The FCC is proposing $8 million in fines against 22 bidders in the Rural Digital Opportunity Fund (RDOF) auction in connection with defaulted bids.
Companies with the highest proposed fines are Starry/Connect Everyone (over $3.8 million), GeoLinks (nearly $3.1 million), Cal.net ($540,000) and Mercury Wireless ($441,000).
The RDOF program was designed to cover some of the costs of deploying broadband to unserved rural areas, but a considerable number of companies defaulted on some or all their winning bids. Funding was tentatively awarded to the company that committed to deploying service to an area at the lowest level of support. Winning bids totaled $9.2 billion before factoring in the defaults.
Today’s announcement was the second from the FCC about fines for RDOF defaults. Previously the commission proposed fines against 73 companies in connection with defaults.
Today’s news came in the form of a notice of apparent liability (NAL) which, as the FCC explains in a press release, advises parties that they apparently violated commission rules and proposes a monetary penalty for the violations.
“Neither the allegations nor the proposed sanctions in the NAL are final commission actions,” the FCC said in a press release.
The Bigger Proposed Fines
Starry was one of the largest winning bidders in the auction but ran into financial problems and advised the FCC that it would not be able to meet its buildout commitments. The proposed fines against Mercury Wireless also pertain to buildout bids that the company said it would not complete.
The defaults for GeoLinks and Cal.net were both for winning bids in California, where the public utilities commission declined to designate either of the companies as eligible telecommunications carriers (ETCs). ETC designation is a requirement of the RDOF program.
This isn’t the first time that the FCC has proposed to fine a company for failing to obtain ETC status. In the previous batch of proposed fines were fines proposed against LTD Broadband, one of the largest winning bidders in the auction, for failing to obtain ETC status in certain states.
The previous batch of proposed fines was issued before the FCC ultimately rejected LTD Broadband for all its winning RDOF bids, arguing that the company had not demonstrated its ability to meet its RDOF commitments. LTD Broadband reportedly was late in filing its ETC applications with certain states, but the NAL does not state that Cal.net or GeoLinks were late in requesting ETC designation from the state of California.
Telecompetitor reached out to Cal.net, which said it had no comment about the proposed defaults, and to GeoLinks, which gave us an earful in response.
“We welcome the opportunity to address the issues presented in the NAL and set the record straight,” said Melissa Slawson, general counsel and vice president of government affairs and education for GeoLinks.
“The bottom line is that GeoLinks fell victim to the fixed wireless bias that is so pervasive in California – despite proposing a project that would have utilized fiber. The decision not to grant GeoLinks’ ETC designation expansion request had nothing to do with GeoLinks’ ability to fulfill its RDOF obligations, as we believe is clear from the fact that GeoLinks successfully received funding in both Arizona and Nevada.
“GeoLinks maintains that the failure to secure ETC designation for its RDOF award areas in California was completely outside of the company’s control. We are confident that the FCC will agree.”
An Ironic Move?
Some readers may find irony in the FCC’s decision to fine companies that were unable to obtain ETC status, considering that the commission has come under fire for not screening RDOF bidders more closely prior to the auction. Instead, the commission allowed winning bidders to wait until after the auction closed to obtain ETC status or to file other important paperwork regarding their eligibility to receive funding.
In today’s press release, FCC Chair Jessica Rosenworcel said that when the FCC set up the RDOF program, “it set clear rules of the road to ensure that winning bidders would fulfill their promise to use this funding to build new broadband infrastructure.”
“Not following the rules has consequences. For those who failed to meet their obligations, today’s action shows the Commission takes seriously its commitment to hold applicants accountable and ensure the integrity of our universal service.”
A full list of the companies proposed for fines is available in the notice of apparent liability at this link.
