RDOF winner coalition tells FCC to grant more funds and amnesty

A group known as the "coalition of RDOF winners" has weighed in on whether the FCC should grant an amnesty period for providers to relinquish their locations awarded through the Rural Digital Opportunity Fund (RDOF) in the interest of making those locations available for the Broadband Equity Access and Deployment (BEAD) program instead. Essentially, the coalition expressed support for the idea but is also pushing for more RDOF funding.

The backstory

The coalition (comprising an unnamed group of RDOF winners, represented by Klein Law Group) first filed an emergency petition with the FCC last year, requesting supplemental funding and additional concessions to address what it called "unprecedented" cost increases associated with RDOF builds. That relief, in the form of supplemental funding, earlier access to funds and a relaxation of a letter-of-credit requirement, is what the group refers to as the "primary relief" it seeks.

"As the RDOF Winners explained above and in the Emergency Petition, due to the impacts of COVID along with new, multi-billion dollar federal fiscal policies and pandemic-prompted broadband deployment funding programs, construction costs have skyrocketed—at a minimum of 30 percent, but some by as much as 100-300 percent," said the group in its FCC filing last week.

Related:Rural broadband group wants 'specific conditions' on RDOF waivers

To that end, the coalition said it wants the "primary relief" it previously outlined, and for the FCC to "make Amnesty Relief available without tying such relief to the financial penalties that may otherwise apply under the RDOF deployment rules," particularly in areas it said are being "overbuilt" with other federal broadband funds.

Added the group: "The relief sought is solely to address the astronomical cost increases above the reserve price, while preserving the integrity of the RDOF program and its public interest objectives. If the Primary Relief is not afforded, then Amnesty Relief without imposing huge financial penalties associated with the Commission's RDOF deployment rules is justified."

Why it matters now

This latest filing from the RDOF coalition comes in response to an FCC request for comment on a proposal to allow winners a short period of time to relinquish their awarded RDOF and Connect America Fund II (CAF II) locations in order to make more locations available for the much larger BEAD program.

That request for amnesty, with limited penalties, was put forth in a letter last month, signed by a group of 69 broadband advocates and stakeholders. Citing the coalition of RDOF winners' petition for relief that was filed in 2023, the letter warned of the potential for providers to default on RDOF locations too late for those locations to still be eligible for BEAD. In turn, it asked the FCC to grant a limited amnesty period for providers to release RDOF/CAF II locations, "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."

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

The FCC then issued a request for public comment on that proposal. Initial comments are due today (March 26), with reply comments due April 9.

'Unforeseeable cost increases'

In its latest filing, the coalition of RDOF winners took issue with some of the comments filed with the FCC thus far on that proposal.

"[C]laims that any Amnesty Relief afforded should be punitive in nature are without merit," said the coalition.

For example, referring to a filing from NTCA–The Rural Broadband Association, which warned that providing amnesty without appropriate penalty would give providers a "get out of jail free card," the RDOF coalition argued that such framing is "misleading" and "talks past the key public policy issue raised in this proceeding: how should risks be allocated in the wake of massive, unforeseeable cost increases caused by COVID-19 and its aftermath?"

Notably, the $9.2 billion RDOF phase I auction, awarded in 2020, is not the only federal telecommunications program facing financial constraints tied to the COVID-19 pandemic.

The "rip-and-replace" program, established with $1.9 billion in the 2019 Secure and Trusted Communications Networks Act, is also facing a roughly $3 billion shortfall due to inflation, according to the industry. That program, which provides funding for network operators to rip out and replace "insecure" network equipment from Chinese companies Huawei and ZTE, has been stalled due to network operators citing cost constraints.

An effort to lobby Congress for additional funding has been unsuccessful, despite a push from the White House.

Another RDOF winner weighs in

Meanwhile, one major winner in the RDOF auction, Conexon, did not file official comments with the FCC on the amnesty proposal. But the company's co-founder said in a recent email newsletter that he supports the idea.

"I think the FCC should grant the petition for limited amnesty," said Jonathan Chambers, partner at Conexon, and a former FCC official, in a newsletter Friday.

Conexon was a successful bidder in both RDOF and the CAF II auctions. The company, which builds and operates fiber networks for and with electric co-ops, had organized a bidding consortium (the Rural Electric Cooperative Consortium, or RECC) which successfully won $186 million through CAF II and $1.1 billion through RDOF.

Yet while Conexon has "assisted our co-op partners in building 80,000-100,000 miles of rural fiber networks" since RDOF began, Chambers added that "even at that pace of construction and with our track record, more than one community has asked us to give up our RDOF award so they can apply for BEAD funding" instead.

"If a community wants to take its chances with BEAD instead of with a company that has an RDOF commitment, I believe they should have that opportunity," said Chambers. "Granting the amnesty petition now will improve the prospects for more co-ops to build more fiber networks."