I was listening in on a webinar the other day and heard the comment that the RDOF grants don’t include any requirement to serve customers. Winners of the grants are required to build networks according to a specific timeline, but there is no requirement that they market and sell to anybody. I went back and read the grant requirements, and this is absolutely true. It turns out that this was also the case for many other federal grants in the last decade. The BTOP grants and a few others had requirements to serve anchor institutions, but most federal grants don’t have any specific requirements for serving the public.
You might ask why this matters – after all, doesn’t a grant recipient want to use the money to attract new customers and gain new revenues? Unfortunately, I can think of examples where this was not the case. Consider AT&T and the CAF II grants. AT&T claimed to meet most of the CAF II requirements by claiming that rural DSL customers could change to a wireless broadband product supplied from AT&T cellular towers. But for much of rural America, this wireless product was a fiction. I wrote a blog a few years ago about a guy in Georgia that called AT&T continuously for nearly a year until he finally found somebody who even heard of the product. Even then, the installer that showed up to install the product was from hundreds of miles away. AT&T met its CAF II requirements with a product that it didn’t even bother to tell its customer service reps about.
I now look back and wonder why the FCC didn’t include a requirement to advertise and notify customers in the CAF II grants. This would have made it a lot harder for telcos like Frontier and CenturyLink to fake the CAF II upgrades. The FCC could have required that grant recipients notify each existing DSL customer when faster DSL speeds were available and to also advertise in local newspapers, with maps, as the CAF II upgrades were completed. Can you imagine the public uproar had these telcos been forced to make public claims that the grant upgrades were complete, if they weren’t? A requirement to advertise the completion of the CAF II upgrades would have provided real-time feedback to the FCC from the public about whether DSL speeds were actually improved.
I can foresee this same situation with the RDOF grants. As an example, Starlink has no obligation to serve anybody in the areas where the company will receive nearly a billion dollars of grant money. They aren’t required to spend some of the grant money to advertise in these areas and they aren’t required to give customers in the grant areas any better priority for satellite broadband than customers that live outside the grant areas. I bet that years from now we’ll find out that satellite penetrations are no higher where Starlink got the grants than elsewhere in the country – and maybe even lower since some of the grant areas in the Appalachians don’t look friendly for satellite reception.
Without a requirement to market and sell and to notify the public, there is no reason that other RDOF grant recipients can’t take shortcuts. A few grant recipients might make little or no upgrades like the telcos did in CAF II. It wouldn’t be hard for a grant recipient to build only a portion of a grant award area as a way to shave costs – and hope that nobody notices.
As bad as it is for grant a recipient to not have to notify the public when grant construction is completed, there is no requirement for a grant recipient to give the FCC any feedback on many households actually purchase the improved broadband. The FCC grabs a lot of glory when it announces a grant – but then doesn’t have any requirements for feedback that the public benefited from the grant.
These are all reporting shortcomings that the FCC can still rectify with the RDOF grants so that we don’t have a repeat of the CAF II fiasco. One of the unique features of the RDOF grants is that the grants are geographically specific. The grant areas are mapped down to the street level. Grant recipients should easily be able to notify households when grant work is completed and then count customers that benefit after grant completion.
Interestingly, most state grants have accountability. It’s not unusual for state grant offices to want to see construction receipts and to also send somebody out to verify that the construction was done. The FCC has completely ignored grant accountability which is the primary reason that the CAF II grant work went largely undone. It’s time that the FCC build in some basic accountability in federal grants so that we stop handing out checks to carriers and then hope they’ll do the right thing.