Connect America Fund Phase II Auction

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The Federal Communications Commission (FCC) has set dates for the CAF II auction for the week of July 16, 2018. $1.98 billion has been set aside over the next 10 years to winning service provider bidders that provide broadband and voice services. Bidding will be via a reverse auction. Bidding will be on Census Block Groups in eligible, high-cost areas and bids will be expressed as a percentage of the reserve price that has been determined by FCC using their cost model. Winning bidders that are not already Eligible Telecommunications Carriers (ETC) must become an ETC within six months in each state that the bidder has won support. A letter of credit will also be required after the auction.


  • February 2018 – final eligible areas were updated and released by the FCC
  • March 19-30 – application filing window
  • Followed by initial review and status public notice
  • Resubmission window following, if necessary
  • Final review and release qualified bidders public notice
  • July 16-20 – mock auction
  • July 24 – bidding begins
  • Winning bidders must submit long form

Short Form Applications

An FCC Registration Number (FRN) is required to submit the application with the FCC. Short form applications must be submitted before the auction with access to the system made available March 19, 2018 at noon ET. The short form will collect states to be bid on, technology or technologies to be used, and the service tier or tiers that the applicant intends to bid, along with bidder financial information.

Service Tiers

Performance Tiers



Usage Allowance



>= 10/1 Mbps

>= 150 GB



>= 25/3 Mbps

>= 150 GB or US median,
whichever is greater


Above Baseline

>= 100/20 Mbps

>= 2 TB



>= 1 Gbps/500 Mbps

>= 2 TB



Latency Tiers



<= 100 ms

Weight = 0



<= 750 ms & MOS of 24

Weight = 25



Bids are assigned weight based on the service tiers, which is simply the total weight from the performance tier and latency tier. For example, a service offered at 10/1 Mbps with high latency would have a weight of 90 versus a service offered at 1 Gpbs/500 Mbps with low latency has a weight of 0.

Eligible Areas
A map and list of eligible areas is located on the FCC website. Eligible census blocks are grouped into Census Block Groups (CBG) for bidding with each CBG having a reserve price and number of locations. Winning bidders will be required to offer service to the locations in the CBG, with 40 percent of the locations by year three and 20 percent in each following year with 100 percent by year six. Voice and broadband rates must be comparable to rates for similar services in urban areas.

Bidding Procedures

CGBs have a reserve price that is the maximum amount of support that can be awarded for an area. Bids will be a percentage of the reserve price for each area in multiple rounds, with the percentage decreasing in each round. Lowest bidder in each area will receive support. Each bidding round has a base clock percentage, which is the lowest percentage a bidder can bid in the round and this starts high and decreases each round. Bidders are not allowed to bid for more support than you did in a previous round. Bidders will have an option to use proxy instructions to automatically tell the bidding system to submit a bid in each round, down to a user-specified price point percentage. Proxy instructions can be changed at any time and can be used to make sure that you do not miss a bidding round. Bidders will also have an option to bid for a group of areas at a single price point percentage if they choose. The auction for any given area ends after there is no area with more than one bid at the base clock percentage. Prices for each bidding area are listed as annual support, with support disbursed in equal monthly installments.


Winning bids will have the following buildout timeline:

  • 40% of the locations in each CBG must be constructed by year 3
  • Each following year must add another 20%
  • 100% of locations must be constructed by year 6

Although there is no requirement that anyone sign up for your service, to be considered constructed, you must be able to place service to the premise with 10 days after service has been requested.


KLJ can assist with Outside Plant (OSP) and network designs to determine costs to serve potential bidding areas. This includes business plans and potential bidding strategies including determination of lowest support costs for any and all areas. To set up a meeting to discuss or if you have any questions, feel free to contact Joe Puhalla with KLJ at 701-355-8408 or