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RDOF Winners Seek Supplemental Funding for Covid-related Costs

The group attributes surging costs to unforeseen post-COVID challenges



Photo of dollar bills from Pixabay.

WASHINGTON, August 3, 2023 – Winning bidders for the Rural Digital Opportunity Fund are pressing the Federal Communications Commission for supplemental funding due to Covid-related factors, despite the chairwoman’s response that the agency currently lacks such funds.

On June 20, representatives of the Coalition of RDOF winners met with FCC Chairwoman Jessica Rosenworcel‘s legal advisor to request more financing due to circumstances that “could never have been anticipated at the time of bidding.”

In the ex-parte notice letter, the companies pointed to the impact of post-COVID fiscal policies, such as consecutive interest rate hikes, which had triggered “spiraling inflation” and driven up construction costs. Moreover, the influx of federal grants intended to expand broadband infrastructure resulted in a “massive” surge in demand for broadband construction materials, equipment, and labor, also leading to escalated final costs, the group said.

As per the coalition’s estimation, those challenges have led to a fourfold increase in the total costs of network construction. The delivery time for these projects has also been extended by six to 18 months.

Therefore, the coalition is asking the commission to disburse additional funds from the initial $9 billion allocation, as the agency ended up authorizing only $6 billion following defaults of more than $2.8 billion by a handful of companies earlier this year.

Responding to a group of senators who wrote to the Chairwoman on June 12 asking about the FCC’s strategy to address concerns about RDOF funding shortfall, Rosenworcel said that the FCC “collects only enough funding through the Universal Service Fund contribution process to match the approximately $6 billion committed” and that the agency does not “have support in reserve readily available for reallocation.”

Philip Macres of the Klein Law group, on behalf of the coalition of RDOF winners, told Broadband Breakfast that the FCC could modify the contribution factor for the Universal Service Fund to direct additional money for RDOF. Macres then cited how the commission had previously adjusted the USF contribution percentage to facilitate extra funding for A-CAM, another federally funded grant catering to carriers providing broadband access to hard-to-reach, high-cost, and low-return locations across the country.

But financial support is not the only relief the group is asking for. In a letter dated July 14, the coalition pointed out that the FCC can execute various amnesty measures, all culminating in permitting companies to surrender their pledged coverage areas without incurring penalties if the required funding amount remains unaddressed. Additionally, they also suggested the FCC to expedite the distribution of funds or extend the funding period by another year.

In her letter on June 26, Rosenworcel emphasized the importance for the commission to uphold the rules it had set forth, following the agency’s proposal in May to impose $8 million in fines against 22 RDOF applicants who failed to meet their obligations.

“The Commission’s default rules are designed to impress upon recipients the importance of being prepared to meet all Commission requirements and be prepared to fulfill deployment obligations,” read the letter.

However, Rosenworcel noted that the FCC would still consider waiver requests on a case-by-case basis and “warrant a deviation from the general rule if such a waiver would be in the public interest.”

Opposition to coalition

Although the coalition’s efforts have yet to move the needle at the FCC, they have encountered strong opposition from the telecom association WTA-Advocates for Rural Broadband. On July 28, the association submitted a letter warning the commission against what they perceived as “gaming tactics” employed by those seeking additional funding.

“An obvious gaming danger,” said the letter, is the use of a strategy that offers an “unreasonably low” amount of money to win specific areas, and then ask for more funding later. Acceding to the request for additional funding would lead to unfair treatment of “responsible” bidders who opted to withdraw from the competition rather than compromising their prices beyond what was deemed “financially feasible or sustainable,” said the WTA.

Additionally, if the commission were to grant the coalition’s requests, this would set a very “problematic precedent for the future reverse auction,” it continued. The reverse auction model, where the lowest bidder wins the bid, serves as the primary method for distributing funds in RDOF and other programs like the Connect America Fund, and potentially the Broadband Equity, Access, and Deployment program, a flagship initiative of the Joe Biden administration that has been garnering significant media attention lately.

In the case of RDOF, the companies’ inability to follow through on their bid commitments calls into question the efficiency of the reverse auction approach, which has been a subject of considerable controversy in recent years. Some argue that it can incentivize companies to use their funds more efficiently, ultimately leading to a reduction in project costs. Its critics, including the WTA, contend that the reverse auction model tends to favor larger companies with a financial advantage, or potentially results in a compromise on service quality to accommodate the reduced prices.

In addition, industry insiders also expressed concerns that the reverse auction method exacerbated the situation by permitting incompetent bidders to win projects they were incapable of completing in the first place.

Nevertheless, the coalition’s request is the latest addition to the program’s tumultuous history as it has weathered numerous policy changes since the tenure of FCC Chairman Ajit Pai up to the current Chairwoman.

First, the FCC’s map used to identify unserved and underserved areas came under heavy criticism for being plagued with inaccurate and unreliable data. Then, the updated map came along which reshuffled the target locations, resulting in a surge of companies defaulting on areas they had committed to serve, as they cited the new data categorized those regions as already served.

Back in 2020, the RDOF program was hailed by former Chairman Pai as “the biggest step the FCC has ever taken” in bridging the digital divide and extending digital opportunities to rural America. Three years into what was supposed to be a decade-long plan and drawing more criticism than praise along the way, it remains uncertain whether RDOF will truly live up to Pai’s ambitious claim.

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House Democrat Introduces Bill to Add Local Parks to E-Rate Program

The Technology in the Parks Act would also put parks in line for used computers and equipment from federal agencies.



Screenshot of Rep. Danny Davis, D-Illinois, at a House hearing on November 15.

WASHINGTON, December 1, 2023 – A House Democrat announced on Friday a bill that would fund broadband internet and devices for public parks.

The Technology in the Parks Act would expand the Federal Communications Commission’s E-Rate program to include local parks. That program currently provides approximately $4 billion in yearly broadband subsidies for schools and libraries through the FCC’s Universal Service Fund. Adding public parks would allow them to request government money toward the cost of internet each month.

The move is “crucial to bringing broadband access to these community spaces,” said the bill’s sponsor, Rep. Danny Davis, D-Illinois, in a statement.

In an effort to provide devices on the subsidized connection, the bill would also put parks in the U.S. General Services Administration’s Computers for Learning program. That would give parks access to computer equipment no longer being used by federal agencies. 

The bill would also tap the Department of Labor to implement a grant program for “technology training programs” in local parks.

Similar programs aimed at helping people navigate and participate in online spaces are drawing funds from other federal agencies. The Commerce Department’s $42.5 billion broadband expansion program makes room for states to fund digital literacy trainings, and its $2.75 billion Digital Equity Act programs are targeted at such efforts.

Reps. Raúl Grijalva, D-Arizona, and Bruce Westerman, R-Arkansas, introduced a similar bill on November 29 that would expand broadband in national parks managed by the federal government.

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North Carolina Releases Final Guidance on $100 Million Pole Replacement Program

Providers may receive up to $10,000 for each utility pole they replace in unserved areas.



Photo of Nate Denny, deputy secretary for broadband and digital equity at the North Carolina Department of Information Technology.

WASHINGTON, November 27, 2023 – North Carolina’s broadband office released on Monday final guidance for its $100 million pole replacement program.

The program, funded by the American Rescue Plan Act, will reimburse broadband providers for utility pole replacement costs. Expanding networks can involve attaching equipment to those utility poles. When a pole needs to be replaced to accommodate more equipment, pole owners typically pass the cost on to attachers.

Telecommunications companies have cited this extra cost as a barrier to quick broadband deployments, something utility companies dispute. The two industries have been in conflict on the issue for years, with both continuing to push the FCC to weigh in on a cost sharing regime.

North Carolina’s plan is an effort to smooth over the issue for future broadband expansion efforts, Nate Denny, the state department of information technology’s deputy secretary for broadband and digital equity, said in a statement. 

“It addresses a significant barrier to closing the digital divide in remote parts of our state,” he said.

Under the program, broadband providers can apply for 50 percent of the replacement cost for each pole replaced, up to $10,000 per pole. Pole replacement costs in unserved areas after June 1, 2021 are eligible for reimbursement. 

The program will kick off in February 2024 and accept applications from qualified providers.

The FCC has authority in 26 states over the terms of agreements between investor-owned utilities and telecom companies, which does not include publicly owned utilities or broadband providers that solely provide internet. The agency is set to vote on updated pole attachment rules at its December meeting.

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Expert Opinion

Kate Forscey: National Security and Global Success Depend Upon Prioritizing Telecom Funding

The Affordable Connectivity Program and the Rip-and-Replace program are both central funding needs for the industry.



The author of this Expert Opinion is Kate Forscey, contributing fellow for the Digital Progress Institute

With the government now funded into the new year, it’s time for Congress to take another look at its broader priorities, especially when it comes to the race with China for dominance in next-generation technologies. Whether it’s AI or cloud computing or virtual reality, if the United States is to remain competitive, we need to make secure and effective communications a priority. This means finally connecting all Americans to high-speed broadband and ensuring that our connectivity cannot be undermined by foreign adversaries.

Two popular programs are central to this goal: the Affordable Connectivity Program and the Rip-and-Replace program. Both of these programs have tremendous bipartisan, bicameral support; but both have been underfunded and now risk dying on the vine. Congress has the opportunity to fully fund these programs if it has the will to do so.

Let’s break it down.

The Affordable Connectivity Program provides low-income American families and veterans with discounts on Internet service and connectivity equipment, including higher discounts for those living on Tribal lands. With affordable broadband, more Americans can get online and be a part of the digital economy.

The ACP has been wildly successful, connecting over 21 million households to essential broadband they could otherwise not afford. And it continues to garner widespread support, with the vast majority of voters (78%) calling for its extension, including 64% of Republicans, 70% of Independents, and 95% of Democrats.

Congress provided the ACP with $14.2 billion in 2021—but funding is now running low and is projected to be fully exhausted by spring 2024. Governors, lawmakers on both sides of the aisle, public interest groups, and Internet service providers are all raising the alarm about its imminent depletion. That’s why the Biden Administration in October called on Congress to replenish the program’s coffers with an additional $6 billion.

A good start, but not the whole story. Our foreign adversaries are well known for their espionage, and while a spy balloon might get the attention, a far more insidious problem lurks in our communications networks: equipment designed and produced by Chinese suppliers Huawei and ZTE. A bipartisan Congress passed the Secure and Trusted Networks Act to eradicate national security threats such as these, but sufficient funding for the Rip and Replace program has never materialized.

Again, the Biden Administration has stepped up and identified a need for $3.1 billion to fully fund the program as a “key national security priority” in its emergency supplemental funding request. It’s a narrative we can all get on-board with: that broadband falls under the umbrella of national security as a whole. American consumers and institutions both benefit from American-built networks and increased protection at home. But communications providers can’t live up to these needs on their own.

As it stands, the responsibility to get affordable, secure connectivity programs across the finish line rests with Congress. Even with a consensus of support for these two programs, the devil is in the details of how to make the price tags palatable to enough policymakers on Capitol Hill. The key is ensuring that any changes preserve the widespread efficacy of the program that has made it popular so far.

For example, Congress could cut the cost of the ACP by limiting the additional Tribal funding to rural Tribal lands. Any such change should be grounded in an evaluation of existing need in urban areas, but could be an opportunity to ensure funds are being directed to areas of greatest need. And Congress should consider indexing the ACP to inflation. The high inflation of recent years has wreaked havoc on the budgets of consumers—and inflation-proofing the program would ensure that broadband remains affordable for all Americans even should inflation come back.

As for Rip-and-Replace, those of us urging for more funds could concede putting safeguards in place to ensure the money is being used for its intended purpose – the kind of compromise needed to get such policies across the finish line

These are just some ideas as we head into the final funding fight. Not everyone is going to be on the same page on what is and isn’t working best, but shared success starts by recognizing that we all have the same endgame. Congress must ensure that adequate funding for the ACP and Rip and Replace program are included in any year-end spending package. We have an all-too-rare opportunity to win the race for high-tech dominance—we just need to provide the resources.

Kate Forscey is a contributing fellow for the Digital Progress Institute and principal and founder of KRF Strategies LLC. She has served as senior technology policy advisor for Congresswoman Anna G. Eshoo and policy counsel at Public Knowledge. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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