RiverStreet Seeks FCC Approval to Transfer Unbuilt CAF II Locations
RiverStreet is seeking to divest 3,757 locations that were to receive about $8.1 million in annual CAF II broadband deployment support.
Ted Hearn
WASHINGTON, May 15, 2024 – RiverStreet Communications is seeking approval to transfer thousands of federally supported broadband locations won at auction to EMPOWER Broadband in a request that includes waivers from unmet buildout requirements and financial penalties.
RiverStreet, based in Wilkesboro, N.C., won the locations in the FCC’s Connect America Fund Phase II auction held in 2018. Overall, RiverStreet won $32.1 million in CAF II support to provide high-speed Internet to 13,518 locations in Virginia. RiverStreet is looking to divest about 28% of those locations it had promised to serve.
RiverStreet is not selling customers or infrastructure assets as part of the transaction. It has no subscribers in the 24 Census Block Groups that it wants to assign to EMPOWER Broadband with the approval of the Federal Communications Commission.
“Accordingly, the transaction will not result in any loss or impairment of service for either applicant’s subscribers and will not have an adverse effect on competition,” the two companies said in a May 14 joint filing at the FCC.
RiverStreet is seeking to divest 3,757 locations that were to receive about $8.1 million in annual CAF II broadband deployment support. The entire CAF II auction resulted in $1.98 billion in support over 10 years for 103 winning bidders, which are required to offer voice and broadband service.
EMPOWER Broadband, based in Chase City, Va., is a wholly-owned subsidiary of Mecklenburg Electric Cooperative. The company offers “middle-mile capacity, retail high-speed internet service, as well as voice over IP telephony, high-speed data services, and advanced cloud-based solutions throughout portions of Southside Virginia and northern North Carolina,” according to the EMPOWER Broadband website.
In the FCC filing, the companies said that the locations they want to transfer in three Virginia counties “are largely within its parent electric cooperative’s service area and/or areas adjacent to its existing broadband facilities” so that “the transaction will not result in any harm to existing customers.”
The companies said that based on the terms of the transaction, the transfer of the CAF II locations “will serve the public interest.”
RiverStreet said it was transferring the locations because since the time of the CAF II auction, it has “encountered certain obstacles that have prevented [it] from meeting its CAF II buildout milestones in the assigned CBGs.”
In the filing, RiverStreet acknowledged that failure to meet its CAF II buildout milestones exposed it to financial penalties under FCC rules.
Under CAF II auction rules, RiverStreet was to build to 60% of its assigned locations by Dec. 31, 2023. According to the numbers in the filing, RiverStreet has built to just 26% of locations.
In the CAF II auction, EMPOWER Broadband received about $1.8 million to serve 838 locations in Virginia. It also won about $5 million in the FCC’s 2020 Rural Digital Opportunity Fund auction to serve 3,602 locations. EMPOWER Broadband has already “completed gigabit-tier broadband buildout to all 838 of its required CAF II locations,” the filing said.
EMPOWER Broadband - in request not joined by RiverStreet - wants the FCC to waive the buildout milestones that it will inherit from RiverStreet and any RiverStreet buildout penalties until Dec. 31, 2024. EMPOWER is also asking the FCC to provide it with the CAF II support withheld from RiverStreet for failure to meet its buildout milestones.
“If [EMPOWER Broadband] is going to assume 3,757 more CAF II locations from RiverStreet and the buildout obligations that come with these locations, it would be unfair to make [EMPOWER Broadband] ‘inherit’ the penalties imposed on [RiverStreet] by withholding from [EMPOWER Broadband] the support previously available ... for the assigned CBGs,” the filing said.
As part of the transaction, RiverStreet at closing will pay EMPOWER Broadband “an amount equal to all CAF II funding received to date by [RiverStreet] in the assigned CBGs." EMPOWER Broadband is promising to deploy “gigabit-tier broadband and voice services” to the former RiverStreet locations.”
FCC approval of the RiverStreet transfer would not be unprecedented. On May 10, 2024, the FCC’s Wireline Competition Bureau approved the transfer of CAF II support from Echo Wireless Broadband to Resound Networks for eligible service areas in Texas and New Mexico. In Texas, Echo Wireless Broadband received a 10-year total of $3.9 million to serve 1,093 qualifying locations in 439 census blocks.
