On June 9, the Federal Communications Commission adopted procedures for Phase I of the Rural Digital Opportunity Fund (RDOF) auction, set to take place in October. Auction participants stand to win $16 billion in funds in phase one of the RDOF to build out internet networks in select census areas around the U.S.
On the latest Fiber for Breakfast live video series, two experts sat down with Fiber Broadband Association President & CEO Lisa Youngers to discuss what the FCC decided this week, and how companies should continue to prepare to put their hat in the ring.
According to the FCC, Phase I of the RDOF auction will be held on Oct. 29. Funding will be awarded through a reverse auction and will utilize a weighting system to favor bids with high speeds (“the gig tier”) and/or lower latency service. Bids will be by census block groups currently underserved, meaning they have no availability of 25/3 Mbps service, with detailed information about these areas expected to be released in the immediate term.
Tom Cohen, partner of Kelley, Drye & Warren, said it is expected the auction will cover six million locations. He said while the auction doesn’t exclude DSL, fixed wireless and satellite carriers, as structured, fiber is the best suited for winning the money. Namely, he said, the FCC will prioritize bidders with higher speeds—up to 1 Gbps—and lower latency networks, something many other networks can’t provide successfully in rural areas.
“If you go in with fiber and you hit the budget clearing round, you are going to win,” he said. “The door is open a crack for wireless internet service providers to demonstrate they can provide a gigabit service. We need to see the text [of the procedures] to see how big that crack is. But even if that is open, they’re going to have to bring fiber relatively close to make them capable of meeting that performance.”
He added it will be difficult for satelite to have similar speeds.
“There were filings by GeoLinks showing it can be done, but in a real limited way,” he said.
Mike Romano, senior vice president of industry affairs and business development at NTCA—The Rural Broadband Association, said he thinks the FCC left the door open for several different types of internet providers to make the auction more robust. Allowing varying types of network operators of varying size to participate will drive competition up and benefit the consumer.
“The key here isn’t an auction where people walk away and go their separate ways,” he said. “There’s a public policy obligation—there’s consumers who are longing for broadband.”
He said what’s going to be the differential is the short form application process. The short form application opens on July 1 and closes on July 15, and is designed to gather key information from of potential bidders. Romano said even if someone is unsure they want to bid, they should submit the short from application to allow them access.
The most important part of that process is providing information about one’s ability to build a network that qualifies under the auction. How rigorous they will be upfront has yet to be seen, though organizations such as the Fiber Broadband Association and NTCA - the Rural Broadband Association have pushed for the FCC to be more transparent upfront about network requirements. Cohen said it’s clear fiber is better suited for auction funds, as it not only provides the speeds needed now, it’s also futureproofed for even larger capacities.
“The argument that we made is everyone knows what fiber can do,” he said. “We know what it can do in the future as well.”
What’s encouraging to both Cohen and Romano, though, is the FCC’s penalties if a service is not performed. The FCC already has a set of rules regarding defaults. Cohen said these alone will be deterrents for network operators who want the funds to participate, but may not be able to offer the speeds required. Romano agreed, adding that the census block requirements also push for entire census blocks to be served. If a network provider can only offer required speeds to a portion of the block but not all, they probably won’t win a bid.
“You’re going to have to serve everyone,” Romano said. “And you’re going to have to deliver service at a reasonably comparable price. They can’t take the money and cherry pick where in a census block they want to build.”
Both agreed this is a great opportunity not only for fiber companies looking to expand, but for rural Americans desperately seeking reliable internet.
“If you’re in an area where these funds will go, you’d be remiss in not taking a look,” said Romano. “Seriously evaluate the opportunity to participate in this action because you really will be missing something if you don’t. The company that wins this is going to become a provider for a community that needs it.”
Join us for our next Fiber for Breakfast live video series on June 17. The topic: State Broadband Funds and Deployment Offices. To read the Fiber Broadband Association's full statement on the RDOF, click here.