With RDOF Phase I Review Underway, Telecom Groups Target Biggest Winners
State telecom associations asked the FCC to reject some of the biggest winners’ long-form applications for the Rural Digital Opportunity Fund Phase I auction. The Minnesota Telecommunications Association, Iowa Communications Alliance and Wisconsin State Telecommunications Association want LTD Broadband’s application to be rejected, claiming the company is incapable of delivering the services it won bids on.
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LTD filed an opposition to the several petitions against its winning bid. It said MTA and ICA based their petition on “speculation, innuendo and surmise.” The company also said WSTA’s request relies on “unsupported and irrelevant claims and assumptions that do not bear on Commission staff’s comprehensive review of LTD’s technical and financial qualifications” (see 2104060061).
Just three entities won nearly 40% of the $9.2 billion awarded during RDOF Phase I. LTD received the largest amount, $1.3 billion to service 528,088 locations in 15 states, including Iowa, Minnesota and Wisconsin (see 2012070039). MTA and ICA filed a joint petition earlier this month asking for more scrutiny of LTD's long-form application and to reject it if the commission determines LTD can't deliver (see 2104010065). WSTA filed a similar petition. A Minnesota Public Utilities Commission spokesperson declined comment due to “pending regulatory decisions.” The Iowa Utilities Board and Wisconsin Public Service Commission also declined comment.
FCC staff is “carefully reviewing long-form applications for the technical, financial, and operational capabilities to make sure that the winning bidders can deliver on their commitments,” said a spokesperson. It remains uncertain how long the vetting process will take, but experts estimate the money won't be paid for at least another year (see 2103080042).
The FCC is “is full of highly competent staff and will no doubt perform a thorough review of all applications, including LTD Broadband's,” said LTD Broadband CEO Corey Hauer. “This is not the FCC's first reverse auction nor is the first time they have withstood criticism from angry mobs of losing bidders.”
MTA and ICA countered LTD’s opposition Thursday: The company “has no experience in constructing and operating fiber optic networks or of providing broadband services at speeds anywhere near the Gigabit tier.” Instead of addressing their concerns, LTD is “clearly attempting to deflect attention away from its questionable performance record to date and its untested and speculative prospects for meeting its RDOF performance obligations.”
“It’s obvious that [LTD] knows they don’t have the capability of performing and actually delivering on what they say they’re going to,” said Brent Christensen, MTA CEO: “There’s just no way they can do that.” With Minnesota’s short construction season and supply chain issues, “there’s just no physical way they can deliver on what they committed to doing,” he said.
LTD isn’t the only top winning bidder that faced scrutiny in recent weeks. SpaceX’s Starlink provisionally won nearly $900 million during RDOF Phase I to serve 23 states, including 7,529 locations in Minnesota. MTA decided to leave concerns about Starlink with those that have more experience dealing with the company, but “I have great concern with a lot of these winning bidders,” Christensen said. Viasat asked the FCC to more thoroughly review Starlink's long-form application.
“No matter how you slice it, [Starlink] falls short,” said John Janka, Viasat chief officer-regulatory and global affairs. “There’s a very fundamental disconnect between the maximum capacity” on Starlink’s satellites and the “geographic density of the specific RDOF locations that SpaceX bid and won,” Janka said. The FCC should consider releasing the long-form applications because “even under the best-case assumptions” Viasat made in its analysis of Starlink’s ability to meet RDOF requirements, “the system fails,” he said.
SpaceX’s situation is unique, Janka said, because it was the only satellite system that was allowed to bid for low-latency low-earth orbit. “The commission didn’t let anyone else compete for that money,” Janka said, and “we’re skeptical that they should’ve been let into the game to the exclusion of everyone else to begin with.”
“There are serious questions surrounding a number of these awards,” said Mike Romano, NTCA senior vice president-industry affairs. The increased scrutiny is necessary because the FCC changed the rules from the Connect America Fund Phase II auction for RDOF to allow companies to bid based on tiers, Romano said. When the commission did that, it “fundamentally changed the dynamics of this auction,” Romano said.