Several West Virginia internet providers are in the thick of competing for a piece of $1.98 billion in federal funding to expand rural internet access.
The Federal Communications Commission’s Connect America Fund Phase II reverse auction began July 24. The purpose of the fund is to give internet providers incentive to build in rural areas of the country that otherwise wouldn’t make financial sense. Being a reverse auction, the FCC is searching for the lowest bids instead of the highest.
The state Broadband Enhancement Council has kept a close eye on fund developments, especially what areas are eligible for funding. The federal program is one of several funding sources aiming to improve rural internet access. An FCC report issued earlier this year ranked West Virginia 43rd among states in fixed broadband access.
Much of West Virginia’s southern half, plus its two panhandles, contain census blocks eligible for funding.
A large portion of central West Virginia is unable to reap the rewards of the program, however. Seven counties in the state were ruled ineligible for funding: Barbour, Gilmer, Harrison, Lewis, Marion, Randolph and Upshur.
Development officials have pointed to shortcomings in data the FCC relies on as the reason why those counties — which are supposedly 100 percent fixed broadband access, per its Form 477 data — have been knocked out of the running.
The Connect America Fund’s first phase distributed funding to 10 larger carriers, including Frontier Communications. The funding Frontier has received will help bring broadband to 89,000-plus households in high-cost areas of West Virginia by the end of 2020, said spokesman Andy Malinoski. Among its Connect America Fund projects is one completed in Berkeley Springs last week, which “brought new and improved broadband and phone service to 452 families in the Pious Ridge area,” he added.
The playing field has opened up in the fund’s second phase, though, with some service providers in West Virginia beyond Frontier being eligible for funding. The auction currently underway is the first to award the funding through competitive bidding, according to the FCC.
The FCC has approved 220 bidders in all. Among those with West Virginia connections are Frontier; Altice, parent company of Suddenlink Communications; Citynet, a Bridgeport-based internet firm; the Hardy County-based Hardy Telecommunications; and a subsidiary of Lumos Networks, which has a fiber network and several data centers in the state.
Providers are, for the most part, keeping their bid plans under wraps. But at least for Hardy Telecommunications, its involvement in the bid process “is very limited,” said Derek Barr, Hardy’s director of customer service, sales, marketing and human resources. The company is interested in bidding for a few census blocks in the Rio area of southern Hampshire County, he said.
“Our OneNet fiber network goes right to that point, so we do anticipate using fiber if we get the bid,” Barr said. “There aren’t any other areas that we could make work financially, so we’re looking at just those few census blocks around Rio.”
Bids are “scored” relative to an area’s reserve price, with the lower bids receiving priority. The reserve price for areas in West Virginia run as low as $8 in an Ohio County location to as high as $297,822 for a cluster of locations in Webster County.
Winning bidders will subsequently need to have a long-form application approved. Once that happens, it can begin receiving support.
The FCC will fund the successful bidders over 10 years. There are benchmarks those companies will have to hit over that period, however.
“Authorized winning bidders will be required to offer voice and broadband service at or above specific performance levels, and file annual reports on their deployment progress,” the FCC says.
There are other requirements, too, such as offering 40 percent of the required number of locations in a state by the end of the third year and 100 percent by the end of the sixth year of support.
Carriers must also “offer at least one broadband and voice service at rates that are reasonably comparable to the rates for similar service in urban areas,” per the FCC.
Winners that don’t meet FCC requirements could see increased reporting requirements, or the FCC could withhold or recover their funding from providers.
The FCC, as of Friday, has auction rounds scheduled from July 30 to Aug. 3, each being held from 10 a.m. to 4 p.m. The FCC will announce the winners at some point after the auction wraps up.