Conexon CostQuest Midwest Energy and Communications. FCC s Connect America Fund Auctions

Transcription

1 Conexon CostQuest Midwest Energy and Communications FCC s Connect America Fund Auctions

2 CAF Auction: Geographic Areas Nearly 1 million locations in 210,647 eligible blocks within 30,033 census block groups Eligible areas Three Geographic Areas: Where Price Cap carriers (e.g., AT&T, Verizon) rejected FCC s offer of support Extremely high cost areas according the FCC cost model the most expensive 1% of the population to serve with fiber Areas that received bids in the Rural Broadband Experiment auction $1.98 billion 10-year budget; $6.2 billion cumulative reserve prices

3 CAF II Opportunity Analysis Tool Analysis tool for broadband providers to assess their potential for participating in the FCC s forthcoming CAF II Reverse Auction. Preliminary assessment of the auction eligible census blocks/block groups, that shows: CAF II Auction reserve amounts Estimated deployment CapEx Estimated monthly Opex costs 3

4 CAF II Opportunity Analysis Tool 4

5 Freeform: Draw/Adjust the area CAF II Opportunity Analysis Tool 5

6 SAC: Select/Buffer the area CAF II Opportunity Analysis Tool 6

7 Key Dates and Deadlines for Auction 903 Auction application tutorial available (via Internet) By March 13, 2018 Short-form filing application deadline March 30, 2018; 6:00 p.m. ET Auction bidding tutorial available (via Internet) By June 28, 2018 Mock auction begins During week of July 16, 2018 Auction begins July 24, 2018 Long-form filing application deadline Detailed description of technology and system design Letter from bank committing to issue an irrevocable stand-by letter of credit Letter of credit and legal opinion letter ETC designation Audited financial statements 10 business days after release of auction closing public notice 60 calendar days after release of auction closing public notice 60 calendar days after release of auction closing public notice 10 business days after release of public notice listing long-form applicants that may be authorized for CAF-II support 180 calendar days after release of auction closing public notice 180 calendar days after release of auction closing public notice (If applicant did not file audited financials at the short-form application stage.)

8 CAF Auction: Short-Form Application Process Ownership Compliance Certification Selected States Provision of voice, broadband and/or electric service for at least two years Financial Statements Financial Qualification metrics (audits, operating margin, TIER, Current Ratio, Equity Ratio) Performance Tier and Latency Combinations Operational Information Reasonably capable of meeting speed, usage, latency and service milestones for each state Respond to specific operational questions Must assume 95% build-out within 6 years, 70% subscription rate, and peak period usage assumptions Applicant Identifier Information (477, 499, study area codes) Due Diligence Certification ETC Certification (acknowledgment)

9 CAF Auction: Design and Bidding Process Reverse Auction Multiple round, descending clock auction TIER SPEED MONTHLY CAPACITY WEIGHT Two stages: geographic independent stage until budget sufficiency, followed by head-to-head bidding Weighting of the Tiers FCC adopted weights for various speed and latency combinations to account for consumer preference for high-speed, low-latency service Support reduced by tier weights: Support (B/R W)/100 * R B = Bid Amount R = Reserve Price W = Weights for Speed + Latency Gigabit 1 Gbps/500 Mbps > 2 TB 0 Above- Baseline Baseline 100 Mbps/20 Mbps 25 Mbps/3 Mbps > 2 TB 15 Higher of 150 GB or U.S. median Minimum 10 Mbps/1 Mbps 150 GB 65 Latency For each tier, providers must commit to either low latency ( 100 ms) or high latency ( 750 ms and a Mean Opinion Score ( MOS ) of 4) 45 25

10 CAF Auction: Preparing to Participate Process Business plan (know your own numbers) Block group analysis (from FCC s published list of eligible blocks) Full, partial and not electric served Overlapping electric coverage of two coops within the same census block group Board approval of bid and commitment to fulfill obligations Prior decisions about bid strategy, e.g., exit point in the descending clock auction No collusion, no communication with other bidders during auction Bid individually, enter joint bidding agreement or join bidding consortium Award should be considered revenue to help offset early operating losses

11 CAF Auction: Mobility Fund Goal Expand 4G LTE coverage to areas unserved today (and preserve 4G LTE where it exists only due to a subsidy) Funding $453M in annual support for ten years Multi-round reverse auction Eligible areas to be determined after challenge process Performance Requirements Median data speeds of 10/1 Mbps Latency of less than 100 ms Rates that are reasonably comparable to urban rates

12 Connect America Fund Programs 4 CAF Programs Price Cap Carriers ($1.8B per year through 2020) Rate of Return/Small Telcos ($2.2B per year) Mobility Fund ($0.5B per year through 2028) CAF Auction ($0.2B per year through 2028) Annual Support by Program Price Cap RoR/Small Telco Mobility Fund CAF Auction

13 Is There A Better Way? The CAF Auction is unnecessarily complex. The CAF Auction does little to address the digital divide. The potential for gaming still exists. Is a reverse auction the best way to reach the hardest to reach areas? Shouldn t the consumer have a vote it s their money. MEC and other coops will participate, but there s got to be a better way.

14 The Rural Fiber Project Every rural home and business should have access to world class telecommunications both fixed and mobile Every provider of broadband services should have access to federal and state funds on an equal basis Government funding for rural broadband should be based on consumer decisions, not the FCC s decisions

15 Five Steps to Rural Gigabit Everywhere NOW 1. Use the FCC s data to identify all areas unserved by broadband, but use the data correctly. 2. Use the FCC s Connect America cost model to determine the appropriate level of public funding and to target funds to the areas most in need. 3. Make available such support to all Internet Service Providers (ISPs) that are certified in states as eligible telecommunications carriers. 4. When ISPs submit data to the FCC, indicating geographic area, speed, technology and numbers of customers, each ETC would also submit their data to USAC. 5. Any ISP could win back a customer it loses, and thereby win back the subsidy amount; let competition work for rural America.

16 QUESTIONS