As more and more stakeholders express concern that some RDOF (Rural Digital Opportunity Fund) winners will not be able to deploy rural broadband meeting the service parameters to which they committed, one stakeholder has an interesting idea for what to do about this. Perhaps an RDOF amnesty program would be appropriate, suggested Jonathan Chambers, a partner with Conexon, on a recent phone interview with Telecompetitor.
Conexon formed the Rural Electric Cooperative Consortium, a bidding entity representing 90 cooperatives that, collectively, won $1.1 billion in the auction — and while members of that group appear well-positioned to meet their buildout requirements, that may not be true for all winners.
On our call, Chambers added his voice to others that have expressed concerns about some winners. There is a real question of whether “companies that haven’t built tens of thousands of miles of fiber will be capable of building thousands of miles over a short period of time,” noted Chambers.
Chambers is one of several stakeholders that have singled out LTD Broadband, which won the most funding — $1.3 billion — in the auction, as a company that won funding to serve considerably more locations than it already serves. Traditionally the company has offered fixed wireless and fiber but bid to deploy gigabit-speed fiber for its RDOF buildouts.
Telecompetitor talked to LTD Broadband CEO Corey Hauer in late December, who said, “We have a history of very rapid growth. We expect that to continue. We have met challenges of growth and scale as we’ve grown.”
Bait-and-Switch on the Horizon?
Some other big RDOF winners bid to deploy gigabit fixed wireless and/or gigabit fiber, and some stakeholders, including Chambers, have questioned whether fixed wireless will be a viable means of providing gigabit service in rural areas. Although manufacturers claim it will be possible, Chambers and others argue that the technology has not yet been proven in rural areas.
Chambers said he has heard from auction participants that some participants that initially wanted to use gigabit fixed wireless for their auction bids were told they couldn’t bid to use fixed wireless at the gigabit speed tier. (The auction awarded funding to the company that committed to deploying broadband at the lowest level of support, but a weighting system favored bids to deploy gigabit service.)
It’s not clear why some companies allegedly were allowed to bid gigabit fixed wireless and others weren’t. One possibility is that different FCC staffers responded differently to bidders after reviewing their initial applications.
The upshot, according to Chambers, is that “you can already see there are companies that seem to be preparing for the great bait-and-switch.” He speculates that some companies that bid to deploy gigabit fiber will try to get the FCC to allow them to use fixed wireless instead.
RDOF Amnesty Program?
Chambers and other critics have said the FCC should have requested more information from auction applicants prior to the auction. Chambers hopes the FCC will make up for that as part of the long-form application process, which winners are in the middle of now.
“Financial projections should include construction costs, including the miles of fiber you expect to build – if someone doesn’t know that number, that’s a red flag,” Chambers said, noting that members of the Rural Electric Cooperative Consortium already secured fiber and labor for their RDOF gigabit fiber build-outs.
He believes some winning bids could and should be rejected but that will only occur if the FCC changes the way it reviews things.
“The way they review [applications] is by looking at descriptions of the networks; they don’t look at capability to build,” he said.
Chambers sees a possibility that the review process could change, considering the recent administration change. As things stand now, however, any funding pulled back from the provisional winner would likely roll into the Phase 2 RDOF auction, which won’t happen until the FCC completes its revamp of broadband availability data collection and analyzes that data, which could be a time-consuming process.
Chambers offered some interesting alternative ideas. One idea, he said, might be to offer RDOF amnesty to any auction bidder, which would give over-zealous bidders the option of bowing out gracefully without encountering penalties.
And perhaps the FCC wouldn’t have to wait until the Phase 2 auction to award the funding returned by those accepting amnesty. Perhaps the commission could conduct a separate auction for areas turned back, Chambers suggested.
These seem like ideas worth exploring, and I would hope to see the FCC do just that.
Updated to say that LTD Broadband’s RDOF win was for $1.3 billion
6 thoughts on “How About an Amnesty Program for Over-Zealous RDOF Winners?”
A meaningful post, I’m still skeptical about such changes.
Had those overzealous companies been scrutinized more before the auction, and had not been allowed to bid at all with an unproven gigabit wireless technology, many companies bidding for gigabit using fiber would have likely been assigned block groups when the budget was met. Here’s another idea, maybe they should go back and look at where things stood at the time the budget was met, and after removing the gigabit wireless bidders, give those companies who would have won due to a superior technology the option to accept the won block groups at that percentage, before the bidding got driven downward by those ‘overzealous’ companies. They certainly have plenty of money left in the budget. It will be very frustrating for companies who spent large amounts on consulting and engineering for this auction, and now it will have to be spent all over again if there as a ‘re-do’ auction. They really messed this up.
As one of the winners allowed to use wireless in the gigabit tier I can tell you exactly why some companies weren’t allowed to do the same — they weren’t qualified. The short-form process was grueling for fixed wireless applicants (the same would not appear to be true for any fiber applicants regardless of experience however), so anyone up in arms about folks winning with gigabit fixed wireless is either massively uninformed or has ulterior motives (be they a sore loser or the beneficiary of campaign funds from a sore loser). I doubt anyone got in with fixed wireless that’s not well positioned to make it happen.
Any “wireless” gigabit provider that was willing to take <10% of the reserve price to serve a rural area either doesn't have any clue or should be asked why they weren't serving that area prior to RDOF. There are countless examples of where fixed wireless doesn't work with the topography of rural areas. Still today, no one has claimed or demonstrated they've had scaled success delivering Gig speeds. Secondly, it's not a sore loser mentality. Most of the smaller / independent companies that lost these areas care and do more for their local areas than the companies that won.These companies often provide good paying local jobs that give thousands of dollars back to their communities. Furthermore, they believe broadband is vital to rural growth and stability. They have a right to be skeptical. Or maybe they see it for what it is, a fleecing of the FCC.
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All bids should be reviewed to insure a valid business plan at the data rate bid exists – This is not just a gigabyte wireless issue. Because so many CBG’s were bid to very low reserve, it could be that “blocking strategies” were used. Bidders need to be held accountable for their bids across the board. If they want out of their obligations, or default then the should be fined and excluded from future auctions and possible funding programs. The FCC needs to stand up on this. Many valid programs got shut out by what appears to be “a race to the bottom” – so the FCC needs to determine fast if a valid build plan exists in the long form process. “Over Zealous” is a naive view of what occurred. It’s time to be fair to all bidders and hold all winners to their obligations or take aggressive steps to insure those who placed “invalid bids” are punished and exempted. Rural America is watching how this works out.