FCC violation

The FCC late Friday proposed fines totaling $4.3 million against 73 companies for defaulted bids in the Rural Digital Opportunity Fund (RDOF) auction. More than half of the proposed fines are for a single company — LTD Broadband, which was one of the biggest winning bidders in the auction.

As the commission explained in a notice of apparent liability (NAL) for forfeiture, the defaulted bids generally fall into one of two categories — either the applicant failed to submit a long-form application, or the applicant submitted a long-form application but subsequently notified the commission that it intended to default on one or more census block groups.

The commission notes in a press release, however, that the notice “does not propose forfeitures for applicants who defaulted on bids in response to the FCC’s letters identifying census blocks that may have been already served or raised significant concerns about wasteful spending.”

That’s a reference to 197 letters that the FCC sent to companies that had winning RDOF bids for areas that, according to challengers, should not have been included in the auction because high-speed broadband was already available there. Some of the companies that received the letters agreed not to pursue buildouts or funding for those areas, thereby defaulting on those bids.

Proposed RDOF Fines

The RDOF auction tentatively awarded $9.2 billion in funding to cover some of the costs of deploying broadband to unserved rural areas. Winning bidders were those who committed to deploying service to an area for the lowest level of support.

“The applicants agreed to follow the commission’s auction rules when they signed up to participate in the … auction,” said Acting FCC Enforcement Bureau Chief Loyaan A. Egal in the press release. “These defaults have put at risk the timely deployment of broadband access for many and necessitate this strong enforcement action.”

The FCC has released funding to many of the winning bidders for many of the areas where they had winning bids, but some winning bidders – including LTD Broadband – have not yet had any funding released.

According to the NAL, the proposed fine against LTD Broadband involves 768 census block groups, including some in Kansas and Oklahoma where LTD did not obtain eligible telecommunications carrier status in time for the deadline, as well as some additional census block groups on which the company said it intended to default.

Some other companies that the FCC proposes to fine also have not yet had any funding released.

RDOF auction rules call for a penalty of $3,000 per census block group for defaults but are capped at 15% of the total amount of funding associated with those census block groups.

Companies that the FCC proposes to fine “will be given an opportunity to respond and the commission will consider the party’s submission of evidence and legal arguments before acting further to resolve the matter,” the FCC said in the press release.

The NAL and a full list of proposed fines can be found at this link.

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