FCC Agrees to Let New York Direct Some Broadband Subsidies

State will get $170 million of USF funds for its own program
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In keeping with the new chairman's focus on closing the digital divide, the FCC voted Thursday to provide as much as $170 million from the Connect America Fund broadband subsidy to expand deployment in rural New York State.

“Broadband is critical to economic opportunity and job creation,” said FCC chairman Ajit Pai in a statement. “This is a first step of many to fulfill my promise to empower Americans with online opportunities, no matter who they are and no matter where they live.”

The FCC is granting New York state a waiver to use the FCC's Universal Service Fund subsidies for its own competitive New NY Broadband Program for providing broadband in unserved rural areas, subject to conditions to insure "broad participation and oversight."

The money comes from Connect America Phase II funding, which was made available to competitive carriers like cable telecoms after incumbents had first crack at it. Verizon defined the funding being made available for New York.

"ACA appreciates the diligent review conducted and balanced decision reached by the FCC in approving New York State's petition for a waiver to access Connect America Fund support," said the American Cable Association, whose members are among the rate-of-return carriers who will be able to get access to the funds. "New York has one-upped the FCC by instituting a program to bring broadband service with performance capabilities that exceed those required by the FCC to unserved areas while ensuring government money is used efficiently and accountably. Moreover, New York is chipping in substantial additional funding."

The FCC said that would be about $200 million in state funding and private investments.

"That forward-looking approach, which greatly benefits New York residents, businesses, and communities, should be rewarded. So long as those robust requirements are met, the FCC should permit other states to join New York in partnering in the Connect America Fund program."

"With today¹s order, the FCC takes the smart move of enabling better coordination between the FCC and New York broadband programs," said Verizon SVP Will Johnson. "This step will speed the deployment of broadband to New Yorkers in rural and other unserved areas.  Verizon appreciates the efforts of the FCC and the State of New York to work together to close the digital divide."

The Wireless Internet Service Providers Association had some concerns that the FCC was setting a precedent for other states to cherrypick funding from the program.

"After robust opportunity for public input, last year the FCC adopted a CAF II framework that was truly technology neutral, and designed to harness the power of competition to deliver the most broadband, to the most Americans, at the lowest overall price," said WISPA President Steve Coran. "Unfortunately, [the FCC's] action appears to deviate from this approach by providing disproportionate support to one state at the expense of others, which will now be competing for even less federal support.  We expect the Commission to exercise the oversight necessary to ensure fair and open participation by all in the New York program, but are concerned that the action will encourage additional states to make end runs to receive off-the-top” money in a manner contrary to nationwide CAF objectives."

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