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More RDOF Controversy

I read a lot of petitions and pleadings at regulatory commissions. But one of the most extraordinary filings I can remember was made recently in Minnesota, where the Minnesota Telephone Alliance and the Minnesota Rural Electric Association jointly filed with the Minnesota Public Utilities Commission, asking to revoke the ETC status for LTD Broadband. I call this extraordinary because I can’t recall ever seeing a big group of petitioners asking to decertify another carrier.

The petition stems from LTD being the winner in the RDOF auction in Minnesota to receive $311 million to bring broadband to 102,000 passing in the state. In the RDOF filings, LTD promises to build fiber-to-the-premise to all of these passings. The petition contends that LTD can’t make the financial commitments to fulfill the RDOF pledge.

The petition relies heavily on a recent South Dakota proceeding where the State denied LTD’s petition to gain ETC status. ETC stands for Eligible Telecommunications Carrier and must be awarded by a state regulatory authority or by the FCC to any carrier that wants to collect funding from the FCC’s Universal Service Fund. In order to get ETC status, a carrier must demonstrate that it has the technical, managerial, and financial resources needed to operate.

In this case, LTD already has ETC status in Minnesota – something it got in the past as an operating WISP in the state. This filing argues that LTD doesn’t meet the technical, managerial, or financial requirements to tackle a huge fiber build in Minnesota. I’m not going to spit back the specific details, which are in the petition and the gist of the filing is as follows. The petitioners argue that the State can’t take a chance on LTD. If the FCC awards the RDOF funding to LTD, the company will have six years to build the fiber network, with completion landmarks that must be met along the way. The first completion goal is not until three years after the award, and the pleading argues that is too long to wait to find out if LTD can fulfill its requirements. The petition argues that if LTD fails to build broadband as promised that it would be detrimental for the households involved because the current period of big federal grant funding will have passed. That might mean no broadband for the 100,000 impacted homes for many years.

LTD has already run into problems with getting ETC status in other states. The FCC vacated the RDOF awards in California, Kansas, Oklahoma, Iowa, Nebraska, and North Dakota because LTD didn’t properly apply for ETC status in those states as required for all RDOF winners. As mentioned, the South Dakota Public Utilities Commission recently denied ETC status for LTD.

From a regulatory perspective, it’s an interesting petition. It is fairly easy for a state to deny a new petition for ETC status. A state can deny a petition based on a carrier not meeting any one of the managerial, technical, or financial requirements. It’s harder for a state to revoke an ETC status that the state has already granted in the past. The petition argues that there are new facts available that were presented in South Dakota, including information on the FCC long-form application made by LTD to the FCC that shows that the company cannot meet its financial obligations to fund the broadband. Those documents aren’t available to the public, so we don’t know specifically what that means.

Interestingly, the Minnesota PUC doesn’t have to do anything. Regulatory bodies are free to accept or reject requests to open new proceedings. However, the sheer number of petitioners probably means the State will feel obligated to investigate the issue. Commissions generally hate contentious filings between carriers, but the fact that a nearby state has already acted on this issue might make it hard for the MPUC to not at least look at the issue. There is also tremendous political pressure for the MPUC to act since the RDOF award stretches across many counties.

The petition is interesting because of the timing. Rural communities across the country are hoping that the FCC decides soon on the large RDOF awards that are still pending, like the one for LTD. There are other large RDOF awards that have not been awarded, including an RDOF claim by Starlink. Communities need to know soon if the RDOF awards are going to be rejected so they can begin the process of looking for other grants. That option was driven home this week when the Minnesota legislature approved a $95 million Border-to-Border grant for this summer to build rural broadband. The areas with the pending LTD Broadband RDOF awards are not eligible for these new grants. Hundreds of counties nationwide want the FCC to decide on the large RDOF awards soon. If the FCC rejects LTD soon, this petition would be moot and other grants could be used for these areas.

When I first read this petition, my first thought was that the primary reason for the petition is to put pressure on the FCC to reject LTD Broadband. I’m not sure what else is happening at the MPUC, but this filing likely means it’s not going to have a quiet summer.

One reply on “More RDOF Controversy”

I live in a fairly low density township in northern MN that is part of LTD’s RDOF proposal. The LTD CEO told me last July that when they get the award, they will be allowed to ignore 5% of the RDOF area that they bid on – this was in answer to my question of how they plan to reach low density areas such as the one I live in.

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