Lumen Facing Penalties in Wake of RDOF Defaults
The company defaulted on auction-won locations in three states
Ari Bertenthal
WASHINGTON, September 13, 2024 - A federal agency is holding Lumen Technologies responsible after the company withdrew from thousands of Rural Digital Opportunity Fund locations across three states.
The company, which originally won over 77,000 homes and businesses in the RDOF reverse auction in 2020, is now defaulting on 3,500 of those locations.
The Federal Communications Commission said in a public notice Monday that it expects to recover all of its previously established financial support for the defaulted locations that Lumen will no longer serve when the deployment term concludes.
The company led by CEO Kate Johnson decided to withdraw from the RDOF support program locations in New Mexico, South Dakota and Wyoming.
Based in Monroe, La., Lumen provides Internet access to customers in 16 states. It ended the second quarter with 2.65 million broadband subscribers, down 52,000 from the previous quarter.
“Lumen has observed deployment costs increase dramatically in many areas since it made its bids,” said Lumen Vice President and Deputy General Counsel Joseph Cavender in an August letter to the FCC. “[Lumen understands] that it may be subject to applicable non-compliance rules [as a result of its defaults].”
In the public notice, the FCC said the federal government expected RDOF winners to keep their promise to connect the unserved to the Internet.
“Although some defaults after auctions are expected because of changing business plans or economic circumstances, we expect carriers to live up to their deployment commitments, and those who fail to meet their obligations can jeopardize the opportunity to bring broadband to the promised areas and undermine the integrity of the programs,” the FCC’s Wireline Competition Bureau said in the 12-page notice.
If the agency cannot find an alternative carrier, it designates the area as a priority for service under other federal broadband access programs.
The FCC also requested in its notice that any other companies who may be considering a default contact the Wireline Competition Bureau, along with any relevant state broadband offices or Tribal governments in order to discuss their specific situations.
