The $42.5 federal BEAD broadband grants that are being funded from the Infrastructure Investment and Jobs Act should be a gamechanger for rural broadband. There will be many hundreds of millions of grants given to each state to fund the construction of broadband networks. This is likely once-in-a-generation funding, so there will only be one chance to do this right.
There is one pending issue that could really gum up the BEAD grants – there are pending RDOF awards that should not be funded. These pending RDOF grants fall into three categories.
First are RDOF auction winners that have probably bitten off more than they can chew. An example of this might be LTD Broadband. I don’t have any inside knowledge of the company, but I’ve seen estimates that the company would need to raise something north of $7 billion dollars to go along with the $1 billion RDOF award. There are likely other similar companies in the auction. The FCC has had almost a year to determine the financial ability of grant winners to fund the rest of the projects they won. If these companies don’t have the needed funding, it’s time for the FCC to cut them loose. This shouldn’t be a hard determination.
The second category is unique. Starlink won nearly a billion dollars of RDOF funding. There are still a lot of unknowns about the company’s capabilities. I know some of the RDOF areas won by Starlink are heavily wooded, and from what I hear, that’s a big problem for the technology. There are also still questions about the ability of Starlink to serve every home in a grant area – which is what the RDOF requires. I have nothing against Starlink, and if I lived in a rural area, I would have been first in line for the beta test. But the company is still an unproven technology in terms of being able to serve everybody. The company is still a start-up with no guarantee of success or longevity. At the end of the day, Starlink doesn’t meet the basic requirement that federal funding should only go to companies that can guarantee to meet the requirements of the award.
Finally, are the RDOF auction winners that claim to be able to deliver gigabit wireless technology. Like Starlink, these are not field-proven technologies and likely will never deliver what is being promised. Over the last year, I haven’t talked to a single engineer who thinks it’s possible to deliver a wireless gigabit to every customer in rural Census blocks with gigabit wireless. I have no doubt that the new wireless technologies have the capability of being a lot faster than current fixed wireless technology. But these grants weren’t awarded to deliver a few hundred megabits per second. These grant winner should be tossed for overclaiming the technology, since doing so gave them an unfair advantage in the auction. If they had bid with the ability to deliver 200 Mbps the auction results would have been very different. These companies gamed the auction rules and that alone should have invalidated the awards. Unfortunately, the FCC might be ready to make these awards, having recently awarded funding to Resound Networks to provide gigabit wireless broadband.
It’s obvious that the FCC is already wrestling with all of these issues because it’s been eleven months since the RDOF winners filed their long-form information. But the FCC must know that the BEAD grants change everything. If it had known that BEAD grants were coming, the FCC probably would not have held the reverse auction. This new federal grant money changes the equation and brings a new paradigm that should make it easier for the FCC to make up its mind about questionable RDOF awards.
If the FCC gets this wrong, then the RDOF areas in question won’t be seeing the same broadband solutions that are coming everywhere else. The BEAD grants make it easy for the FCC to reject applicants that have not demonstrated the financial wherewithal to fund the promised RDOF solution. The BEAD grants should make it easy to reject Starlink – the company is still free to market broadband to all of rural America, and it already has a huge waiting list of people willing to buy service. The BEAD grants should make it easier for the FCC to admit it erred in letting bidders overclaim technology.
It’s not going to be easy for the FCC to publicly admit that it made some big mistakes in the RDOF auction. Most of these issues could have been avoided if the FCC had pre-screened applicants. Any technology that was not already proven to work in the real world should have been excluded from the auction. Applicants should have been given a dollar limit for participation in the auction based on their balance sheet. But the FCC has a chance to set this right by rejecting the questionable awards and letting the folks that live in these areas have a chance for a better and more permanent broadband solution through BEAD grants. FCC – please do the right thing.