The biggest RDOF winner LTD Broadband responds to naysayers

Those companies shut out of phase 1 of RDOF can still participate in phase 2. (Pixabay)

LTD Broadband is a company that most people have never heard of. But it garnered the largest award of any company in the FCC’s recent Rural Digital Opportunity Fund (RDOF) reverse auction

The company snagged $1.3 billion to provide high-speed broadband to unserved areas of 15 states. Although it’s a wireless internet service provider (WISP) that often uses fixed wireless access (FWA) technology, the company has pledged to provide gigabit speeds to rural areas with its RDOF funds. And it’s promised to lay fiber when necessary to achieve those gigabit speeds, which may mean it will primarily be laying fiber with its RDOF money

LTD Broadband is an 11-year-old company based out of Las Vegas, and it has 145 employees.

Corey Hauer, CEO of LTD Broadband, said his company is a member of WISPA and it’s also “going to be joining all the fiber broadband associations.” The company claims to be the fourth largest fixed-wireless WISP in the United States. It currently provides service in Iowa, Minnesota, Nebraska, South Dakota and Wisconsin. Hauer said he doesn’t disclose the company’s subscriber numbers.

As part of its RDOF pledge, LTD will provide broadband in parts of 15 states at speeds of at least 1 Gbps down and 500 Mbps up.

Broadband Now chart
Top 10 RDOF winners (BroadbandNow)
Naysayers cry foul

Since the results of the first phase of the RDOF auction have been released, there’s been an outcry from participants in the auction who weren’t awarded any funds. For instance, the National Rural Electric Cooperative Association (NRECA) held a webinar last week where leaders from several electric co-ops complained about the winners.

NRECA’s CEO Jim Matheson said, “A number of fixed wireless providers have pledged to deliver gigabit speeds, and there are a number of reasonable concerns about the viability of claims that they can deliver those speeds in that category.”

One theory for why traditional broadband players — such as some of the electric co-ops — didn’t get awarded more funds in the auction is that they didn’t fully appreciate the "clearing rounds" in the auction.

The RDOF auction was a “reverse auction.” This is different than typical auctions where multiple buyers bid up the price for an item from the seller. In its reverse auction, the FCC drove down the price of its item — awards to deploy broadband — by having multiple bidders compete against each other to provide the best technology at the lowest price. The FCC has used reverse auctions before.

But there was a provision in the FCC’s auction rules (paragraph 20, page 9) for RDOF that created a “clearing round.” The bidding system took into account the performance and latency promises of bidders in a census block and eliminated the inferior bidder from proceeding.

The electric co-ops may not have bid at the highest speed tier — the 1 Gbps/500 Mbps — if they weren’t confident they could deliver those speeds. But it turned out they were often eliminated from the auction if another bidder in a particular census block did bid at that speed tier.

On last week’s webinar, Mike Malandro, CEO of Choptank Electric Cooperative in Maryland, said Choptank developed a realistic strategy to bid in RDOF. He said, “After the clearing round, we could see there were at least two gigabit bidders in every area we were bidding. As the auction progressed and the money available went lower and lower, we started dropping out each day as the FCC money available was not enough…until we were completely out of the auction with no successful bids whatsoever.”

Malandro is upset because Choptank’s competitor Talkie Communications had won nearly every available census block in Maryland and Delaware even though it’s a much smaller company.

“The FCC expressed a preference for the gigabit tier,” said LTD's Hauer. “Anybody that was willing to put gigabit in for a particular census block was allowed to continue. Some of the vocal complainers after the auction may not have realized this. This was very clear in the FCC rules.”

“This sort of weighted system was meant to incentivize providers bidding the highest possible speeds,” said Tyler Cooper, editor-in-chief of BroadbandNow, a company that collects and analyzes data about broadband availability in the United States.

RELATED: Congressmen worry RDOF funds will be squandered

The co-ops are also upset about the awards to satellite companies. SpaceX was the fourth largest winner in the RDOF auction, garnering $885 million. Matheson said it bid in the 100 Mbps/20 Mbps category “with their satellite program that’s still in beta testing, not a proven technology.”

LTD Broadband

Hauer said LTD plans to deliver on its promise of fiber to rural areas, and he doesn’t seem daunted by the cost, even though the expense of fiber has humbled large companies in the past, such as Verizon.

He said it’s hard for providers to lay fiber in urban and suburban areas because there is a lot of existing infrastructure to contend with such as natural gas lines, sewer pipes, water systems and buildings. “Our theory is that it’s going to be easier to do in rural areas,” he said. “Fiber is primarily a labor proposition." He said his company will be able to deploy fiber faster and cost-effectively in rural because there are less obstacles.

He said LTD will probably lay fiber using both methods: in-the-ground and aerial on existing infrastructure such as telephone wires. He said, “With a fiber plow that puts fiber in the ground, you can go at walking speed.”

Even though there’s a shortage of skilled fiber layers, Hauer said he has a plan for securing workers, which he’s not willing to share publicly.

In areas where it’s simply impossible to lay fiber, LTD will use other methods such as microwave hops. “Fiber is the source of the river,” said Hauer. “And in many cases, we also will use fiber at the end. For RDOF, where we would consider FWA would be the middle mile…. It might be mountain top to mountain top where we could do multi-gigabit microwave links as part of this. In most cases we’ll be able to run fiber.”

RDOF monies

The first phase of the RDOF auction awarded $9.2 billion out of a pot of $20 billion, which means the second phase will have $10.8 billion in available funds.

LTD Broadband plans to participate in the second phase.

Hauer said that up to this point very little Universal Service Funds money has been spent on building fiber in rural areas. But RDOF “puts that on its head,” he said. “They’re going to get tons of fiber built where historically they haven’t. I think the FCC is definitely going to move the needle.”

Winners in the first phase of RDOF must submit their long-form applications to the FCC by February 16. BroadbandNow’s Cooper said the FCC’s review process typically takes about a month.

The exact date when the FCC will start distributing phase 1 funds is unknown. Hauer said he expects it will be sometime in 2021.

For those companies shut out of phase 1, they can still participate in phase 2. 

Cooper said phase 1 was for census blocks that are completely unserved – broadband deserts. While phase 2 will allocate funds to areas that were not completed in phase 1 and also to census blocks that are partially served.

The electric co-ops want the FCC to take a hard look at the long forms and vet the winners based on their technology and business models. 

NRECA’s Matheson said, “We’re using the public’s money in the RDOF auction. And it’s designed to be a deployment program for proven technologies not a research and development experiment.” 

He pointed out that if a census block is awarded a bid, that shuts out any other federal money being spent in that census block for the next 10 years.