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The Rural Digital Opportunity Fund Auction Should Favor Fiber Builders, Says Corning Analyst

David Jelke

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Photo of barn from North Carolina Highway 130 by Gerry Dincher from November 2013 used with permission

April 20, 2020— There are aspects of fiber-optic cabling that make the Rural Digital Opportunity Fund auction “very favorable" to the technology, said Kara Mullaley, a market development manager at Corning Optical Communications at a webinar hosted by Corning on Thursday.

The Rural Digital Opportunities Fund will offer $20.4 billion through a reverse auction scheme for broadband builders to help address the digital divide.

A reverse auction means that competitors will bid for the lowest amount of money from the Federal Communications Commission necessary to build out in a given census block.

The first phase of the two-part auction reserves $16 billion for “unserved” territories, which are defined as any census block that contains not a single resident with speeds of at least a 25 megabit download and 3-megabit upload.

The remaining funds will be reserved for what is called “underserved” territories. These are census blocks in which at least one resident meets the 25 down/3 up threshold defined by the FCC but are still severely lacking consistent broadband speeds.

There is much that is still yet unknown about the auction, participants said.

The only day that is “set in stone,” according to Mullaney, is the day of the actual auction, October 22, 2020.

Areas that are deemed eligible to participate in the auction by the FCC are expected to be announced in early June. Initial application materials are expected to be due by July. And grants should be announced by the end of the year.

The FCC will begin wiring funds in 2021 and will spread out the money over the course of 10 years.

“Everyone should have fiber in their network and their diet,” Mullaney said.

Mullaley touted three aspects of fiber that make it more favorable for building. The first she identified is longevity. “A fiber infrastructure would be one that is going to last past our lifetime and hopefully your children’s as well,” said Mullaney.

Secondly, the price of fiber “had dropped considerably,” Mullaney said, because the price of the components that go into fiber has gone down.

Third, fiber will create more opportunities for its users. Citing the Fiber Broadband Association, Mullaney said that fiber-to-the-home-enabled communities enjoy 46 percent better new business formation compared to communities without fiber broadband services.

Because of the growth that fiber provides, the FCC is likely to look favorably upon fiber builders as opposed to other types of builders when reviewing applications and providing grants, she said.

Mullaley also weighed in on rumors that the FCC is considering switching to counting census tracts, which are much larger than census blocks, as the smallest unit of auction for RDOF. “I doubt they will change the way the bidding is” conducted, Mullaley said.

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