Update on RDOF

The RDOF reverse auction was completed in December 2020, and since then, the FCC has been silent about the disposition of any of the winning bidders. Part of the quiet period has been due to the FCC processing the long-form applications where grant winners demonstrate that they have the technical, managerial, and financial capability of fulfilling the RDOF buildouts. The FCC’s silence came to an end recently with several actions taken by the agency.

The FCC first published a list of almost 11,000 Census blocks where RDOF grant winners have elected to reject funding totaling over $78.5 million. The defaults came for a variety of reasons. For example, there are some cases where investigation showed that an ISP was already offering fast broadband in a grant area. Other defaults come from the bidders deciding they couldn’t make an economic case for the Census block clusters won in the auction. The FCC has the ability to fine grant winners that default on winning grants, and the agency will likely consider the fines on a case-by-case basis.

Next, the FCC sent letters to dozens of RDOF winners asking them to voluntarily give up the RDOF funding for specific Census blocks. These are places that should never have been included in the auction. The list included such places as large metropolitan airports and big parking lots. Starlink alone was asked to give up funding to 6,500 Census blocks.

The FCC also sent a different letter to 197 RDOF grant winners asking them to reevaluate taking funding in specific blocks where the FCC now believes that one or more ISP already delivers speeds of 25/3 or faster. The FCC acknowledges that most of these areas were erroneously included in the action due to bad mapping data. These grant winners were warned that if they don’t relinquish these Census blocks that the FCC will look hard at blocking the funding for these areas – an action that could delay approval of overall funding for an ISP.

The FCC also announced that it was rejecting some of the claimed areas for LTD Broadband. The FCC killed funding for the company in California, Kansas, and Oklahoma due to the company not getting regulatory approval in those states to become an Eligible Telecommunications Carrier. This rejection killed $187.5 million in California to serve 76,856 locations, $81.1 million in Oklahoma to reach 39,889 locations, and $3.2 million in Kansas to reach 2,122 locations.

There has been some question of what happens to the Census blocks that are now back in play. Some have speculated that these areas would roll into the next RDOF auction. However, the FCC has no power to claim or reserve Census blocks, and any of the areas that fall out of RDOF becomes eligible for the many other grant programs now underway.

Finally, the FCC started making RDOF awards. It awarded $311 million to these companies that have made it successfully through the long-form review process. This will bring broadband to over 200,000 homes. This is only a small fraction of the $9 billion that was claimed in December. But for these companies and these Census blocks, the 10-year clock will soon be started to fulfill whatever technology was promised in the winning bid.

The FCC still has a long way to go. These actions clear up some of the messes caused by the FCC using bad mapping in setting grant areas. There are industry analysts that say that this effort is not complete and that additional areas are yet to be identified. But the FCC has disposed of less than $1 billion of the $9 billion in awards, so expect to hear periodic awards for more grant winners.

The FCC still has to wrestle with a few huge issues. There have been numerous complaints saying that grant winners like LTD Broadband should not have been allowed to participate in the auction in a big way. There are other grant winners that claimed the ability to deploy gigabit rural wireless – a technology that nobody I know thinks exists. There are likely ISPs that will not make it through the long-form review for some other reason, such as the inability to guarantee funding. The agency is likely a long way from resolving these many issues.

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