FCC Should not Reward RDOF Failure

By James Erwin

The Rural Digital Opportunity Fund (RDOF) is not quite a punchline among broadband advocates, but its shortcomings have long been apparent. Deadlines are often blown, tax dollars routinely wasted, and consumers largely left unsatisfied. Of the $9.2 billion awarded through RDOF over 10 years, over $2.8 billion has gone into default, according to one estimate.

It should be out of the question, then, for the FCC to reward the ISPs who have failed to convert RDOF subsidies into high-speed internet in rural areas by waiving their penalties and allowing them to apply for new grants. But that is precisely what some RDOF winners are now asking the commission to do.

A petition filed with the FCC by a coalition of local governments, government-owned networks, providers, and community development nonprofits asks the commission to grant amnesty to winners of RDOF’s reverse auctions who have not deployed high-speed broadband in rural areas, despite these winners’ failure to fulfill their obligations. This would include both waiving the penalties associated with defaulting on the bids and allowing the awardees to apply for the much larger pot of $42.5 billion available through the Broadband Equity, Access, and Deployment (BEAD) program coordinated by NTIA but run by state governments. They also ask that more USF funds be made available to supplement their RDOF bids.

The Infrastructure Investment and Jobs Act (IIJA), which created the BEAD program, prioritized unserved areas over those with broadband or with “enforceable commitments” for future broadband buildout under programs like RDOF. During the drafting of the IIJA, a bipartisan group of Senate negotiators specifically had RDOF in mind when they included this provision to prevent wasteful overbuilding. The very providers they wanted to keep from double-dipping, and indeed protect from overbuilding by others, now ask the FCC for an administrative workaround of enacted law.

The justification for all of this, according to the petitioners, is that inflation has made material and labor costs too high for their initial grant to succeed. As FCC Chairwoman Jessica Rosenworcel noted last year in a letter to Senator Cindy Hyde-Smith, USF works on a revolving basis as monthly fees are collected from landline users, so there is no pile of cash sitting around to be doled out. It is therefore impossible to supplement their bids. Even if it were, granting this petition would undermine the integrity of other FCC reverse auctions – any provider could low-ball their bid to win a reverse auction, start building so the commission cannot easily replace them, then come back for more when they run out of money. This will exacerbate the already-bleak fiscal situation for USF.

Every provider who entered a bid under this program knew the rules – they should have to abide by them. It is also not the FCC’s job to ensure that certain ISPs, who have a track record of failure, may apply for a different subsidy program run by a different agency. They should instead do the opposite and provide NTIA with a full accounting of which ISPs follow through on their commitments and which ask the federal government to reward failure by throwing good money after bad.