FCC seeks to fine some big names over RDOF default

The FCC has proposed to fine 22 telecoms companies for failing to follow through with its rural funding programme in the US and there are some big names on the list.

The US regulator is seeking to levy the best part of $9 million in fines against the companies. That’s not a huge sum, particularly considering that some of those in the firing line generate billions of dollars in annual revenues. But the move is significant because it suggests that the FCC’s efforts to boost rural broadband deployment are not going as well as it might have hoped.

The FCC awarded $9.2 billion in funding for the rollout of broadband networks in difficult-to-reach areas to 180 companies under its Rural Digital Opportunity Fund (RDOF) in late 2020. At the time, the headlines were dominated by the likes of Elon Musk’s SpaceX, which secured $885.5 million to roll out broadband in 35 states, and by three companies that each picked up more than $1 billion: LTD Broadband, Charter Communications, and the Rural Electric Cooperative Consortium.

Last August the FCC changed its mind about LTD and SpaceX, having analysed their long-form bids. In a nutshell, it had doubts about the cost of SpaceX’s consumer premises equipment, and judged LTD to be incapable of providing what it had pledged in its winning bid due to a failure to secure licences in certain states.

Things haven’t gone wholly to plan for the other two big winners either. Charter Communications defaulted on winning bids via a couple of subsidiaries, including Time Warner Cable, while Conexon Connect, a member of the Rural Electric Cooperative Consortium also defaulted on a number of bids, according to the FCC’s list of 22 companies in line for censure. Subsidiaries of both companies also appeared on a list of 73 bidders facing fines published by the FCC last summer; this latest litany of 22 is the regulator’s second move to punish RDOF defaulters.

The new list also includes Altice USA and a number of smaller players, one of which is Connect Everyone a unit of fixed wireless provider Starry, which filed for Chapter 11 bankruptcy protection in February.

“When the Commission set up this program, it set clear rules of the road to ensure that winning bidders would fulfill their promise to use this funding to build new broadband infrastructure,” said FCC Chair Jessica Rosenworcel. “Not following the rules has consequences. For those who failed to meet their obligations, today’s action shows the Commission takes seriously its commitment to hold applicants accountable and ensure the integrity of our universal service funding.”

Meanwhile, in his own statement, fellow commissioner Geoffrey Starks leaned heavily on the consequences of those defaults for the communities in the relevant areas of the country.

“When applicants fail to live up to their obligations in a broadband deployment program, it is a setback for all of us. Defaulting applicants pay a fine, but rural communities that have already waited too long for broadband pay a larger toll,” he said. “I’m glad that we are holding these companies accountable through our enforcement rules, and hope that these communities will be served by forthcoming broadband deployment programs.”

The fines in this second round of RDOF enforcement amount to $8.78 million in total. They are not yet set in stone; each company will have the opportunity to respond and FCC says it will consider each submission of evidence and legal arguments before acting further to resolve the matter.

Given the size of at least some of the companies involved and the relatively low proposed fines, it’s questionable whether the FCC’s actions will have much impact.

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