FCC Proposes $22 Million Fine Against LTD Over RDOF

The company was one of the biggest to default on the Rural Digital Opportunity Fund auction.

FCC Proposes $22 Million Fine Against LTD Over RDOF
LTD Founder and GigFire CEO Corey Hauer

WASHINGTON, December 11, 2023 – The Federal Communications Commission on Tuesday released a proposal for a $21.7 million fine against LTD Broadband for defaulting on its bid in the commission’s broadband subsidy program.

LTD was the biggest winner in the 2020 Rural Digital Opportunity Fund auction, coming away with more than $1.3 billion in planned support over 10 years. Broadband providers competed with bids to serve unconnected areas using the least government money.

In August 2022 the FCC nixed LTD’s award, declaring it to be in default. LTD, now called GigFire, had failed to meet eligibility requirements in several states it was supposed to serve and, the commission decided, was ultimately unlikely to be capable of getting high-speed internet to the 528,088 homes and businesses to which it had committed.

LTD was not alone. It’s estimated that over $2.8 billion of the $9.2 billion awarded has since gone into default. The commission was criticized at the time for choosing bids from companies that exaggerated their capability and only vetting applicants more closely after the auction.

That’s what happened in the case of LTD – the commission found it to be in default after reviewing a longer application from the company. On the same day the proposed fine was adopted, the FCC denied LTD’s appeal of the default decision, reaffirming its position that the company could not meet its obligations under the program.

By defaulting on its bid, the commission said in a statement announcing the fine, LTD “hindered the disbursement of funds that could have otherwise been expended for the advancement of broadband access across primarily rural areas in the United States.”

The Minneapolis Star Tribune reported that the company’s CEO Corey Hauer is considering further options, including “taking the FCC to court.” Hauer did not respond to a request for comment.

Other major defaults include SpaceX and Starry, who lost out on $886 million and $269 million respectively. The two companies were slated to serve more than 700,000 rural homes and businesses.

LTD’s penalty is the largest to date – the commission has proposed another $13 million in total fines against 95 other defaulting RDOF bidders. That includes a $732,000 fine against Etheric Communications announced alongside LTD.

RDOF was originally budgeted for $20.4 billion, but it’s not clear when or if the remaining money will be awarded.

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