The idea started out simply enough. In January, the FCC had adopted its RDOF auction design whereby Gigabit tier bidders would win in the auction against all other bidders. In March, the FCC had identified the eligible census blocks and the amount of funding.
And in March, across the nation, schools and businesses started the experiment of large-scale schooling and working online. Economic activity began to shut down. Conexon was working with nearly 100 electric coops who were prepared to begin constructing rural fiber optic networks to every home and business in their service areas, and the RDOF caused most of the projects to pause. If there is a large funding program, and you may or may not receive funding, the program itself can be the cause for delay until the results are known.
So, I published a straightforward proposal: accelerate the RDOF program for those who are guaranteed to win in the auction and are prepared to move forward now and build on an expedited schedule. Recognize that the times call for action. Spend no more money than has already been allocated in the very places and for the very amounts that have already been determined. And move the timetable up by a year. Get rural America back to work by building necessary fiber infrastructure.
Congressman Clyburn liked the proposal, turned it into legislation, and the House adopted Congressman Clyburn’s legislation as part of the HEROES Act. Then, Washington does what it is so good at doing: mischaracterize, delay, obfuscate. All while rural America waits.
I stand by the words I wrote in March. They are unchanged and can be found here: https://www.conexon.us/conexon-blog/accelerate-the-rdof-how-to-spend-billions-in-long-term-critical-broadband-infrastructure-create-jobs-and-stimulate-the-rural-economy-now/
I thought it might be time to correct some of the record concerning the legislation, now introduced on a bipartisan basis in both House and Senate.
First, the FCC claims that the legislation would delay the RDOF auction. If properly implemented, it would not.
Under the current schedule, the Commission will remove census blocks from the auction up to two weeks before the auction begins, mostly blocks that are part of any RUS ReConnect grant awarded between June 25 and October 15. The Commission clearly has the ability to remove census blocks for other purposes, such as the Clyburn legislation. Only one category of applicants, those who will certainly win in the auction, would identify such census blocks. Only those blocks would be removed from the auction. The applicants would demonstrate their readiness and financial viability by submitting network diagrams and demonstration of financial capability. Determining whether the required documents have been filed is a ministerial act. The information, and the other documents in the FCC long-form application, can be evaluated in full during or after the auction is concluded, just as it is for all winning bidders in an auction.
The question is simply whether the FCC has time between September 15 and October 15 to remove census blocks before the auction identified by applicants who will assuredly win those same geographic areas during the auction. Under the auction schedule, the FCC will require long-form applications to be filed in January and other documents six months later, with awards made in the months after that. The original purpose of the legislation was to allow applicants, the known winners, to file their long-form applications first, so that they may be evaluated early, so that they may get funding sooner and get to work on an expedited schedule. That original purpose still stands. The legislation will cut six months to a year off the schedule for applicants who will win anyway.
A related issue has arisen regarding state and federal Eligible Telecommunications Carrier certification. The legislation eliminates the process for the RDOF program. Following the CAF II auction, the FCC allowed six months for winning bidders to get ETC certification. It took some carriers a year or longer. RDOF is largely a broadband program, and no state commission examines the broadband capabilities under its ETC examination. ETC is a voice-only certification. I have been involved in dozens of ETC processes starting with the very first ones following the passage of the 1996 Telecommunications Act. The process today is an anachronism. More important, the process takes time, time that shouldn’t be wasted during a crisis.
Second, the legislation would award the Gigabit tier applicants 100% of the model-calculated reserve price. The FCC’s model is a projection of the cost to construct, operate and maintain greenfield, fiber-to-the-premise Gigabit Passive Optical Networks. It makes sense to award 100% of the reserve price to pay for the very thing that was modeled to the only applicants/bidders who would build such a network. After all, since 2015 under the CAF program and ACAM program, the FCC has awarded 100% of FTTP model-based funding using variations of the same model, but only for service of 4/1 Mbps, 10/1 Mbps and 25/3 Mbps.
During the auction, these applicants/bidders would win the amount of the clearing round price, which may or may not be 100%. The clearing round price point in the CAF II auction was 78.35%. The clearing round in RDOF will likely be 80% or 90%. Awarding at 100% is a policy choice. The legislation makes it clear that the budget for the remaining bidders cannot be negatively affected. Of the 100% award, 50% will be drawn from the RDOF II program. In that way, as long as the clearing round is 50% or above, the budget relative to the eligible census blocks is not decreased. Since the RDOF budget is $16 billion and the aggregate reserve prices are just over $27 billion, it is mathematically impossible for the clearing round to be less than 50% and therefore mathematically impossible for the budget for remaining bidders to be reduced relative to the remaining geography.
Finally, the legislation was initially limited to symmetrical Gigabit service. The bill was introduced in the Senate and re-introduced in the House to include service that was capable of at least Gigabit downstream, without the requirement of symmetrical speeds. Conexon only builds fiber networks, so we prefer networks capable of symmetrical Gigabit speeds. This was a policy choice. Sec. 254 of the Communications Act charges the FCC with ensuring that rural America has access to telecommunications and information services that are reasonably comparable to services in urban America. According to the latest publicly available FCC data, Gigabit downstream speeds are available to over 98% of urban households, while Gigabit upstream speeds are available to 38% of urban households. Therefore, while that wasn’t my original proposal, it seems a reasonable policy choice to me.
Let’s not lose sight of the objective, which is to accelerate the construction of broadband networks. Is an acceleration of RDOF by six months or a year such a big deal? Just last week, Conexon assisted seven electric cooperatives in Mississippi prepare applications for broadband funds pursuant to the CARES Act, funds which must be spent to improve broadband capacity by the end of this year. In less than six months, these coops will build over 2000 miles of fiber making service available to over 40,000 unserved rural Mississippians. Another half dozen Mississippi coops are doing the same thing with other construction firms. Is six months a big deal? It is to the people we serve. It’s a big deal to a million people in Mississippi without adequate broadband, and to the millions we serve in dozens of states across the country.