Some Providers Won’t Yank RDOF Bids

Some FCC Rural Digital Opportunity Fund Phase I auction bidders that received letters allowing them to withdraw certain bids without penalties said in recent interviews they plan to keep their provisionally won bids (see 2107260044). One big RDOF winner, LTD Broadband, told us it may take up the agency on its request. Experts said RDOF Phase II may not start for months as a result.

The FCC sent some 100 winning RDOF providers letters last month noting certain bids that may be withdrawn without penalties. Census blocks were found to be in areas "already served by one or more service providers that offer 25/3 Mbps" or identified as parking lots and international airports, the letter said (see 2105240060). The areas totaled thousands of census blocks in nearly every state. They didn't include specific details about the identified census blocks or award amount associated with them. Providers have until Aug. 16 to make a decision.

There’s likely “going to be a real interest” in getting RDOF right, said Public Knowledge Director-Government Affairs Greg Guice. Providers have the opportunity to “step away without penalty” if they over-included areas, Guice said. “I think that’s something that they will likely take the FCC up on.”

Most providers that received letters, including Wavelength, Starlink, Cox and Windstream, didn’t comment Wednesday. Nor did the regulator. Starlink's letter was among those that included the largest number of census blocks in question, more than 6,000 locations in 34 states.

LTD is considering the offer, emailed CEO Corey Hauer. “So far our inspection of the FCC's proposed census blocks seems to concur with their belief that those locations are already served with 25/3.” LTD's letter identified hundreds of census blocks in more than a dozen states. The company's “current inclination is to accept the revised maps as accurate and voluntarily default on the census blocks the FCC has indicated are served,” he said (see 2108040073). Hauer noted the proposal's language says the commission “may” waive penalties instead of “will,” but “I trust the FCC to do the right thing if we accept their offer to default on those census blocks.”

Charter is "looking into the additional locations as the FCC requested," emailed a company spokesperson: "RDOF auction funding is intended to close the digital divide by connecting unserved areas with high-speed broadband, so where facts on the ground show a provider offering service today or one that will soon do so, RDOF support would be redundant." Charter received letters regarding several of its bids in Alabama, Georgia, Missouri, and Tennessee.

Some providers said they aren’t interested in the offer. BEK Communications is “absolutely not” going to withdraw its bids in question and plans to respond to the FCC within the next week, said CEO Derrick Bulawa. The agency identified two census blocks within the 337 locations BEK provisionally won as areas where concerns were raised. “We went through the entire vetting process of census blocks and then suddenly they're kind of reversing direction,” Bulawa said.

One of the census blocks BEK won was a residential area in which it also received Connect America Fund Phase II support, Bulawa said. The other location has a building undergoing remodeling and will require service “at some point in the future,” he said. Bulawa questioned on what grounds there would be any pushback “from a factual standpoint.”

LocalTel Communications isn’t considering the offer to withdraw bids, Vice President John Seabeck emailed. The FCC identified 46 census blocks within the 12,530 locations LocalTel provisionally won. Conexon isn't considering the offer because it's not clear how much money it would be giving up or whether the census blocks listed are served, said partner Jonathan Chambers: “It's irresponsible.”

It’s “an interesting kind of political battle and legal battle,” said New Street’s Blair Levin: “You can be somewhat sympathetic in that it was essentially the fault of the [Ajit] Pai FCC that the maps were bad.” It may be a mixed bag of providers choosing to withdraw or defend their bids, Levin said. The FCC may want to “hold off” on Phase II of the auction until states finish spending on infrastructure and new broadband maps are completed, he said.

Any money that's ultimately found through this process will flow back into the Phase II auction, Guice said. When that auction happens will likely depend on when the FCC’s new broadband maps are completed, he said. The new maps are expected to be finished before the end of next year.

Whether the FCC decides to reject bids after the Aug. 16 deadline depends in part on whether acting Chairwoman Jessica Rosenworcel is nominated as the permanent chair, Levin said. The auction's Phase II will also depend on whether Congress passes the infrastructure package before then, he said, because the FCC is “well aware of the congressional unhappiness with the RDOF results.”