FCC Rejects LTD, Starlink RDOF Long-Form Applications
The FCC rejected LTD Broadband and Starlink's Rural Digital Opportunity Fund Phase I auction long-form applications Wednesday, citing a "failure to demonstrate that the providers could deliver the promised service." LTD was the largest winning bidder, preliminarily bidding about $1.3 billion to serve 528,088 locations in 15 states (see 2012070039). Starlink's preliminary award was about $885.5 million.
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The commission determined that funding the proposed projects "would not be the best use" of USF dollars, said a news release. An FCC review "concluded that LTD was not reasonably capable of deploying a network of the scope, scale, and size required by LTD’s extensive winning bids." Part of LTD's winning bid included a commitment to deploy gigabit fiber to 475,616 locations in 11 states, said a public notice Wednesday in docket 19-126. LTD's long-form application was denied partly due to "inadequate responses" to follow-up questions, the notice said. LTD CEO Corey Hauer didn't comment.
"Consumers deserve reliable and affordable high-speed broadband,” said Chairwoman Jessica Rosenworcel. The FCC "must put scarce universal service dollars to their best possible use," she said: "We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”
Commissioner Brendan Carr said he was "surprised to find out via a press release" while on a "work trip to remote parts of Alaska" about the FCC's decision regarding Starlink: "I will have more to say because we should be making it easier for unserved communities to get service, not rejecting a proven satellite technology that is delivering robust, high-speed service today." Wednesday's announcement "tells families in states across the country that they should just keep waiting on the wrong side of the digital divide even though we have the technology to improve their lives now," Carr said.
LTD faced some obstacles in obtaining eligible telecom carrier designation as required to receive RDOF support and withdrew its petition for reconsideration of an FCC order denying the ISP's request for a limited waiver of the designation in June (see 2206210035). Several groups sought more scrutiny of LTD's application and potential rejection (see 2104090039).
The FCC decision follows significant state scrutiny of LTD Broadband through utility commissions’ ETC designation processes. The South Dakota Public Utilities Commission decided last month to rehear its earlier denial of ETC status for LTD, and the Minnesota PUC agreed unanimously to open a proceeding on whether it should revoke LTD’s previously granted ETC status (see 2207200037 and 2207140047). LTD decided not to appeal an Iowa court decision that affirmed an Iowa Utilities Board decision not to grant ETC status (see 2207260036). LTD pulled out of California after the CPUC in May denied reconsideration of its own denial (see 2206210035).
“At this point nothing has changed with our proceeding,” South Dakota PUC Chairman Chris Nelson told us Wednesday. “Obviously, any of the parties have the option to file motions in that proceeding. But until a motion is filed, we proceed as normal.”
The Minnesota PUC didn’t comment by our deadline on what the FCC decision meant for its LTD Broadband review. The Minnesota Telecom Alliance is reviewing what the order means for its petition for the PUC to take a second look at the company’s ETC designation, said MTA President Brent Christensen.
“Starlink’s technology has real promise,” Rosenworcel said, but "the question before us was whether to publicly subsidize its still-developing technology for consumer broadband ... with nearly $900 million in universal service funds until 2032.” Starlink's application included a bid to provide 100/20 Mbps low latency service to 642,925 locations in 35 states. The FCC noted its speeds "have been declining from the last quarter of 2021 to the second quarter of 2022, including upload speeds that are falling well below 20 Mbps," citing data from Ookla as of July 31.
“We are not surprised by this result, as several parties raised these concerns,” emailed Viasat Global Chief Government Affairs and Regulatory Officer John Janka. “The Commission reached the right decision today.” Viasat publicly opposed Starlink's RDOF bid in several FCC filings (see 2112230041). SpaceX didn't comment.
The National Rural Electric Cooperative Association applauded the FCC decision. "The RDOF auction exists to fund broadband deployment for rural Americans, not finance science experiments or underwrite risky bets," said NRECA CEO Jim Matheson.
Also Wednesday, the FCC authorized support for 80 winning RDOF bidders. Letters of credit and bankruptcy code opinion letters for the authorized bidders are due by Aug. 24 at 6 p.m. EDT. Monster Broadband and Emery Telephone's E Fiber San Juan and E Fiber Moab received waivers of the June 7, 2021, deadline to receive ETC designation. The Northern Arapaho Tribal Industries received a waiver of the June 7, 2021, deadline to submit audited financial statements.