High Cost

Funds

CAF Phase II Auction

Total Funding: $1.49 billion
Start Date: May 2019
Fund Length: 10 years
Supported Service: Voice and broadband infrastructure

Connect America Fund (CAF) Phase II Auction, commonly called “CAF II Auction,” provides support to carriers to deliver service in areas where the incumbent price cap carrier didn’t accept CAF Phase II model-based funding and in extremely high-cost areas located within the service areas of the incumbent price cap carriers. After a reverse auction bidding process (Auction 903) completed in 2018, the FCC awarded a total of $1.49 billion over 10 years to more than 100 winning bidders to provide fixed broadband and voice services to over 700,000 locations in 45 states. Learn more.

How the Program Works

CAF Phase II Auction winning bidders or their assignees must submit a long-form application to the FCC for review. If the long-form applicant satisfies the application requirements, the FCC issues a “ready to authorize” public notice and the long-form applicant will have 10 business days to submit a Letter of Credit (LOC) from a qualified bank, as well as a bankruptcy Opinion of Counsel (OOC) letter, to USAC. Note: Please see below for information about how to draft an acceptable LOC. Study Area Codes will be assigned in Attachment A of the relevant “ready to authorize” public notice. The FCC will issue “ready to authorize” public notices on a rolling basis.

After USAC has approved the LOC and OOC, the FCC will issue a public notice announcing authorization of support for the winning bid and directing USAC to begin disbursing payments. USAC will begin issuing monthly payments shortly after the public notice has been released.

Carriers participating in CAF Phase II Auction must fulfill their total build-out obligations over six years of the ten-year program, and meet interim service milestones along the way. Carriers must file and certify annually in the HUBB (High Cost Universal Broadband) portal all locations deployed to in the prior year, and should be prepared to provide documentation to the High Cost compliance team to substantiate build-out. The compliance team will conduct verification reviews of both interim and final milestones to confirm deployment to a sample of locations reported to the HUBB.

After a carrier has certified its 60 percent service milestone in the HUBB and USAC has verified that the milestone has been met, the carrier may reduce the value of its LOC to 90 percent of the total support received, plus the amount of support that will be disbursed in the coming year. After the carrier has certified its 80 percent service milestone in the HUBB and USAC has verified that the milestone has been met, the carrier may reduce the value of its LOC to 60 percent of the total support received, plus the amount of support that will be disbursed in the coming year.

After a carrier has certified its 100 percent service milestone in the HUBB and USAC has verified that the milestone has been met, USAC will prepare a final verification report and send it to the FCC for review. The carrier may be released from its LOC if the FCC determines that the carrier has satisfied all obligations under the program. Both USAC and the FCC will sign off on the release of the LOC, and USAC will return the LOC to the carrier and/or its bank.

Additionally, any CAF Phase II Auction participant that meets its total deployment obligation before the end of year six may be released from its LOC after review and approval by USAC and the FCC. If a carrier certifies in the HUBB that it has completed its total build-out ahead of the program schedule, the USAC compliance team will initiate the verification process as soon as possible.

Any carrier participating in CAF Phase II Auction may be subject to non-compliance measures if it fails to meet its build-out obligations and/or other service requirements. Non-compliance measures may include additional reporting requirements, reduction of support or a draw on the carrier’s LOC.

Letters of Credit (LOC)

Carriers are required to submit LOCs, generated by their banks, to USAC for review and approval. Please refer to the following resources to ensure your LOC contains all of the necessary information. USAC will reject LOCs that do not contain the proper information.

Deployment Obligations

In order to receive CAF II Auction funding, carriers must offer at least one stand-alone voice service plan and one plan that provides broadband service commercially. These services must meet the relevant service requirements to the requisite number of locations. 

Carriers must complete:

  • 40% of deployments by the end of year 3
  • 60% of deployments by the end of year 4
  • 80% of deployments by the end of year 5
  • 100% of deployments by the end of year 6

For more information, see the FCC’s CAF Phase II Auction page.

Annual Filing Requirements

Carriers receiving CAF Phase II Auction support must also complete the following filing and certification
requirements each year.

  • By the last business day of the second calendar month following the relevant support year: Submit the geolocated locations where the carrier has newly deployed facilities capable of delivering broadband that meets or exceeds the defined speed tiers in the previous year. Submit locations in the HUBB.
  • By the last business day of the second calendar month following each service milestone: Certify that the carrier has met the service milestone and is meeting the requisite public interest obligations. File certifications in the HUBB.
  • July 1: File and certify FCC Form 481 (Carrier Data Annual Collection Form). File Online
  • October 1: Certify that the carrier has used High Cost funding correctly per program rules. Most carriers are certified by their states. If your company is not subject to state jurisdiction, the carrier must file directly with USAC and the FCC. Learn more.

Related Orders

Connect America Phase II Auction Order (FCC 16-64) – The Commission adopts rules to implement a competitive bidding process for Phase II of the Connect America Fund

Connect America Fund Phase II Auction (Auction 903) Closes (FCC-18-887) – The Commission announces 103 winning bidders in the CAF Phase II Auction

Ready to Authorize PN for the 31 carriers in Attachment A (DA 19-126) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be Authorized for CAF II Auction

Ready to Authorize PN for the 40 carriers in Attachment A (DA 19-248) – The commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be Authorized for CAF II Auction.

Ready to Authorize PN for the 2,025 carriers in Attachment A (DA 19-403) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be Authorized for CAF II Auction

Support Authorized for 459 Winning Bids (DA 19 - 414) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for the 611 carriers in Attachment A (DA 19-535) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be Authorized for CAF II Auction

Support Authorized for 856 Winning Bids (DA 19-539) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.