FCC Rural Broadband Experiments Panelists: Carol Mattey, Deputy Chief Wireline Competition Bureau Jonathan Chambers, Chief Office of Strategic Planning.

FCC Rural Broadband ExperimentsPanelists:

Carol Mattey, Deputy ChiefWireline Competition Bureau

Jonathan Chambers, ChiefOffice of Strategic Planning & Policy Analysis

Moderator: Edyael Casaperalta, coordinatorRural Broadband Policy Group

Center for Rural Strategies

Rural Broadband Experiments WebinarEdyael CasaperaltaCenter for Rural Strategies

Edyael joined Rural Strategies after serving as a consultant for our efforts in the Gulf Coast in the fall and winter of 2006-2007. She directs our telecommunications policy efforts and coordinates the Rural Broadband Policy Group, a national coalition of rural groups advocating for policies that increase access to fast, affordable, and reliable Internet service in rural areas. She also advices the Immigration and Rural Communities Working Group of the National Rural Assembly. Edyael received a B.A. from Occidental College in Los Angeles and a master's degree in Latin American Studies at Ohio University in Athens.

Rural Broadband Experiments WebinarCarol MatteyDeputy Chief of the Wireline Competition Bureau

Mattey has served in her current position since April 2010. Prior to that she was Senior Policy Advisor on the Omnibus Broadband Initiative, focusing on developing universal service recommendations for the National Broadband Plan. She has over 25 years of experience developing telecommunications public policy and advising private sector clients on the intersection of business and regulation. Mattey was a director at Deloitte & Touche LLP, providing consulting services to telecommunications and media clients, and private equity firms. She joined Deloitte in 2005 after over 10 years at the FCC, where she was Deputy Bureau Chief of the Wireline Competition Bureau from 2000-2005. She holds a J.D. and M.A. in Public Policy Analysis from the University of Pennsylvania, and B.A. from the University of Virginia.

Rural Broadband Experiments WebinarJonathan ChambersChief of the Office of Strategic Planning and Policy Analysis

Mr. Chambers has been at the FCC since May 2012, first as senior adviser and then as acting chief of the Office of Strategic Planning and Policy Analysis (OSP).

He previously served in government from 1987 to 1994, as the Republican staff director of the Senate Committee on Commerce, Science and Transportation, legislative director for Sen. John C. Danforth (R-Mo.) and as a professional staff member to the U.S. Senate Select Committee on Intelligence.

Chambers’ private sector experience has involved roles in law, public policy and strategic planning working for wireless, cable, and Internet service providers in the United States and in Europe.

Rural Broadband Experiments

Carol Mattey, Deputy Chief, Wireline Competition BureauJonathan Chambers, Chief, Office of Strategic Planning & Policy Analysis

Overview

• $100 million budget

• Three categories of experiments in price cap territories:

– Category 1: $75 million for projects offering at least 25 Mbps/5 Mbps in high-cost areas ($20M per-project cap)

– Category 2: $15 million for projects offering at least 10 Mbps/1 Mbps in high-cost areas ($7.5M per-project cap)

– Category 3: $10 million for projects offering at least 10 Mbps/1 Mbps in extremely high-cost areas ($5M per-project cap)

• Entities may choose to submit multiple bids in the same category and different proposals in multiple categories; each entity, including its affiliates, is subject to a $20 million limit

• Support will be provided in equal monthly installments over a 10-year term

• Winning bidders must be designated eligible telecommunications carriers, but can wait to obtain designation from the state or FCC until after notification that they have won

6

Eligible Areas

• Projects must propose to serve census blocks in price cap areas

– Category 1 and 2: census blocks must be high-cost areas, as determined by FCC’s Connect America Phase II cost model

– Category 3: all price cap locations in the census block must be extremely high-cost, as determined by FCC’s model

• Census blocks must be unserved by an unsubsidized competitor offering voice service and Internet access providing 3 Mbps downstream/768 kbps upstream

• Wireline Competition Bureau has released a list of census blocks eligible for rural broadband experiment support: http://www.fcc.gov/document/release-eligible-census-blocks-rural-broadband-experiments

– Eligible census block list is available at: http://www.fcc.gov/encyclopedia/rural-broadband-experiments – Challenge process underway to determine whether “unserved” blocks are in fact served• Check FCC’s Phase II Challenge Process website before bidding to see list of blocks that are subject to

challenge: http://www.fcc.gov/encyclopedia/connect-america-phase-ii-challenge-process

7

Connect America Phase II - Initial Eligible Areas Map

8

An interactive map of census tracts eligible for Connect America Phase II to help identify possible project areas is available at: http://www.fcc.gov/maps/fcc-connect-america-fund-phase-ii-initial-eligible-areas-map

Selection Methodology • The most cost-effective projects in each category will be selected until the budget is exhausted:

– Categories 1 and 2: most cost-effective bids as compared to model-calculated support will be selected• Example: FCC’s cost model calculates $100,000 support to serve the 100 locations in census block A

for 10 years ($1,000 per location) and $200,000 to serve the 100 locations in census block B for 10 years ($2,000 per location). Bidder 1 proposes to serve census block A for $90,000 for 10 years ($900 per location); Bidder 1 will have a score of .90 ($900/$1,000). Bidder 2 proposes to serve census block B for $150,000 ($1,500 per location); Bidder 2 will have a score of .75 ($1,500/$2,000). Bidder 2’s project is more cost-effective.

– For categories 1 and 3, entities may also improve their cost-effectiveness score by proposing to serve additional locations that are extremely high cost• Example: Assume $100,000 in support is available to serve the 100 locations in high-cost census block

C for 10 years ($1,000 per location) and $200,000 in the support to serve the 100 locations in high-cost census block D ($2,000 per location). Bidder 1 proposes to serve census block C and an additional 50 locations from an adjacent extremely high-cost census block for $90,000 for 10 years; the support for all of the locations proposed to be served is $600 per location ($90,000/150), so Bidder 1 will have a score of .6 ($600/$1,000). Bidder 2 proposes to serve census block D for $150,000 for 10 years ($1,500 per location), which is a score of .75 ($1,500/$2,000). Bidder 1’s project is more cost-effective.

– Category 3: most cost-effective bids based on a support per location basis will be selected• Example: Bidder 1 proposes to serve the 100 locations in census block C for $500,000 for 10 years

($5,000 per location). Bidder 2 proposes to serve the 100 locations in census block D for $300,000 for 10 years ($3,000 per location). Bidder 2’s project is more cost-effective.

• Entities proposing to serve only Tribal census blocks will receive a 25 percent bidding credit

9

Application Requirements

• Applications due no later than October 14, 2014 by 6 PM EST. Entities will file applications online using the Commission’s Auction System.

• The Wireline Competition Bureau recently released greater details regarding the application process:• Applicants will have a filing window of at least 15 days before the October 14th deadline

in which to complete applications.• Applications will include:

Background information on the applicant, direct and indirect ownership interests, a description of the project, and planned voice and broadband offerings, including Lifeline offerings

Descriptive data forms will include information such as the type of provider and technology to be deployed, whether the applicant currently is an ETC, and whether the applicant will elect to receive 30 percent of its funding upfront

Bid forms will include census block identification numbers, total amount of requested support (annual support x 10), and total number of eligible locations and extremely high-cost locations, if any, to be served

• Following OMB approval, the Bureau will release a public notice announcing the opening of the application filing window and releasing the bid form and descriptive data form.

10

Post-Selection Review of Winning Bidders

• A public notice will be released announcing the winning bidders

– Within 10 business days, winning bidders must submit certain financial and technical information

– Within 60 days, winning bidders must submit a letter from an acceptable bank committing to issue a letter of credit (LOC)

– Within 90 days, winning bidders must submit appropriate documentation of its eligible telecommunications carrier designation in all areas for which it will receive support

• If winning bidder deemed financially and technically qualified, entity must submit a LOC that must remain open and renewed until 120 days after support term ends

11

Conditions for Rural Broadband Support

• Build-out obligations– 85 percent of required number of locations by the end of the third year; 100 percent of required locations

by the end of the fifth year– Accelerated option: may request 30 percent of support upfront; if requested, must deploy to 25 percent

of required number locations within first 15 months– Voice and broadband services must meet certain defined requirements, including latency, usage, and

reasonably comparable pricing

• Accountability requirements, including reporting and certifications, 10 year record retention, and compliance reviews

• Cooperation with data gathering efforts

• Failure to comply will result in support reductions, then a draw on the letter of credit to recover past support and a prohibition on future support; may also result in forfeitures

12

Resources

• January 2014 Commission order adopting rural broadband experiments: http://www.fcc.gov/document/fcc-oks-voluntary-experiments-testing-impact-technology-transitions-0

• July 2014 Commission order implementing rural broadband experiments: http://www.fcc.gov/document/rural-broadband-experiments-order

• List of census blocks eligible for rural broadband experiment support: http://www.fcc.gov/document/release-eligible-census-blocks-rural-broadband-experiments

• August 2014 Bureau public notice detailing rural broadband experiment application process: http://www.fcc.gov/document/rural-broadband-experiments-application-process-public-notice

• “What’s New” on Connect America Fund home page: http://www.fcc.gov/encyclopedia/connecting-america

13

Contact Information for Additional Questions

Ian ForbesAttorney Advisor, Telecommunications Access Policy Division, Wireline Competition BureauPhone: (202) 418-0091, Email: [email protected]

Heidi LankauAttorney Advisor, Telecommunications Access Policy Division, Wireline Competition BureauPhone: (202) 418-2876, Email: [email protected]

14

Visit us at: National Rural Assembly

The National Rural Assembly and the Rural Broadband Policy Group are supported in part by grants from: