As Industry Reacts to RDOF Rejections, What About the Other Big Unauthorized Bids?

The FCC’s announcement yesterday that it would not be awarding over $2 billion in Rural Digital Opportunity Fund (RDOF) to two of the largest winning bidders — SpaceX/Starlink and LTD Broadband – means that nearly a quarter (23.7%) of the $9.2 billion tentatively awarded in the auction will be returned to the Universal Service Fund (USF) to fund future projects. The RDOF rejections news was received with some thumbs up and some thumbs down.

RDOF funding will cover some of the costs of bringing broadband to unserved rural areas. Funding for an area was tentatively awarded to the company that committed to deploying service for the lowest level of government support, pending FCC approval of the company’s long-form RDOF application.

The RDOF rejections received praise from the National Rural Electric Cooperative Association (NRECA) and the Fiber Broadband Association praised the decision about Starlink. But FCC Commissioner Brendan Carr is not happy about the Starlink rejection.

“[W]e should be making it easier for unserved communities to get service, not rejecting a proven satellite technology that is delivering robust, high-speed service today,” said Carr in a prepared statement, which also noted that he was not informed in advance of the decision and that he will have more to say on the issue. “[T]his is a decision that tells families in states across the country that they should just keep waiting on the wrong side of the digital divide, even though we have the technology to improve their lives now.”

Gary Bolton, president and CEO of the Fiber Broadband Association (FBA), saw it differently.

“This is a huge victory for the 640,000 families that had been previously relegated to low earth orbit satellite service as a result of the 2020 RDOF auction results,” said Bolton in a prepared statement.

Bolton took the opportunity to tout a study commissioned by FBA that said the nascent Starlink LEO satellite service would not meet minimum bandwidth requirements — an analysis that may have played a role in the FCC’s decision.

NRECA weighed in on both RDOF rejections.

“The RDOF auction exists to fund broadband deployment for rural Americans, not finance science experiments or underwrite risky bets,” said Jim Matheson, NRECA CEO, in a prepared statement. “We thank the FCC for taking this important step to ensure that recipients of RDOF funding deliver on their promises to provide quality broadband services.”

Many rural electric cooperatives won funding to deploy fiber broadband in the RDOF auction and have had funding released to them by the FCC, as have most winning bidders that plan to rely on fiber broadband for their RDOF builds. Although LTD Broadband’s bid called for the company to deploy fiber, the FCC was concerned about the company’s ability to successfully complete the builds to which it had committed.

Other Outstanding Bids

LTD Broadband and SpaceX are just two of five large winning bidders in the RDOF auction that have not had funding released to them.

Three companies that won large amounts of funding to deploy a combination of fiber broadband and fixed wireless to support gigabit speeds – Nextlink, Starry and Resound Networks – are still waiting for the results of the FCC’s long-form RDOF application review.

What the commission’s decision on SpaceX and LTD Broadband means to those three companies is unclear. Certainly, it’s good new for those three companies that they weren’t included in yesterday’s announcement, and perhaps if the FCC plans to reject them, it would have included them.

It’s possible that the FCC is still evaluating how extensively fixed wireless can support gigabit speeds and how extensively each of those companies plans to rely on fixed wireless.

Another potential concern is how extensively each company plans to rely on unlicensed spectrum. The NTIA introduced a new element of uncertainty about fixed wireless when it released rules for the $42.5 billion BEAD rural broadband funding program. The agency said that fixed wireless service based on unlicensed spectrum was not “reliable.”

The Wireless Internet Service Providers Association (WISPA) has asked NTIA to reconsider that decision – at least when it comes to determining which areas would be eligible for BEAD funding. As it stands, areas where the only service faster than 25/3 Mbps uses unlicensed fixed wireless or another technology, such as satellite, that NTIA doesn’t consider reliable, would be eligible for BEAD funding and could be overbuilt by someone winning funding in the BEAD program.

And that means that if the FCC were to approve the three big provisional RDOF winners in areas where they plan to use unlicensed fixed wireless, those areas would be eligible for BEAD funding just a few years later.

Perhaps the FCC is looking closely at where the three companies plan to use licensed versus unlicensed spectrum for RDOF builds and will only approve some of their builds. Perhaps the commission is still evaluating gigabit fixed wireless. Perhaps NTIA is considering whether to make WISPA’s proposed change and the FCC is waiting to hear on that.

It’s also possible that the FCC will simply never complete its review of the three companies’ RDOF long-form applications, although that would seem less likely now that the commission opted to reject, rather than to sit on, the applications from LTD and SpaceX.

Telecompetitor will be watching closely for any new developments in this area.