On July 24, 2023, the FCC released a Report and Order (R&O), a Further Notice of Proposed Rulemaking (FNPRM), and a Notice of Inquiry (NOI), in the matter of Enhanced ACAM (EA-CAM). On numerous occasions over the past several months we have provided updates on this issue in the ICORE Blog. This R&O presents a new offer of USF support that includes changes to existing support programs and broadband deployment obligations for both current ACAM carriers and Legacy Rate of Return carriers. All carriers must evaluate this new offer and make an election decision by October 1, 2023. In developing the new EA-CAM offer the FCC attempts to bring the current USF support programs into alignment with other Federal Broadband support efforts (most notably the Broadband Equity and Deployment Program – BEAD) and to ensure the availability of 100/20 broadband service in areas served by rural ILECs.
The EA-CAM offer provides support $1.27B annually for 15 years for those carriers electing to participate. The offer extends current ACAM support by either 10 or 12 years (12 years for those ACAM carriers that did not accept the revised ACAM offer in 2018). Electing carriers must offer voice and terrestrial broadband service at 100/20 speeds to 100% of unserved EA-CAM required locations by the end of 2028, however, there may be a one year extension of the final deployment milestone. Unserved locations are locations where 100/20 service is not available or there is not an enforceable commitment to provide 100/20 service as a result of a state or federal grant program. As with previous ACAM offers, participation is voluntary. Carriers not electing to participate will continue to receive support based on their existing support plans. Future support from existing plans will be considered in the NOI. The Wireline Competition Bureau will be releasing initial offers (subject to update) during the week of August 21, 2023. As mentioned above, carriers must decide to participate by October 1, 2023. It should be noted that the EA-CAM offer is conditioned on securing sufficient participation from existing ACAM carriers equal to at least 50% of the unserved locations for ACAM carriers as a whole.
The WCB will determine the required locations for each carrier using the most recent Broadband Data Collection (BDC) information. Required Locations for EA-CAM will include locations where 100/20 service is not available including high cost locations, ACAM supported locations, and low cost locations that do not receive ACAM support. Required Locations will not include locations currently served with 100/20 service or locations where 100/20 service will be made available via an enforceable state or federal program. The Required Location data will be adjusted in the future and deployment obligations will be adjusted. Depending on the level of adjustments to deployment obligations, support amounts may also be adjusted in the future.
Regarding the specifics of the support amounts to be offered to current ACAM carriers, the funding threshold has been increased from the current level of $52.50 to $63.69. Required Locations whose model based cost is less than or equal to $63.69 will not receive support from EA-CAM. The location funding cap, currently $262.50, will be increased to a higher amount that is yet to be determined but is expected to be in the range $300 – $350 per location. EA-CAM support amounts will be the higher of an amount equal to the difference between the funding cap and the funding threshold amount or a percentage of the difference between the model estimated location cost and the funding threshold. This percentage has not yet been determined but it is expected to be between 40% and 80%. The uncertainty regarding the exact percentage and the level of the funding cap will have to be resolved prior to the initial offers that will be distributed in the week of August 21, 2023.
In addition to the support amount changes for ACAM carriers discussed above for unserved locations, the new EA-CAM offer will also address current ACAM support levels for locations currently receiving 100/20 service. The current support amounts will be reduced going forward by a yet to be determined percentage but will be payable for the extended term of EA-CAM which is either 10 or 12 years beyond the term of the current ACAM program.
For Legacy carriers electing EA-CAM to replace current CAF-BLS and High Cost support, the EA-CAM offer provides for two transition options. The transition plans differ depending on whether the EA-CAM support is greater than or less than existing high cost support from CAF-BLS and HCLS. Both plans provide a transition to EA-CAM support over the period 2024 to 2038.
The above discussion provides a high level overview of the new EA-CAM offer contained in the FCC’s R&O. In the FNPRM, the FCC seeks comment on how to amend the existing CAF-BLS and HCLS programs to better align them with the goal of widespread broadband deployment. In the NOI, the FCC takes a longer term view and seeks to build a record to help the Commission consider methods to modify the USF program to promote the affordability and availability of broadband services well into the future.
To summarize, every carrier, both ACAM and Legacy support recipients, has a major decision to make in the coming weeks. The FCC plans to provide initial EA-CAM offers to carriers during the week of August 21, 2023, and carriers must make an election decision by October 1, 2023.
Please note, ICORE would advise that elections be made by Thursday, September 28, 2023, to allow adequate time for processing and any unexpected delays.
There are many factors to consider relative to this voluntary election and ICORE is prepared and ready to provide advice and support to assist you in arriving at the best decision specifically for your Company.