Tag Archives: Commissioner Brandon Carr

Another RDOF Auction?

There was a recent interview in FierceTelecom with FCC Commissioner Brandon Carr that covered a number of topics, including the possibility of a second round of RDOF. Commissioner Carr suggested that improvements would need to be made to RDOF before making any future awards, such as more vetting of participants upfront or looking at weighting technologies differently.

The FCC is building up a large potential pool of broadband funding. The original RDOF was set at $20 billion, with $4.4 billion set aside for a second reverse auction, along with whatever was left over from the first auction. The participants in the first RDOF auction claimed only $9.2 billion of $16 billion, leaving $6.8 billion. When the FCC recently decided not to fund LTD Broadband and Starlink, the leftover funding grew by another $2 billion. Altogether that means over $11 billion left in funds that were intended for RDOF.

We also can’t forget that around the same time as the RDOF that the FCC had planned to fund a 5G fund to enhance rural cellular coverage. Due to poor mapping and poor data from the cellular carriers, that auction never occurred. That puts the pool of unused funding at the FCC at $20 billion, plus whatever new FCC money might have accrued during the pandemic. That’s a huge pool of money equal to half of the giant BEAD grants.

The biggest question that must be asked before considering another RDOF reverse auction is how the country will be covered by the BEAD grants. It would be massively disruptive for the FCC to try to inject more broadband funding until that grant process plays out.

Commissioner Carr said that some of the FCC’s funding could go to enhance rural cellular coverage. Interestingly, once BEAD grant projects are built, that’s going to cost a lot less than was originally estimated. A lot of the money in the proposed 5G fund would have been used to build fiber backhaul to reach rural cell sites. I think the BEAD last-mile networks will probably reach most of those places without additional funding. However, there is probably still a good case to be made to fund more rural cell towers.

But there are larger questions involved in having another reverse auction. The big problem with the RDOF reverse auction was not just that the FCC didn’t screen applicants first, as Carr and others have been suggesting. The fact is that a reverse auction is a dreadful mechanism for awarding broadband grant money. A reverse auction is always going to favor lower-cost technologies like fixed wireless over fiber – it’s almost impossible to weight different technologies for an auction in a neutral way. It doesn’t seem like a smart policy to give federal subsidies to technologies with a 10-year life versus funding infrastructure that might last a century.

Reverse auctions also take state and local governments out of the picture. The upcoming BEAD funding has stirred hundred of communities to get involved in the process of seeking faster broadband. I think it’s clear that communities care about which ISP will become the new monopoly broadband provider in rural areas. If the FCC has a strict screening process up front, then future RDOF funding will only go to ISPs blessed by the FCC – and that probably means the big ISPs. I would guess that the only folks possibly lobbying for a new round of RDOF are companies like Charter and the big telcos.

The mechanism of awarding grants by Census block created a disaster in numerous counties where RDOF was awarded in what is best described as swiss cheese serving areas. The helter-skelter nature of the RDOF coverage areas makes it harder for anybody else to put together a coherent business plan to serve the rest of the surrounding rural areas. In contrast, states have been doing broadband grants the right way by awarding money to coherent and contiguous serving areas that make sense for ISPs instead of the absolute mess created by the FCC.

A reverse auction also relies on having completely accurate broadband maps – and until the FCC makes ISPs report real speeds instead of marketing speeds, the maps are going to continue to be fantasy in a lot of places.

Finally, the reverse auction is a lazy technique that allows the FCC to hand out money without having to put in the hard effort to make sure that each award makes sense. Doing grants the right way requires people and processes that the FCC doesn’t have. But we now have a broadband office and staff in every state thanks to the BEAD funding. If the FCC is going to give out more rural broadband funding, it ought to run the money through the same state broadband offices that are handling the BEAD grants. These folks know local conditions and know the local ISPs. The FCC could set overall rules about how the funds can be used, but it should let the states pick grant winners based upon demonstrated need and a viable business plan.

Of course, the simplest solution of all would be for the FCC to cut the USF rate and stop collecting Universal Service Fund revenues from the public. The FCC does not have the staff or skills needed to do broadband grants the right way. Unfortunately, that might not stop the FCC from tackling something like another RDOF auction so it can claim credit for having solved the rural digital divide. If the FCC plans on another RDOF auction I hope Congress stops them from being foolhardy again.

ARPA is Not Just for Rural Broadband

FCC Commissioner Brandon Carr released an extraordinary statement the other day that is worth reading. Carr is taking exception to the final rules from the Treasury Department concerning how communities can use the $350 billion in funding from the American Rescue Plan Act (ARPA). Carr is asking states to somehow intervene in the way that cities, counties, and towns elect to use these funds.

As a reminder, the $350 billion he is talking about is funding that is being given directly to states, cities, counties, and townships. The money is not just for broadband and is intended to help local governments combat issues related to the pandemic.

Broadband is listed as an acceptable use of these funds since most communities had broadband-related problems during the pandemic as many millions were sent to work and school from home. But the money can also be used for many other purposes such as supporting the public health response to the pandemic, addressing negative economic impacts, replacing lost local government tax revenues that came as a result of the pandemic, covering premium pay for essential workers, and making investments in water and sewer infrastructure. The large majority of this funding is going to go to needs other than broadband.

Commissioner Carr starts with the statement that “the Administration’s rules green-light spending to overbuild existing, high-speed networks in communities that already have fast Internet service, rather than directing those dollars to the rural and other communities that lack access to any broadband service today.”

I take exception to this sentence for several reasons. First, I think the final Treasury rules are following the intent of Congress that wrote the enabling legislation. Congress included broadband as a possible use for the funds. If Congress had intended this funding to be used only for rural broadband, the legislation would have said so. But broadband is listed as an acceptable use for every community, including cities. I’m not sure how Commissioner Carr thinks that ARPA money given to Detroit, Baltimore, or New York City could be used to support rural broadband.

A lot of the funding is going to rural communities and I know many communities are aiming this funding to help areas with poor broadband. But I think cities contemplating using this funding also think they are helping to solve the digital divide. In every city, there are places where cable companies never built broadband, and there are many millions more homes that can’t afford broadband. Most of the urban initiatives I’ve seen for using ARPA funding are aimed at building infrastructure to serve public housing or for bringing broadband to students that don’t have home broadband. Commissioner Carr says those kinds of projects deviate from the intent of ARPA, and I have to disagree.

Commissioner Carr also doesn’t think this money should be used for overbuilding. I always get my hackles up when I hear that word, because the big ISPs have been using the word overbuilding as a pejorative for many years. Looking back to the days when there were federal grants that were earmarked to bring better broadband to areas with broadband speeds under 10/1 Mbps, the big ISPs fretted that the money would be used to overbuild existing rural ISPs. The big ISPs don’t think any federal funding should be used to ever overbuild any existing ISP – the big ISPs are in favor of maintaining monopolies. Whenever I see the word overbuild coming from a big ISP I just substitute the correct word – competition. When Congress added broadband as an acceptable use for the ARPA funding, it obviously intended that the money could be used to compete (overbuild) against ISPs that weren’t delivering the broadband households needed during the pandemic.

I must admit that I got a good laugh out of Commissioner Carr’s warning that “the Treasury rules allow these billions of dollars to be spent based on bad data.” The final Treasury rules allow the exact opposite by allowing communities to ignore the FCC’s notoriously bad broadband data when determining where to spend the money.

I opened the blog by calling this an extraordinary statement because I’m not sure why he wrote it. Commissioner Carr’s plea to the states doesn’t mean much since local communities are free to use the ARPA funds without any approval from the states. It’s just a guess, but perhaps Commission Carr is upset that the FCC has no role in this spending. This funding was created by Congress and given to the Treasury Department and to communities directly in what looks like a deliberate snub of the FCC. The FCC got snubbed again more recently when Congress decided to send the $42.5 billion in BEAD grants to the states to spend.