The Federal Communications Commission (FCC) released a Report and Order on July 24, 2023, that adopts a voluntary Enhanced Alternative Connect America Cost Model (A-CAM) support program.
The program aims to promote widespread deployment of 100/20 megabits per second (Mbps) broadband across areas served by rate-of-return incumbent local exchange carriers (ILECs).
Explore key highlights of the order below.
Overview
Deployment milestones under the Enhanced A-CAM program are designed to align with the Broadband Equity, Access, and Deployment (BEAD) program, requiring participating carriers to deploy at least 100/20 Mbps service to all required locations within their service areas by the end of 2028.
The order adopts a budget for the Enhanced A-CAM support offers of either no more than:
- $1.27 billion annually
- $1.33 billion annually if certain conditions are met
The program has a 15-year support term, beginning January 1, 2024, and ending December 31, 2038.
Enhanced A-CAM support offers will be extended to all current A-CAM support recipients and all current rate-of-return carriers eligible to receive legacy support.
Carriers will be required to make their elections by no later than October 1, 2023.
Notice of Proposed Rulemaking (NPRM) and Notice of Inquiry (NOI)
The FCC also released an NPRM and an NOI.
The NPRM seeks comment on how to amend legacy rate-of-return support mechanisms in the near term to align them with the current broadband deployment and support environment.
The NOI takes a longer-term view and seeks to build a record on methods for modifying the Universal Service Fund (USF) high-cost program to promote affordable and available broadband services.
Important Details of Enhanced A-CAM Order
Explore important details about the order:
- Key dates
- Budget notes
- Support calculations
- Transitional support for legacy carriers
- Electing carrier obligations
- Unsubsidized competitors
- Final deployment obligations to support locations
- Affordability requirements
- Tariffing obligations
- Enhanced A-CAM elections
- Minimum carrier participation threshold for implementation of Enhanced A-CAM
- Tribal government engagement
- Adjusting the high-cost budget for carriers remaining on legacy Support
- High Cost Loop support (HCLS) cap
- Cybersecurity and supply chain risk requirements
Key Dates
Enhanced A-CAM support begins January 1, 2024, for a 15-year term (2024–2038)
Elections must be made by October 1, 2023, or potentially earlier.
Budget Notes
The Enhanced A-CAM annual budget won’t exceed $1.27 billion, which is an increase from $1.1 billion, with certain potential exceptions.
The Wireline Competition Bureau (WCB) can increase the annual budget to $1.33 billion to allow substantial increases in deployment or to increase support due to updates to the National Broadband Map
The $1.27 billion budget increases the USF contribution factor by 0.7% while the potential $1.33 billion budget increases the fund factor by 1%.
Support Calculations
Below are several estimates and support calculations.
Model Cost Estimates
Enhanced A-CAM offers are based on cost estimates from an updated version of A-CAM model that incorporates location data from Fabric v.2 with no cost input changes to the model.
Support for Required Locations
Eligible locations are based on the National Broadband Map, not census blocks.
A $63.69 funding threshold is available for non-Tribal locations.
The support cap based on the greater of two methodologies, with specific values to be determined:
- Model estimated cost above the funding threshold up to a funding cap (with the target being no higher than $300 per location per month for non-Tribal areas
- Percentage of the difference between model-estimated cost and the funding threshold, with the target range being 40%80%
Support for Locations Served by 100/20 Mbps by the ILEC
Locations without an unsubsidized competitor will receive 50%–75% of current A-CAM support for duration of Enhanced A-CAM term. This includes support for locations that were ineligible for prior A-CAM offers.
Locations with an unsubsidized competitor or those that will be served by another provider due to an enforceable commitment, are limited to the total amount of support that location would’ve received through the end of the existing A-CAM term but will be paid over the entire Enhanced A-CAM term.
This means 33% of current A-CAM support will be paid for an additional 10 years.
Tribal Broadband Factor
Locations on Tribal lands will receive a $47.76 funding threshold. This funding cap is $15.93 higher than the cap for non-Tribal lands.
Enhanced A-CAM carriers are expected to immediately engage the relevant Tribal governments regarding deployment to Tribal locations and continue to participate in Tribal engagement throughout funding term.
Carrier and Tribal governments may mutually agree to forego Enhanced A-CAM deployment obligations for Tribal locations awarded BEAD funding, which is expected to be de minimis and not require a change in support.
Transitional Support for Legacy Carriers
Enhanced A-CAM offers will be made to all legacy rate-of-return carriers, depending on whether 2022 legacy support, as follows:
More Than or Equal to Enhanced A-CAM Offer
- 2022 support will be frozen for six years (20242029)
- Annual reductions of 4% will be made for five years (20302034)
- Transition to model-based support will be based on glide path in Section 54.311
Less Than Enhanced A-CAM Offer
- 2022 support will be frozen for six years (20242029)
- Support will increase over five years to full Enhanced A-CAM support (20302034)
Deployment obligations are the same as obligations for existing A-CAM carriers electing Enhanced A-CAM.
Electing Carrier Obligations
Electing carries must serve all unserved locations in their study areas with broadband at speeds of at least 100/20 Mbps with latency of up to 100 milliseconds. This establishes an enforceable commitment and alleviate the need or eligibility for BEAD and other broadband funding in these areas.
Deployment obligations are to be defined by the WCB based on the Fabric and Broadband Data Collection (BDC), identified at the time of the offer, but may be adjusted through the end of 2025 to recognize locations that are:
- In the Fabric when WCB sets final obligations
- Already served by an unsubsidized competitor at the time of the offer but not reflected in the BDC
- Subject to an enforceable commitment to deploy 100/20 Mbps broadband at the time of the offer
Companies are expected to make their election based on their own knowledge of locations and competition in their study areas.
If there’s a substantial decrease in the number of eligible locations, support will be decreased as follows:
- 95% or more of locations: Requires no adjustment in support.
- 85%–95% of locations: Gradual adjustment to be determined in future order
- 85% of locations: Support to be recalculated based on support calculation
The 100% deployment obligation to unserved locations includes extremely high-cost locations and locations that currently receive no support because estimated cost-to-serve is below cost threshold.
An Enhanced A-CAM recipient is also expected to continue serving locations where it already provides 100/20 Mbps service.
Unsubsidized Competitors
Entity provides voice and 100/20 Mbps plus broadband service using wireline or terrestrial fixed wireless.
Any provider that has an enforceable federal or state commitment to deploy 100/20 Mbps or faster broadband service.
Enhanced A-CAM recipients aren’t required to provide broadband to locations served by an unsubsidized competitor or to a location where a carrier has an enforceable commitment to provide 100/20 Mbps or faster service.
Final Deployment Obligations to Supported Locations
Interim deployment milestones are by December 31 of the following years:
- 2026: 50% of required locations
- 2027: 75% of required locations
- 2028: 100% of required locations
In 2027, WCB will determine if a one-year extension of final deployment obligation is warranted due to delays in BEAD deployment.
Until then, entities:
- May use any technology to meet deployment obligation, providing required service levels are met (subject to performance testing)
- Must provide voice service to required location
- Recognize enhanced A-CAM interim and final deployment milestones supersede existing A-CAM deployment milestones.
- Must continue to report in the high-cost universal broadband any progress made toward existing deployment milestones in 2023
Support Recovery Provisions for Deployment Noncompliance
Support withholding or recovery provisions for deployment noncompliance are the same as those applicable to existing A-CAM carriers:
- 1.89 times average support per location over the support term for the relevant number of locations plus 10% of total support
- Compliance gap of 5% or more results in quarterly reporting and potential support withholding or recovery
Performance Measures Testing
Performance measures testing is the same as all other high-cost recipients, with the WCB to determine the specific schedule.
Companies currently out of compliance with existing deployment obligations eligible are to participate in Enhanced A-CAM.
Support will be reduced until compliant with existing obligations in accordance with Section 54.320(d)(1) and (2) noncompliance rules.
Federal Funding Coordination Requirements
To qualify for federal funding requirements, entities must participate in good faith in any BEAD funding challenge process and coordinate with states, Tribes, and other eligible entities (and other federal broadband funding programs) to avoid duplicative federal broadband funding.
Entities also must not receive or use BEAD funding or other future federal grant funding that supports broadband deployment to Enhanced A-CAM supported locations.
Compliance with these obligations must be certified annually through FCC Form 481.
Entities may receive BEAD funding or other future federal grant funding for locations that aren’t eligible for Enhanced A-CAM support due to an unsubsidized competitor that is deemed to not provide reliable broadband under BEAD, or locations that aren’t eligible for Enhanced A-CAM.
At the time of election, carriers must identify the technologies they intend to utilize to fulfill Enhanced A-CAM broadband deployment obligations.
Affordability Requirements
Enhanced A-CAM recipients must participate in the Affordable Connectivity Program or a substantially similar successor program and supply an annual description and certification of compliance (FCC Form 481).
Tariffing Obligations
Enhanced A-CAM carriers must exit the NECA Common Line Pool.
Electing carriers may continue to participate in the NECA Tariff for Common Line and CBOL charges.
Enhanced A-CAM recipients are eligible to move business data services (BDS) offerings to incentive regulation.
Enhanced A-CAM Elections
The election process will be delegated to WCB. Support offers will be announced in a future release.
Elections are voluntary, irrevocable, and made on a state-by-state basis.
The WCB may set a deadline for acceptance of Enhanced A-CAM offers on or before October 1, 2023.
The election letter must identify technologies carrier plans to use to meet broadband deployment obligations. Fixed wireless service provided over entirely unlicensed spectrum may result in locations being eligible for BEAD funding. Acceptances will be made public.
Minimum Carrier Participation Threshold for Implementation of Enhanced A-CAM
Existing A-CAM recipients must collectively accept Enhanced A-CAM offers that cover at least 50% of unserved locations across all offers to those carriers.
Locations covered by offers to existing legacy rate-of-return carriers aren’t included.
If 50% participation threshold isn’t reached, Enhanced A-CAM program won’t proceed.
Tribal Government Engagement
Entities must certify to ongoing annual Tribal engagement through FCC Form 481.
Enhanced A-CAM carriers must initiate engagement with relevant Tribal governments within 90 days of Enhanced A-CAM offer (reported in 2024 FCC Form 481).
The BEAD program doesn’t recognize Enhanced A-CAM as an enforceable commitment for the deployment of qualifying broadband unless it includes a legally binding agreement, which includes a Tribal government resolution, between the Tribal government of the Tribal lands encompassing that location, or its authorized agent, and a service provider offering qualifying broadband service to that location.
Carriers accepting Enhanced A-CAM offers are expected to act in good faith to provide relevant Tribes with opportunity to consent to the carrier’s broadband deployment in the Tribal area.
Enhanced A-CAM Tribal locations not subject to a Tribal government resolution or legally binding agreement may be eligible for BEAD funding. If BEAD funding is awarded to another provider, the Enhanced A-CAM carrier and the Tribal government may notify the WCB that they mutually agree to forego the Enhanced A-CAM deployment obligation. WCB will adjust Enhanced A-CAM support and deployment obligation.
Adjusting the High-Cost Budget for Carriers Remaining on Legacy Support
2024–2025 budget for CAF BLS and HCLS will be set at 2023-2024 support claims less frozen support received by carriers transitioning to Enhanced A-CAM.
Consider further adjustments in NPRM.
High Cost Loop Support (HCLS) Cap
The HCLS cap will be rebased to reflect Enhanced A-CAM elections.
To calculate elections, remove from the HCLS cap amount that Enhanced A-CAM carriers transitioning from legacy rate-of-return support would’ve received absent Enhanced A-CAM election. Then recalculate HCLS for remaining carriers using rebased amount.
Cybersecurity and Supply Chain Risk Requirements
Enhanced A-CAM carriers must implement operational cybersecurity and supply chain risk management plans by January 1, 2024.
Plans must be submitted to Universal Service Administrative Company (USAC) and certified by January 2, 2024, or within 30 days of Office of Management and Budget approval.
The cybersecurity risk management plan must reflect latest version of NIST Framework for Improving Critical Infrastructure Cybersecurity and an established set of cybersecurity best practices.
The supply chain risk management plan must incorporate key practices in National Institute of Standards and Technology (NIST) Internal Resources 8276, Key Practices in Cyber Supply Chain Risk Management: Observations from Industry, and related guidance from NIST 800-161.
Updates to plans must be submitted to USAC within 30 days.
Annual certification is required to verify that plans have been maintained and whether modifications were submitted in prior year through FCC Form 481.
Failure to have plans in place meeting FCC’s requirements will result in withholding of 25% of monthly support until compliant.
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