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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.”

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Funding

FCC Should Not Increase Rural Program Obligations in Light of New Federal Funding: Meeting Notes

Opponents say increasing coverage and speed obligations of the ACAM program may be unnecessary with new federal broadband money.

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Photo of FCC commissioners

WASHINGTON, August 4, 2022 – The Federal Communications Commission should withhold expanding funding for a program of the Universal Service Fund because there may be support for broadband infrastructure from other federal funds and state activities, according to responses to the FCC proceeding on revising that program.

The FCC’s Wireline Competition Bureau is seeking comment on enhancing the Alternative Connect America Cost Model program – which funds build-outs to rural and high-cost areas by allowing carriers to recover costs from the USF – by proposing additional funding support in exchange for increasing provider obligations to expand broadband deployment locations at higher internet speeds. It would also use the new Broadband DATA Act maps – which are set to be released by the fall – to determine new deployment obligations.

The new obligations would require speeds of at least 100 Megabits per second download and 20 Mbps upload to 90 percent and at least 25/3 Mbps to the remaining 10 percent of eligible census blocks. In 2019, the commission increased the speed obligation to 25/3, which made at least 106,000 additional rural homes and small businesses eligible for A-CAM funding.

But the proposal is facing some opposition. According to a meeting summary with a legal advisor in Commissioner Brendan Carr’s office published Tuesday, telecom company Windstream reiterated that Congress has created an unprecedented $42.5-billion opportunity to deploy broadband networks in rural areas through the Infrastructure, Investment and Jobs Act and corresponding state broadband programs.

Windstream stressed in the meeting the importance of studying the IIJA’s impact prior to increasing current obligations to fund broadband projects, which it said would impact the stability of the USF.

The FCC is currently studying the future of the USF, whose revenues are derived largely from dwindling voice service revenues. Windstream expressed its support of the commission acting under what Windstream views as the FCC’s authority to expand the USF contribution base to include broadband internet access services, which has been an issue of debate for some time and is being studied by the commission.

NCTA, the internet and television association, in a summary of a meeting held with the legal advisor to Chairwoman Jessica Rosenworcel, added that rather than spend USF resources where they may not be necessary – and may even disrupt state activities already in progress – the commission should pause any new high-cost support through the A-CAM program.

The association added that the FCC should be skeptical of requests to increase support for ongoing maintenance and operations through A-CAM as alternative federal funding may eliminate the need for operational support in many areas.

Comments on the decision to revise A-CAM will be accepted through August 18.

The proposal follows a request in June by Siyeh Communications, which asked for a change in A-CAM because the program allegedly incorrectly determined certain areas to be ineligible by misidentifying those areas being served by an unsubsidized, unaffiliated carrier.

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Funding

Agriculture Department Announces Fourth Round of ReConnect Funding

The announcement is the second round of ReConnect funding in fiscal year 2022.

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Photo of RUS Acting Administrator Christopher McLean by Drew Clark from June 2022

ASHINGTON, August 1, 2022 – The Rural Utilities Service of the United States Department of Agriculture announced the fourth round of funding for the ReConnect Program, with publication of the funding opportunity announcement scheduled for the federal register on August 4.

The announcement is the second round of ReConnect funding in fiscal year 2022.

The RUS has seen great interest in the third round of funding and is considering drawing on other federal infrastructure funds to satisfy demands, said the Acting Administrator Christopher McLean said in June. The latest round of funding received 305 applications requesting a total of $4.8 billion, but the program only allocated $1.15 billion.

USDA Considering Drawing on Infrastructure Bill Money as ReConnect Demand Increases

 

The ReConnect Program uses funds provided under the Infrastructure and Investment Jobs Act which sets aside $42.5 billion for the National Telecommunications and Information Administration to disburse among states for broadband infrastructure. It provides loans and grants to broadband deployment projects in rural areas.

The application will open 30 days after the announcement of funding opportunity is released. Applications will be submitted through the RUS online application portal on the ReConnect webpage. The application process will be open for 60 days.

Applicants should consider projects that will assist rural communities recover economically from the COVID-19 pandemic, ensure all rural residents have equitable access to rural development programs, and reduce climate pollution while increasing resilience to the impacts of climate change.

Proposed service areas are eligible for funding if at least 50 percent of the households in the area lack sufficient access to broadband as defined in the funding opportunity announcement.

As part of the application process, applicants are expected to undergo an evaluation process and will be scored based on the rurality of the proposed service area, level of existing service, economic need of the community, affordability of service offerings, net neutrality principles, cybersecurity, and labor standards. Applications submitted by local governments, non-profits and tribal governments will be awarded higher scores.

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Funding

Anticipating Launch, Yellowstone Fiber to Seek Federal Funds for Rural Broadband

With service beginning in late September, non-profit fiber ISP aims to serve rural Gallatin County

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Photo of Greg Metzger in July 2022 from Yellowstone Fiber

BOZEMAN, Montana, July 27, 2022 – Officials at the non-profit internet entity Yellowstone Fiber announced Thursday that they would pursue federal broadband funding to expand network construction in rural areas of its footprint in Montana.

Because every state is poised to receive a minimum of $100 million to expand broadband infrastructure under the bipartisan Infrastructure Investment and Jobs Act, officials at Yellowstone Fiber believe they are well-suited to obtain funding to connect homes, businesses, farms, and ranches to high-speed fiber internet in the sections of the Montana’s Gallatin County north of Bozeman.

Although Yellowstone Fiber is just going live with its first customers in September – and began offering pre-sales in late July – the new fiber entity believes that the availability of funding through the Broadband Equity, Access and Deployment program of IIJA offers a unique opportunity.

As with all states, Montana will receive a minimum of $100 million to expand high-speed broadband infrastructure to the nearly one-third of state residents who currently lack access.

Speaking about the impending launch of services on Yellowstone Fiber, CEO Greg Metzger said, “This is an important milestone for Yellowstone Fiber and we’re enormously excited to announce we’ll have the network live in a matter of weeks.”

“For decades, people in rural Montana have been limited by slow and expensive internet service and empty promises by cable providers. Today’s announcement signals we’re serious about connecting rural Gallatin County to high-speed fiber and the limitless possibilities that it brings,” he said.

Yellowstone Fiber is building an open access network, which means that Yellowstone builds, owns, and operates the fiber infrastructure, then leases space on its high-speed fiber to service providers, including Blackfoot Communications, Skynet Communications, Global Net, TCT and XMission.

In an interview, Metzger touted the role that open access networks play in enabling free market competition, including better prices, service, and reliability.

Metzger, an entrepreneur who previously manufactured plastic deposit bags for banks, sold that business and bought a furniture company in Montana.

Although he said he would rather be playing golf, when he stumbled across a new funding mechanism, he decided to create a non-profit entity designed to serve his community with fiber optic network services.

Yellowstone Fiber was formerly Bozeman Fiber, and was created in 2015 as an economic development initiative to address the lack of true high-speed broadband in Gallatin County, Montana.

A group was formed including the City of Bozeman, Gallatin County, the Bozeman School District and business leaders and funded by eight banks with a Community Reinvestment Act-designated loan.

This $4,000,000 was used to create a fiber ring connecting anchor tenants including the city, county and the school district, and also servicing the Cannery district and downtown Bozeman.

Anchor operations began in the fall of 2016, and commercial operations in February 2017. In 2020, the network formed an operational partnership with Utah-based UTOPIA Fiber to bring fiber-to-the-home services to every address in Gallatin County.

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