Small Providers Accept FCC RDOF Bid Withdrawal Offer

Some winning Rural Digital Opportunity Fund Phase I auction bidders asked the FCC to waive penalties if they decide to withdraw bids for census blocks that faced questions about whether service is already available. Bidders that won the smallest number of census blocks are among those that responded to the FCC accepting the offer so far.

The agency sought responses from more than 100 providers on whether they would be willing to withdraw certain bids. Citynet of West Virginia was the first to request a penalty waiver to withdraw two of its provisionally won census blocks in question (see 2108110043). More are expected to accept the offer by Monday's deadline.

The letters said the commission "may” waive any penalties associated with withdrawal. Some providers questioned the letter's language and whether it meant the FCC would ultimately waive penalties (see 2108040054). The FCC was “prudent” to keep its options open, but “I don’t think it’s seeking to be punitive here,” said Free Press Research Director Derek Turner.

The commission may be willing to waive penalties if a provider acts in good faith, Turner said, but it likely used the language it did in its letter to prevent others from trying to “abuse this process and get out of bids that otherwise they shouldn’t be let out of.” An FCC spokesperson said Friday the commission is “continuing to review responses as they come in” and referred us to the language in its letter, which said the commission will entertain waiver requests if they demonstrate “good cause.”

First Light Fiber said it was "advancing and protecting the commission's universal service policies" by agreeing to withdraw two of its provisionally won bids, in its waiver request Friday. AT&T is already serving those areas, First Light Fiber said, noting it bid for those areas because the census blocks weren't included in the commission's Form 477 broadband data then.

The National Rural Electric Cooperative Association was “glad” the FCC sent the letters because there was a “poor level of data” during Phase I, said Senior Director-Regulatory Affairs Brian O'Hara. The number of NRECA members that received a letter was surprising, O’Hara said, and it wasn't clear if top winning bidders like SpaceX or Charter would withdraw their bids in question.

JTM Broadband said Charter won RDOF support in an area that it recently completed building part of its fiber network and “would hate to see money spent where there is already fiber (gig) service,” it said in a letter posted Friday in docket 19-126. It said Charter got funding for that area because form 477 filing rules didn’t allow JTM to “demonstrate the area was just months away from being served with fiber.” Charter previously said it was reviewing its bids.

Several NRECA members, including Continental Divide Electric Cooperative, Gibson Connect, Covington Electric Cooperative and Meriwether Lewis Electric Cooperative, already accepted the FCC’s offer, in petitions for waivers posted Friday. More members are likely to accept the offer, O’Hara said, noting his group plans to meet with members to come up with a “list of proposals to improve the process of Phase II” of the auction: “We wanted a more rigorous upfront vetting.”

Continental Divide said evidence is "strong" that four census blocks it provisionally won already receive service by another provider, in its petition for a waiver of penalties. Gibson agreed to give up one census block, Meriwether Lewis agreed to withdraw two, and Covington one under similar circumstances.

It “isn’t that surprising” that smaller providers are among the first to take advantage of the offer because they had fewer bids to review, Turner said. “The big question is what is going to happen with Starlink,” Turner said: “They won bids all over urban America.” SpaceX didn’t comment.

Whether the commission decides to reject bids from providers that fail to respond remains to be seen, Turner said. “We're operating here in a little bit of a no man's land,” he said, because the FCC has a “tremendous amount of authority” during the long-form application review process.