The Remaining RDOF Funds

The FCC originally budgeted $20.4 billion dollars for the RDOF subsidy program to be spent over ten years. The original RDOF reverse auction offered $16 billion in subsidies. But in a story that is now well known, some entities bid RDOF markets down to ridiculously low subsidy levels, and only $9.4 billion was claimed in the auction. $2.8 billion of this funding ended up in default, including some of the bidders who had driven the prices so low.

That means that only $6.4 billion of the original $20.4 billion has been allocated. The question I’m asking today is what the FCC will do with the remaining $14 billion.

It seems unlikely that there will ever be another RDOF-like reverse auction. RDOF was meant to bring broadband to areas that were unserved according to the FCC’s broadband maps at the time of the reverse auction – meaning areas where no ISP claimed broadband speeds of at least 25/3 Mbps. But since ISPs are able to claim marketing speeds under the FCC mapping rules instead of actual broadband speeds, many millions of unserved locations were left out of the RDOF process.

Since the RDOF auction, there have been many billions spent to bring broadband to unserved areas through ReConnect grants, local ARPA grants, state broadband grants, and several smaller grant programs. To understand how poor the original FCC RDOF maps were, even after these many grants, the latest FCC maps still show over 8 million unserved locations. Folks like me who look at the map at a granular level think there are even more areas that are still mistakenly claimed to have 25/3 Mbps broadband but that don’t in real life.

To be fair, the RDOF is doing some good things. A lot of electric coops, telephone coops, telephone companies, and independent fiber overbuilders are building networks using the RDOF subsidy as the basis for getting funding. Charter and a few other larger ISPs are building networks using the RDOF funding.

But the RDOF awards also left behind a lot of messes. First, it took too long to eliminate the default bidders. Areas claimed by these bidders were off-limits to other federal grants and most state grants – many of these areas would have fiber today had they not been in RDOF limbo.

The bigger problem is that the FCC made an absolute mess by awarding RDOF in what can be best called a checkerboard RDOF serving area. The following map is a good example of what this look like in a real county. In this particular county, the areas to the east have no people due to large parklands, but in the rural areas where people live, the RDOF awards covered some areas but not adjacent Census blocks. The Census blocks that were not awarded have the same lousy broadband options and were not included in the RDOF award due to the mapping problems discussed earlier.

This creates a real challenge for anybody now trying to get a BEAD or other grant to serve what is left. The areas left after RDOF don’t make a big coherent serving area, but a jumbled mess of remaining Census blocks. For somebody building a fiber network, these checkerboard areas are a nightmare because a builder must go through RDOF areas to reach the remaining areas. It’s one more factor that will drive up the cost of the BEAD grants in counties that got a lot of RDOF funding.

The FCC is dreadful at awarding grants and subsidies. The RDOF process was used so the FCC didn’t have to review traditional grants where ISPs proposed coherent grant serving areas. This is the same FCC that gave over $11 billion to the biggest telcos for CAF II to upgrade DSL to 10/1 Mbps.

Now that the states have broadband offices, the easiest way for the states to award the remaining RDOF billions would be to let state broadband offices do the heavy lifting. It would be one more tool for state broadband offices – that hopefully would not follow the complicated BEAD rules. The worst possible way to use the money would be for the FCC to take some easy path to shovel the money out the door again – please don’t give us RDOF II!

5 thoughts on “The Remaining RDOF Funds

  1. Does the “leftover” money from RDOF actually exist beyond a budget line? What I mean is, USAC collects money through USF from telecom providers based on what the FCC expects to need. I believe, though I’m not certain, that USAC would only collect enough money to cover what RDOF funding was actually handed out, not what it expected to hand out. If my understanding is correct, there isn’t leftover money sitting in an FCC bank account becasue it was never collected by USAC in the first place. So allocating leftover money to states would require USAC to hike the contributions factor to come up with that money. Or are my assumptions off?

    • Not – it’s a budget item, But it’s from the Universal Service Fund and the FCC is largely obligated to spend that money on the various broadband-related programs. The real question is what they are going to do with that money. It’s $1.5 billion per year that hasn’t been earmarked.

  2. What a joke, states have proven to have no clue how to build or run the Internet. All they see, like most non-profits, is how can we make more money for ourselves, and the product they put out is barely even considered. RDOF was a joke favoring new companies going into a business they didn’t even know how to build, just like CAF keeps going to ILEC’s that are phone companies, not serious internet companies. How about for once the government just look at each market, see what actual Internet companies are building, offer to have them build the rest of the non-ROI rural areas out, and simply fund that. It would be a fraction of the pro-government running everything faction, who really just wants a state-run media.

    • I feel like there’s a middle ground, at least for some states, and in consideration of their topographical/density realities. In Colorado, at least, the cost for building needed middle mile is so great that no last-mile provider has ever taken it on to the more rural corners of the status (with the possible exception of CLink/Lumen, but that’s another story, and their network is definitely not the answer for our issues). We have a established history of building regional governmental administered DWDM fiber rings, getting wholesale bandwidth from major Internet nodes to then drop off in these remote towns, and letting local private ISPs use it to support their local fiber, cable, and fixed wireless last-mile solutions. It’s not meant to be a profit center for the government managed middle-mile, but merely cover costs, and provide redundancy and capacity where it wasn’t provided privately by the open market. It also provides a potential for choice among providers, as opposed to the locked-down proprietary networks. The problem though is that we need more of these networks throughout the state and they’re extremely costly to build over long distances over mountain passes, and there’s no program that currently funds these sorts of builds. There was the recently closed NTIA Enabling Middle Mile grant which was extremely underfunded at $1B for all 50 States and territories, and was discriminatorily set up to make it difficult for government consortiums to apply for the grant. We do have a very healthy and functional state broadband office here in Colorado. We could certainly use some more money towards a second round of middle mile funding, with the state broadband offices administering it, or the NTIA adjusting the applications for grass-roots regional government efforts to be able to take advantage of it. I would love to see some of the unassigned RDOF money go toward that effort, and certainly no more reverse auction style distributions, which have done nothing to improve broadband deployment for our region.

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