Winning bidders in the Rural Digital Opportunities Fund auction who later abandoned their plans to follow through on build-out and participating in the process could face fines of more than $4.3 million from the Federal Communications Commission.
“The applicants agreed to follow the Commission’s auction rules when they signed up to participate in the Rural Digital Opportunity Fund program,” said Acting FCC Enforcement Bureau Chief Loyaan Egal. “These defaults have put at risk the timely deployment of broadband access for many and necessitate this strong enforcement action.”
The RDOF auction to support $16 billion in Universal Service Fund work over a decade happened in late 2020. There were nearly 790,000 census blocks identified as eligible for RDOF work, in nearly 62,000 Census Block Groups (CBGs); nearly 400 qualified bidders participated in the auction. Ultimately, 180 participating bidders won approximately $9.23 billion in support over the ten-year period of RDOF funding.
Winning a bid was a formal commitment and involved providing further documentation to the FCC in order to get official authorization for the funds. In the wake of the auction, however, questions arose about whether particular census blocks were actually unserved. The Competitive Carriers Association was among the voices raising concern over RDOF funding decisions, saying that it had identified more than $1 billion out of program funds that might go to areas which were likely to already have fixed or mobile service that meets the FCC’s 25/3 Mbps requirements. CCA found that 5.5% of RDOF award locations “likely include sites that have access to at least 25/3 Mbps fixed broadband,” and about 6.9% of RDOF locations “likely” have access to fixed or mobile broadband that meets the 25.3 threshold, according to the report based on the analysis and filed with the FCC.
The FCC made moves to “refocus the program” to make sure that funding was actually going to unserved areas that need broadband, and as a result, 85 winning bidders opted not to pursue buildout in 5,089 census blocks. Those defaults were sanctioned by the agency because it believed that build-out wasn’t necessary in those areas after all; they are not part of the enforcement action.
The FCC is proposing fines of $4.35 million for 73 companies who had won work in 1,702 CBGs and have defaulted for various reasons, and two entities that were organized as bidding consortia for the purpose of participating in the auction whose members have defaulted. The rules of the auction has established a baseline of $3,000 forfeiture per default, with a cap at 15% of the defaulting bidders’ total assigned support for the CBGs in which it is defaulting.
Most of the fines were relatively small, at less than $20,000 per entity. There were a few exceptions to that: Charter subsidiaries in North and South Carolina, Pennsylvania, Texas, Ohio, New Hampshire, Massachusetts, Kentucky, Indiana, Delaware, Tennessee, Missouri, Michigan, Georgia, Alabama and California face potential fines totaling more than $1.2 million. LTD Broadband could be fined as much as $2.3 million for forfeiting work in 768 CBGs.
The agency’s action is not final; it is formally known as a Notice of Apparent Liability for Forfeiture (NAL), and the parties involved will have a chance to respond before the FCC takes final action.