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Digital Divide

Starry still optimistic about RDOF

Fixed wireless provider Starry still believes it will receive around $269 million in government funding from the FCC's Rural Digital Opportunity Fund (RDOF). The company's optimistic outlook is noteworthy considering the FCC recently said it would deny such funding for two other RDOF participants, LTD Broadband and SpaceX's Starlink.

"The Federal Communications Commission is in the final stages of its review of Starry's Rural Digital Opportunity Fund (RDOF) long form application and we are confident it will be granted in the near term," the company said earlier this week. Starry officials said they still stand by that statement following the FCC's surprise announcement Wednesday rejecting LTD and Starlink's applications.

Nonetheless, the situation is becoming serious. As noted by the financial analysts at Cowen, Starry rescinded its full-year revenue guidance due to the RDOF situation. The company had hoped to already be receiving roughly $2.2 million per month from the program.

"We included approximately seven months of RDOF regulatory revenue in our 2022 guidance provided on the first quarter earnings call and will provide an update once the FCC finalizes its process," Starry said.

(Source: Starry. Used with permission.)
(Source: Starry. Used with permission.)

The FCC said it rejected LTD's RDOF application because it believed the company "was not reasonably capable of deploying a network of the scope, scale, and size required by LTD's extensive winning bids." LTD had said it planned to use mostly fiber connections to meet its RDOF obligations.

As for Starlink, the company's low-Earth orbit (LEO) satellite technology "has real promise," said FCC Chairwoman Jessica Rosenworcel in a statement. "But the question before us was whether to publicly subsidize its still developing technology for consumer broadband – which requires that users purchase a $600 dish – with nearly $900 million in universal service funds until 2032."

LTD was the top winner in the FCC's RDOF program, netting $1.3 billion in funding. Starlink came in fourth with $886 million. Starry came in ninth with $278 million. The FCC has been approving funding to a wide range of other RDOF participants in recent months.

The FCC's RDOF program is a reverse auction where companies and entities that submit the lowest bid for covering a particular area win – however, then they're on the hook to cover that area with broadband services. Winning bidders will receive ten years of subsidy payments from the FCC, disbursed in equal monthly installments, and have six years to deploy broadband to winning locations. The program is an effort to cross the digital divide.

Starry, for its part, is a newly minted public company on its way to around 100,000 fixed wireless subscribers across a handful of big markets such as Boston, New York City, Los Angeles and Denver. The company recently inked a deal with Cantor Fitzgerald for up to $100 million in additional funding to reach its network buildout goals, but company officials are in negotiations for more cash.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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