New Research Shows that CAF II Auctions Penalized High-Performance Providers; Failed to Account for Full Benefits of Networks
Washington, DC (September 20, 2019) — Today, the Fiber Broadband Association and strategy consulting firm Cartesian released research finding that the weighting methodology used in the Federal Communication Commission’s (FCC’s) 2018 Connect America Fund (CAF) Phase II auction penalized high-performance broadband providers and failed to account for the full socio-economic benefits of these networks. The researchers recommend new weights for future FCC auctions to reflect the benefits of high-performance networks and encourage participation from gigabit providers.
Below are the key findings from the study:
- Despite the rapidly growing demand for high-speed connectivity, the weights used by the FCC in its CAF Phase II Auction 903 did not encourage meaningful participation by providers offering gigabit services. Few areas saw gigabit bids, and no areas saw bids from more than 3-gigabit providers.
- The auction also failed to take into account tangible socioeconomic benefits produced by different access technologies such as telecommuting, remote health and learning, e-commerce, and video streaming. For instance, satellite connections are slower and high-latency and are therefore inadequate for many use cases — but the FCC’s methodology failed to reflect this.
- Because the auction did not maximize participation from high-performance providers and did not account for the differences in consumer benefits between various technologies, it did not distribute support most cost-effectively.
- To determine weights in future auctions, the FCC should use a bottom-up methodology that accounts for the benefits brought on by access service tier and latency – and should adopt weights that provide at least a 70% spread between the gigabit and baseline, low latency tiers.
“We are pleased that the FCC is providing support to connect the unconnected. But, to be useful, this support must give unserved consumers broadband that is truly comparable to what urban consumers have,” said Lisa R. Youngers, President and CEO of the Fiber Broadband Association. “This research shows that the FCC should change its auction weighting methodology to incentivize and prioritize high-performance broadband providers. Let’s build once and build right — and that means maximizing the use of federal dollars to build out all-fiber networks to connect consumers in unserved areas.”
About the Fiber Broadband Association
The Fiber Broadband Association is the largest and only trade association in the Americas dedicated to the pursuit of all- fiber-optic network infrastructure to the home, to the business and to everywhere. The Fiber Broadband Association helps providers make informed decisions about how, where, and why to build better broadband networks with fiber optics while working with its members to lead the organization forward, collaborate with industry allies and propel the deployment of fiber networks. Since 2001, these companies, organizations and members have worked with communities and consumers in mind to build a better broadband future here and around the world. Learn more at fiberbroadband.org.
Fiber Broadband Association members can go here to access the study.