the FCC is likely to adopt later this month.

The auction, commonly known as CAF II (for Connect America Fund), will award funding rejected by price cap carriers such as AT&T and Verizon to deploy service to unserved parts of their local service territories. The CAF II auction start date would be July 24 if the public notice posted on the FCC website is adopted.

In the public notice, the FCC also responds to service provider groups and other stakeholders who commented about various aspects of the CAF II auction plans. In general, the FCC does not appear to have been swayed by those comments, which expressed concerns that anti-collusion provisions were too strict and that the proposed auction process was too complex.

The commission did clarify, however, that providers using satellite delivery would be precluded from bidding as low-latency or gigabit service providers and that providers using DSL or fixed wireless would be prohibited from bidding as gigabit providers. The clarification likely was triggered by comments from service provider groups expressing concerns about appropriate bid categories based on technology.

CAF II Auction Start Date

The CAF II auction is designed to award funding to the service provider that offers to deploy broadband service at the lowest level of support, with no one receiving greater support than the amount originally offered to the incumbent provider. When there are multiple bidders in an area, bidders will have to reduce the amount bid in each of multiple rounds until all but one bidder drops out.

Plans call for bids to be weighted based on the broadband speeds a provider offers to deliver and on whether the provider offers to support low-latency service. The weighting system is designed to favor bidders offering to deliver lower-latency, higher-bandwidth service – and although some stakeholders may have considered the system overly complex, the weighting factor plans detailed in the latest public notice essentially have not changed from what the FCC initially proposed back in September.

The public notice also upholds the original plan to award funding on a census block basis but to allow participants to include multiple census blocks in a single “package” bid. Some stakeholders had argued that package bidding would make the bidding process overly complex, but according to the public notice “the bidding experience for a bidder that chooses not to use package bidding will be no more complicated than if package bidding were not an option.”

No Change on Anti-Collusion Rules

In comments filed with the FCC, several associations representing rural service providers asked the commission not to limit an independent consultant’s ability to work with multiple CAF II auction bidders as initially proposed. That rule was designed to prevent collusion but the service provider groups argued that there is a limited number of experienced consultants and that small companies might not be able to afford a consultant unless the cost could be spread across several bidders working together with the consultant.

The FCC apparently was not persuaded by that argument, however. In the new public notice, the commission argues that “[c]ommunication of bids or bidding strategies between applicants disadvantages other applicants and thereby harms the competitive bidding process.”

The commission noted that its stance was shaped, in part, by what happened in the incentive auction of TV broadcast spectrum. At least one participant in that auction made bids through multiple entities and was accused of collusion.

The public notice also noted that the bids each applicant places will help determine the amount that all winning bidders will receive. “As a result, it would be unwise for us to take any action that would facilitate undesirable coordinated conduct,” the commission said.