Mercury Broadband Stares Down $25 Million Penalty for Surrendering RDOF Locations

WASHINGTON, May 20, 2025 - Mercury Broadband in Mission, Kan., is asking the Federal Communications Commission to waive a $25 million penalty over the regional wireless and fiber ISP’s decision to surrender thousands of locations awarded by the FCC in a reverse auction conducted by the Rural Digital Opportunity Fund (RDOF) program five years ago.

Mercury won over 122,000 locations in the RDOF auction, but has since defaulted on more than 1,000 Census Block Groups with RDOF locations in six states: Indiana, Kansas, Michigan, Illinois, Missouri, and Ohio.

Under FCC rules, Mercury is expected to return the $10.8 million given to it in RDOF support, and pay a fine of $14.2 million resulting in a total payment of $25.1 million. Mercury CEO J Findley argued in an FCC filing Monday that “the millions of dollars in penalties Mercury would be required to pay—far above any amount Mercury received—are not reasonable and proportionate with the bids Mercury submitted.”

Mercury sought relief in a waiver petition filed Monday with the agency.

Mercury argued that there was good cause for the FCC to waive the penalty. 

The ISP argued that retaining the surrendered locations would have led to overbuilding, as “at least half the locations in more than 500 of the returned CBGs are already served by 100/20 Mbps service, and every single location within nearly 200 of these CBGs is already served.” It asserted that if the RDOF auction were held today, none of these CBGs would be deemed unserved or eligible for federal USF support.”

For the surrendered locations that remain unserved, Mercury claimed that its expeditious return of those locations, and its efforts to ensure that they qualified for Broadband Equity, Access, and Deployment (BEAD) program funding, justified a waiver of its penalty. It further asserted that many of the CBGs it was awarded used overinflated estimates for the number of locations they contained and that, along with inflation, this “dramatically changed the economics of the timeline in which Mercury could expect to recover its deployment investment.”

Mercury also maintained that many of the areas it served were designated as unserved by the BEAD program. As a result, it claimed that it would soon be forced to compete with federally subsidized internet service, and would not be able to generate the revenue necessary to serve the returned CBGs.

If the FCC waives the fine, Mercury said it would agree “to repay an amount equal to the number of surrendered locations multiplied by the statewide average support per location that Mercury was authorized to receive in each state.” But the ISP did not say how much less than $25 million that would be. 

In addition to waiving the fine, Mercury also asked the FCC to reduce its letters of credit “to levels commensurate with its continuing RDOF obligations” and to remove its surrendered locations from its RDOF obligations. It asked that if “the [FCC] deem a penalty appropriate here,” it should assess one under the pre-authorization forfeiture rules, which cap penalties at the lesser of either 15% of an ISP’s RDOF support or $3,000 per surrendered CBG.