While the U.S. government opened up new paths for broadband funding this year, the Federal Communications Commission (FCC) has worked on doling out awards from its $9.2 billion Rural Digital Opportunity Fund (RDOF) broadband subsidy auction.
The RDOF Phase I auction wrapped up back in December 2020, and since then the FCC has been processing and subsequently approving the winning bids. But not every RDOF contestant managed to score. Here were the bidders who came up short in 2022.
Perhaps the most surprising RDOF twist in 2022 was that LTD Broadband and SpaceX subsidiary Starlink, both among the top ten winners in the Phase I auction, came away with nothing. The FCC in August determined neither company would be able to deliver on their RDOF commitments.
LTD Broadband originally came out as the largest RDOF recipient, bagging $1.3 billion to deliver gigabit broadband to 528,000 locations across 15 states. Starlink scored $885.5 million to deploy satellite broadband to 642,925 locations across 35 states. Now, that funding will remain in the FCC’s Universal Service Fund for other potential state and federal funding programs.
In Starlink’s case, the FCC referred to Ookla data from earlier this year which indicated Starlink speeds fell short of the 100/20 Mbps required to deliver its RDOF project.
Commissioner Brendan Carr publicly disagreed with the FCC’s decision, arguing Starlink is on track to deliver 100/20 Mbps speeds within the next three years. Specifically, Ookla’s data showed Starlink download speeds actually increased 38% year-on-year to 90.55 Mbps, despite uplink speeds falling 33% to 9.33 Mbps.
Starlink in September appealed to the FCC, asking the agency to reconsider its decision. As for LTD Broadband, the FCC was less clear about why its application was denied. But LTD Broadband’s RDOF troubles began earlier this year.
In May, the FCC accused LTD of violating the agency’s “quiet period” to discuss bidding strategies with Cox Communications. According to the FCC, it was RJM & Company, LTD’s investment agent, that disclosed the company’s bidding information to Cox, as LTD did not have RJM sign a non-disclosure agreement.
As a result, the FCC ruled LTD should pay a $100,000 fine for the offense. The agency said it would allow LTD to appeal for a reduction or cancelation of the proposed fine.
But the dues kept stacking up for LTD, which in July was hit with a $2.3 million fine for backing out of RDOF commitments in Kansas and Oklahoma.
That fine came over a year after LTD requested waivers for several thousand census blocks across 13 states, the company arguing those locations already have access to sufficient broadband speeds.
Providers defaulting on RDOF bids is nothing new. Charter Communications, who came away with $1.2 billion from the RDOF auction, stands to pay $1.18 million in fines for defaulting on bids in more than a dozen states. Operators such as Breezeline and Nextlink were also fined under the FCC’s order this summer.
However, RDOF saw another major development unfold in October, when fixed wireless broadband provider Starry abruptly skipped out on all its winning bids. The FCC, which in August had finally approved the company’s RDOF application, did not disclose why Starry defaulted on its bids.
The reason was likely financially motivated, as shortly thereafter the company laid off half its staff and halted construction on new projects due to a cash shortfall. As Fierce recently uncovered, RDOF builds don’t come cheap.
Future of RDOF
Though LTD, Starlink and Starry are out of the running, the FCC has already approved most of its top 10 winning bidders, including Windstream, Nextlink, Frontier, Rural Electric Cooperative Consortium and Lumen’s CenturyLink.
From that list, fiber and fixed wireless provider Resound Networks was the last member awaiting the RDOF greenlight. But the FCC announced this month it’s ready to authorize RDOF funding for Resound in seven states.
As for the future of RDOF, the FCC has yet to decide whether it will host a Phase II auction. The agency has called into question the need for a second round in light of the various broadband funding efforts that emerged this year – efforts that Fierce Telecom unpacked in a separate story earlier this week.