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Groups Heap Praise on FCC for Corrective Action on Rural Digital Opportunity Fund

The agency is scrutinizing the winning bids for the $9.2-billion fund, and asking companies to consider withdrawing.

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Former FCC Chairman Ajit Pai, foreground right, and current Acting Chairwoman Jessica Rosenworcel, background.

July 29, 2021—Industry and advocacy groups are praising the Federal Communications Commission after it announced this week that it is revisiting the winning bids of the $9.2-billion Rural Digital Opportunity Fund, while giving an opportunity for successful bidders to withdraw their funding requests after complaints of possible overbuilding and wasteful spending in coverage areas.

The agency simultaneously announced that that nearly 1,500 winning bids amounting to $311 million of the RDOF across 36 states are ready to be authorized. The RDOF program, which announced winners in December under previous agency chairman Ajit Pai, was done through a reverse auction, meaning successful bidders were those who needed the least amount of the subsidy to build.

The auction complaints stem from what some have said are suspicious claims of project delivery by the top winners, including whether fixed-wireless technologies can deliver gigabit internet speeds, as well as concerns about overbuilding in areas already considered served with adequate broadband.

A further April 1 letter signed by five broadband associations asked the agency to leave the areas that are supposed to be funded by RDOF open to other funding programs until final applications are approved, urging the FCC to make known the credit and debt reports of the winning bidders to ensure solvency.

FCC gives companies opportunity to withdraw 

In light of complaints of possible overbuilds and the fund being used to connect parking lots, the agency announced that it had sent letters to 197 of winning bidders provided them an opportunity to withdraw their funding requests “from those places already with service or where significant questions of waste have been raised.” One notified winner was SpaceX’s Starlink, one of the big winners of the auction with an expected subsidy of roughly $900 million.

The FCC said several bidders have said they will not pursue all or some of their winning bids in a state. It also denied money to AB Indiana as well as top winner LTD Broadband’s application to provide connectivity to California, Kansas and Oklahoma, which represented $271 million of the $1.3 billion it was approved for, because it didn’t get state certification.

“This program can do great things, but it requires thoughtful oversight,” said Acting FCC Chairwoman Jessica Rosenworcel. “That’s why we are refocusing the program on unserved areas and putting winning bidders on notice of their obligation to ensure that support goes to the areas that need it. And for those applicants who are dragging their feet or can’t meet their obligations, follow the rules or we will disqualify you and move on.”

Praise for FCC action

The Ensuring RDOF Integrity Coalition, which was one of the signatories of the April letter, said in a Monday press release that it is “pleased” about the FCC’s efforts to “clean up the mess” of the auction.

“These remedial actions by the FCC only begin to reveal the underlying problems of several RDOF applications,” said Bob Silverman, counsel to ERIC.

“The Coalition calls on the FCC to go bold on its corrective efforts by establishing a public review process under protective order that would expeditiously assist FCC staff with vetting applications, consistent with the wishes of members of Congress and local and state governments concerned with eligibility of potential defaulted areas that could benefit from other sources of broadband funding,” Silverman added.

The FCC released an initial list of bids in default, which are subject to penalties.

Since the auction winners were announced in December, advocacy website the Free Press conducted a six-part investigation into the auction, allegedly claiming coverage areas of the winning bidders were densely-populated urban and affluent areas with existing adequate connectivity.

It also found that connectivity would be supplied to unoccupied parking lots, storage tanks and traffic islands.

“We appreciate the new Commission’s close attention to the issues we originally raised at the tail end of the Pai FCC,” Free Press Research Director S. Derek Turner said in press release.

“While we have yet to fully review the series of recommendations and actions released today, it’s encouraging that Acting Chairwoman Rosenworcel wants to get this right…Under Rosenworcel, the FCC seems determined to do the due diligence that Pai skipped to ensure that federal money actually connects real people — as opposed to traffic medians — to affordable services.”

According to Telecompetitor, at the Fiber Connect 2021 conference, Tony Thomas, CEO of Windstream, which was the recipient of $500 million from RDOF, said the program was a mess with “a lot of unqualified bidders” and that “we can’t do that again.”

Reporter Uhunoma Edamwen, from Richmond, Virginia, earned his Bachelor of Arts in Media Studies and Public Policy at the University of Virginia. Working towards a Masters in Public Administration, he has performed communications and research work and aims to continue his career in the public interest arena with a focus on technology policy. Uhunoma enjoys podcasts, gaming, spicy foods, and fighting for better, high-speed broadband for everyone.

Funding

Venture Capital, Private Equity and Institutional Investors on Digital Infrastructure Investment

Panel 4 video. Join the Broadband Breakfast Club to watch the full-length videos from Digital Infrastructure Investment.

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Video from Panel 4 at Digital Infrastructure Investment: Tom Coverick, Managing Director, Keybanc Capital Markets, David Wedick, Chief Financial Office, Maine Connectivity Authority, and Vikash Harlalka, Equity Research Analyst, Communications Services Team, New Street Research, moderated by Drew Clark, Editor and Publisher, Broadband Breakfast,

For a free article summarizing the event, see States and Municipalities Should Move Quickly on Infrastructure Funding, BEAD or Not: Beginning financial planning early and allow time to tweak statutes that may stand in the way of certain funding options, Broadband Breakfast, November 18, 2022.

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States and Municipalities Should Move Quickly on Infrastructure Funding, BEAD or Not

Beginning financial planning early and allow time to tweak statutes that may stand in the way of certain funding options.

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Photo of Drew Clark (left), Tom Coverick, David Wedick and Vikash Harlalka at Digital Infrastructure Investment by Zoey Howell-Brown.

WASHINGTON, November 20, 2022 – Despite an unprecedented influx of federal broadband funding, states should expeditiously pursue diverse network funding options, said Tom Coverick, managing director at Keybanc Capital Markets, speaking Thursday at Broadband Breakfast’s Digital Infrastructure Investment conference.

Coverick advocated financial strategies that are “nimble, responsive, and quick.” And among other benefits, beginning financial planning early on allows time to tweak statutes that may stand in the way of certain funding options, he argued.

“I don’t think sitting and waiting for one piece (of financing) is the right thing to do,” he said. “I don’t say that people should be hasty, but the reality is it’s always easier to slow things down in the financial world than it is to speed them up,” he added.

David Wedick, chief financial officer of the Maine Connectivity Authority, also spoke to importance of timely action. “Time is money, and the market is changing,” he said.

The two were speaking on a panel moderated by Broadband Breakfast Editor and Publisher Drew Clark, and including Vikash Harlalka, a member of the Communications Services team at New Street Research.

The private sector can offer much more to the broadband industry than just financial support, Wedick argued. “Investment from the private sector is not just going to be in terms of dollars, it’s going to be in terms of resources (such as) the law firm that decides to create a new division around broadband legal work,” he said.

In addition to seeking out private investment, state officials must navigate the federal government’s multitude of broadband-funding efforts, including a $65 billion infusion from the Infrastructure Investment and Jobs Act.

Federal moneys are divided among numerous programs administered by various federal agencies, including the United States Treasury’s Capital Projects Fund, the Department of Agriculture’s ReConnect program, the Federal Communications Commission’s Rural Digital Opportunity Fund, and the National Telecommunications and Information Administration’s Broadband Equity, Access, and Deployment initiative. The BEAD fund will distribute $42.45 billion to the states for deployment and related projects.

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Local Leadership and Coordination Key to Proper Federal Fund Allocation, Conference Hears

Local communities understand their own needs, said Arkansas’s Glen Howie.

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Photo of Phil Murphy, senior advisor at the NTIA, at the DII conference Thursday

WASHINGTON, November 17, 2022 – Robust state and local leadership in coordination with federal support initiatives is key to the rollout of the Infrastructure, Investment and Jobs Act’s broadband funding, agreed officials from the National Telecommunications and Information Administration and state broadband offices speaking at Broadband Breakfast’s Digital Infrastructure Investment conference Thursday.

Local communities understand their own needs best, said Glen Howie, director of the Arkansas State Broadband Office. Howie said his state will “go county by county,” encouraging ground-up leadership from the citizens of his state.

“It’s not really about Washington, and it’s not even really about Little Rock, it’s about (local communities),” he said. Before assuming his current position, Howie worked in Louisiana’s broadband office, another state which prioritizes community engagement.

In Maryland, state funding initiatives favor service providers who enjoy community support, said the state’s broadband director, Kenrick Gordon. One Maryland program even allows local jurisdictions to apply in partnership with a preferred provider, he said.

At the federal level, the NTIA is working with states to provide them the resources they need, said Phil Murphy, senior advisor in the Office of the Assistant Secretary at the NTIA. Speakers noted that many state broadband offices are only months old, understaffed, or both.

“We really want to be partners,” he said, “We want to work with (states) through this process and to help them leverage the capabilities that we’ve developed so that we’re all working towards the same goal.”

And beyond the IIJA funding initiatives, Howie said he is working to brighten his state’s future by seeking out technology innovators in many fields, including agriculture, education, and healthcare.

“I’m on the hunt for really cool, innovative things that could be disruptors…in Arkansas,” he said.

The IIJA, which became law one year ago Tuesday,  allocated to broadband infrastructure an unprecedented $65 billion. Congress designated the bulk of these funds – $42.5billion – for the Broadband Equity, Access, and Deployment program, primarily a infrastructure deployment initiative, which will issue grants to the states based on relative need, as shown in the Federal Communications Commission’s national broadband map.

The NTIA administers BEAD funds and is scheduled to announce states’ grants by June 2023. Once states receive funds, they will operate sub-grant programs to allocate funding to individual deployment and related projects.

Beside the BEAD program, the IIJA funded initiatives to promote digital equity and adoption, middle-mile infrastructure, and tribal broadband.

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