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Questions on Winners

RDOF Money May Start in a Year

FCC staff is struggling to work through the information submitted by winners of the Rural Digital Opportunity Fund Phase I auction, which closed in December, and it could take a year or longer for money to start flowing through the program, industry and FCC officials said in interviews. The FCC said 417 applicants filed long-form applications after winning bids. Long-form application reviews are complicated and take time to process, officials said.

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In comparison, the FCC must sort through applications by 21 winners in the C-band auction. The much smaller Connect America Fund Phase II auction closed in August 2018, and money was awarded starting in May 2019 (see 1905140073).

FCC staff are carefully reviewing long-form applications to make sure that applicants meet all legal, technical, and financial requirements," emailed a spokesperson Monday. "This thorough review must be completed before support can be authorized. As the long form review process is underway, we are moving forward with the federal Eligible Telecommunications Carrier designation process for RDOF auction winners.”

Challenges to the approval process and questions about the data available from applicants are another likely source of delay for RDOF (see 2102100057). “We have seen a number of petitions filed post-auction, and the auctions are getting more complex these days,” said Blooston’s Benjamin Dickens. “The commission has got to work its way through a number of filings, and … who knows what it will do to the timelines.”

Free Press is “very concerned that there’s going to be quite a bit of RDOF money going out the door to serve already served areas and areas where there are no businesses or households to be served,” said Research Director Derek Turner. “We’re concerned about some overbuilding in some very rural areas.” Free Press supports “anything the commission does to get this right,” including “looking at the long forms and stress testing these applications,” he said: New Form 477 data is coming in, which should provide more information for the FCC to use, he said.

Move as quickly as possible to review applications, USTelecom urged in docket 10-90. Don’t “allow the long form review process to drag on for years … or allow applicants to retroactively change their commitment to a lower tier,” it said.

"Some applications may take longer than others, but that’s simply a function of conducting proper due diligence when important or difficult questions are presented about a given applicant’s ability to perform," said Michael Romano, NTCA senior vice president-industry affairs. NTCA has "full confidence that the FCC will be able to proceed in a similar manner here," he said. The association's recommendations for the process include third-party review and comment on applications "subject to protective order."

Groups and winning RDOF bidders asked the FCC to allow independent experts to review certain questionable winning bidders' long-form applications. "The risk that consumers will be stranded on the wrong side of the digital divide is too great if unqualified applicants are authorized, given that we may not know the auction’s actual deployment results for over five years in many areas," USTelecom told commissioners.

The Ensuring RDOF Integrity Coalition, which includes WTA but not the Competitive Carriers Association (see subsequent correction, 2103100020), urged the commission to allow a "limited third party review process." This would give the commission "first-hand, real world knowledge of the locations and areas to be served and actual costs necessary," ERIC said. Applicants subject to such review would be less than 10% of winning bidders, the group said.

Three entities won nearly 40% of the $9.2 billion awarded through RDOF Phase I: LTD Broadband won $1.3 billion, Charter $1.2 billion, and the Rural Electric Cooperative Consortium $1.1 billion (see 2012070039). ERIC wants FCC review of limited auction information for LTD Broadband, Charter and others due to concerns about their lack of "technical and financial ability" and the agency's "ability to fully vet these bidders’ qualifications."

ERIC's request is "crazy," emailed LTD Broadband founder Corey Hauer. He questioned whether the group was "presuming to know better than the FCC how to evaluate long-form applications." The FCC "ran a fair and transparent auction process and has a lot to be proud of, just as they did with CAF II," he said. Charter didn't respond to a request for comment on ERIC's filing.

That idea is "just damn silly," Jonathan Chambers, Conexon partner, told us. The FCC should "do its job, and everyone should live with the results," he said. The FCC made a “misstep” allowing bidders not to prove ahead of time that their technology is capable of delivering 1 Gbps, Chambers said. Because RDOF is a 10-year funding program that won’t require winning bidders to check in until several years in, “you're asking for trouble,” he said.

"Moving quickly to award the funds should be a priority, but the FCC has a responsibility to carefully review the applications and relevant filings to ensure that winning bidders can actually deliver on their promises,” said Jeffrey Westling, R Street technology and innovation policy fellow. “Funding is limited, and many communities still remain unserved due to the high costs of deployment in many rural areas.”

The Wireless ISP Association “trusts that the career FCC staff will conduct a thorough and impartial review of the long-form applications,” a spokesperson said. Some parties are seeking changes in how the long forms are reviewed, but “they have not filed timely petitions for reconsideration with the FCC, or petitions for review with federal courts of appeals” on the RDOF order, WISPA said. “The FCC should reject those untimely requests.”