No need for 'broad relief' from RDOF, CAF II default penalties – FCC

The FCC has concluded there is no need for 'broad relief' from penalties for broadband providers that default on awarded locations through RDOF and CAF II, citing its existing procedures and concerns about program integrity.

Nicole Ferraro, Editor, host of 'The Divide' podcast

July 8, 2024

3 Min Read
Court gavel resting on a pile of money
(SOURCE: IVAN KMIT/ALAMY STOCK PHOTO)

The FCC has concluded there is "no demonstrated need for broad relief" from provider penalties associated with defaulting on Rural Digital Opportunity Fund (RDOF) and Connect America Fund II (CAF II) network builds. However, the agency further said it will continue to waive certain penalties on a case-by-case basis.

"Individual providers contemplating a default should contact the Bureau, as well as the relevant state or territory broadband offices and Tribal governments, as soon as possible to discuss their specific situation," said the FCC in a public notice.

The decision comes after the FCC opened a public comment process earlier this year, in response to a petition asking the federal agency to offer an amnesty period to encourage providers that wish to default to do so sooner than later to free up those locations for the Broadband Equity Access and Deployment (BEAD) program.

At issue is the fact that locations awarded broadband funding under federal programs like RDOF and CAF II are ineligible for funding under the forthcoming $42.5 billion BEAD program. States are currently finalizing their lists of eligible locations for BEAD. Should providers default on CAF II/RDOF builds after BEAD locations are finalized, that could leave locations in the hardest-to-reach areas of the country without access to federal broadband deployment funding.

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

But according to the FCC, demonstrated progress with RDOF and CAF II, plus the agency's existing course for managing defaults and penalties, means there's no need for broad relief.

"RDOF and CAF Phase II support recipients have shown significant progress toward meeting deployment obligations, with only 4% of CAF Phase II carriers reporting not timely meeting buildout milestones, and with 71% of RDOF carriers reporting locations served a full year prior to the first deployment milestones required by the program," said the FCC's Wireline Competition Bureau in the public notice.

The FCC further highlighted arguments opposing the idea of granting a window for broad amnesty relief, including concerns that doing so would encourage providers to game the system:

"While some parties, including certain parties to the Entity Letter, supported offering a brief window during which CAF Phase II and RDOF support recipients could default, in some cases without explanation or justification, and with established support recovery procedures reduced, these parties failed to demonstrate that there is a need for broad amnesty relief among RDOF and CAF Phase II providers. In fact, while some comments offered various options for reduced default recovery, including using the lesser forfeiture structure available to all RDOF participants pre-authorization, most commenters rejected the concept of allowing defaults with no support recovery as thwarting the reverse auction system, encouraging bad actors, and undermining certainty in future support programs," said the FCC.

Related:FCC solicits comments on request for RDOF, CAF II amnesty

Default early (not often)

That said, the FCC also encouraged providers considering a default to make those plans known as soon as possible.

"To ensure federal deployment funds reach the locations where they are needed, we strongly encourage carriers contemplating defaulting on their deployment obligations under the Commission's competitively bid high-cost programs to reach out to the Bureau, and to the relevant state or territory broadband offices or Tribal governments, about their situation as soon as possible," said the FCC. "Earlier defaults can limit the support recovery and penalty costs to the carrier and also ensure that states and territories timely receive the necessary information for their Broadband Equity, Access, and Deployment (BEAD) planning. Earlier defaults also ensure that our sister federal agencies timely receive this information to target funding for their broadband deployment programs."

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

In the past several months, a range of providers including Altice, Charter, Sparklight and others have told the FCC they would default on certain awarded RDOF locations.

About the Author(s)

Nicole Ferraro

Editor, host of 'The Divide' podcast, Light Reading

Nicole covers broadband, policy and the digital divide. She hosts The Divide on the Light Reading Podcast and tracks broadband builds in The Buildout column. Some* call her the Broadband Broad (*nobody).

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