Skip to content Skip to navigation

Connecting America: An Analysis of the FCC's Connect America Fund Phase II Auction

Undergraduate Thesis
Alex Millard

The FCC’s Connect America Fund (CAF) Phase II auction is the largest broadband expansion program to date, awarding $1.5 billion in subsidies over the next 10 years. The FCC set two policy objectives for this program: (1) achieve universal internet service access; and (2) maximize the value Americans receive, balanced with cost efficiencies. This thesis analyzes the extent to which the CAF auction achieved the FCC’s second policy objective by estimating the effects of reserve price per household on predicting which census block groups received bids in the CAF auction. Internet service providers placed more bids in areas with a higher reserve price per household, not in areas with higher expected demand. While cost efficient, this bidding behavior does not maximize the total value Americans will receive from the auction. To better align future internet expansion programs’ results with the FCC policy objectives, I make the following recommendations: (1) encourage more satellite-based providers to participate in future auctions; (2) re-evaluate reserve prices to align providers’ and the FCC’s estimates of costs; and (3) limit the total amount of support a provider may bid for in the auction.