Connect America Costs to be Based on Fiber-to-the-Premise

When the Federal Communications Commission determines how much support to offer price cap carriers to bring broadband to areas that do not have broadband today in Phase 2 of the Connect America Fund program, the funding offered will be calculated based on the assumption that the carrier will use a fiber-to-the-premises approach.

The FCC made the decision to use this approach in a report and order issued yesterday, in which the commission also said it would use a greenfield approach in calculating support levels. The FCC’s decision to calculate funding using FTTP may come as a surprise to readers, many of whom are acutely aware of how adamantly the crafters of Universal Service reform plans have defended a target speed of 4 Mbps downstream and 1 Mbps upstream for the broadband Connect America Fund program. In many cases carriers could achieve the 4/1 Mbps speed target using digital subscriber line (DSL), which typically is a less costly upgrade than doing an overbuild using FTTP — and it was that logic that appeared to drive the relatively unambitious speed target. In justifying its decision, the FCC noted that DSL networks have higher expected operating expenses than FTTP networks and are more likely to require significant additional investment to make faster broadband offerings available in the future.

Carriers accepting CAF Phase 2 funding will not be required to deploy FTTP however.