Deployment cost estimates underlying winning RDOF bids are no longer accurate, representatives for a coalition of RDOF winners told FCC officials on Friday. The representatives suggested several possible remedies, including providing additional funding and other ideas.
In a letter summarizing the meeting, the coalition cited “massive and unprecedented increases in broadband deployment construction costs . . . that could never have been anticipated at the time RDOF winners placed reverse bids during the RDOF auction.”
The RDOF auction was designed to cover some of the costs of deployments to unserved areas. Funding for an area went to the company that committed to deploying service to the area at the lowest level of government support.
Winning bidders were announced in late 2020, and costs have risen considerably since then, driven in part by pandemic-driven scarcities and by increased competition for materials and labor triggered, in part, by new government broadband funding programs.
The Coalition of RDOF Winners recommended several possible options for addressing the funding shortfall, including:
- Supplemental funding to RDOF winners that have “affirmatively requested such funding”
- A short amnesty window that would allow winners to relinquish all or part of their funding without penalties if the commission chooses not to make supplemental funds available or if the amount of supplemental funds is insufficient to cover an RDOF winner’s costs (This option would make the impacted areas eligible for BEAD funding)
- RDOF payments in years 7-10 released in earlier years
- An extra year of funding and/or
- Relief from all or certain aspects of the letter of credit requirements on an expedited basis
The representatives for the Coalition of RDOF Winners are not the only ones to have asked the FCC for help on this front.
In June, three U.S. senators sent FCC Chair Jessica Rosenworcel a letter asking the FCC to make supplemental funding available to RDOF winners, or perhaps only to RDOF winners with less than 250,000 current broadband subscribers. The senators – Roger Wicker, Cindy Hyde-Smith and J.D. Vance – also floated the amnesty idea in the event supplemental funding could not be made available.
The senators cited something Telecompetitor previously noted: Only a bit more than $6 billion has been committed in the RDOF program, even though intended funding was $20.4 billion.
Rosenworcel’s answer to the senators noted something else that Telecompetitor previously noted. As she explained, “when the commission establishes spending requirements or sets a budget for a particular model-based high-cost program, the total amount in the budget is not collected from contributors and then stored in reserve waiting for the moment of distribution.
“Instead, the contributions required are calculated quarterly. . . With respect to the RDOF program, . . . funding needs are projected on a rolling basis, and collected based on the expected upcoming distributions to authorized recipients. . . Thus, we do not have support in reserve readily available for reallocation to the extent that the total amount authorized for RDOF fell below the projected budget.”
She did say, however, that the FCC would “carefully consider” waiver requests of commission rules about penalties for forfeited bids if some RDOF winners choose not to complete their builds.
The Coalition of RDOF Winners apparently has not taken Rosenworcel’s comments about the lack of RDOF reserve funding as a complete no. The coalition representatives apparently didn’t discuss RDOF reserve funding, but they continued to press for additional funding, apparently without specifying a potential funding source.