Yesterday, the FCC reached a major milestone in its mission to connect rural America to robust broadband. Thursday was the deadline for some of the nation's largest phone companies to decide whether to accept "Phase II" funds from the FCC's Connect America Fund to expand broadband to their rural customers. All told, ten carriers accepted over $1.5 billion in annual support to provide broadband to nearly 7.3 million consumers in 45 states and the Commonwealth of the Northern Mariana Islands. In exchange for receiving funding for all eligible areas that they serve in a given state, these providers have committed to expanding and maintaining broadband service with defined milestones and obligations over a six-year period.
This is great news for these rural communities, where broadband can spark economic development, support education, and provide residents with access to the news, information and cutting-edge Internet applications that are a fact of life in most other parts of the country. The funding that will flow to these areas will go a long way toward closing the digital divide isolating rural America. And it builds on past Commission decisions that used "Phase I" Connect America funding to expand broadband to over 637,000 homes and businesses.
The companies didn't accept the entire offer, although most accepted most, if not all, of theirs. Like other investments, this was a business decision each company had to make – and as we expected, some of the companies declined the offer of support in certain states. But that doesn't mean the residents in these communities will be left behind. Instead, we're getting ready to unleash the power of market competition to provide broadband in these communities.
The FCC will open the door for other companies, including cable companies, neighboring rate-of-return carriers, electric companies, satellite companies and fixed-wireless providers, to compete for the first time with the price cap carrier incumbents to win these subsidies through a market-based auction. Our Rural Broadband Experiments program demonstrated that competitive auctions can draw interest from a variety of providers willing to provide faster broadband at lower cost, and we now are eager to implement competitive bidding on a larger scale across the country.
We're excited about the potential these auctions hold for connecting rural America to broadband. And we're excited about the fact that the 7.3 million consumers served by the companies that accepted the Connect America Fund offer are on the path to getting better service.