Charter Communications has asked the FCC for a limited waiver that would shave down some of the original deployments commitments linked to the cable operator's winning bids in phase I of the Rural Digital Opportunity Fund (RDOF).

Charter, a big winner in phase I that will result in the deployment of new 1-Gig fiber-to-the-premises (FTTP) networks, was assigned winning bids for more than 5,300 census block groups (CBGs) representing about 1.06 million homes and small businesses across 24 states.

However, Charter said an extensive follow-on review found that, in small instances, the Commission's "challenge process" conducted prior to the phase I auction failed to detect some areas that are already served by a broadband provider or already have funding to do so. Therefore, those areas should not have been included in the RDOF auction, Charter explained.

As a result, Charter is seeking a limited waiver (PDF) of its RDOF deployment obligation in several CBGs in Massachusetts along with a smaller group of areas in Kentucky, Missouri, Virginia and Wisconsin. Here's how the request breaks down:

"Each of these CBGs is already being served, or will soon be served, by Charter itself or by other wireline broadband providers that overlap 95-100% of the estimated locations in the CBG," Charter told the Commission.

In the case of Massachusetts, Charter said it discovered there were numerous areas within municipalities in which the Massachusetts Broadband Institute (MBI) had already awarded grants for broadband expansion projects prior to the auction through its "Last Mile Program." Those were incorrectly identified as "wholly unserved" and thus included in the RDOF phase I auction, the operator explained.

Among other instances subject to Charter's limited waiver request, the operator discovered that the operator had already built its network to 62 homes with a grant from the Menominee Indian Tribe of Wisconsin. However, Charter inadvertently bid for and won the RDOF CBG that partially overlaps that tribal grant. However, an estimated 93 remaining locations in the CBG remain "unserved" and are not encompassed by Charter's tribal grant.

While Charter's review revealed some holes in the RDOF process, those holes appear to be relatively small. Given that Charter was the phase I RDOF winner in 5,366 CBGs, the 43 CBGs that are subject to the operator's waiver request represent less than 1% of Charter's original total.

Charter isn't the only provider that plans to curtail a portion of its original RDOF obligations. Nextlink, a fixed wireless Internet provider, alerted the FCC that it does not plan to build Internet connections across 265 locations in New Mexico because the economics of deploying in those particular areas simply don't add up.

'Big project'

Tom Rutledge, Charter's president and CEO, discussed the size and scope of the RDOF project and addressed some of the challenges ahead last week at MoffettNathanson's 8th Annual Media & Communications Summit.

Rutledge noted that Charter plans to be ramping up RDOF-related construction toward the end of this year. While the operator's RDOF commitments will represent about 2% of Charter's total passings when completed, they also represent another 120,000 miles of infrastructure. The size and scope of that buildout is relatively considerable given the estimated 750,000 miles of infrastructure spanning Charter's current network.

"It's a significantly less dense, massive infrastructure project," Rutledge said of RDOF. "Physically, getting it done is a big deal. Getting a labor force in the markets where we're going to be is going to be difficult … I can't overemphasize how much of a big project this is."

Clearing the poles and getting the "make-ready" aspects of that build is part of the challenge that Charter (and other RDOF winners) will face. Rutledge said Charter is exploring some ways to accelerate that piece by promoting the idea of clearing poles and handling some of the make-ready elements on behalf of utility companies.

And once the RDOF network pieces start to get built, Charter does not anticipate altering how it prices services.

Charter is permitted to use a two-tiered pricing structure, "but I'm not sure how practical that is from a marketing perspective or an operating perspective," Rutledge said. "We don't need a different price to make the economics work. When we bid in the RDOF process, our bid assumed that we'd be charging the same rate as we charge everywhere."

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— Jeff Baumgartner, Senior Editor, Light Reading