FCC Approves Transfer of Unbuilt CAF II Locations
RiverStreet handed about 3,700 Virginia locations over to EMPOWER Broadband.
Jake Neenan
WASHINGTON, August 5, 2024 – The Federal Communications Commission has approved RiverStreet Communications’s request to hand over more than 3,700 subsidized locations to EMPOWER Broadband.
The agency agreed not to enforce some penalties against EMPOWER, which became noncompliant with FCC deployment timelines when it assumed responsibility for the RiverStreet locations.
The locations were funded through the FCC’s 2018 Connect America Fund Phase II auction, which requires 80 percent completion by the end of 2024 and 100 percent by the end of 2025.
EMPOWER has already built out to the 838 Virginia homes and businesses it won at the auction, but RiverStreet wasn’t able to deploy to any of the 3,757 locations it transferred, putting EMPOWER behind schedule. EMPOWER’s 838 locations corresponded to about $1.8 million in CAF II support over 10 years, while RiverStreet won about $8.1 million to serve the 3,757 it handed over.
RiverStreet will pay EMPOWER all CAF II Auction support it’s received from the agency so far as part of the deal. The FCC agreed on July 31 to hand over to EMPOWER money the agency previously withheld from RiverStreet for noncompliance, and to allow EMPOWER to maintain a letter of credit equal to three years of support for its new total of 4,595 locations, or about $3 million, a reduction in the default amount required of noncompliant providers.
Under FCC subsidy rules, providers that fall behind deployment timelines by 50 percent or more for six months are subject to support recovery by the agency – the FCC will start clawing back its subsidy money. But the agency agreed to waive that provision for EMPOWER until the end of 2025, by which time the company plans to have deployed enough locations to avoid that penalty.
Providing RiverStreet’s withheld support and waiving the claw back provision “will result in the swiftest deployment of broadband services in these areas while ensuring the efficient and non-duplicative use of federal and state broadband funds,” the FCC said.
The FCC didn’t waive all of its rules: EMPOWER will still have its monthly support reduced by 50 percent because of the non-compliance resulting from the deal, and it will continue to receive reduced support until it has come in line with the default program deployment deadlines.
