COVID-19 Update: USAC remains open for business—Washington, DC office closed. Learn more about USF program responses

CAF Phase II Auction

Connect America Fund (CAF) Phase II Auction, commonly called “CAF II Auction,” provides support to carriers to deliver service in areas where the incumbent price cap carrier didn’t accept Learn more.

How the Program Works

CAF Phase II Auction winning bidders or their assignees must submit a long-form application to the FCC for review. If the long-form applicant satisfies the application requirements, the FCC issues a “ready to ize” public notice and the long-form applicant will have 10 business days to submit a Letter of Credit (LOC) from a qualified bank, as well as a bankruptcy Opinion of Counsel (OOC) letter, to USAC. Note: Please see below for information about how to draft an acceptable LOC. Study Area Codes will be assigned in Attachment A of the relevant “ready to ize” public notice. The FCC will issue “ready to ize” public notices on a rolling basis.

After USAC has approved the LOC and OOC, the FCC will issue a public notice announcing ization of support for the winning bid and directing USAC to begin disbursing payments. USAC will begin issuing monthly payments shortly after the public notice has been released.

Carriers participating in CAF Phase II Auction must fulfill their total build-out obligations over six years of the ten-year program, and meet interim service milestones along the way. Carriers must file and certify annually in the HUBB (High Cost Universal Broadband) portal all locations deployed to in the prior year, and should be prepared to provide documentation to the High Cost compliance team to substantiate build-out. The compliance team will conduct verification reviews of both interim and final milestones to confirm deployment to a sample of locations reported to the HUBB.

After a carrier has certified its 60 percent service milestone in the HUBB and USAC has verified that the milestone has been met, the carrier may reduce the value of its LOC to 90 percent of the total support received, plus the amount of support that will be disbursed in the coming year. After the carrier has certified its 80 percent service milestone in the HUBB and USAC has verified that the milestone has been met, the carrier may reduce the value of its LOC to 60 percent of the total support received, plus the amount of support that will be disbursed in the coming year.

After a carrier has certified its 100 percent service milestone in the HUBB and USAC has verified that the milestone has been met, USAC will prepare a final verification report and send it to the FCC for review. The carrier may be released from its LOC if the FCC determines that the carrier has satisfied all obligations under the program. Both USAC and the FCC will sign off on the release of the LOC, and USAC will return the LOC to the carrier and/or its bank.

Any CAF Phase II Auction participant that meets its total deployment obligation before the end of year six may be released from its LOC after review and approval by USAC and the FCC. If a carrier certifies in the HUBB that it has completed its total build-out ahead of the program schedule, the USAC compliance team will initiate the verification process as soon as possible.

In addition, because of the Covid pandemic, the FCC has issued a limited waiver that allows any CAF II Auction participant to comply with LOC rules for the new Rural Digital Opportunity Fund (RDOF) until Dec. 31, 2021. This means that any CAF II Auction participant may:

  • obtain a LOC valued at an amount equal to 18 months of support (as opposed to 24 months) for year two of the support term
  • reduce its LOC value to one year of support upon verification by the USAC compliance team that it has met an optional 20 percent buildout milestone by the end of its second year of support (2021)
  • request a USAC verification review of a deployment milestone at any time, instead of waiting until the end of a specific support year, in order to reduce its LOC value

CAF II Auction participants should familiarize themselves with USAC’s verification review process and procedures, and understand what documentation they may need to supply for the compliance team to verify buildout, before requesting a review. Carriers can contact hcverifications@yfdingzhi.com to initiate a verification review of the optional 20 percent milestone – for deployment completed as of Dec. 31, 2021 – after that deployment data is certified in the HUBB. Carriers have until March 1, 2022 to file and certify data for broadband deployment completed as of Dec. 31, 2021 in the HUBB.

Any carrier participating in CAF Phase II Auction may be subject to non-compliance measures if it fails to meet its build-out obligations and/or other service requirements. Non-compliance measures may include additional reporting requirements, reduction of support or a draw on the carrier’s LOC.

Letters of Credit (LOC)

Carriers are required to submit LOCs, generated by their banks, to USAC for review and approval. Please refer to the following resources to ensure your LOC contains all of the necessary information. USAC will reject LOCs that do not contain the proper information.

Deployment Obligations

In order to receive CAF II Auction funding, carriers must offer at least one stand-alone voice service plan and one plan that provides broadband service commercially. These services must meet the relevant service requirements to the requisite number of locations.

Carriers must complete:

  • 40 percent of deployments by the end of year 3 (2022)
  • 60 percent of deployments by the end of year 4 (2023)
  • 80 percent of deployments by the end of year 5 (2024)
  • 100 percent of deployments by the end of year 6 (2025)

For more information, see the FCC’s CAF Phase II Auction page.

Annual Filing Requirements

Carriers receiving CAF Phase II Auction support must also complete the following filing and certification
requirements each year.

  • March 1: Submit geolocated broadband deployment data showing where they have built out broadband by latitude and longitude in the previous calendar year. Submit locations in the HUBB.
  • July 1: File and certify File Online
  • October 1: Certify that the carrier has used High Cost funding correctly per program rules. Most carriers are certified by their states. If your company is not subject to state jurisdiction, the carrier must file directly with USAC and the FCC. Learn more.

Related Orders

Connect America Phase II Auction Order (FCC 16-64) – The Commission adopts rules to implement a competitive bidding process for Phase II of the Connect America Fund

Connect America Fund Phase II Auction (Auction 903) Closes (FCC-18-887) – The Commission announces 103 winning bidders in the CAF Phase II Auction

Ready to ize PN for the 31 carriers in Attachment A (DA 19-126) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction

Ready to ize PN for the 40 carriers in Attachment A (DA 19-248) – The commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction.

Ready to ize PN for the 2,025 carriers in Attachment A (DA 19-403) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction

Support ized for 459 Winning Bids (DA 19 – 414) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to ize PN for the 611 carriers in Attachment A (DA 19-535) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction

Support ized for 856 Winning Bids (DA 19-539) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Support ized for 2,413 Winning Bids (DA 19-657) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Support ized for five New York Winning Bidders (DA 19 – 658) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to ize PN for the 1,122 Winning Bids (DA 19-685) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction.

Support ized for 593 Winning Bids (DA 19-769) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to ize PN for the 375 winning bids in Attachment A (DA 19-825) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction.

Support ized for 1,031 Winning Bids (DA 19-906) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to ize PN for the 566 Winning Bids (DA 19-981) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction.

Support ized for 387 Winning Bids (DA 19-1030) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Order (DA 19-1165) –  Establishes a voluntary process to facilitate post-auction review of the defined deployment obligations (and associated support) when the total number of actual locations in an eligible areas is less than the number of funded locations.

Support ized for 66 Winning Bids (DA 19-1170) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Support ized for 669 Winning Bids (DA 19-1276) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to ize PN for 2,121 Winning Bids (DA 19 – 1309) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction.

Ready to ize PN for one New York Winning Bidder (DA 19-1311) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction

Order (DA 20-108) –  Establishes uniform filing deadlines for CAF Phase II Auction participants

Ready to ize PN for 150 Winning Bids (DA 20-230) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction.

Support ized for 1060 Winning Bids (DA 20-153) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Support ized for one New York Winning Bidder (DA 20-154) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Support ized for 21 Winning Bids (DA 20-409) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to ize PN for 105 Winning Bids (DA 20-483) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction

Support ized for 77 Winning Bids (DA 20-514) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Support ized for 1 New York Winning Bidder (DA 20-516) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to ize PN for 480 Winning Bids (DA 20-585) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction.

Support ized for 169 Winning Bids (DA 20-619) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Support ized for 483 Winning Bids (DA 20-747) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.

Ready to ize PN for 1 Winning Bid (DA 20-829) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be ized for CAF II Auction.

Support ized for 1 Winning Bid (DA 20-1011) – The Commission directs and izes USAC to obligate and disburse the amounts identified in the Public Notice.