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March 24, 2020 by Gregory Bathrick

What Makes the Rural Digital Opportunity Fund (RDOF) Different?

 

There are over 21 million rural Americans without sufficient broadband. This digital divide adversely affects the education of their youth and healthcare for their families, further hampering job growth and businesses opportunities in those areas. If not corrected, we will fail to compete globally as a country over time.

Although it is FCC’s top priority to close the digital divide, key changes are needed. Just look at the inefficiencies of last large stimulus program—CAF 2 model funding—which awarded $1.6 billion annually over the past six years. Due to the lack of a proper framework, fund recipients deployed only the minimum necessary required speeds: 10/1Mbps. These speeds are unacceptable for today’s standards and taxpayers will suffer the burden in the end.

To help avoid misgivings of the past, the Rural Digital Opportunity Fund’s (RDOF) $20.4 billion program will differ in two significant ways. First, it closes the digital divide once and for all. The RDOF prefers FTTH designs over lower speed DSL and fixed-wireless technologies. This is done by adopting the CAF II Auction’s weighting system, as well as a new rule of which the bidder is funded immediately when it has “best” performance at the budget clearing round. Note, this round occurs when the aggregate cost of bids is less than or equal to the $16 billion budget. This rule protects those service providers willing to make the long-term fiber investment from unproductive competition.

Second, the RDOF framework encourages smaller service providers to participate. Previous barriers of entry, such as the incumbent service provider’s right of first refusal on bidding areas and rules that mandate state-wide support, are removed. Further, the FCC will use a smaller bidding area—census block groups—ensuring that all interested bidders, including small entities, have flexibility to design a network that matches their business model.  

Interested service providers must start thinking about their bidding strategy. Although the FCC has not officially released October 22 auction’s eligible census blocks, initial scenarios can be created using currently published FCC map data. Based on this, service providers need to complete detailed feasibility studies to determine the best technology to be deployed and firm up their financials to be reported in short-form application submitted prior to the auction. A technical guide on how the auction will work is published in the following FCC public notice.

Please join us on March 26 for our webinar, "What makes the Rural Digital Opportunity Fund different?", to hear industry experts discuss the key milestones, learn how to start to prepare for RDOF, and how a smaller service provider can effectively bid and win funding support.