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Altice USA told the FCC it will default on its RDOF builds in Louisiana
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New Street Research analyst Blair Levin said the interaction between RDOF and BEAD "has been a big problem"
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FCC is proposing an amnesty period for RDOF defaulters
Altice USA is the latest ISP that’s bidding farewell to Rural Digital Opportunity Fund (RDOF) builds.
In a letter addressed to the Federal Communications Commission (FCC) on March 15, Altice said it will surrender 18 census block groups in Louisiana, where it initially won RDOF funding to deploy 100/20 Mbps service.
The operator noted it had begun connecting unserved locations in its RDOF areas and that by defaulting on its Louisiana bids, it’s “ensuring that remaining unserved areas are eligible to receive federal funding to support symmetric gigabit speeds” through programs like the Broadband Equity, Access and Deployment (BEAD) program.
When it comes to BEAD, Louisiana has been at the top of the class. It was the first state to publicly release its initial proposal and digital equity plan, and it was the first to gain access to its BEAD allocation of $1.3 billion. As of March 19, Louisiana is the only state that's scored approval for volume two of its initial proposal.
Fierce reached out to Louisiana's broadband office to ask about its plans to deal with RDOF defaulters in the state. We'll update this story if we hear back.
Currently, rules established by NTIA say that areas promised broadband through RDOF or Connect America Fund II (CAF II) are disqualified from BEAD funding. What’s less clear is whether locations that end up not covered by RDOF due to defaults can get connected to high-speed internet.
A messy history
New Street Research's Blair Levin said the interaction between RDOF and BEAD "has been a big problem," and part of it has to do with how RDOF came to be in the first place.
The FCC adopted its Notice of Proposed Rulemaking for RDOF in August 2019, then released its Report and Order for the fund in January 2020. "RDOF occurred in an environment in which no one thought Congress would pass an infrastructure bill," Levin noted.
He added the FCC "did a bad job of due diligence with RDOF, leading to a number of defaults and uncertainty that were unrelated to BEAD" and it also led to "problematic incentives for bidders."
In December 2023, the FCC announced it had completed all RDOF long-form application reviews, publishing a list of 379 recipients with winning bids totaling more than $6 billion to be paid over 10 years. But not every RDOF winner came away with a prize. The Commission in 2022 rejected RDOF bids for LTD Broadband and Starlink, both of which were among the top 10 winners in the RDOF Phase I auction in 2020.
Levin previously told Fierce it remains unclear how many RDOF locations would be ineligible for BEAD funding. He estimated while the number as a percentage of U.S. homes is low, “the prospect of continuing to be disconnected is a big problem for those living in such communities.”
State broadband officials have also expressed concern about RDOF interfering with BEAD. Colorado broadband chief Brandy Reitter has said RDOF defaults will likely continue for years until the program is finished. By then, it would be too late for ISPs to apply for BEAD funding in locations impacted by the defaults.
The FCC has tried to propose fines against ISPs that have backed out of their commitments. In May of last year, the Commission proposed $8.8 million in fines to nearly two dozen companies, with Starry making up the vast majority of that sum. The fines aren't final just yet, as the parties named have time to respond to the FCC's allegations before the matter is resolved.
But perhaps the FCC will cut defaulters some slack. Earlier this month, it announced it’s seeking public comment on a proposed amnesty period for RDOF defaults. The move came after ISPs, schools, unions and local officials warned the FCC that defaults could cause rural communities across the U.S. to miss out on broadband expansion.
Those ISPs and other groups requested the FCC provide RDOF defaulters “a very short and expedited amnesty period of no more than a month” that allows them to relinquish all or part of their winning bids “without being penalized to the full extent that the Commission’s rules provide.”
"Where we sit today, there are no perfect answers but the highest priority should be to make sure that no community gets left out of BEAD," Levin said, "Unless there is a very high probability of getting an RDOF funded network (as there will never be another BEAD program)."
"So if letting an RDOF recipient off the hook is necessary, so be it," he concluded.