Connect America Fund and Rate of Return Carriers


Mike Beecher, Head of Engineering



The Connect America Fund (CAF) proposal (submitted by several groups including NTCA) is for Rate of Return Carriers which are mostly the Tier 3 with some Tier 2 providers currently receiving voice-only high cost support. There will be two options a carrier can take when planning out their future:

  • Stay with the current cost model but it would be modified to fund broadband only and would see a decreasing pool fund.
  • Cost model in which a company could receive guaranteed support for a 10-year period but the funding would be based on a formula with some limits to per subscriber support. Some language points to 10:1 to 100% in the 10 year period. 

There are proposed longer terms. This would be in the form of a bid arrangement where multiple competitors could receive support.

This could give Tier 3 providers an opportunity to serve areas currently served by Tier 1 and 2  providers.  Some of these larger providers are in harvest mode and really do not want to invest their capital in Rural America.  Especially if the investment requires a 10 Mbps downstream and 1 Mbps upstream to a very large percentage, if not 100% of the subscribers depending on the FCC guidelines.  In many cases, the larger carriers may choose to continue to do nothing in rural America.  This will leave the rural areas unserved or underserved.  The Digital Divide will continue to grow.  This should make for an interesting last half of the year with both challenges and opportunities.  Be mindful of nearby communities, especially with some small to medium sized businesses.  There may be opportunities available to those who respond quick.

To learn more about the Connect America Fund and CHR's Engineering Services, contact us at or 713.351.5111.


Written by Michael Beecher at 00:00
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