Broadband coalition asks FCC to grant RDOF relief for BEAD's sake

In a letter sent today to the FCC, a coalition of nearly 70 broadband industry groups, ISPs, community leaders and nonprofits is requesting the FCC grant a short amnesty period for Rural Digital Opportunity Fund (RDOF) winners to relinquish their awards without stiff penalties, in order to make those locations available for Broadband Equity Access and Deployment (BEAD) funding.

The letter is the result of growing concern about providers defaulting on their RDOF awards, as well as Connect America Fund II (CAF II) awards. Since BEAD rules stipulate that locations already awarded funding through federal programs such as RDOF and CAF II are ineligible for BEAD funding, those locations – some of the most rural and hard-to-reach locations in the country – are at risk of being left out of getting connected at all.

To that end, the coalition is asking that the FCC create a "limited-time mechanism allowing ISPs who can not — or will not — fulfill their obligations under the RDOF or CAF II programs to relinquish their grants with a reduced penalty," as summarized in a press release.

Some background

Specifically, the letter refers to a petition filed with the FCC last August on behalf of a group of RDOF providers – known as the Coalition for RDOF Winners – requesting "emergency relief" due to higher broadband construction costs. The group argues such costs have increased "at a minimum of 30 percent, but some by as much as 100-300 percent" since 2020.

Related:NTIA poses alternatives to BEAD letter of credit requirement

That August letter in turn asked for additional financial support for their RDOF builds, or "a short amnesty period that allows RDOF Winners to relinquish all or part of their RDOF winning areas without forfeitures or other penalties."

The coalition petitioning the FCC today has thus requested the FCC grant that amnesty request, "or otherwise provide a mechanism for relinquishment that ensures that thousands of communities across rural America are not disconnected from the benefits of reliable and affordable broadband Internet."

According to the letter, the FCC could fulfill this by granting RDOF and CAF II awardees "who cannot or do not intend to build their networks a very short and expedited amnesty period of no more than a month that allows them to relinquish all or part of their winning areas" with lower penalties. Moreover, the FCC could "consider increasing the penalties for awardees who default after the amnesty period is over" to further incentivize awardees to relinquish their locations.

The letter further suggests in a footnote that, for ISPs that relinquish their RDOF/CAF II locations, the "NTIA or the state broadband office could then decide whether those ISPs would be eligible for BEAD funding in those areas."

But, as the letter also notes, time is of the essence: States are already beginning to hold their challenge processes to determine final eligible locations for the BEAD program, a process that will wrap up in the coming months.

'Entirely' in the FCC's power

The letter sent today to the FCC was organized and signed by some of the same groups that previously organized a successful push for the NTIA to pose alternatives to BEAD rules that would have required BEAD providers to maintain an irrevocable letter of credit for 25% of the full grant amount.

Thus far, however, the FCC has not seemed willing to grant relief for RDOF recipients. As Chairwoman Jessica Rosenworcel said last year in response to a Senate inquiry about supplemental funding, "we do not have support in reserve readily available for reallocation to the extent that the total amount authorized for RDOF fell below the projected budget." The Commission has also already proposed tens of millions in fines for providers that have defaulted.

But concerns abound that widespread RDOF defaults, paired with flaws in the FCC's national broadband map dictating BEAD-eligible locations, could leave many unserved communities disconnected.

"Many of the RDOF and CAF II awardees who cannot or will not deploy their networks are located in states with the greatest connectivity needs, like Missouri and Mississippi. The Commission should not permit these unserved rural communities to face this type of double whammy and be left behind once again," the broadband coalition said in today's letter. 

"It is entirely in the Commission's power to ensure that large swaths of rural America are not left out of Congress' bipartisan, once-in-a-lifetime investment to close the digital divide."