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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.

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Spectrum

Senate Indian Affairs Committee Chair Takes FCC to Task for Communication With Tribes

‘You need to get a little better about talking to and listening to native communities,” the chairman told the FCC.

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Screenshot of Sen. Brian Schatz, D-HI, chairman of the Senate Committee on Indian Affairs.

WASHINGTON, September 23, 2022 –Senate Indian Affairs Committee Chairman Brian Schatz on Wednesday urged the Federal Communications Commission to consult more regularly with Tribal leaders on the spectrum-licensing processes.

“Some of [the problems voiced native panelists at the roundtable] could simply be avoided by better, more aggressive, more continuous, more humble consultation, and you’re going to save yourselves a ton of headache,” said Schatz, a Hawaii Democrat. “I’m wondering if you need to get a little better about talking to and listening to native communities at every step in the process.”

“Chairman, I think you put that extremely well,” responded Umair Javed, chief council for the office of FCC Chairwoman Jessica Rosenworcel.

Tyler Iokepa Gomes, deputy to the chairman of the Department of Hawaiian Home Lands, told the committee of difficulties faced by native Hawaiians in obtaining spectrum licenses. Since the DHHL is a state entity, not a Tribal government, Gomes said, it was forced to compete against two local, native communities in a waiver process. Gomes said that his agency’s competition with the other waiver applicants caused considerable friction in Hawaii’s native community at large.

Low digital literacy is also a problem for some native communities attempted to secure spectrum licenses. “When it comes to technology, a lot of people seem to be scared of it,” said Keith Modglin, director of information technology for the Mille Lacs Band of Ojibwe, a federally-recognized Indian Tribe.

Modglin argued that education initiatives to raise digital literacy and explain the intra- and intercommunity benefits of spectrum would benefit his band greatly.

The land of the Mille Lacs Band is a “checkerboard,” meaning that Tribal lands are interspersed with non-tribal lands, said Melanie Benjamin, the tribe’s chief executive officer. According to Benjamin, navigating government’s failure to account for this status caused substantial delays for her tribe.

In addition to improving communication, Schatz called on the FCC to take affirmative actions to ease regulatory burdens on small tribes. “There are some really under resourced native communities, and it shouldn’t be a labyrinth to figure out what they’re eligible for,” he said. “Try to figure out some one-stop shop, some simple way to access the resources that they are eligible for under current law.”

Javed acknowledged a need for the FCC improve its communication with native communities, but he said the FCC is making strides in other areas. “While spectrum is one piece of that puzzle, I think we are making a lot of progress in some of our programs like the Affordable Connectivity Program, updates to the E-Rate program, some of our mapping efforts as well,” he said.

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Rural

Republican Congressmen Criticize NTIA, FCC Absence at Farm Bill Hearing

‘Their absence is noted, and it illustrates their indifference towards the needs of rural Americans and our rural communities.’

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Photo of Rep. Glenn Thompson, R-PA, obtained from House.gov

WASHINGTON, September 19, 2022 – Two Republican congressmen criticized the National Telecommunications and Information Administration and the Federal Communications Commission for their absence at Thursday’s Agriculture committee hearing on the dispersal process for federal broadband funds.

In his opening statement, Ranking Member Glenn Thompson, R-Penn., said that the NTIA and FCC were invited to testify before the committee but declined. “Their absence is noted, and it illustrates their indifference towards the needs of rural Americans and our rural communities,” said Thompson. Rep. Rick Allen, R-Georgia, also panned the NTIA and the FCC for failing to appear.

“The question is: Are they dodging coming here today because they don’t want to be accountable for their flawed record?” Thompson told Broadband Breakfast, adding a Republican-controlled Congress may be more aggressive in its oversight of the two agencies. The midterm elections are in November.  

“If given the opportunity to chair this committee…should that happen, the next time we ask them to come here it will be with a subpoena,” Thompson said. “We’ll put some teeth behind it.”

In addition, Thompson said during the hearing that the United States Department of Agriculture – which runs the ReConnect broadband program – is the best-suited agency to administer rural broadband deployment – not the NTIA or FCC. “I don’t have a lot of trust in NTIA or FCC. They received significant dollars back under the stimulus [act] back in 2010 and they failed to bridge the digital divide,” he said during the hearing.

“I remain disappointed that USDA was largely excluded from playing in its essential role, a role that it plays very effectively…in bringing broadband…into rural communities,” Thompson added. “It is the best situated agency to help rural providers serve their communities.”

Contacted by Broadband Breakfast, the NTIA and FCC did not respond to a request for comment.

The NTIA was allotted $42.5 billion by the Infrastructure, Investment and Jobs Act to distribute to the states for that end. The federal government has also been rolling out American Rescue Plan Act funding to the states, which are actively being used to address gaps in connectivity. 

At the hearing, Xochitl Torres Small, Agriculture’s undersecretary of Rural Development, and Chris McLean, acting administrator for the Rural Utilities Service, emphasized the importance of interagency information and best-practice sharing in mapping, funding, and network deployment efforts.

“We meet with the FCC, NTIA, and the Treasury on a biweekly basis – and frankly, regularly more often – both to establish a regular cadence of communication and to work through those sticky issues,” said Small.

Farmers need broadband

The hearing was held as the committee prepares the 2023 “farm bill,” which will be the latest in a series of agricultural investment packages that originated in the 1930s. Farm bills are often passed at five-year intervals, and exact provisions of each farm bill vary as time passes and circumstances change. The latest farm bill, the Agriculture Improvement Act of 2018, included funding for conservation initiatives, crop subsidies, crop-insurance support, and the Supplemental Nutrition Assistance Program.

The Agriculture committee must shepherd the 2023 farm bill to President Joe Biden’s desk before the 2018 package expires in September 2023.

Garrett Hawkins, president of the Missouri Farm Bureau, testified to the broadband needs of farmers. “Today’s farmers and ranchers, we use precision [agriculture] techniques to make decisions that impact everything from fertilizer to the amount of water that’s needed for our crops to the amount and type of herbicides that are applied,” Hawkins said. “These are just a few examples of how farmers are using connectivity to bump yield, improve environmental impact, and increase profitability.”

Eric Slee, Wireless Internet Service Providers Association’s vice president of government affairs, issued a statement Thursday supporting the Agriculture Committee’s work. “WISPA strongly encourages Congress to work toward a Farm Bill that among other things targets broadband funding to truly unserved locations on a tech-neutral basis, and avoids duplication of services financed by private and federal resources,” the statement said.

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Rural

FCC Commits Additional $800 Million From Rural Digital Opportunity Fund

The authorization comes three weeks after the commission denied funding to Starlink and LTD Broadband.

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Photo of rural area from BroadbandNow

WASHINGTON, September 1, 2022 – The Federal Communications Commission announced Wednesday it is authorizing just under $800 million from the Rural Digital Opportunity Fund for six providers to expand broadband in over 350,000 locations in 19 states.

The six providers are NextLink Internet, California Internet L.P., Connect Everyone LLC, GigaBeam Networks LLC, Safelink Internet LLC, and Shenandoah Cable Television LLC. The states in which the winning bids will serve are Virginia, West Virginia, Nevada, Pennsylvania, Ohio, Illinois, Colorado, Arizona, Alabama, Wisconsin, Texas, Oklahoma, Nebraska, Louisiana, Kansas, Iowa, Indiana, Illinois, and Minnesota.

The largest amounts will go to Illinois with $212 million, Arizona with $140 million and Iowa with $130 million.

“This round of funding supports projects using a range of network technologies, including gigabit service hybrid fiber/fixed wireless deployments that will provide end-user locations with either fiber or fixed wireless network service using licensed spectrum,” the FCC said in a press release.

The announcement means the FCC has committed over $6 billion from the $9.2-billion fund, which initially announced winners under a different-look commission in December 2020, but which was scrutinized over the past year-and-a-half due to claims that the winning bids would go to areas that don’t need the connectivity promised. Under new Chairwoman Jessica Rosenworcel, the FCC has been purging the fund of what it sees as potential wasteful spending and provided those winning bidders with opportunities to let go of those bids.

The new commitment comes three weeks after the commission denied RDOF money to two such winning providers – broadband satellite service provider Starlink and the largest winner in the reverse auction process, LTD Broadband. The former was said to have a still-developing technology with a high-cost upfront commitment, while the latter had issues with getting certification from certain states by the time it was spurned.

FCC Commissioner Brendan Carr challenged the denial after saying he only learned about them in a press release.

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