Update: The FCC's Enhanced ACAM offer could take up to 1.3 million locations off the board for BEAD

Last week the FCC published its first “illustrative run” of what the offers might be to ISPs who elect extended subsidies in exchange for agreeing to bring 100/20 broadband to every location in their “study area.” I wrote about this here when the order was first released. With this illustrative run document, it now appears that if all the ISPs accept the FCC’s offer, 1.3 million locations would be ineligible for BEAD funding because the FCC would have an enforceable commitment from the ISP to bring service to that location.

Let’s start at the beginning. The FCC uses a unit of geography called “study areas” for administering some of its High Cost programs, including A-CAM. There are over 1,000 study areas in the country. My understanding is they were established a long time ago by state public utility commissions. Seems like one of those “seemed like a good idea at the time” situations.

The file that the FCC released explaining how the Enhanced ACAM offers would work has 879 unique study areas, each with its own ISP (“ILEC”). My understanding of the Enhanced ACAM Report and Order is that by electing the EA-CAM offer, the ISP would be committing to provide 100/20 broadband (though not necessarily with fiber) to every location in all of its study areas in the state (one company can have more than one study area due to acquisitions, among other reasons). In exchange, their subsidies from the FCC’s Universal Service Fund would be extended by 10 years. The amount of the subsidy for each ISP in each state would be calculated based on the current status of the locations in their study areas (the detail of that is beyond the scope of this post).

In my first analysis of this order, I used the 2010 Census blocks that are part of ACAM I and ACAM II. That yielded 1.3 million locations including 583,000 Unserved and Underserved locations. This new illustrative run includes a lot of study areas that are under the Connect America Fund “Broadband Loop Support” FCC program. I see 6.0 million Broadband Serviceable Locations in study areas that would get offers. The more meaningful number is 1.3 million, which is the number of locations in those study areas that are currently Unserved or Underserved.

In the previous post, I used a high-level metric to calculate the cost per location in this program. At $1.27 billion new spend for 10 years, that’s $12.7 billion. In net present value terms that’s $10.8 billion to serve 1.3 million locations, or $8,030 per location, about half of what it was in my last estimate.

It’s worth also restating how the technology choices factor into this. The FCC will accept any technology other than satellite to meet the 100/20 throughput threshold, presumably because any policy that is technology-aware becomes controversial and can’t get three votes at the FCC. But if an ACAM ISP deploys unlicensed fixed wireless, those locations would still be eligible for BEAD, and the state would have a requirement to bring another provider into the area. However, if the ACAM ISP deploys licensed fixed wireless (including wireless using CBRS spectrum) those locations would have an enforceable commitment to deploy 100/20 broadband that meets NTIA’s definition and be ineligible for BEAD. No new competition for the incumbent ISP.

These ACAM ISPs don’t strike me as the fixed wireless types. On the other hand, they’ll have to deploy broadband everywhere in their service areas. And some of those locations will be quite expensive. Which ACAM ISPs accept the FCC’s offer, and what technology they deploy, becomes super important.

Let’s look at one example from a giant study area in Nebraska. This study area (#371532) is north of North Platte along Route 2. It runs through some small towns like Hyannis and Mullen. It’s ILEC is Consolidated Companies. It’s more than 12,000 square miles, almost double the size of Connecticut, and only has 6,413 Broadband Serviceable Locations.

Consolidated has deployed fiber in some of its rural areas, but not everywhere. In fact, the towns of Mullen and Hyannis, which are reasonably dense, don’t have fiber, and are instead covered by 10/1 DSL. Considering how much of this study area is already served, I think it is highly likely that Consolidated would accept the ACAM offer and bring service to the rest of the locations. (I’m leaving for potential future analysis how each study area and ISP subsidy offer compares to the number of Unserved and Underserved locations they would be required to deploy to with new 100/20 service.)

(Note on enforceable commitments: The FCC EA-CAM Report and Order, and the Illustrative Run spreadsheet, make clear that they will not offer subsidies to locations that are subject to an enforceable commitment to bring 100/20 broadband service (according to the FCC’s Funding Map). In the FCC’s data, this reduces the total locations in the study areas from 6.8 million to 6.5 million. There isn’t any overlap between the EA-CAM study areas and RDOF-authorized areas, so the enforceable commitments they’re subtracting are coming from other programs on the Funding Map.)

There’s more to play out on this EA-CAM program. Importantly we need to know how many ISP’s take the FCC’s offer and what technologies they plan to use. But the FCC paying for more locations — up to 1.3 million — is good news for certain high-cost states that would have otherwise struggled in BEAD.