As expected, the Federal Communications Commission (FCC) announced on Thursday its new Rural Digital Opportunity Fund (RDOF) for faster broadband speeds in order to help close the digital divide in rural areas.
RDOF will push out up to $20.4 billion in funding over the next 10 years to build and connect gigabit broadband speeds in unserved rural areas.
The RDOF initiative follows on the heels of the FCC's Connect America Fund (CAF) II program. For telco incumbents such as AT&T, CenturyLink, Windstream and Frontier, RDOF extends their CAF II funding for one additional year through 2021.
Unlike CAF II, RDOF will be implemented through a two-phase reverse auction process, which includes the incumbent telcos competing directly with independent broadband providers.
“We are excited that the FCC has adopted the Rural Digital Opportunity Fund,” said David Bartlett, CenturyLink vice president of government affairs, in a statement. “We appreciate Chairman Pai’s and the other commissioners’ leadership and collaborative efforts in designing a program that will bring the tremendous benefits of broadband and faster speeds to more Americans in high-cost, hard-to-serve areas of the country where it’s currently lacking.”
The first phase of RDOF starts later this year, and targets census blocks that are wholly unserved with fixed broadband at speeds of at least 25 Mbps down and 3 Mbps up. The first phase would make available up to $16 billion to census blocks where existing data shows there is no such service available whatsoever.
The funds will be doled out via a multi-round reverse auction similar to the one used in 2018’s CAF Phase II auction. FCC staff has identified about six million rural homes and businesses that are currently located in areas initially eligible for bidding in the Phase I auction.
The FCC said the RDOF auction will prioritize networks with higher speeds, greater usage allowances, and lower latency. Prospective bidders must also commit to providing a minimum speed more than double than was required in the CAF Phase II auction.
Phase II of the program will make available at least $4.4 billion to target partially served areas, or census blocks where some locations lack access to 25/3 Mbps broadband speeds.
According to a recent report from MoffettNathanson Research, CenturyLink has received $506 million per year since 2015 in CAF II awards, which will total more than $3 billion over the six-year period from 2015 to 2020.
Other top beneficiaries of CAF II awards include AT&T, which has received $428 million per year since 2015; Frontier, which has received $332 million per year during the same time frame; and Windstream, which has received $175 million per year.
In exchange for the free government money, the recipients agreed to deploy broadband service with at least 10 Mbps downstream and 1 Mbps upstream to specific rural locations. MoffettNathanson reports that the CAF II money that the incumbents received was typically more than the cost of the network builds.