On January 30, 2020, the FCC approved what they are calling the “largest investment ever,” just over $20 billion, to fund rural broadband at up to gigabit speeds through a two-phase reverse auction mechanism called the Rural Digital Opportunity Fund (RDOF). The Connect America Fund (CAF) Phase II reverse auction is the predecessor to the RDOF, and the FCC is sticking close to the procedures and methods used in the CAF Phase II auction in 2018—at least for Phase I of the RDOF. RDOF’s Phase II, which will occur several years down the road, intends to fund unserved pockets within census blocks that would be considered “served” based on Form 477 data, but this phase will not occur until after the FCC’s Digital Opportunity Data Collection (DODC) has been completed and produced useful data.

Meanwhile, the FCC will move ahead with Phase I of the RDOF, which provides up to $16 billion for several categories of unserved census blocks:

  1. Census blocks where price cap carriers receive CAF Phase II model-based support, but have not deployed 25/3 Mbps broadband;
    1. RDOF will include non-Tribal lands census blocks, where the cost per location is above $40.00 rather than the $52.50 used in the model and where 25/3 service has not been deployed. For Tribal lands, the threshold will be even lower at $30.00.
  2. Census blocks that were included in the CAF Phase II auction, but were not won by any participant (these are largely “extremely high cost” blocks);
  3. Blocks won in the CAF Phase II auction, but where the winner defaulted;
  4. Census blocks that were not included in the CAF Phase II auction or the price cap model offer because they were over 10/1 Mbps then, but now are under 25/3 Mbps;
  5. Blocks served by both price cap and rate-of-return carriers to the extent that the census block is in the price cap carrier’s service territory as determined by the most recent study area boundary data (“split blocks” in other words, and only the price cap carrier portion will be included in the RDOF);
  6. Census blocks where no price cap carrier or other high-cost ETC is providing service; and
  7. Rate-of-return census blocks where the provider indicates that they are not expecting to extend 25/3 broadband service.

The next step is for the Wireline Competition Bureau to publish a list of preliminary eligible census blocks which will then undergo a “limited” challenge process. Companies that have deployed 25/3 or greater in the blocks on the preliminary list will be able to file challenges requesting that the blocks be removed from the RDOF. The FCC decided in the CAF Phase II proceeding that a “robust” challenge process is too administratively burdensome and time-consuming, and they maintain this position for the RDOF as well. Therefore, the FCC will not accept challenges where a challenger tries to prove a negative – that a specific area is not served.

The FCC commissioners adopted the RDOF Order with partial dissents from Commissioners Rosenworcel and Starks and made some key changes between the draft order and what was presented at the open meeting. First, they struck a middle ground between parties that requested significantly relaxed, or eliminated, Letter of Credit requirements and the need for the FCC to ensure that it is not authorizing “fly by night” companies with sketchy financial wherewithal to receive funding. Second, the Order now says that areas getting USDA ReConnect funding will be off-limits for the RODF, and other areas that receive similar federal and state funding are also not eligible. At this time, it is unclear what exactly the FCC means by this, and how they will determine where other federal and state funding areas are in order to remove them from the preliminary eligibility list.

Response from the industry has overall been positive, and with such a large amount of money dedicated to expanding rural broadband for the next 10 years, it is easy to see why.

JSI will continue to share developments in the RDOF including deadlines, next steps, and details about the procedures. JSI will hold a webinar on Tuesday, February 25. If you have any questions about the RDOF, please contact John Kuykendall in the Maryland office at 301-459-7590.