An FCC program meant to expand high-speed internet in rural America is facing a new snag: At least some of the participating internet service providers say they need more funding to complete their projects, along with an option to bail.
The issue concerns the FCC’s Rural Digital Opportunity Fund (RDOF), which will award $20 billion in funding over the next decade to ISPs that win bids to build broadband networks for select areas. The program’s goal is to deliver at least 100Mbps—but potentially up to a gigabit—in internet speeds. But in recent weeks, some of the RDOF winners say they need even more funding, citing inflation and rising construction costs.
The request comes from a group called the Coalition of RDOF Winners. In letter sent earlier this week, the coalition urges the FCC “to address the massive and unprecedented increases in broadband deployment construction costs RDOF winners are facing—that could never have been anticipated" when the RDOF auction took place in fall 2020.
Since then, "the cost of fiber more than doubled, and the cost of pipe, handholes, and splice cases more than tripled since we started construction," the coalition said in a June letter.
To ensure the broadband projects go through, the coalition is asking the FCC for “supplementary” funding for ISPs that request it, along with a short “amnesty window” that’ll let companies bail from their bids without suffering financial penalties.
Without the amnesty window, ISPs that withdraw from their projects face tens of thousands of dollars in fines. Last month, the FCC proposed a $4.3 million penalty against 73 RDOF applicants for defaulting on their bids.
According to the coalition, other forms of relief could include the FCC offering an extra year of funding, making more subsidies available earlier during the program, and allowing RDOF winners to relinquish certain project areas.
Which ISPs are part of the coalition remains unclear. A lawyer for the group refused to say, according to Ars Technica. But according to an earlier filing, Arkansas-based Aristotle Unified Communications and the Texas company Tekwav attended an FCC meeting with the coalition, where they requested the additional funding. In June, the coalition also provided the FCC a letter signed by three GOP senators from Mississippi and Ohio, who inquired about freeing up more funding.
The news doesn’t bode well for the rural broadband fund. But another lobbying group, Advocates for Rural Broadband (WTA), sent a letter to the FCC last month, faulting other ISPs for failing to account for potential price increases during the RDOF bidding process.
“WTA members and other responsible bidders factored these likely future cost increases into their Auction 904 bid strategies, and stopped bidding when the bid prices became so unreasonably low that projects were no longer financially feasible or sustainable,” the group wrote, urging the FCC to stop other ISPs from “gaming” the system.
The FCC didn’t immediately respond to a request for comment. But last month, FCC Chairwoman Jessica Rosenworcel told the senators—J.D. Vance, Roger Wicker, and Cindy Hyde-Smith—that the RDOF program doesn’t collect additional funding; it can only match the $6 billion it’s already committed to participating ISPs during the first phase of the program.
Rosenworcel also indicated it's up to ISPs to budget their bids appropriately. “??The Commission’s default rules are designed to impress upon recipients the importance of being prepared to meet all Commission requirements and be prepared to fulfill deployment obligations,” she wrote. That said, the FCC will "carefully consider” a waiver on penalizing an ISP for defaulting on a project if it was in the public’s interest to do so, she added.