FCC Order Details Conditions on New York Auction's CAF Use; O'Rielly Cites Concerns

The FCC imposed conditions on a waiver it gave New York to use $170.4 million in Connect America Fund auction money for the state's own auction of rural broadband subsidies, but Commissioner Mike O'Rielly still partially dissented due to concerns (see 1701260047). The commission will maintain control over the CAF Phase II subsidy funds at all times, including by specifying where they can be awarded, limiting the amounts, and ensuring recipients comply with CAF oversight, said the order issued Thursday in docket 10-90. It conditioned the waiver on New York ensuring any state auction rule modifications are consistent with federal communications law, allow for the provision of CAF funds only to eligible entities, and don't conflict with other FCC requirements. The order said a core FCC objective is to ensure support doesn't go to areas where unsubsidized competitors already are providing qualifying broadband/voice services, and it ordered the Wireline Bureau to publish an updated list of such unserved census blocks in New York to determine which would be eligible for the CAF support. The FCC said it would condition its funding on New York committing to provide at least the same amount of support in subsidized areas, noting the state intends to make at least $200 million available. The commission also set reserve price restrictions on the federal distributions; and it waived CAF II auction broadband performance tier requirements but clarified that New York recipients of federal funding would face FCC public service obligations to ensure the rural services are reasonably comparable to urban services. In a statement, O'Rielly said he appreciated the FCC oversight and commended Chairman Ajit Pai "for his willingness to commit to pull the plug on this whole effort if it is not consistent with our universal service objectives." But O'Rielly said he was concerned the funding wouldn't be used efficiently, and said New York is a state that diverts 911 fees to unrelated purposes: "We should have received assurances that New York would cease this disgraceful practice." Without New York assurances of a "multi-round reverse auction or scarcity to drive down bids," he said the program could overpay for deployment in some areas. He voiced concern the waiver would also reduce competitive pressures in the FCC's nationwide CAF II auction.