Some of the winning bids in the RDOF rural broadband funding auction were for unrealistically low levels of support and the net result could be that those areas do not get service, according to two of the rural electric cooperatives that bid in the auction.
The cooperatives discussed their concerns on a virtual press conference organized by the National Rural Electric Cooperative Association (NRECA) today, where NRECA urged the FCC to closely scrutinize the long-form applications submitted by auction winners.
The Rural Digital Opportunity Fund auction awarded $9.2 billion to cover some of the cost of deploying broadband to unserved areas using a reverse auction approach. Funding went to the bidder that committed to deploying service at the lowest level of support, with a weighting system favoring bids to deploy faster, lower-latency service. The vast majority (85%) of winning bids call for the recipient to deploy service at gigabit speeds.
Michigan RDOF Bids
Midwest Energy Communications (MEC) won $37 million in the RDOF auction as part of a consortium organized by the National Rural Telecommunications Cooperative (NRTC). The company will use the funding toward the full $165 million cost of a fiber-to-the-premises deployment that will make service available to 40,000 locations in rural Michigan.
The company dropped out of bidding for 30-some census block groups when it was underbid by a company bidding to use fixed wireless service in the fastest speed group—1 Gbps.
“MEC contends that the blocks were lost to other bidders that cannot and will not be able to deliver service at the level claimed in the tier they bid,” said Bob Hance, MEC CEO, on the virtual press conference webcast.
He added that “wireless technology is not capable of providing gigabit service, even in the most ideal circumstances.”
People in the census blocks that MEC lost are “likely to obtain inferior service for the next several years,” Hance said.
Manufacturers of fixed wireless equipment say the technology can support gigabit speeds. But NRTC and NRECA have issued a white paper detailing its concerns about the ability of fixed wireless technology to support gigabit service.
In the RDOF auction, the NRTC consortium bid fixed wireless at “responsible speeds” of 100 Mbps in some areas, noted Tim Bryan, CEO of NRTC, on the webinar.
“We lost in all those area,” he said.
The Maryland Example
Another RDOF bidding story came from Mike Malandro, president and CEO of Maryland’s Choptank Electric Cooperative. Choptank bid to provide service using fiber broadband in unserved rural areas of the state but dropped out of the auction when it was underbid by a “very small company.”
Malandro subsequently confirmed that the company was Talkie Communications which, according to FCC data, plans to use FTTP for its deployments.
“The money available was not enough to commit to serving the area in a six-year time frame,” said Malandro of Choptank’s decision to drop out. “Prior to the RDOF auction, I had great hope for [closing] the digital divide quicker, but I now feel that the RDOF has done the opposite.”
By taking areas with dubious winning bids off the table, the auction “will leave rural Maryland homes and businesses behind,” according to Malandro.
MEC, Choptank and NRECA join a growing group of stakeholders that have questioned how the FCC handled the RDOF auction. Others that have expressed concern include NTCA – The Rural Broadband Association, more than 150 federal legislators, rural lender CoBank and Windstream CEO Tony Thomas.
Some stakeholders have argued that the FCC should have vetted bidders and business plans more closely before beginning the auction. Those stakeholders have urged the commission to closely scrutinize the long-form applications that winning bidders are required to submit.
Jim Matheson, CEO of NRECA, added his voice to those stakeholders today.
“Every bid should be thoroughly evaluated” and there should be “more transparency” about that process, Matheson said. He also urged the FCC to impose tighter rules for the planned Phase 2 RDOF auction.