Opportunity Fund or Off Track? A ViodiTV Conversation with NTCA’s Mike Romano about RDOF

On December 7th, 2020, the FCC released the names of the winners of its Phase 1, reverse auction, Rural Digital Opportunity Fund (RDOF). Two days later, Free Press and ViodiTV’s sister publication, the Viodi View, both reported that significant sums of RDOF support appear headed towards urban locations, potentially siphoning off funding from the target, broadband-deficient, rural areas.

RDOF Program Highlights

  • $9.2B preliminary awarded in Phase 1 (subject to FCC acceptance of long-form applications)
  • Offer commercially at least one voice & one broadband meeting specified performance requirements.
  • Operator determined rollout with certain passing milestones that culminate in 100% buildout by year 6.
  • Pricing that is comparable to the rates for similar services in urban areas.

Although the anomalies pointed out in those articles appear to be related to mapping data, a takeaway from the above interview with Mike Romano, is that broadband mapping inaccuracies are just one of many concerns with RDOF, Phase 1. Romano, NTCA’s Senior VP of Industry Affairs & Business Development, has been closely following and been providing feedback to the FCC throughout the RDOF process.

RDOF Brief Timeline

Beyond mapping, Romano cautions that the technology “should have been judged before the auction, rather than after the auction.” Romano’s concern is that the Phase 1 RDOF auction process does not consider the maturity of the technology in being able to deliver on the promises of some of the auction winners.

Further, without a measure of actual success, such as a minimum number of subscribers in a given footprint, it will not be easy to determine whether the support is helping the intended beneficiaries.

As Romano indicates, “the ball is in the FCC’s court,” since the next step is to review the long-form applications, which the winning bidders must submit by January 29th. With a Democrat-chaired FCC starting January 20th, it will be interesting to see how the next FCC judges the long-form applications and the resulting implications for RDOF.

FCC Commissioner Rosenworcel’s Red Flags

Commissioner Rosenworcel’s comments mirror many of the concerns expressed by Romano. In addition to concerns about mapping data, low baseline speed, and the structure of the program, in her January 2020 comments, Rosenworcel expressed concern about cost as a barrier to adoption and how the plan did not explicitly address that issue.

Interview Highlights:

  • 00:56 – NTCA’s members serve approximately 5% of the population and 30 to 35% of the U.S. landmass with broadband.
  • 02:34 – Paul Bunyan Communications of Bemidji, MN is a typical NTCA member that has evolved from a copper telephone network to a 100% fiber to the home broadband provider.
  • 03:27 – Romano provides an overview of RDOF.
  • 05:23 – Romano points out that it is still early in the game for determining the success of the FCC’s first broadband reverse auction, CAF II. CAF II funding currently only serves 87 locations, compared to the approximately 722k locations supported by CAF Broadband Loop Support.
  • 07:01 – The Fiber Broadband Association and NTCA believe that the definition of broadband should be revised upward from the FCC’s minimum 25Mbs/3Mbs, downstream/upstream, as indicated in their 12/18/20 filing.
  • 10:20 – Romano explains how the reverse auction process promises to deliver higher-speed broadband for less money than traditional approaches. He believes that one of the unintended consequences is that entities have an incentive to stretch the capabilities of technology. He goes on to say that many open questions should have been answered prior to the auction.
  • 13:36 – What provisions are there for the FCC to claw back support if a winning bidder does not meet their performance promises?
  • 16:16 – Support is based on passings, not actual subscribers. Romano points out that shared networks, particularly satellite which covers a large footprint, might have an incentive to lightly load their networks to meet performance levels. He believes that a subscription penetration metric (i.e. adoption) will be important.
  • 19:59 – The discussion turns to the challenge of and the importance of creating accurate broadband maps. It is pointed out that a little more than 50% of the RDOF funding in Silicon Valley is going to approximately 15,000 urban locations, as detailed here.
  • 23:50 – RDOF Phase 2 auction has the potential of being an $11B reverse auction.
  • 27:24 – Romano indicates that “the ball is in the FCC’s court” as they review the long-form applications submitted by the winners.