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Why the Rural Digital Opportunity Fund is So Significant, and How to Succeed in Applying For RDOF

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Photo by Larisa Koshkina used with permission

TYSONS, Virginia, May 4, 2020 – The Rural Digital Opportunity Fund (“RDOF”) is a significant acceleration of the Federal Communications Commission’s efforts to subsidize the construction of broadband infrastructure in rural communities.

The FCC has pledged to allocate $20.4 billion of support, over 10 years, in two phases. That’s roughly $2 billion a year in broadband subsidies.

But the auction is a complicated process. Fortunately, on Tuesday, May 5, at 12 Noon ET, two knowledgeable organizations – the “broadband fabric” data and mapping experts at CostQuest Associates and attorneys from Marashlian & Donahue, PLLC, also known as The CommLaw Group – will explain what would-be bidders need to understand about RDOF in a FREE webinar, “How to Prepare and Effectively Bid in the Rural Digital Opportunity Fund Auction.”

The first phase of the FCC’s reverse-auction is expected to push out $16 billion (over 10 years), and is scheduled to begin on October 22, 2020. The second phase of the reverse-auction, of at least $4.4 billion (also over 10 years), would provide financial support for additional areas, including those locations unserved by phase one.

Here is how much of an acceleration RDOF represents over the Connect America Fund, Phase II (“CAF II”), the last FCC program to provide subsidies for rural broadband:

In 2018, CAF II offered $1.48 billion over 10 years, or $148 million a year in broadband subsidies. RDOF’s Phase I is expected be more than 10 times as large the widely-heralded CAF II auction.

Additionally, 713,176 locations – homes or offices – were funded through CAF II.  RDOF’s Phase I is expected to provide support for nearly 6 million locations –more than eight times the number of locations in CAF II.

Laying the groundwork for a reverse-auction process

Bit by bit, the FCC has been laying the groundwork for this bonanza of funding. On August 1, 2019, the agency initiated a Notice of Proposed Rulemaking on the RDOF. On February 7, 2020, the agency released its Report and Order detailing the steps it will be taking in Phase I of the auction, as well as the reasoning behind those decisions.

On March 2, 2020, the FCC released a Public Notice with its proposed bidding procedures and program requirements for this phase of RDOF, which has been denominated as Auction 904. An initial map of 5,907,896 locations – within about 66,000 census block groups – was released on March 17, 2020. Final reply comments on the bidding procedure were due on April 10, 2020, and the FCC is soon expected to finalize those procedures and release a timeline for the auction.

Organizations seeking to bid in RDOF will want to understand those details. But to be successful, they should also have a broader understand the context and requirements necessary.

Few are better situated to facilitate that understanding than CostQuest Associates – which was contracted by the FCC to design the Cost Allocation Model (CAM) that undergirded the CAF II auction, and also the RDOF auction – and attorneys from The CommLaw Group, who have helped hundreds of companies comply with the FCC’s broadband, telecommunications and auction requirements.

Register for FREE for “How to Prepare and Effectively Bid in the Rural Digital Opportunity Fund Auction,” on Tuesday, May 5, 2020, at 12 Noon ET.

The CostQuest / CommLaw Group webinar will be followed on the same day at 4 p.m. ET by a Federal Communications Commission webinar on RDOF. Attending the CostQuest / CommLaw Group webinar will better prepare potential bidders for the FCC webinar and for the FCC auction.

Short forms, long forms, and a brief description of the reverse-auction process

The FCC’s “Fact Sheet” on Auction 904, the first phase of RDOF, has an extremely bare-bones description of the timeline and deadlines. Once auction procedures are officially adopted and eligible census block group areas are finalized, the agency will open the window for the filing of “short form” application with basic information about the broadband providers’ proposed service. Filling this out is a prerequisite for bidding in RDOF’ first phase.

As is normal for its auctions, the agency will conduct a “mock auction” before the actual auction to familiarize would-be bidders on what takes place in an FCC auction or reverse-auction.

Bidding is scheduled to begin on October 22, 2020, and is expected to last for several weeks. There has been some pressure on the FCC to delay the auction because of the coronavirus pandemic. By the same token, others have pressed the agency to accelerate the auction to get more broadband funding to help cope with the pandemic. Agency-watchers expect the FCC to stick with its current schedule.

Following the conclusion of the auction, winning bidders submit what is a called a “long form” application. For funds to then be disbursed to winning bidders, this long form must include additional regulatory details, including proof of Eligible Telecommunication Carrier status for RDOF winners.

The FCC is expected to provide more details on the actual short form deadlines, as well as the mock auction, at the agency’s webinar at 4 p.m. ET on Tuesday, May 5. The CostQuest/CommLaw Group webinar will preview these requirements and give greater insight into how these different RDOF elements needs to fit together.

Differences between CAF II and RDOF, Phase I

The February 7 order governing the first phase of the RDOF auction builds upon the processes used in the CAF II auction, the agency’s first auction to award ongoing high-cost universal service support through competitive bidding in a multiple-round reverse auction. Unlike a spectrum auction, a this auction is a “reverse auction” because bidders are seeking money to offer services, and the winner is the one who offers to provide the service at the lowest price, weighted again service tiers and other conditions.

Perhaps this prior success at such a reverse auction has given the FCC the confidence to put rules in place for shoveling $16 billion — more than 10 times the amount of funds in CAF II –in just the first phase of RDOF.

Notwithstanding, the FCC did make some changes from the CAF II process. In addition to the increased funds, the FCC has raised the required minimum supported speed from 10 Megabits per second (Mbps) download / 1 Mbps upload in CAF II, to 25 Mbps / 3 Mbps in RDOF Phase I.

Additionally, the FCC has changed the tiers and the latency weights that it gives to particular broadband technologies. This is designed to “implement a framework that prioritizes faster broadband speeds of up to a gigabit per second,” according to the FCC’s February 7 order.

Understanding the “weights” associated with particular tiers of speeds and latency requirements (called “T +L” in the FCC’s proposed bidding procedures) is crucial to unlocking what is going on, and what proposed bidders will need to understand to be successful. This will be discussed in the CostQuest / COmmLaw Group webinar. Register for FREE for “How to Prepare and Effectively Bid in the Rural Digital Opportunity Fund Auction,” on Tuesday, May 5, 2020, at 12 Noon ET.

A controversy over mapping lingers in the background of RDOF

An additional controversy surrounding the first phase of RDOF is worth noting. It concerns the issue of broadband maps.

The FCC requires broadband providers to submit deployment data on its Form 477. Such data is collected within a nesting-doll framework of geographies called the FIPS Code, or the Federal Information Processing Specification. These codes include ID numbers for states, counties, census tracts (66,438 in United States), census block groups (211,267), and census blocks (11,155,486). The census block is the smallest unit of geography the U.S. government recognizes.

These geographical units don’t mesh well with broadband providers’ mapping service areas. Wireline providers use line drawings. The wireless industry employs radio frequency engineers to create propagation maps with polygons that predict coverage areas based on distance from towers. Both mapping techniques create shapefiles that can overlap with census geography and estimate which census blocks are covered.

However, if a census block is considered “covered” when only one person within that block can get broadband, that overcounts broadband availability. The average population of a census block is 30, but census blocks are defined by geographic boundaries, not by population. Blocks can be quite small in urban and suburban areas but hundreds of square miles in rural and remote areas.

Getting at the blocks that are partially served has been at the heart of the controversy over improving broadband mapping. In part to begin to resolve the question of measuring and mapping broadband locations better, in August 2019 – during the same meeting at which the FCC proposed the RDOF – the FCC proposed the creation of a new and more granular broadband map called the Digital Opportunity Data Collection (“DODC”).

This new and theoretically improved DODC has not yet been finalized, and the Democratic commissioners on the FCC have urged that that DODC should be completed before RDOF funds are awarded. But agency Chairman Ajit Pai instead proposed that RDOF be split into two phases.

The first phase – the $16 billion phase current the subject of Auction 904 – will only award funds for location in census blocks completely unserved by 25 Mbps/3 Mbps broadband.

As stated in the order, “Phase I will target those areas that current data confirm are wholly unserved; and, Phase II will target unserved locations within areas that data demonstrates are only partially served, as well as any areas not won in Phase I. By relying on a two-phase process, we can move expeditiously to commence an auction in 2020 for those areas we already know with certainty are currently unnerved, while also ensuring that other areas are not left behind by holding a second auction once we have identified any additional unnerved location through improvements to our broadband deployment data collection.” The order then footnotes to the DODC proposal.

The FCC has adopted Chairman Pai’s proposal, and so the nearly 6 million locations available for support in Phase I deliberately exclude locations within census blocks that are “partially served,” meaning that if one customer in a neighborhood can get broadband, that neighborhood may still be excluded from RDOF’s Phase I.

Why understanding the Cost Allocation Model is crucial to success

Reviewing the FCC’s map of initial eligible areas, released March 17, 2020, is a good place to start to understand costs of service, and how those costs interact with the cost allocation model. Doing so will be crucial to success in the RDOF. Think of this FCC map as the map of a donut hole: It is demonstrating precisely those areas in which broadband is not.

Therefore, these maps and accompanying datasets highlight the 66,000 census block groups that are likely to be eligible for service through RDOF Phase I. (A “challenge process” will allow broadband providers to attempt to knock out census block group from subsidized coverage if they can prove that they already offer service at 25 Mbps / 3 Mbps.)

These FCC maps include color-coded information about the number of eligible locations within each census block group, as well as the “annual reserve price” at which a block group will be subsidized.

Here, a little background is in order. In the early 2010s, as part of a years-long effort to transition universal service fund support, the FCC contracted to develop a Connect America Cost Model (“CAM”). Who developed this model for the FCC? CostQuest Associates.

The model that ended up being codified by the FCC in 2015 defined the costs at which subsidies would be granted. Incumbent local exchange carriers, known as “price cap carriers,” were given the opportunity to accept financial subsidies based upon the model, in exchange for offering 10 Mbps / 1 Mbps service by 2020.

As the FCC recounts in its February 7 order, “In areas where price cap carriers declined the model-based support…, support was to be allocated through the subsequent CAF Phase II auction, a competitive bidding process in which all eligible providers were given an equal opportunity to compete. The auction yielded 103 winning bidders… in 45 states.”

The “reserve price” listed on the FCC’s map shows the price, for each census block group, that the CAM uses to calculate the estimated cost, per household per month, to bring broadband to the average location in that census block group.

FCC regulation (specifically 47 CFR 1.21003(c)) gives the FCC the discretion to establish reserve prices prior to the auction. In CAF II, the FCC had set the minimum support threshold at $52.50 per location, with a per-location support cap of $146.10.

For RDOF Phase I, the FCC has lowered the minimum support threshold to $40.00 per location (or $30.00 per Tribal location), with a per-location support capped at $212.50 per household per month. In addition to potentially offering bidders the ability to bid on 66,000 census block groups (versus 33,000 in CAF II), the significantly wider range in reserve price availability is another reason why the funding in RDOF Phase I is certain to dwarf CAF II.

Since its work for the FCC in the creation of the CAM, for more than a year CostQuest Associates has developed what it calls a “broadband serviceable location fabric,” and which provides a foundation for broadband providers to understand how individual service locations geolocate within census blocks and census block groups.

The uses to which CostQuest data can be put in an RDOF application will be discussed on the webinar, together with an assessment of how broadband data should be used in preparing, assessing and complying with the terms of an RDOF grant.

To register for the webinar, please visit “How to Prepare and Effectively Bid in the Rural Digital Opportunity Fund Auction” to secure your spot on Tuesday, May 5, 2020 at 12 Noon ET.

Author Drew Clark, the Editor of Publisher of Broadband Breakfast, is also a telecommunications attorney at Marashlian & Donahue, PLLC, The CommLaw Group. Clark served as executive director of the Partnership for a Connected Illinois, the State Broadband Initiative in the land of Lincoln. PCI engaged in broadband mapping and planning, infrastructure investment, and digital literacy training.

For more than a decade, Clark has been one of country’s leading voices advocating for improved broadband mapping efforts and a rational geospatial system for collecting broadband data. The CommLaw Group and its sister company, The Commpliance Group, have helped hundreds of companies comply with the Form 477 and other FCC requirements. See Clark’s article, “Broadband Maps Are a Mess, So Now Let’s Focus on Actually Improving Them,” from July 2019. Also see “CostQuest and The CommLaw Group Join to Host Fine-Grained Webinar on Rural Digital Opportunity Fund,” from April 14, 2020.

Drew Clark is the Editor and Publisher of BroadbandBreakfast.com and a nationally-respected telecommunications attorney at The CommLaw Group. He has closely tracked the trends in and mechanics of digital infrastructure for 20 years, and has helped fiber-based and fixed wireless providers navigate coverage, identify markets, broker infrastructure, and operate in the public right of way. The articles and posts on Broadband Breakfast and affiliated social media, including the BroadbandCensus Twitter feed, are not legal advice or legal services, do not constitute the creation of an attorney-client privilege, and represent the views of their respective authors.

Rural

FCC Announces $163 Million in Second Round of Approved RDOF Funding

The agency is reevaluating winning bids after asking providers to ensure census blocks aren’t already served.

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Acting FCC Chairwoman Jessica Rosenworcel

WASHINGTON, October 7, 2021 – The Federal Communications Commission announced Thursday another approved round of funding from the $9.2-billion Rural Digital Opportunity Fund.

The $163 million in approved money will go to 42 providers who will drive fiber to the home for gigabit services covering 65,000 locations in 21 states over the next ten years, the FCC said Thursday.

“More help is on the way to households without broadband,” said FCC Acting Chairwoman Jessica Rosenworcel in a press release Thursday. “This is an important program for getting more Americans connected to high-speed internet, and we are continuing careful oversight of this process to ensure that providers meet their obligations to deploy in areas that need it.”

The FCC in July asked that providers conduct an assessment in areas for which they won money from the fund in December, because complaints emerged that the approved areas were already served with adequate connectivity.

The commission said 85 bidders chose not to pursue their bids in 5,089 census blocks because those areas were either served or could be wasted. Some attributed their enlightenment to updated FCC maps based on Form 477 data, an often criticized form of data collection that is reliant on service provider data.

The last round of approved money was last month, when the FCC approved a further 13 bidders.

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Varying Technologies Needed to Make Widespread Public Library Wi-Fi a Reality

From direct fiber connections to low-earth orbit satellites, libraries can provide public Wi-Fi through varying means.

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Don Means from the Gigabit Libraries Network.

WASHINGTON, October 4, 2021 – The director of the Libraries Whitespace Project said libraries across the country will need varying ways to get connected and provide access to public Wi-Fi.

That means that while the “cheapest, most equitable, most economical way to connect every community with next generation broadband is to run fiber to all of the 17,000 libraries,” Don Means said Friday, other solutions will need to be considered where geography doesn’t allow for a direct fiber connection.

“Every community is a unique combination of density, topology, socioeconomics, existing infrastructure and also available spectrum and then whatever the local policy preferences are,” said Means, who was hosted by the Gigabit Libraries Network hosted as part of Libraries in Response series on Friday.

There is no one size fits all solution to connectivity, Means said. But vendors, he said, are often concerned with selling a single solution for the simple reason that it’s more efficient and profitable to do so.

A technology still in its infancy is low-earth orbit satellites for broadband, which hover closer to earth than traditional satellites and thus theoretically provide better connectivity than those flying higher above the earth’s surface. The first library in the world connected through LEO satellites is a tribal library located in northern New Mexico, Means said, noting that such technologies could help fill the connectivity gap.

SpaceX’s Starlink is racing to make its broadband constellation of LEOs a staple of rural and urban connectivity, as it has been beta testing its technology for months now.

Means added that some free Wi-Fi hotspots have served to cover entire communities.

“We talk about rural in terms of density, and we use the numbers of countywide density, people per square mile across the county, which is really low,” he said.

“But when you look at where people really live, most rural people live close together in small communities. It might be a mile or two across… which means that these few hotspots across town could cover the whole town.”

He used the example of the town of Plymouth, Nebraska, which set up a handful of these Wi-Fi access stations for $17,000 and gave the entire rural community access to the internet.

The GLN began the series in response to the pandemic, which made clear that broadband, connectivity, and the internet are fundamental to the nation’s wellbeing.

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Christopher Ali’s New Book Dissects Failures of Rural Broadband Policy and Leadership

“Farm Fresh Broadband” explains the world of broadband policy and provides solutions to bridge the digital divide.

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WASHINGTON, September 24, 2021—In his most recent book, University of Virginia Professor Christopher Ali argues that the ongoing battle for improved connectivity is not only far from over, but also critically flawed.

“Farm Fresh Broadband” proposes a new approach to national rural broadband policy to narrow the rural-urban digital divide. In Ali’s view, the lack of coordinated, federal leadership and a failure to recognize the roles that local communities and municipalities need to play in the deployment of broadband has contributed to a lack of competition between carriers, and ultimately, higher costs to consumers.

Just two days after it was released, Ali sat down for a video interview with Broadband Breakfast Editor and Publisher Drew Clark to discuss his story – and Ali’s recommendations that resulted from his journey.

Ali raises the question about How the $6 billion in federal funds allocated to broadband is spent annually? Based on his findings, he makes policy recommendations to democratize rural broadband policy architecture and re-model it after the historic efforts to bring telephony services and electricity to Americans across the country.

In particular, Ali discusses how, in one chapter of his book, he raises the provocative question about whether “Good Is the Enemy of Great: The Four Failures of Rural Broadband Policy.” In his telling, less money, lower speed, and poor-quality broadband mapping have all contributed to an approach that, in seeking “good enough,” federal policy has failed Rural America.

Ali, an associate professor at UVA’s Department of Media Studies and a Knight News Innovation Fellow with the Tow Center for Digital Journalism at Columbia University, is also the chair of the Communication Law and Policy Division of the International Communications Association and the author of two books on localism in media, “Media Localism: The Policies of Place” (University of Illinois Press, 2017) and “Local News in a Digital World” (Tow Center for Digital Journalism, 2017)

“Farm Fresh Broadband: The Politics of Rural Connectivity” available at the MIT Press.

See Professor Ali’s recent Expert Opinion for Broadband Breakfast, “Christopher Ali: Is Broadband Like Getting Bran Flakes to the Home?

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