Schumer Reveals: Over $170 Million in Fed Funds That Belong to New York Will Be Diverted to Other States

Press Release

During a conference call with reporters, U.S. Senator Charles E. Schumer today revealed that over $170 million in federal funds that was set aside for Upstate New York to expand broadband and high speed internet service could be sent to other parts of the country. Many telecommunications companies are using federal investment from the Connect America Fund to expand broadband Upstate, but Verizon did not accept the money it was allocated. Now, the FCC wants to take this unused money from New York and bid it out nationally. Schumer said the FCC should reverse course and keep money designated for New York in New York and allow other companies to use these funds so to improve broadband access across the state.

"The federal government should invest--not divest--in Upstate internet access. That is why I am urging the FCC to immediately reverse course on this senseless proposal that takes money away from Upstate New York -- we must keep the broadband money for New York, in New York. Other companies in Upstate should have the opportunity to bid on this funding, so we can 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 the $170 million in federal investment. These federal funds would complement the $500 million broadband deployment plan Governor Cuomo announced just last year. New York State wants the opportunity to partner with the FCC to deploy the outstanding $170 million in order to help encourage companies serving Upstate New York, to expand broadband service in New York, and Schumer is advocating for the FCC to accept the partnership offer.

"Access to high speed Internet in every corner of New York is key to unlocking our full economic potential and the reason why this administration has made an unprecedented commitment through our $500 million New NY Broadband Program. We strongly oppose any efforts by the federal government to pull back previously promised funding to New York for this cause. We thank Senator Schumer for his strong support on this vital issue and look forward to working with him to ensure the federal government keeps its commitments to help deliver broadband for all in New York State," said NY Governor Andrew Cuomo.

Schumer has long advocated for expanding broadband access in Upstate New York. In 2013, Schumer announced that the Federal Communications Commission (FCC) heeded his call and relaxed overly stringent rules so that New York telecommunications companies could more easily access funds aimed at deploying broadband across Upstate New York. Schumer explained that the FCC's Connect America Fund (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, are currently denied the opportunity to receive high-speed broadband supported by CAF funds.

Now, Schumer explained, the FCC is proposing to reallocate this unclaimed Verizon money into a national pot. Schumer said this action would result in a national auction in which Upstate New York's dedicated funding would be sent to other parts of the country. Today, Schumer argued that this is unfair to rural communities across Upstate New York 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.

Therefore, Schumer is urging the FCC instead adopt rules that enable states like New York, who are conducting their 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. Schumer said this would allow New York to keep the money designated for the state and allow other companies to bid on these funds so they may continue improving broadband access across the state in areas where Verizon will not. For instance, Schumer said a partnership between the FCC and the New York Broadband Initiative could be developed that 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.

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