Rural Digital Opportunity Fund Weighting System Favors Low Latency Technology

June 9, 2020 — The Federal Communications Commission adopted procedures for Phase I of the Rural Digital Opportunity Fund auction, or Auction 904, at their open meeting Tuesday.

The auction, scheduled to begin October 29, will award up to $16 billion in federal support to existing and prospective broadband providers over the course of 10 years, for the development of broadband networks to unserved areas across rural America.

The most significant change in bidding procedures for Auction 904 is the change in bid assignment rules. The agency settled on a weighted system that will favor bids which provide higher speed, or lower latency, service.

The RDOF grants define four performance tiers Internet Service Providers can fall into, in order to rank them by latency. For the Phase 1 auction, a new “baseline” tier of 50/5 Mbps was added.

Providers’ success in the auction relies on their ability to deploy lasting, low latency networks at the lowest possible price.

ISPs seeking bids are tasked with identifying and utilizing optimal building strategies and cost-effective low latency technology, as efficient network construction will ensure their applications are well positioned to benefit from available funds.

The new Phase I procedures will likely impact the type of internet infrastructure technology ISPs choose to deploy, as they hope to increase their chances of securing funding.

For example, satellite-based services have been adversely impacted by the agencies’ weighting system. Initially, it was questioned whether satellite services would even be allowed to bid to provide low-latency service, as providers do not have a track record of delivering advertised speeds.

Fiber infrastructure is extremely high speed, but its utilization will be affected by its high deployment costs. In order to secure funding, it will be necessary for fiber ISPs to strategize with possible partners to drive down the overall infrastructure costs, preserving their competitiveness for bids.

Fixed wireless providers have an advantage in securing federal funding. They hold the potential to deliver rapidly built, robust, and cost-effective high-speed broadband networks to unserved areas.

The American Communications Association and the Rural Broadband Association expressed their support for the effective use of government funding with the adoption of Phase I at the commission meeting.

Commissioner Jessica Rosenworcel dissented in part to the auction rules, arguing that the commission should have acted sooner to correct known issues with broadband mapping data. Further, she objected to a rule that prevents recipients of state-level broadband funding from participating in the RDOF auction.

The $16 billion Phase I budget will likely exceed any other federal broadband funding program for the next decade.

Phase II of RDOF will award $4.4 billion for census blocks considered partially served, based on data to be collected through a new process that aims to be more accurate than the agency’s past mapping. The commission will reconsider which technologies are categorically prohibited from bidding in the second phase of the auction.