Updated, 3-2 RDOF Language Could Limit Support to States With Broadband Programs

States with their own broadband subsidy programs or partnered with federal programs could face reduced funding opportunities through the Rural Digital Opportunity Fund, after language was added to an order Wednesday, Democratic commissioners told reporters Thursday. Commissioners voted along party lines to approve the order for the $20.4 billion program. Commissioners Jessica Rosenworcel and Geoffrey Starks approved in part and dissented in part.

The $20 billion RDOF program is an even bigger deal than the upcoming Super Bowl, said Chairman Ajit Pai, a Kansas City Chiefs fan and Kansas native. It's the biggest action the FCC has taken to close the digital divide.

Rosenworcel called the vote "an election year bonanza" meant to make headlines, "flooding the zone with dollars" without knowing where they're going. She said the FCC is plowing ahead before it has better broadband mapping data, saying moving too quickly will leave some rural residents behind. "We are spending down three-quarters of our broadband funds for the next decade right here and now without doing the hard work necessary to figure out just where those dollars should go." She called the efforts "sloppy and unfocused."

Because the program doesn't have unlimited funding, "one thing we cannot in good conscience do is waste this opportunity," said Pai. He said the FCC will target efforts to areas that don't have broadband "and where there are no current federal and state programs -- fiscal or otherwise -- that will ensure broadband is deployed in the near future. I cannot condone handing companies additional taxpayer money to deploy broadband in areas where they are legally obligated to deploy broadband already."

Commissioner Mike O'Rielly applauded Pai for rejecting the Democratic commissioners' concerns over New York RDOF eligibility, saying government funds shouldn't be used to overbuild recipients from the New NY Broadband program or other areas subject to enforceable deployment obligations. Sending RDOF money to New York would undermine longstanding FCC policy against "awarding duplicative support in areas already served by an existing provider," he said. Rosenworcel and Starks shared stories of rural New York residents lacking broadband access in areas deemed covered under the latest FCC form 477 data.

"Without reservation, I fully support providing the resources needed to connect rural communities," Starks said. "I understand the urgency of getting those resources into the field." He's concerned the order takes a "ready, fire, aim" approach by favoring speed of funding before better mapping data. He isn't convinced there will be enough money in RDOF phase II to support those left unserved after phase I. Starks is "concerned with some of the chaos around this item."

New York stakeholders spoke out in recent weeks when the FCC signaled the state won't be eligible for phase I (see 2001280039). Phase I auctions could start by the end of the year and give up to $16 billion.

“RDOF funding for New York wouldn’t be duplicative; existing FCC [Connect America Fund] support is limited to a subset of locations addressed through the New NY Broadband Program, with the vast majority not receiving any prior federal funding,” emailed a New York State Broadband Program Office spokesperson. “New York should be included in RDOF Phase I under the same terms as every other state in the nation. The fact that New York has made an unprecedented state investment in expanded broadband availability should not preclude areas of New York State that nevertheless meet RDOF’s eligibility criteria for federal funding.” Gov. Andrew Cuomo (D) didn't comment.

Pai welcomes information from providers in New York and other states to help inform areas that could be eligible for phase I, he told us in media Q&A.

Public Knowledge asked the FCC to clarify whether it really means to ban RDOF grants where state subsidies exist. "We should encourage states to take initiative and reward those that rise to the challenge," said Senior Vice President Harold Feld.

LOC Easing

The rules included changes to lower letter of credit requirements as long as recipients meet or exceed deployment milestones, as expected (see 2001290018).

Commissioner Brendan Carr took the lead on the revisions, Pai said. Carr said the LOC requirements that circulated would have required providers to spend over $600 million more than necessary for fees on financial institutions. That "could have prevented providers from participating in the program altogether, which would only decrease our chances of getting more broadband built out," he said. The freed up capital can go directly to infrastructure spending, he said.

Incompas General Counsel Angie Kronenberg noted Carr's work on addressing LOCs. The Wireless ISP Association "greatly appreciates that the Commission has reduced this burden with rules that substantially diminish the value of an LoC over time as build-out milestones are met," said CEO Claude Aiken.

Wireline Bureau Chief Kris Monteith said more details on new LOC requirements will be public once the final order is released, expected within days.

Industry statements largely lauded the vote, as expected (see 2001150005). The RDOF program "offers great promise," said NTCA CEO Shirley Bloomfield. The group wants to ensure the FCC protects rural communities "that are well-served today only by the grace of universal service support," she said.

USTelecom sees RDOF laying the groundwork for rural wired broadband and 5G, said CEO Jonathan Spalter. "The RDOF provides a sensible path for companies to further expand networks into communities that are often the most challenging to reach," said AT&T Executive Vice President-Regulatory and State External Affairs Joan Marsh. The program will "bring the tremendous benefits of broadband and faster speeds to more Americans in high-cost, hard-to-serve areas of the country," said CenturyLink Vice President-Government Affairs David Bartlett.

The program's budget clearing round approach would help offer to rural residents broadband service reasonably comparable to that available to their urban counterparts, said America's Communications Association CEO Matt Polka. The new rules favor future-proof technology, said National Rural Electric Cooperative Association CEO Jim Matheson.

Meeting Notebook

The media modernization order having MVPDs deliver some notices to broadcasters via email instead of via the post was unanimously approved. Rosenworcel was again critical that broadcaster online political files aren't searchable, sortable and downloadable (see 1910170037). O'Rielly called the item "simple common sense." Echoed Carr, "For many people, sending letters through the mail is as unthinkable as using a mobile phone to make a phone call." The Media Bureau said the approved item didn't differ significantly from the draft. ACA Connects' Polka tweeted that the regulatory streamlining was "meaningful."

An order unanimously approved Thursday making permanent an FCC program that allows video relay service translators to work from home included a cost benefit analysis that was “beyond embarrassing,” said O'Rielly. “Raising cost-benefit analysis without showing your work is not a sound practice,” said Starks. Both spoke in Q&A after the meeting.

Consumer and Governmental Affairs Bureau Chief Patrick Webre told us the pilot version showed no net cost increases for providers participating in the program, and that the item was different from other FCC items because it considered a voluntary program. “I don't know what Commissioner O'Rielly would have necessarily expected in the item, so I can't answer your question,” he said when asked why commissioners felt the analysis fell short. The commission is owed “a fulsome examination” of program costs, O'Rielly told us.