The Nebraska Public Service Commission has begun accepting applications for a reverse auction that will award up to $13 million for rural broadband deployments.
The commission is exercising an option laid out in state legislation that gives the commission the ability to reclaim funding previously awarded to a network operator through the state’s universal service fund if the network operator doesn’t meet certain deployment deadlines. The legislation also gave the PSC the option of using a reverse auction to award that funding to other operators.
After an initial proposal and comment period, the Nebraska PSC adopted an order late last month to establish procedures and requirements for a reverse auction, with a scheduled start date of August 8, 2022. Interested parties have until July 15 to apply to participate in the auction.
The telecommunications director for the Nebraska PSC told local media outlet Star Herald that Nebraska may be the first state to use a reverse auction to award broadband funding.
Nebraska Reverse Auction
The news about the Nebraska auction comes at a time when the reverse auction concept has fallen out of favor at the federal level. The FCC’s 2020 Rural Digital Opportunity Fund (RDOF) auction, which tentatively awarded $9.2 billion for rural broadband, has been heavily criticized by people who argue that several large winning bidders should not receive funding.
Concerns have been expressed that companies were allowed to bid to use technology that hadn’t been proven to meet deployment requirements or that companies were allowed to win funding for a higher level of deployments than they could reasonably complete according to the FCC timeline.
In some ways, the rules for the Nebraska reverse auction are similar to those that the FCC put in place for the RDOF auction and for the previous Connect America Fund (CAF) II auction. But the Nebraska PSC also seems to have taken into account lessons learned from those auctions.
For example, the Nebraska PSC requires applicants to provide documents showing a demonstrated history of at least two years of service at speeds that meet the minimum requirements for the service tiers in which the applicant plans to bid. Applicants also must demonstrate experience with the technology that they plan to use.
In addition, applicants that want to use technology other than fiber or a combination of fiber and other technologies, must include an attestation from a qualified engineer describing the speed capabilities of the proposed technology. (It’s not clear what recourse the commission would have if the engineer overestimates capabilities, however.)
Bidders also must certify that they will have sufficient funding for all project costs that exceed the support level won in the auction. Additionally, the commission will be able to revoke an entity’s ability to participate in the auction or to receive funding at any time.
Like the RDOF and CAF II auctions, the Nebraska reverse auction will use a weighting system to favor bids to deploy higher-speed service. But while the RDOF auction had four bidding tiers, the Nebraska auction will have just two: one requiring service of at least 100 Mbps symmetrically and one requiring 1 Gbps downstream and 500 Mbps upstream.
Companies that previously returned Nebraska USF support for census blocks included in the auction are not allowed to participate in the auction.
Winning bidders will be required to offer a standalone voice plan and to participate in the Affordable Connectivity Program and Lifeline programs.