Six months ago, FCC Chairman Pai announced the creation of the Rural Digital Opportunity Fund (RDOF), a new $20B program that would bring broadband service to millions of unserved areas in the U.S. This past week, he released a draft order, which the FCC will consider at its January 30 meeting. The big surprise in the draft is that the Chairman is proposing that the FCC significantly favor bids for higher performance tiers. This is great news for rural America and presents a substantial opportunity for providers that want to deploy gigabit (fiber) broadband.
In Phase I of the RDOF, the FCC plans to award $16 billion over 10 years via a reverse auction. The eligible areas are largely those where price cap carriers are receiving Connect America Fund (CAF) Phase II cost model support, which will end at the end of 2021, and that do not have 25/3 Mbps broadband service. Bidders in the auction can use a variety of fixed technologies—fiber, HFC, DSL, fixed wireless, satellite—but bidding favors higher performance technologies. Moreover, unlike with the 2018 CAF Phase II auction, once the auction passes the budget clearing round—where the aggregate amount of the highest bids in all areas is below $16B—the FCC will then award support to the bidder offering the highest performance. No further bidding will occur, except where two bidders offer to provide the same “highest” performance. This will encourage bids for higher performance tiers (e.g., the gigabit tier) and discourage bids for the minimum (25/3 Mbps) tier.
The question now is whether the Chairman’s proposal will hold. Over the next several weeks, there will be lots of lobbying at the FCC both in support of the Chairman’s proposal and to oppose and amend it to favor certain providers and technologies. So, stay tuned.
If you might be interested in participating in the program, I suggest you read the draft. There are many requirements, and to ensure the success of the RDOF and the integrity of the auction process, the FCC is going to apply them strictly. Once the FCC adopts the rules, the next step will be to adopt auction procedures, which should be done by mid-year. Then short-form applications will be due, and the Chairman would like to start the auction by later this year.
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