USACHigh CostFunds
CAF Phase II Auction

CAF Phase II Auction

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.

The FCC awarded winning bids in four service tiers, each with varying network speed requirements (with speeds ranging from at least 10 Mbps downstream/1 Mbps upstream (10/1 Mbps) up to a gigabit) and varying usage allowances (ranging from 150 gigabytes up to 2 terabytes of data), as well as two latency tiers (one for high-latency connections and one for low-latency connections). Winning bidders must offer service with speeds, usage allowance and latency consistent with their winning bids.

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.

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.

In addition, because of the Covid pandemic, the FCC has issued several limited waivers (DA 20-677, DA 21-1502, DA 22-1304 and DA 23-1140) allowing CAF II Auction participants to comply with LOC rules for the Rural Digital Opportunity Fund (RDOF). This means that until Dec. 31, 2024, any CAF II Auction participant that continues to meet its deployment and reporting obligations may:

  • obtain a LOC valued at an amount equal to 18 months of support (as opposed to 24 months) for year two of the support term
  • reduce its LOC value to one year of support upon verification by the USAC compliance team that it has met an optional 20 percent buildout milestone by the end of its second year of support (2021) and maintain a LOC value of one year of support if it continues to meet its deployment milestones
  • request a USAC verification review of a deployment milestone at any time, instead of waiting until the end of a specific support year, in order to reduce its LOC value

CAF II Auction participants should familiarize themselves with USAC’s verification review process and procedures, and understand what evidence they may need to supply for the compliance team to verify buildout, before requesting a review. A carrier must contact hcverifications@usac.org to initiate an on-demand milestone verification review after certifying its deployment data in the HUBB.

Once a carrier requests a verification review, it will receive an automated email that contains a blank process questionnaire (attached as a Word document) for carriers to download and complete as part of the pre-verification process. This questionnaire collects information about the steps and methodology that the carrier used to identify locations for broadband deployment and report those locations in the HUBB, as well as the types of evidence that carrier could provide to prove deployment. Carriers must upload the completed process questionnaire, as well as examples of evidence to substantiate speed, date and unit count, at one time using the link in the email to avoid a delay in processing of this information. USAC performs on-demand milestone reviews in the order that requests are received and typically takes about 90 days after sending an official announcement letter to a carrier to complete a review, although this timeline may be subject to change.

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 that a LOC contains all necessary information. USAC will reject LOCs that do not contain the proper information.

Deployment Requirements

For the CAF II Auction program, the FCC awarded winning bids in four service tiers, each with varying network speed requirements (with speeds ranging from at least 10 Mbps downstream/1 Mbps upstream (10/1 Mbps) up to a gigabit) and varying usage allowances (ranging from 150 gigabytes up to 2 terabytes of data), as well as two latency tiers (one for high-latency connections and one for low-latency connections). Winning bidders must offer least one stand-alone voice service plan and one plan that provides broadband service commercially, with speeds, usage allowance and latency consistent with their winning bids, at rates reasonably comparable to those available in urban areas.

Carriers must complete:

  • 40 percent of deployments by the end of year 3 (2022)
  • 60 percent of deployments by the end of year 4 (2023)
  • 80 percent of deployments by the end of year 5 (2024)
  • 100 percent of deployments by the end of year 6 (2025)

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

Annual Filing Requirements

Carriers receiving CAF Phase II Auction support must comply with the following filing and certification requirements annually:

  • March 1: Submit and certify deployment data in the HUBB showing where the carrier built out broadband using CAF support in the previous calendar year (and complete separate deployment milestone certifications) or certify that the carrier has “no locations to upload.” Carriers must report latitude and longitude coordinates, minimum speeds offered and date of deployment, among other information, for every location where mass-market, high-speed Internet service is available. Submit Locations in the HUBB. USAC will conduct verification reviews to confirm deployment to a random sample of locations reported in the HUBB following each deployment milestone. Carriers must notify the FCC and USAC, and relevant state, U.S. Territory or Tribal governments if applicable, within 10 business days after the applicable deadline if they have failed to meet a build-out milestone (see 47 CFR Section 54.320(d)).
  • July 1: Submit speed and latency test data from performance measures testing conducted in the previous calendar year at a random sample of locations reported in the HUBB that have active subscribers. (USAC encourages carriers to file and certify test results on a quarterly basis after each quarter’s testing is complete.) Submit speed and latency test data in the Performance Measures Module.
  • July 1: Certify financial and operational data collected by FCC Form 481.
  • October 1: Certify that the carrier is eligible to receive High Cost support and used all support received in the proceeding calendar year only to provide, maintain and upgrade the facilities for which the support was intended and will do the same in the coming calendar year. State utility commissions certify carriers under their jurisdiction as eligible telecommunications carriers (ETCs). Carriers not subject to state jurisdiction self-certify. Learn more about the annual ETC certification.

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.

Support Authorized for 2,413 Winning Bids (DA 19-657) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Support Authorized for five New York Winning Bidders (DA 19 – 658) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for the 1,122 Winning Bids (DA 19-685) – 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 593 Winning Bids (DA 19-769) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for the 375 winning bids in Attachment A (DA 19-825) – 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 1,031 Winning Bids (DA 19-906) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for the 566 Winning Bids (DA 19-981) – 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 387 Winning Bids (DA 19-1030) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Order (DA 19-1165) –  Establishes a voluntary process to facilitate post-auction review of the defined deployment obligations (and associated support) when the total number of actual locations in an eligible areas is less than the number of funded locations.

Support Authorized for 66 Winning Bids (DA 19-1170) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Support Authorized for 669 Winning Bids (DA 19-1276) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for 2,121 Winning Bids (DA 19 – 1309) – 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 one New York Winning Bidder (DA 19-1311) – 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

Order (DA 20-108) –  Establishes uniform filing deadlines for CAF Phase II Auction participants

Ready to Authorize PN for 150 Winning Bids (DA 20-230) – 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 1060 Winning Bids (DA 20-153) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Support Authorized for one New York Winning Bidder (DA 20-154) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Support Authorized for 21 Winning Bids (DA 20-409) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for 105 Winning Bids (DA 20-483) – 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 77 Winning Bids (DA 20-514) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Support Authorized for 1 New York Winning Bidder (DA 20-516) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for 480 Winning Bids (DA 20-585) – 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 169 Winning Bids (DA 20-619) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Support Authorized for 483 Winning Bids (DA 20-747) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for 1 Winning Bid (DA 20-829) – 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 1 Winning Bid (DA 20-1011) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for 6 Winning Bids (DA 20-1234) – 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 6 Winning Bids (DA 20-1339) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Support Authorized for 1 New York Winning Bidder (DA 21-54) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to Authorize PN for 1 Winning Bid (DA 22-638) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carrier that is now Ready to Be Authorized for CAF II Auction.

Support Authorized for 1 Winning Bidder (DA 22-1203) – The Commission directs and authorizes USAC to obligate and disburse the amounts identified in the Public Notice.

© 2024 Universal Service Administrative Company. All rights reserved.