FCC Denies ISPs Request to Waive Penalties for Withdrawing from RDOF

WASHINGTON, April 17, 2024 – The Federal Communications Commission on Monday denied an internet service provider's request to waive certain penalties for noncompliance after the provider opted to withdraw from the Rural Digital Opportunity Fund.

In a public notice, the FCC disagreed with Cable One’s claim that it has met its buildout obligations to 22 locations across four census blocks in Louisiana, and denied the ISPs request to waive penalties outlined in Rules 54.320(d) and 54.806(c)(1) for these 22 locations.

In a letter to the FCC on March 12, Cable One declared that it had finished building infrastructure to the 22 locations it received $3,615 to service in Louisiana, and affirmed it will continue to provide broadband and voice services in these locations. Consequently, it requested a waiver from the commission, contending that its withdrawal should not be construed as a default in meeting buildout objectives.

The FCC’s response on Monday stated, “Because Cable One is withdrawing from RDOF in Louisiana, it will not be subject to performance testing and reporting in the state, and we will have no way to confirm that Cable One will continue to meet the required performance obligations for the remainder of the RDOF support term.” RDOF requires awarded carriers to meet relevant performance metrics for a 10-year term.

Under Rule 54.320(d), from which Cable One sought relief, the administer of universal broadband service programs in the United States, the Universal Service Administrative Company, implements penalties in response to noncompliance by ISPs by either withholding a certain percentage of monthly support provided to ISPs to deploy and maintain broadband infrastructure, or by recovering support already disbursed. Different tiers of penalties apply depending on the severity of the noncompliance.

Similarly, Rule 54.806(c)(1) outlines award recovery amounts USAC will take based on the percentage of deployment achieved by the support recipient. For ISPs which have achieved less than 90 percent deployment, the penalties can include recovering up to 1.75 times the average support per location received, in addition to 10 percent of the total support authorized for the ISP.

These penalties escalate based on the degree of deployment shortfall, with higher penalties for lower deployment percentages. 

With the public notice, the FCC also announced the penalties Cebridge Telecom LA will face for surrendering 18 census blocks in Louisiana for which it secured $303,894.20 to service 2,266 locations in. Cebridge Telecom received winning bids through its parent company Altice USA, Inc., which announced it was withdrawing from the awards on March 15.

“Cebridge Telecom and Cable One's decisions to withdraw from the RDOF support program constitute notification that they will not meet the final service milestone and that they will not come into compliance after a 12-month grace period or at any point during the support term,” the public notice states.

As a result, each will receive no further RDOF auction support payments for Louisiana, and they are subject to support recovery and noncompliance measures consistent with the commission’s rules outlined above.

This means that ISPs must repay the specified support recovery amount within six months after receiving an invoice from USAC. If they don't, the bureau will allow USAC to use the support recipient's line of credit to recover the owed amount.

The FCC will also remove both companies’ Louisiana RDOF service areas from the Broadband Funding Map, making the defaulted census blocks eligible for other funding programs, including the $42.5 billion Broadband, Equity Access and Deployment program.

The ISPs remain subject to recordkeeping rules for the high-cost program. Carriers seeking relief from support recovery measures have the option to request a waiver.

Within the same public notice, the FCC announced that it will forgive noncompliance penalties for RiverStreet Communications, an ISP that is unable to fulfill its obligations under the Connect America Fund Phase II auction in seven census blocks in North Carolina.

The FCC said it found “good cause” to waive the aforementioned Rule 54.320(d); however, the commission did not specify what exactly led to this decision or what special circumstances warrant a deviation from the general rule.

The commission mentioned that USAC will stop providing financial support to RiverStreet Communications for the specific areas it is withdrawing from, detailed in a March 12 letter to the FCC.

Per the notice, RiverStreet will default on 234 of the 368 locations for which it was authorized to receive funding, totaling $679,130.10 over ten years.

The FCC is currently considering granting a short amnesty period to allow ISPs that cannot fulfill their contractual obligations under the RDOF and CAF II broadband expansion programs to relinquish commitments without facing full penalties outlined in program guidelines.