FCC Seeks Comment on Allowing RDOF and CAF II Winners to Relinquish Some or All of Their Bids Without Fully Imposing Requisite Penalties

FCC Seeks Comment on Allowing RDOF and CAF II Winners to Relinquish Some or All of Their Bids Without Fully Imposing Requisite Penalties

In a Public Notice released on Tuesday, the Federal Communications Commission (FCC) seeks comment on a letter that requests the FCC to allow winners of the Rural Digital Opportunities Fund (RDOF) and Connect America Fund Phase II (CAF II) auctions a brief window of no more than a month to relinquish all or a part of their winning bids without facing the full extent of the penalties that accompany such defaults.  The letter was filed by a group of sixty-nine entities comprised of broadband providers, trade associations, state and local officials, school districts, unions, and civil society organizations.  Comments are due March 26 with replies due April 9. 

According to the letter, many RDOF and CAF II winners “cannot or will not” deploy broadband facilities in their supported areas making it possible that “millions” of rural residents will not be connected to robust and affordable broadband.  The letter contends that if the FCC were to allow a brief “amnesty period” in which penalties for default would be significantly lowered, RDOF and CAF II winners would have an incentive to relinquish areas where they will not be fulfilling their buildout obligations so that those areas could be funded by the Broadband Equity Access and Deployment (BEAD) program.

In explaining why some winners are not deploying broadband, the letter cited a petition filed by a coalition of RDOF winners alleging that significantly increased construction costs have made it financially impossible to build out in certain areas.   While not mentioned in the letter, the petition also noted that allowing for an amnesty period would address situations where areas identified for RDOF or CAF II funds already have high speed broadband due to other federal and state broadband grant programs.   The letter also alleged that some RDOF and CAF II winners are “bad actors” in that they “simply sat on the money” rather than building networks.  The letter then urges the FCC to allow even those carriers to participate in the amnesty period.

We encourage clients to actively participate in this proceeding by filing comments and then conducting ex partes.  We recommend that clients oppose any ruling that would allow “bad actor” winners of RDOF and/or CAF II to be granted amnesty.  We recommend that such comments provide examples of how your company adheres to universal service support rules while meeting buildout obligations in contrast to the “bad actors” who do not intend to fulfil their obligations.  Comments should also provide examples of how “bad actors” were able to win in areas where your company was ready and prepared to timely deploy broadband.  We believe that providing this type of data to the FCC will help to ensure that those that flout FCC rules must not escape the full impact of penalties designed to ensure consumers receive high speed broadband in rural areas. 

We also encourage clients that participated in RDOF and/or CAF II auctions and have found it financially impossible to build out in certain areas or have areas that are being overbuilt by federal or state grant programs to consider filing comments that would distinguish your legitimate need for relief from that of the “bad actors.”  

Please contact John Kuykendall,  Dounia Chikhoune, or Jenn Holtz if your company is interested in filing comments in this proceeding or if you would like our assistance with ensuring that your company is able to meet RDOF or CAF II buildout obligations.