CAGW Files Comments with FCC on RDOF Emergency Petition | Citizens Against Government Waste

CAGW Files Comments with FCC on RDOF Emergency Petition

Agency Comments

March 26, 2024

Ms. Marlene Dortch
Secretary
Federal Communications Commission
45 L Street, Northeast
Washington, D.C.  20554

Re:  Letter From 69 Internet Service Providers, Trade Associations, State and Local Officials, School Districts, Unions, and Civil Society Organizations, WC Docket Nos. 10-90, 19-126, and AU Docket No. 20-34.

Dear Ms. Dortch:

On behalf of the more than one million members and supporters of Citizens Against Government Waste (CAGW), I write in response to the request for comments on a letter seeking Rural Digital Opportunities Fund (RDOF) and Connect America Fund (CAF) II Amnesty from 69 Internet Service Providers, Trade Associations, State and Local Officials, School Districts, Unions, and Civil Society Organizations.[1]  CAGW has advocated an all of the above approach to bridging the digital divide.

The Universal Service Fund (USF) was created in 1996 to help provide telephone service to areas of the country that are hard to reach (High Cost); rural health care; schools and libraries (E-rate); and low-income support (Lifeline and Linkup).  The USF includes broadband deployment in High-Cost areas through CAF and RDOF.  Although USF costs have risen significantly, the program relies on an unsustainable method for funding, which CAGW pointed out in its February 16, 2022, comments to the Federal Communications Commission (FCC) on the Notice of Inquiry on the Report on the Future of the Universal Service Fund (WC Docket No. 21-476).[2]

On August 13, 2023, an emergency petition was filed with the FCC based on delays in deploying broadband on schedule in certain awarded census blocks.  The letter asked the FCC to provide “supplementary funding to RDOF winners that have made an affirmative request for the same; relief from all, or certain aspects of, the letter of credit requirements on an expedited basis; and/or RDOF payments for years 7-10 made accessible by RDOF Winners in years 2 or 3-5.”[3]  The petition also requested that the RDOF petitioners be provided a short amnesty period to allow them to relinquish all or part of their RDOF winning areas without forfeitures or other penalties.

This petition for emergency relief was followed on February 28, 2024, by a letter asking that the emergency relief be granted so that the Auction 904 winners could relinquish their areas.[4]  Those areas could then become eligible for the National Telecommunications and Information Agency’s (NTIA) Broadband Equity Access and Deployment (BEAD) program.  The Infrastructure Investment and Jobs Act (IIJA) included provisions that make entities already designated to receive federal funding ineligible to obtain support from the BEAD program. 

The petitioners have raised concerns about their ability to meet certain deadline requirements agreed to as part of their winning bids in Auction 904, claiming problems encountered with deployment during the recent coronavirus pandemic caused undue delays.[5]  They proposed that the FCC provide either supplemental funding, relief from requirements related to non-performance within their winning area, making forward payments for years 7-10 available to the auction winners in year 2 or 3-5, or providing an emergency amnesty from their auction obligations, so that the areas they won in Auction 904 “will remain disconnected due to the inability or unwillingness of ISPs to fulfill their obligations to the programs.”[6]  Auction 904 was conducted at a time that stay-at-home orders, and quarantines were well underway across the nation, and winning bidders should have taken labor and supply chain issues into consideration when making their bids for this funding, and ensuring prior to submitting their bids that they would be able to complete the task. 

Regarding the petitioner’s request for supplemental funding being made available out of the USF program beyond the funding already provided for Auction 904, on June 26, 2023, FCC Chairwoman Jessica Rosenworcel responded to questions from Sen. Cindy Hyde-Smith (R-Miss.) about whether the FCC could issue supplemental funding to RDOF or CAF II census blocks if necessary.  In her response, Chairwoman Rosenworcel noted, “The RDOF auction began on October 29, 2020 and concluded on November 25, 2020.  A total of 180 bidders were preliminarily awarded funding in the auction to deploy high-speed broadband.  After these winning bidders were announced, they were given the opportunity to divide their bids among approved providers, allowing bidding consortia to distribute winning bids among their members.  As a result, 417 providers ultimately filed long-form applications with the Commission.  To date, the RDOF program has authorized over $6 billion in funding to bring primarily gigabit broadband service to over 3.4 million locations in 47 states.”[7]

The USF, as currently funded, has a declining base of contributors and increasing demands.  It would be foolhardy for the program to become even more strained by providing unbudgeted supplemental funding to Auction 904 winners to help them with the task of deploying broadband to these rural communities, leaving other rural areas yet unreached by RDOF or other funding sources without access to broadband in the future.  As Chairwoman Rosenworcel further noted in her letter with respect to making supplemental funding available, “when the Commission establishes spending requirements or sets a budget for a particular model-based high-cost program, the total amount in the budget is not collected from contributors and then stored in reserve waiting for the moment of distribution.  Instead, the contributions required are calculated quarterly based on the ratio of program demand to projected interstate telecommunications revenues.  Thus, the contribution factor changes based on both projected revenues and the needs of the various Universal Service programs established by Congress in the Telecommunications Act of 1996.  With respect to the RDOF program, for example, funding needs are projected on a rolling basis, and collected based on the expected upcoming distributions to authorized recipients.  Competitive bidding allocated $9.2 billion of the RDOF budget to the winning bidders, and after long-form review, just over $6 billion was subsequently authorized.  Therefore, under the law and consistent with the design of the auction, the FCC collects only enough funding through the USF contribution process to match the approximately $6 billion committed.  Thus, we do not have support in reserve readily available for reallocation to the extent that the total amount authorized for RDOF fell below the projected budget.”[8]

The RDOF program required that all winners of Auction 904 must achieve 40 percent deployment by the end of year 3; 60 percent deployment by end of year 4; 80 percent deployment by the end of year 5; and 100 percent deployment by the end of year 6.  Any carrier not meeting those deployment milestones or other service requirements may be subject to non-compliance measures, which could include additional reporting requirements, reduction of support, or a draw on the carrier’s letter of credit.[9]

However, rather than abide by the criteria set forth in their agreement when bidding and winning funding issued by the agency for deploying broadband service to households in areas that are currently unserved by existing broadband providers, the petitioners are asking the FCC to carriers release them of their contractual obligations and requirements without either monetary or punitive restitution.  Several of the signatories on this request are local government entities seeking to build a government-owned network in their community.  CAGW has written extensively about the problems related to taxpayer liability and failure to build and maintain such networks.[10]

CAGW is concerned that if the FCC provides amnesty to the winners of Auction 904 for failing to meet RDOF requirements, they will then apply for BEAD funding.  The NTIA should be notified so the agency can prevent any of the entities who may be granted amnesty from receiving BEAD funding.

Thank you for your consideration.

Sincerely, 

Tom Schatz 
President, CAGW 

Click Here for a PDF Copy

 

[1] Federal Communications Commission (FCC), Public Notice, Wireline Competition Bureau Seeks Comment on Letter Seeking RDOF and CAF II Amnesty from 69 Internet Service Providers, Trade Associations, State and Local Officials, School Districts, Unions, and Civil Society Organizations, WC Docket No. 10-90, WC Docket No. 19-126, AU Docket No. 20-34, March 5, 2024, https://docs.fcc.gov/public/attachments/DA-24-202A1.pdf.

[2] Citizens Against Government Waste (CAGW), Comments to the Federal Communications Commission, In the Matter of Notice of Inquiry on the Report on the Future of the Universal Service Fund, WC Docket No. 21-476, February 22, 2022, https://www.cagw.org/legislative-affairs/agency-comments/fccs-future-universal-service-fund-report.

[3] FCC, Emergency Petition, Rural Digital Opportunity Fund Auction (Auction 904), AU Docket No. 20-34; Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket No. 10-90, Klein Law Group, August 16, 2023, https://www.fcc.gov/ecfs/document/108162898622642/1.

[4] Letter from 69 Internet Service Providers, Trade Associations, State and Local Officials, School Districts, Unions, and Civil Society Organizations requesting amnesty from RDOF and CAF II requirements, February 28, 2024, https://connecthumanity.fund/wp-content/uploads/2024/02/RDOFFCCLetter.pdf?ref=broadbandbreakfast.com.

[5] Ibid.

[6] Ibid.

[7] Letter from FCC Chairwoman Jessica Rosenworcel to Sen. Cindy Hyde-Smith (R-Miss.), June 26, 2023, https://docs.fcc.gov/public/attachments/DOC-395063A2.pdf.

[8] Ibid.

[10] Deborah Collier and Thomas Schatz, The Folly of Government-Owned Networks, CAGW, May 2021, https://www.cagw.org/sites/default/files/pdf/TheFollyofGovernmentOwnedNetworks.pdf.

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