In its Order reforming the Universal Service Fund (“USF”), the FCC created a “Phase I” process, making $300 million available to price cap carriers to deploy broadband services to unserved locations in specific areas identified by the FCC. These areas will be composed of price cap carrier study areas, excluding census blocks where unsubsidized competitors offers broadband services capable of 768/200 kbps speeds.  Price cap carriers must offer service to one unserved location for every $775 accepted in these areas.  

The FCC set a non-binding target date of March 31, 2012, for releasing the list of study areas where it will make Phase I money available.  Price cap carriers will have 90 days after release of the FCC’s list to inform the FCC, the Universal Service Administrative Company, and the state public utility commissions of the areas where they are accepting Phase I support.  Price cap carriers must also to certify that Phase I support will only be used in areas identified by the National Broadband Map as unserved, and that, to the best of the carrier’s knowledge, are unserved by competitive broadband services capable of 728/200 kbps speeds. 

The FCC’s release of the list of areas eligible for Phase I support will mark the beginning of this new broadband service support mechanism.  Broadband service providers, including those that are not eligible for Phase I support, should monitor whether price cap carriers are listed as eligible to receive support to overbuild their broadband service areas, and if so, take steps to avoid having Phase I support used in this way. 

If you have any questions regarding the Phase I support program, please contact James Moskowitz at (202) 872-6881 or jmoskowitz@cm-chi.com.