Add Windstream CEO Tony Thomas to the list of those who have questioned whether some RDOF winners will be able to deploy the networks they committed to building at the level of funding they won.
Without mentioning names, he told Telecompetitor that some “new entrants” that won RDOF funding believe they can “do something the established carriers can’t do using technology and economics that simply aren’t in the marketplace.”
Windstream was one of the biggest winners in the RDOF (Rural Digital Opportunity Fund) auction. But although the company bid on all eligible areas within its local service footprint, competitors won funding for more than half of those areas. Almost all eligible areas in Windstream’s local service territory had a winning bid.
“In areas we didn’t win, we didn’t think it made economic sense at the level that [bids] dropped to,” Thomas said.
The RDOF auction awarded $9.2 billion to cover some of the costs of deploying broadband to areas where it isn’t available today. It was a reverse auction that awarded funding for an area to the bidder that promised to build out broadband at the lowest level of support. A weighting system was designed to favor bids to provide higher speed, lower latency service and as a result, 85% of the winning bids were for the highest-speed gigabit service.
The vast majority of Windstream’s wins were for gigabit service, which the company plans to deliver using fiber broadband. Telecompetitor asked Thomas about that technology choice, considering that the company has been quite bullish about gigabit fixed wireless, an unproven and less costly technology on which several other big RDOF winners were allowed to base bids.
One of Windstream’s key concerns about gigabit fixed wireless, Thomas said, was that RDOF rules require winners to make service available throughout an entire census block.
“We’re confident we can get one gigabit per second downloads through a large swath [of a census block], but topology makes it difficult to do that ubiquitously,” he explained, adding that RDOF rules specify penalties for not making service available to all locations in a census block.
Thomas also expressed concerns about the ability of fixed wireless to support the upstream speed required for RDOF gigabit buildouts.
Windstream doesn’t expect its RDOF winnings to cover the entire cost of a rural buildout but instead expects to contribute at least the same amount of funding or more on the buildouts. That’s in line with what we heard today from Charter, which said it plans to contribute about three-quarters of the cost for its RDOF buildouts.
Thomas noted that as the incumbent, Windstream has a cost advantage because it already has fiber and other infrastructure that it can leverage for RDOF buildouts.
Windstream RDOF Concerns
Based on Windstream’s analysis, Thomas questioned whether some of the companies that won funding in the auction will be able to deliver the service they committed to deploying – a concern not just for those planning to deploy gigabit fixed wireless but for others as well.
For example, he expressed concern that “a number of very small companies won such a large swath of the U.S. footprint.”
He questioned the logic of allowing companies to bid in the auction before they were fully vetted. Only after the auction were winners required to submit a long-form application that requires more details about the companies’ capabilities and buildout plans.
“It seems like it’s a little bit out of order,” he said. “We’re assessing [a company’s capabilities] post-auction.”
He hopes that in the next phase of the RDOF auction, the FCC will do a better job of qualifying bidders.
“We need to move more processes up front,” he said.
One idea might be to require bidders to make a refundable deposit before participating in an auction, Thomas said. He noted that spectrum auctions already have that requirement.
“Partially Served” Area Opportunities
Census blocks that have broadband available to at least one location were not eligible for the recently completed Phase 1 RDOF auction but instead will be the focus of a Phase 2 auction that will occur after the FCC obtains more accurate broadband availability data.
In the meantime, Windstream is putting a lot of focus on getting broadband to those partially served areas, Thomas said.
“Local community partners have been very engaged,” said Thomas. “Local mayors and councils have been ecstatic about the opportunity to work with us.”
Windstream is looking at public private partnerships in areas that weren’t covered in the first RDOF auction.
Thomas noted that in some cases, Windstream can only economically serve a portion of a community and has had discussions with community leaders about the need for the community to offset some of the costs of areas that aren’t economical to serve.
Windstream also has been working to get funding through state-level broadband programs funded through last year’s CARES Act, Thomas noted.
Additional information about the Windstream RDOF win can be found in this press release.