April 9, 2024
Hope Schumaker
In the twenty-first century, when so much of our life occurs online, fast and reliable internet access is a prerequisite for social participation. However, millions of Americans in rural areas need access to the speed and consistency of broadband. To connect the unconnected, the federal government created several different programs to bring people online, often misspending billions of taxpayer dollars in overlapping programs in the process. The Federal Communications Commission (FCC) must determine the best way to ensure taxpayer dollars are used to close the digital divide, bring rural Americans online, and avoid wasteful spending.
The Rural Digital Opportunity Fund and the Connect America Fund (RDOF and CAF) were created to serve areas typically excluded from high-speed internet because it was too difficult and costly for private providers to deploy the necessary infrastructure. These programs had explicit conditions surrounding who qualifies and how the dollars awarded must be used. The FCC also implemented non-compliance measures and default rules for providers to be subject to if they could not meet program requirements.
Among the conditions listed was that locations and providers who received funding were ineligible for additional funding from another federal program, which would now include programs like the Broadband Equity Access and Deployment Program (BEAD.) Additionally, recipients can be fined for failing to meet their commitments when bidding for federal funding. Unfortunately, many internet providers have not met the conditions of their RDOF and CAF funding and have instead defaulted – or announced their intentions to default.
Providers are now requesting amnesty from the FCC for the penalties associated with not fulfilling the conditions of the program. These providers claim that costs have exploded, making it harder for them to meet their commitments.
The FCC seems skeptical of such claims. Last year, FCC Chairwoman Rosenworcel articulated why this is ill advised, “When the Commission set up this program, it set rules of the road to ensure that winning bidders would fulfill their promise to use this funding to build new broadband infrastructure. The Commission’s default rules are designed to impress upon recipients the importance of being prepared to meet all Commission requirements and be prepared to fulfill deployment obligations.” Stressing the seriousness of such commitments, the FCC has routinely fined providers who have failed to meet their obligations.
What would amnesty mean for the unserved areas because of default and for the taxpayer dollars allocated to RDOF and CAF?
Should providers receive amnesty, they would be exempt from the penalties for not using federal funding to bring people online. Perhaps more critically is that these providers likely plan to hop from RDOF funding to BEAD funding, further wasting taxpayer funds that could be better spent elsewhere. This should not be permitted. And, at the very least, any providers who default on their RDOF obligations must be prohibited from bidding on BEAD funding for the same locations.
Without question, states should be prepared to ensure these areas where providers default are included as they restructure the BEAD allocation competitive funding process.
Closing the digital divide is a complex problem, but allowing RDOF and CAF II providers to default on their commitments without penalty only to allow them to re-bid in BEAD would exacerbate the problem, not close it. Rather, the FCC and state broadband offices should look to maximize the funds allocated and incentivize providers to honor the terms of the programs they fall under in order to avoid default and conquer the digital divide.
