FCC Denies Space X’s Starlink and LTD Broadband’s RDOF Bids – $2.18 Billion in Funding Eligible for Other Programs

On August 10, 2022, the FCC announced in a Public Notice that they have denied the release of RDOF (Rural Digital Opportunity Fund) awards for both LTD Broadband and SpaceX’s Starlink, meaning that the two providers had to forfeit the $2.18 billion that they were collectively awarded back to the FCC. The FCC stated that both providers “failed to demonstrate that they could deliver the promised service and funding these vast proposed networks would not be the best use of limited Universal Service Fund dollars to bring broadband to unserved areas across the United States.” These forfeited RDOF awards “will remain in the Universal Service Fund and will be eligible for other state and federal funding programs.”

The auction for Phase I of the Rural Digital Opportunity Fund (RDOF) was conducted in December of 2020, resulting in 180 companies bidding for a piece of the $9.2 billion pie. Among the largest winners were LTD Broadband, Charter, SpaceX, Windstream, Frontier, Starry, and CenturyLink. LTD Broadband was awarded $1.3 billion in subsidies under this program, and the fourth largest winner was SpaceX’s Starlink, winning $885.5 million in subsidies for rural broadband deployment.

The FCC to date has approved around $5 billion in winning RDOF bids, and after denying LTD and Starlink’s winnings they have a little over “$2 billion worth of bids left to process.” LTD Broadband was going to use the funds they were awarded to supply broadband to 528,088 locations across 15 states and Starlink pledged to serve 642,925 locations across 35 states.

The FCC wants to give RDOF awards to those who can provide high-speed and affordable internet Americans require

The FCC Chairwoman Jessica Rosenworcel has stated that the denial of Starlink’s bid was a question of “whether to publicly subsidize its still developing technology for consumer broadband.” The FCC also cited recent Ookla data which indicated that Starlink’s speeds declined between Q4 2021 and Q2 2022, so they elected to wait until their technologies were more developed before supplying funds of this nature.

FCC Chairwoman Jessicase Roscenworcel said “consumers deserve reliable and affordable high-speed broadband. But the question before us was whether to publicly subsidize Starlink’s still developing technology for consumer broadband—which requires that users purchase a $600 dish. We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”

The FCC was not nearly as specific on their justifications for denying LTD Broadband’s application, but they indicated that their “initial default on winning bids in seven states didn’t help its case.” Ultimately, the FCC determined that LTD Broadband would not be able to “deploy a network of the scope and scale required by its RDOF commitments.”

The FCC is aiming to find the ways in which RDOF funds can be used most effectively to bridge the digital divide by supplying widespread access to more powerful and faster networks. Specifically, Chairwoman Rosenworcel says that the FCC “must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks.”

RDOF Phase II

If RDOF’s Phase II auction does continue to proceed, the program will have disbursed RDOF awards of “up to $20.4 billion over 10 years to bring fixed broadband and voice service to millions of unserved homes and small businesses in rural America.” The auction for Phase I took place in December of 2020 and awarded $9.2 billion in subsidies to 180 winning bidders. These bidders have “committed to deploying broadband to more than 5.2 million homes and small businesses in census blocks that previously lacked broadband service with minimum speeds of 25 megabits per second downstream and 3 megabits per second upstream (25/3 Mbps).”

Although the minimum speeds were established at 25/3 Mbps, most of these locations “are expected to receive access to broadband speeds of at least 100 megabits per second downstream and 20 megabits per second upstream (100/20 Mbps).” The winning bidders from Phase 1 have committed to providing gigabit-speed service to over 85% of these locations.

RDOF Phase II has not set a date as of yet, but the auction date could be discussed after the first Broadband Data Collection of 2021. Following the FCC’s new granular broadband mapping approach to collect more precise data that truly reflects the areas in need of high-quality broadband service throughout the U.S. to appropriately target funds.

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