Verizon Did Not Use Fed “Connect America Fund” Money To Expand Broadband Upstate, And Feds Planned to Reallocate That Money Nationally, But Schumer Said Other NY Companies Should Be Given A Chance & Money Should Not Be Sent Away – FCC Is Considering New Proposal That Would Not Divert Upstate NY’s Funds To Other States 

Now That NY’s Has Submitted Official Petition To Spend The Money Where It Was Intended – Upstate NY – Schumer Urges FCC To Give Final Stamp Of Approval; Schumer Has Long Advocated For & Propelled Upstate Broadband, And Helped Deliver These Endangered Fed Dollars To NY In The First Place

Schumer To FCC: Money Meant To Expand Broadband In NY Should Stay In NY

U.S. Senator Charles E. Schumer today announced that the Federal Communications Commission (FCC) is considering a new proposal to allow New York residents to benefit from millions in federal broadband funds intended for the state, as opposed to the Commission’s original plan to divert the money to other parts of the country. Schumer explained that nearly than $300 million in federal funds through the FCC’s Connect America Fund (CAF) program were set aside for Upstate NY to expand broadband and high speed internet service. While many telecommunications companies are using this federal CAF investment to expand broadband Upstate, Verizon did not accept the money $170 million it was allocated for New York state. As a result, the FCC wanted to take this unused money from New York and bid it out nationally. In May, Schumer railed against this proposal, and the FCC subsequently agreed to consider other proposals to allow different broadband providers to use these funds to expand high-speed internet and keep the funds in Upstate NY.

Now that the FCC has agreed to consider this, NY State has officially submitted its petition to make available to other companies across NY the funds that Verizon declined. Schumer said this would allow the funds to stay in NY and bring desperately needed broadband access to communities that currently do not have it. Today, Schumer urged the FCC to swiftly approve this petition and give the final sign-off NY State needs to move its ambitious broadband access plan forward.

“The federal government should be investing—not divesting—in Upstate internet access. We need to keep this broadband money for New York, in New York. While it’s good news that the FCC has in front of it an alternative to its original disastrous plan that would have sent this critical $170 million to other states, our work is not yet done. I’m now urging the FCC to immediately approve New York’s official petition to leave this money where it was intended and allow other companies to bid on this funding. We must keep this money where it belongs and use it to improve Upstate NY’s broadband access. We want this broadband funding to help places like Washington County, not the State of Washington,” said U.S. Senator Charles E. Schumer.

Schumer is partnering with New York Governor Andrew M. Cuomo to reclaim this $170 million in federal investment. Schumer said these federal funds would complement the $500 million broadband deployment plan Governor Cuomo announced just last year. New York State wants the opportunity to leverage the outstanding $170 million federal dollars in order to help encourage companies serving Upstate NY, to expand broadband service in New York.  Schumer is advocating for the FCC to provide the final stamp of approval so NY does not lose out on this critical $170 million and see these funds sent out of the state.

Schumer has long advocated for expanding broadband access in Upstate New York. In 2013, Schumer announced that the FCC heeded his call and relaxed overly stringent rules so that New York telecommunications companies could more easily access the CAF funds aimed at deploying broadband across Upstate NY. Schumer explained that the FCC’s CAF program was set up to award federal funding to private telecommunications companies across the U.S. so that they could deploy and increase access to high-speed broadband in unserved and undeserved areas. Due to its large, unserved population, NY State made up a considerable chunk of those awards, receiving $49 million in annual CAF funding for six years.

However, after receiving this funding, only three of the four price cap companies decided to accept the CAF award. Those companies – Fairpoint, Frontier, and Windstream – have been successfully deploying broadband in NY ever since. Schumer explained that Verizon declined to accept the CAF funds, which amounted to over $28 million annually. As a result, the territories served by Verizon, spread throughout the state, have been denied the opportunity to receive high-speed broadband supported by CAF funds.

Recently, the FCC agreed to reconsider its original proposal that would reallocate this unclaimed Verizon money into a national pot. In May, Schumer argued this action would have resulted in a national auction in which Upstate New York’s dedicated funding could be sent to other parts of the country. Schumer argued that it would be unfair to rural communities across Upstate NY that are still struggling as a result of a lack of broadband connection. Schumer said these funds are critical for the deployment of broadband services across New York, and New Yorkers should not be made to suffer just because one carrier did not want to participate in the program. 

Now, Schumer is urging the FCC approve New York State’s petition to allow other companies to use it to expand broadband access to the same territories Verizon declined to serve, so New Yorkers do not lose out. This swift approval would enable New York – which already conducts its own state-funded broadband auctions – to partner with the FCC in order to achieve deployment objectives that meet or exceed those of the CAF program so that the money can remain where it was originally allocated.  New York’s proposal would allow the Commission to continue its stated goal of encouraging state funding of broadband development in unserved communities, while also allowing NY to implement policies that deliver high-speed broadband with the money that was allocated to them. Schumer said that, instead of diverting CAF funds, the FCC should empower states like NY to use their allocated funding to address their broadband needs. 

Many Upstate New York homes do not meet the FCC’s broadband benchmark speeds of 25 megabits per second (Mbps) for downloads and 3 Mbps for uploads. According to the FCC’s 2015 Broadband Progress Report, the previous 4 Mbps for downloads and 1 Mbps for uploads standard – set in 2010 – were dated and inadequate for evaluating whether advanced broadband is being deployed to all Americans in a timely way. Increasing the standards for broadband speed is necessary because a single Internet connection typically powers a number of connected devices in a home. This means that, the more devices connected, the more the speed is degraded for each individual user.

According to the FCC’s 2015 report, using this updated service benchmark means that approximately 55 million Americans – 17 percent of the total population – lack access to advanced broadband. This divide is particularly evident between urban and rural areas. In fact, more than half of all rural Americans lack access to 25 Mbps/3 Mbps service. Schumer shares FCC Commissioner Jessica Rosenworcel’s opinion that broadband speed standards should be far past the new 25 Mbps download threshold, to 100 Mbps for downloads. Schumer said this would drastically improve access to the Internet for New Yorkers in the future. Schumer noted that 100 Mbps is the standard New York State has set for most areas.

According to New York State, as of December 2014, there were approximately 221,090 households across Upstate New York that did not have access to 25 Mbps service. According to the FCC, there are 77,965 households in Upstate NY that are eligible to receive unclaimed CAF funding. In addition, the total eligible funding for Upstate NY is $28,307,127 over six years – bringing the total to nearly $170 million. During the call, Schumer broke these numbers down by region:

  • In the Capital Region, there were 33,104 households without access to 25 Mbps. In this region, there were 12,954 eligible Verizon locations, for $4,208,870 in federal funding.
  • In Central New York, there were 30,071 households without access to 25 Mbps. In this region, there were 8,566 eligible Verizon locations, for $2,769,671 in federal funding.
  • In Western New York, there were 20,041 households without access to 25 Mbps. In this region, there were 10,283 eligible Verizon locations, for $3,296,143 in federal funding.
  • In the Rochester-Finger Lakes, there were 17,881 households without access to 25 Mbps. In this region, there were 5,404 eligible Verizon locations, for $1,806,365 in federal funding.
  • In the Southern Tier, there were 63,717 households without access to 25 Mbps. In this region, there were 19,988 eligible Verizon locations, for $8,186,842 in federal funding.
  • In the Hudson Valley, there were 2,719 households without access to 25 Mbps. In this region, there were 1,633 eligible Verizon locations, for $668,054 in federal funding.
  • In the North Country, there were 53,557 households without access to 25 Mbps. In this region, there were 19,137 eligible Verizon locations, for $7,371,182 in federal funding.

A copy of Schumer’s letter to the FCC appears below:

Dear Chairman Wheeler,

I write today to urge you to give swift consideration to New York State’s Petition for Expedited Waiver, filed October 12, 2016.  Earlier this year, I urged you, in considering how to allocate unclaimed Connect America Fund (CAF) money, to ensure that money be used in the locations for which the funding was originally awarded.  Specifically, I was concerned that my constituents in New York would be penalized by Verizon’s decision not to claim its award of $170 million to deploy broadband throughout my state.  The waiver New York requests would alleviate this concern by allowing the money to be spent where intended.  It would also effectively leverage both State and private funds to promote broadband deployment, a goal shared by both Congress and the Commission.

The funding allocated under Phase II of the CAF in 2015 was intended to subsidize the construction of high-speed broadband networks, at least 10 Mbps, in unserved and undeserved areas throughout the United States.  I was happy to work with you and your predecessor to ensure that the CAF funding was structured fairly and effectively.  Due to its large, unserved population, New York made up a considerable chunk of those awards, receiving $49 million in annual CAF funding for six years.  Three of the four price cap companies accepted their award and have been successfully deploying broadband in New York.  However, Verizon declined to accept the CAF funds, which amounted to over $28 million annually.  As a result, the territories served by Verizon, including parts of the North Country, Capital, and Western regions, have been denied the opportunity to receive high-speed broadband supported by CAF funds. 

The Commission’s original proposal of a nationwide reverse auction for the unclaimed funds would have exacerbated the problem for New Yorkers within the Verizon territory by allowing the money to be moved into a national pot.  After hearing concerns from my office and others, the Commission issued the CAF Further Notice on May 25, 2016, in which it recognized that the Commission retained a “universal service obligation to connect consumers in areas that would have been reached had the offer been accepted.”  Unfortunately, none of the specific proposals the Commission floated would have addressed New York’s unique challenges.

New York’s request for a waiver, however, would allow the Commission to meet these obligations, would serve the public interest, and would be consistent with the intent of Congress and the Commission.  The State of New York has invested considerably in broadband deployment, and has designed its own competitive reverse auction of State funds.  The State would like to leverage the federal funds that should have been spent in New York by Verizon in order to further promote broadband deployment in the Verizon territories. 

The waiver New York seeks would be consistent with the intent of both Congress and the Commission in their shared goal of promoting broadband deployment, and indeed would serve as a model for other states.   Both Congress and the Commission have embraced the goal of universal broadband deployment.  That goal has been the impetus for various federal legislation, including the Telecommunications Act of 1996, the American Recovery and Reinvestment Act of 2009, and myriad provisions of appropriations bills over the last several years.  At the instruction of Congress, the Commission undertook the transformation of the Universal Service Fund into the CAF.  CAF II allocated funds to price cap carriers because it recognized that there were households in the footprint of those carriers who did not have broadband.  It was not the Commission’s intent that those consumers be penalized by their carrier choosing not to accept federal funds.  The program New York has proposed would allow the Commission’s deployment intent to be realized and would maximize the efficient allocation of federal funding by incentivizing not only private spending by state spending as well.  This will result in greater broadband deployment than would be possible without such a three-way partnership. 

I very much appreciate the thoughtful and sincere manner with which the Commission has approached the challenge of allocating CAF money both fairly and efficiently.  Your staff has diligently engaged with my office and with the State of New York to help identify a solution that is workable for both the State and the Commission, and I am pleased that a path forward has been identified.   I look forward to continuing to work with you on this important issue.


Charles E. Schumer

United States Senator



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