STATE OF INDIANA
INDIANA UTILITY REGULATORY COMMISSION
APPLICATION OF LTD BROADBAND LLC FOR ) DESIGNATION AS AN ELIGIBLE ) TELECOMMUNICATIONS CARRIER FOR THE ) Docket No. 41052 ETC-96 PURPOSE OF PROVIDING SERVICES SUPPORTED ) BY THE FCC’S RURAL DIGITAL OPPORTUNITY ) FUND )
INDIANA EXCHANGE CARRIER ASSOCIATION, INC. D/B/A INDIANA RURAL BROADBAND ASSOCIATION’S REQUEST FOR ADMINISTRATIVE NOTICE
Indiana Exchange Carrier Association, Inc. d/b/a Indiana Rural Broadband Association
(“INRBA”), by counsel, pursuant to 170 IAC 1-1.1-21.5, respectfully requests that the Indiana
Utility Regulatory Commission (“Commission”) take administrative notice of the following facts
as set forth in the referenced attached documents:
1. LTD Broadband LLC was notified by the Federal Communications Commission
(“FCC”) of its apparent liability for forfeiture in the amount of $3,563 for its willful violation of
Section 1.21004(a) of the FCC’s rules and the procedures established specifically for Auction
903 in the FCC’s Phase II Auction Procedures Public Notice. This fact is set forth in the Notice
of Apparent Liability for Forfeiture, attached hereto as Exhibit A.
2. As recently as February 25, 2019, LTD Broadband LLC requested a waiver of the
CAF Phase II Auction deadline for filing audited financial statements on the grounds that it was
a small business with a limited number of employees and administrative resources, that it was not audited in the ordinary course of business, and that its efforts to retain and engage
accountants within the required time frame were unsuccessful. This fact is set forth in the
Connect America Fund Phase II Auction release, attached hereto as Exhibit B. 3. With respect to the Rural Digital Opportunity Fund (“RDOF”) auction (“Auction
904”), the FCC has established four performance tiers (minimum, baseline, above baseline and gigabit), and RDOF recipients must provide broadband service to meet specifications of the performance tier in which they bid during Auction 904. Specifically, Auction 904’s gigabit performance tier requires the provision of broadband service with speeds of at least 1Gbps downstream and 500Mbps upstream and at least 2TB of monthly usage allowance. Additionally, the FCC has established two latency tiers (high and low), and RDOF recipients must provide broadband service to meet the latency tier in which they bid during Auction 904. Specifically, the low-latency tier requires latency less than or equal to 100ms. These facts are set forth in the
RDOF Order attached hereto as Exhibit C.
4. With respect to Auction 904, the FCC has established service milestones that
RDOF recipients must meet in order to receive RDOF support. Specifically, the FCC requires that RDOF recipients commercially offer voice and broadband service to 40 percent of their awarded locations in a state by the end of the third full calendar year following funding authorization, and 20 percent each year thereafter. This fact is set forth in the RDOF Order attached hereto as Exhibit C.
5. The FCC presumes that an entity seeking designation as an eligible
telecommunications carrier (“ETC”) for purposes of being eligible to receive RDOF support
acted in good faith in pursuing said designation if it filed its ETC application within thirty (30)
days of the release of the FCC’s public notice announcing that it is a winning bidder. This fact is
set forth in the RDOF Order attached hereto as Exhibit C.
6. The Minnesota Department of Commerce (“MDC”) noted in comments filed
January 8, 2021 in the Minnesota Public Utilities Commission’s (“MPUC”) Docket No. P999/CI-20-747 (Inquiry into Advertising, Outreach and Offering of Lifeline by High Cost
ETCs) that LTD had no information on its website concerning Lifeline services even though it was obligated to do so as the recipient of federal funds as a winner in the Connect America Fund
Phase II auction and that LTD had not filed comments or provided information in response to the
MPUC’s Lifeline Inquiry. This fact is set forth in the MDC’s comments attached hereto as
Exhibit D.
7. The FCC announced that LTD was a winning bidder in Auction 904, including with respect to certain census blocks in Indiana, on December 7, 2020. This fact is set forth in the FCC’s RDOF winning bidders release attached hereto as Exhibit E.
8. The attached documents are true and correct copies of materials of record and in the FCC’s official files, and therefore, all are appropriately subject to administrative notice pursuant to 170 IAC 1-1.1-21.5. Notice of this request is being provided to all parties in this proceeding, and copies of the referenced materials have been attached to the present motion.
WHEREFORE, INRBA respectfully requests that the Commission take administrative notice of the facts described herein, as set forth in the attached documents, admit those facts and documents as part of the record in this proceeding, and provide such further relief as may be appropriate.
Respectfully submitted,
By: __/s/ Jeremy L. Fetty______Jeremy L. Fetty (26811-06) Erin C. Borissov (27745-49) Aleasha J. Boling (31897-49) PARR RICHEY FRANDSEN PATTERSON KRUSE LLP 251 N. Illinois Street, Suite 1800 Indianapolis, Indiana 46204 Telephone: (317) 269-2500 Facsimile: (317) 269-2514 Email: [email protected] [email protected] [email protected]
Attorneys for Indiana Exchange Carrier Association, Inc. d/b/a Indiana Rural Broadband Association
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing has been electronically served upon the following on May 3, 2021:
Indiana Office of Utility Consumer Counselor Nikki G. Shoultz 115 W. Washington Street, Suite 1500 South Bose McKinney & Evans Indianapolis, Indiana 46204 111 Monument Circle - Suite 2700 [email protected] Indianapolis, IN 46204 [email protected]
Kristopher Twomey Corey Hauer Law Offices of Kristopher E. Twomey LTD Broadband LTD 1725 I Street, NW Suite 300 69 Teahouse Street Washington, D.C. 20006 Las Vegas, NV 89138 kris@lokt.net [email protected]
/s/ Jeremy L. Fetty Jeremy L. Fetty (26811-06)
1645394 Exhibit A OUCC Admin Notice 1 Federal Communications Commission DA 19-950
Before the Federal Communications Commission Washington, DC 20554
) In the Matter of ) ) LTD Broadband LLC ) File No.: EB-IHD-19-00029977 ) FRN No.: 0020926788 ) NAL/Acct. No.: 202032080009 Applicant for Phase II Connect America Fund ) ) )
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: October 11, 2019 Released: October 11, 2019
By the Chief, Enforcement Bureau:
I. INTRODUCTION 1. The Connect America Fund (CAF) Phase II (CAF-II) 1 Auction (Auction 903) was conducted to award financial support to service providers who committed to increasing broadband services in areas of great need. The Federal Communications Commission (FCC or Commission) took steps to protect the integrity and proper functioning of Auction 903 by advising auction participants to diligently prepare to meet all auction requirements and by establishing a penalty for default. LTD Broadband LLC (LTD Broadband or Company),2 was a winning bidder in Auction 903, but withdrew its application for support before receiving its award. By defaulting on its winning bids, the Company hindered the disbursement of funds that could have otherwise been productively used to increase broadband access to unserved or underserved areas. Accordingly, we propose a penalty of $3,563 on the Company for apparently defaulting on its winning bids.
II. BACKGROUND 2. LTD Broadband, formed as a Nevada Limited Liability Company in 2011, provides broadband service to rural and non-rural areas in the Midwest.3 The Company has over 1,500 tower sites in Iowa, Minnesota, Nebraska, and South Dakota.4
1 The Connect America Fund Phase II is part of the Commission’s reform and modernization of its universal service support programs. 2 Any entity that is a “Small Business Concern” as defined in the Small Business Act (Pub. L. 85-536, as amended) may avail itself of rights set forth in that Act, including rights set forth in 15 U.S.C. § 657, “Oversight of Regulatory Enforcement,” in addition to other rights set forth herein. 3 See LTD Broadband, About Us, https://ltdbroadband.com/about (last visited Sep. 24, 2019). 4 Id. OUCC Admin Notice 1 Federal Communications Commission DA 19-950
3. The Commission conducted Auction 903 between July 24, 2018 and August 21, 2018, to allocate CAF-II monetary support to certain eligible areas5 across the United States. Auction 903 was slated to award up to $198 million in annual support, a total of $1.98 billion over ten years, in ongoing high-cost universal service support to service providers that committed to offering voice and broadband services in unserved areas.6 Using a multiple-round, reverse auction, Auction 903 was intended to close the digital divide for all Americans, including those in the rural areas of our country.7
4. In establishing procedures for Auction 903, the Commission was explicit as to the requirements a bidder must meet and the consequences for falling short of those requirements, including the penalties for default.8 In a February 1, 2018 Public Notice (Phase II Auction Procedures Public Notice), the Commission established a bidding process with clear dates and deadlines.9 Each bidder was first required to file FCC Form 183 (Short-Form Application) no later than March 30, 2018.10 Bidders were required to provide information in the Short-Form Application that demonstrated their baseline financial qualifications and technical capabilities in order to establish eligibility.11 After reviewing the Short-Form Applications, the Commission announced the applicants qualified to participate in Auction 903.12
5. Once Auction 903 bidding began, the Commission conducted a multi-round, descending clock auction.13 The minimum geographic areas established by the Commission for bidding in Auction 903 were Census Block Groups (CBGs) that contained one or more eligible census blocks, identified in a list released by the Commission’s Wireline Competition Bureau (WCB) in December 2017.14 The list of CBGs included approximately 214,000 eligible census blocks, located in approximately 30,300 CBGs.15
5 See Wireline Competition Bureau Releases List and Map of Eligible Census Blocks for the Connect America Fund Phase II Auction (Auction 903), AU Docket No. 17-182, WC Docket No. 10-90, Public Notice, 32 FCC Rcd 10381 (WCB 2017) (Eligible Census Block List Public Notice). The list of census blocks can be found at https://www.fcc.gov/files/caf2auctionpublishblockcsv. 6 Connect America Fund Phase II Auction Scheduled for July 24, 2018 Notice and Filing Requirements and Other Procedures for Auction 903, AU Docket No. 17-182, WC Docket No. 10-90, Public Notice, 33 FCC Rcd 1428, para. 1 (2018), (Phase II Auction Procedures Public Notice). 7 Id. at 1428, paras. 1-2. 8 Connect America Fund et al., Report and Order and Further Notice of Proposed Rulemaking, 31 FCC Rcd 5949, 6000, para. 143 (2016), (Phase II Auction Order and/or FNPRM); Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1471-2, paras. 111-119. 9 Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1432, para. 10. 10 Id. 11 Id. at 1438-9, para. 21. 12 See 220 Applicants Qualified to Bid in the Connect America Fund Phase II Auction (Auction 903), Bidding to Begin on July 24, 2018, AU Docket No. 17-182, WC Docket No. 10-90, Public Notice, 33 FCC Rcd 6171, 6176, paras. 27-28 (Rural Broadband Task Force/WTB/WCB 2018) (Qualified Bidders Public Notice). 13 Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1493, para 199. 14 See Eligible Census Block List Public Notice, 32 FCC Rcd at 10381. 15 Id. 2 OUCC Admin Notice 1 Federal Communications Commission DA 19-950
6. On August, 28, 2018, the Commission released a Public Notice identifying the 103 winning bidders who had won $1.488 billion in support over a ten-year period.16 Winning bidders were given the opportunity to assign some or all of their winning bids to related entities by September 14, 2018.17 Additionally, winning bidders were required to submit a post-auction application for support, FCC Form 683 (Long-Form Application), no later than October 15, 2018.
7. The Company timely submitted its Short-Form Application to participate in Auction 90318 and was a successful bidder, winning $1,264,673.30 of support for 108 CBGs in Nevada and Nebraska. The Company also timely filed its Long-Form Application on October 15, 2018.19 On February 25, 2019, the Company notified WCB that it would default on $71,254.00 of support for two winning bids, one in Nevada and one in Nebraska.20 The Company explained that it had not obtained ETC certification for the locations in those two CBGs.21 On June 7, 2019, WCB referred LTD Broadband and another defaulting bidder to the Enforcement Bureau for enforcement action.22
III. DISCUSSION 8. In establishing the procedures for Auction 903, the Commission was unambiguous in the requirements each bidder must meet and the consequences of failing to meet any requirement, stating: Any Auction 903 winning bidder or long-form applicant will be subject to a forfeiture in the event of a default before it is authorized to begin receiving support. A winning bidder or long-form applicant will be considered in default and will be subject to forfeiture if it fails to timely file a long-form application, fails to meet the document submission deadlines, is found ineligible or unqualified to receive Phase II support by the Bureaus on delegated authority, and or otherwise defaults on its winning bids or is disqualified for any reason prior to the authorization of support. Any such determination by the Bureaus shall be final, and a winning bidder or long-form applicant shall have no opportunity to cure through additional submissions, negotiations, or otherwise. Agreeing to such payment in the event of a default is a condition for participating in the Phase II auction (emphasis added).23 Because the Company apparently defaulted on its Auction 903 winning bidder obligations, we find that the Company apparently willfully violated the Commission’s rules and orders governing Auction 903.
16 See Connect America Fund Phase II Auction (Auction 903) Closes; Winning Bidders Announced; FCC Form 683 Due October 15, 2018, AU Docket No. 17-182, WC Docket No. 10-90, Public Notice, 33 FCC Rcd 8257 (Rural Broadband Task Force/WTB/WCB 2018) (Auction 903 Closing Public Notice). 17 Id. at 8259-60, paras. 9-13. 18 See LTD Broadband LLC, Auction 903 FCC Form 183 Application, File No. 0008152553, (filed Mar. 29, 2018). The Company was classified as eligible to participate in the auction. See Qualified Bidders Public Notice, 33 FCC Rcd at 6184-95 (Attach. A: Qualified Bidders sorted by applicant name). 19 See LTD Broadband LLC, Auction 903 FCC Form 683 Application, File No. 0008152553, (filed Oct. 15, 2018). 20 See Connect America Fund Phase II Auction Support for 611 Winning Bids Ready to be Authorized, 2019 WL 2443206, Attach. B (Rural Broadband Task Force/OEA/WCB 2019) (Auction 903 June 2019 Public Notice); Letter from Corey Hauer, CEO, LTD Broadband LLC, to Federal Communications Commission, (Feb. 25, 2019) (LTD Letter). 21 Id. 22 See Auction 903 June 2019 Public Notice, 2019 WL 2443206 at Attach. B. 23 Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1520, para. 314. 3 OUCC Admin Notice 1 Federal Communications Commission DA 19-950
9. Under Section 503(b)(1) of the Communications Act of 1934, as amended (the Act), any person who is determined by the Commission to have willfully or repeatedly failed to comply with any provision of the Act or any rule, regulation, or order issued by the Commission shall be liable to the United States for a forfeiture penalty.24 In order to impose such a forfeiture penalty, the Commission must issue a notice of apparent liability, the notice must be received, and the person against whom the notice has been issued must have an opportunity to show, in writing, why no such forfeiture penalty should be imposed.25 The Commission will then issue a forfeiture if it finds, by a preponderance of the evidence, that the person has willfully or repeatedly violated the Act or a Commission rule.26
10. By withdrawing its application for support in two CBGs, the Company apparently defaulted on two of its winning bids for Auction 903 in apparent violation of section 1.21004(a) of the Commission’s rules and the procedures established specifically for Auction 903.27 Pursuant to section 1.21004(a), a winning bidder of a Commission auction that, for any reason, is not subsequently authorized to receive support has defaulted on its bid and is liable for a default payment.28 Section 1.21004(b) authorizes the Commission to calculate the default payment by a method established in a public notice prior to competitive bidding. In Auction 903, however, the Commission concluded that it would impose a forfeiture in lieu of a default payment.29 Furthermore, the Company agreed to this default payment as a condition to participating in Auction 903.30
11. That the Company defaulted because it could not obtain certain ETC designations in Nevada and Nebraska does not absolve it from forfeiture for its default.31 The prohibition against default in section 1.21004 applies regardless of the reason for default and imposes a measured penalty directly correlated to the amount of support awarded with a cap to prevent outsized penalties. Moreover, we reiterate that the penalties for default were clearly stated in the Phase II Auction Procedures Public Notice before bidding ever began, so the Company can reasonably be expected to have considered the associated penalty both into its decision to bid for support, and the decision to subsequently default on its bids.
12. The Company’s failure to adhere to the established auction procedures was disruptive to the integrity and efficiency of the auctions process. The Commission adopted the forfeiture policy for Auction 903 “to impress upon recipients the importance of being prepared to meet all requirements for the post-selection review process and to emphasize the requirement that participants conduct a due diligence review to ensure that they are qualified to participate in the auction and meet its terms and conditions.”32
24 See 47 U.S.C. § 503(b)(1)(B); 47 CFR § 1.80(a)(1); see also 47 U.S.C. § 503(b)(1)(D) (forfeitures for violation of 18 U.S.C. § 1464). Section 312(f)(1) of the Act defines willful as “the conscious and deliberate commission or omission of [any] act, irrespective of any intent to violate” the law. 47 U.S.C. § 312(f)(1). The legislative history to section 312(f)(1) of the Act clarifies that this definition of willful applies to both sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982), and the Commission has so interpreted the term in the section 503(b) context. See, e.g., Southern California Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388 (1991) (Southern California Broadcasting Co.). 25 See 47 U.S.C. § 503(b); 47 CFR § 1.80(f). 26 See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589, 7591, para. 4 (2002) (forfeiture paid). 27 Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1520-22, paras. 314-316. 28 47 CFR § 1.21004(a). 29 Phase II Auction Order, 31 FCC Rcd at 6000, para. 143; Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1521, para. 315. 30 Id. at 1521, para. 314. 31 See LTD Letter. 32 Phase II Auction Order, 31 FCC Rcd at 6001, para. 145. 4 OUCC Admin Notice 1 Federal Communications Commission DA 19-950
Therefore, participants were expected to plan diligently to fulfill the obligations undertaken in Auction 903, including planning for any difficulties or other contingencies that arose during the process. By becoming a successful bidder and later choosing not to proceed with its service plans and the obligations it undertook for Auction 903, the Company hindered the disbursement of funds that could have gone to another provider, and thereby further delayed the advancements in broadband offerings in the CBGs where it defaulted on its winning bids. Furthermore, defaulting on bids imposes a cost to the CAF-II in administrative time spent on reviewing the bids and awarding the support. Likewise, default negatively impacts the residents of the corresponding CBGs in lost opportunities and delays in launching affordable services.
13. The Commission’s Forfeiture Policy Statement33 specifies that the Commission shall impose a forfeiture based upon consideration of the factors enumerated in section 503(b)(2)(E) of the Act, 47 U.S.C. § 503(b)(2)(E), such as “the nature, circumstances, extent and gravity of the violation, and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require.”34 Moreover, section 312(f)(1) of the Act defines willful as “the conscious and deliberate commission or omission of such act, irrespective of any intent to violate . . . any rule or regulation of the Commission . . . .”35 As discussed herein, the Company agreed, prior to participating in Auction 903, to be subject to a forfeiture in the event of default. Additionally, the Company was cautioned to carefully craft its plans to meet all auction requirements and to prepare for any complications that could occur.36 In considering these factors as well as the procedures established for Auction 903 and the Forfeiture Policy Statement¸ we believe that a forfeiture is warranted against the Company for its apparent willful violation of section 1.21004 of the Commission’s rules and the procedures established for Auction 903.
14. We also find that the Company has apparently committed two violations by defaulting on winning bids in two distinct CBGs. For Auction 903, the Commission established a base forfeiture of $3,000 per violation in the event of an auction default, meaning there would be a separate violation for each geographic unit subject to a bid.37 The Commission deemed a $3,000 base forfeiture appropriate, explaining that it was equivalent to the base forfeiture usually imposed for failing to file required forms or information with the Commission, as the Commission would be prevented from assessing a winning bidder’s qualifications. Acknowledging that not all defaults would relate to the failure to submit the required forms or information, the Commission nonetheless concluded that for administrative simplicity and to provide bidders with certainty as to the base forfeiture that would apply for all pre-authorization defaults, it was reasonable to subject all bidders to the same $3,000 base forfeiture per violation. Therefore, the Company’s default in two distinct geographic units subjects it to a $6,000 base forfeiture.
15. The $6,000 base forfeiture, however, exceeds the caps established for default penalties in Auction 903. To prevent the base forfeiture amount from being disproportionate to the amount of a winning bidder’s bids, the Commission limited the total base forfeiture for Auction 903 to 5% of the
33 The Commission’s Forfeiture Policy Statement and Amendment of Section 1.80 of the Rules to Incorporate the Forfeiture Guidelines, 12 FCC Rcd 17087, 17113 (1997), recons. denied 15 FCC Rcd 303 (1999) (Forfeiture Policy Statement); 47 CFR § 1.80(b). 34 Forfeiture Policy Statement, 12 FCC Rcd at 17100-101, para. 27. 35 47 U.S.C. § 312(f)(1) (emphasis added). The legislative history to Section 312(f)(1) of the Act clarifies that this definition of willful applies to both Sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982), and the Commission has so interpreted the term in the Section 503(b) context. See, e.g., Southern California Broadcasting Co., 6 FCC Rcd at 4388. 36 Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1471-2, paras. 111-119. 37 Id. 5 OUCC Admin Notice 1 Federal Communications Commission DA 19-950 bidder’s total assigned support for the CBG in which it was defaulting.38 The Commission regarded 5% of the total bid amount as not unduly punitive, while providing sufficient incentive for auction participants to diligently inform themselves of the obligations associated with participation in the auction.39 The Company’s total winning bids amounted to $71,254.00 thereby capping the maximum forfeiture at $3,563.00, which is 5% of the Company’s total support won in the areas of default. Thus, in accordance with the Auction 903 Procedures Public Notice, we will limit the Company’s forfeiture to $3,563.00, or 5% of the Company’s total winning bids for Nevada and Nebraska.
16. Finally, after considering all the circumstances presented in the instant case, we conclude that a departure from the base forfeiture is not warranted here. For Auction 903 defaults, the Commission allowed for adjustment of the total base forfeiture, upward or downward, based on the criteria set forth in the Commission’s forfeiture guidelines, notwithstanding the 5% limitation on base forfeitures as discussed above.40 However, on balance, we find that there are no other factors present in the instant case that would justify a departure from the established base forfeiture. Accordingly, we find that a forfeiture in the amount of $3,563.00 against the Company is appropriate here.
IV. ORDERING CLAUSES 17. ACCORDINGLY, IT IS ORDERED, pursuant to section 503(b) of the Communications Act41 and section 1.80 of the Commission’s rules,42 that LTD Broadband LLC, is hereby NOTIFIED of its APPARENT LIABILITY FOR FORFEITURE in the amount of three thousand five hundred sixty-three dollars ($3,563) for its willful violation of section 1.21004(a) of the Commission’s rules,43 and the procedures established specifically for Auction 903 in the Phase II Auction Procedures Public Notice.
18. IT IS FURTHER ORDERED, pursuant to section 1.80 of the Commission’s rules,44 that within thirty (30) calendar days of the release date of this Notice, LTD Broadband LLC, SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a written statement seeking reduction or cancellation of the proposed forfeiture consistent with paragraph 21 below.
19. LTD Broadband LLC, shall send electronic notification of payment to Jeffrey Gee and to Genevieve Ross, Enforcement Bureau, Federal Communications Commission, at [email protected] and [email protected], on the date said payment is made. Payment of the forfeiture must be made by wire transfer, credit card, or ACH (Automated Clearing House) debit from a bank account using the
38 Phase II Auction Order, 31 FCC Rcd at 6000-01, para. 144; Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1521, para. 315. This would occur in situations where the dollar amount associated with the bid is low. For example, assume Bidder A’s winning bid includes 100 CBGs for $100,000 over the 10-year support term. We may impose a base forfeiture of $5,000 (5% of $100,000) because otherwise the base forfeiture would be $300,000 ($3,000 x 100 CBGs), which is three times the entire bid amount. In contrast, if Bidder B’s winning bid includes 100 CBGs for $7,000,000 over the support term, we may impose a base forfeiture of $300,000 ($3,000 x 100 CBGs), which is 4.3% of the total bid. 39 Mobility Fund Phase I Auction Procedures Public Notice, 27 FCC Rcd at 4777, para. 187; Tribal Mobility Fund Phase I Auction Procedures Public Notice, 28 FCC Rcd at 11692, para. 214. 40 See 47 U.S.C. § 503(b)(2)(B); 47 CFR § 1.80(b)(8), note to paragraph (b)(8); Phase II Auction Order, 31 FCC Rcd at 6000-01, para. 143; Phase II Auction Procedures Public Notice, 33 FCC Rcd at 1521, para. 315. 41 47 U.S.C. § 503(b). 42 47 CFR § 1.80. 43 47 CFR § 1.21004(a). 44 47 CFR § 1.80. 6 OUCC Admin Notice 1 Federal Communications Commission DA 19-950
Commission’s Fee Filer (the Commission’s online payment system).45 The Commission no longer accepts forfeiture payments by check or money order. Below are instructions that payors should follow based on the form of payment selected:46
Payment by wire transfer must be made to ABA Number 021030004, receiving bank TREAS/NYC, and Account Number 27000001. A completed Form 159 must be faxed to the Federal Communications Commission at 202-418-2843 or e-mailed to [email protected] on the same business day the wire transfer is initiated. Failure to provide all required information in Form 159 may result in payment not being recognized as having been received. When completing FCC Form 159, enter the Account Number in block number 23A (call sign/other ID), enter the letters “FORF” in block number 24A (payment type code), and enter in block number 11 the FRN(s) captioned above (Payor FRN).47 For additional detail and wire transfer instructions, go to https://www.fcc.gov/licensing- databases/fees/wire-transfer.
Payment by credit card must be made by using the Commission’s Fee Filer website at https://apps.fcc.gov/FeeFiler/login.cfm. To pay by credit card, log in using the FRN captioned above. If payment must be split across FRNs, complete this process for each FRN. Next, select “Pay bills” on the Fee Filer Menu, and select the bill number associated with the NAL Account – the bill number is the NAL Account number with the first two digits excluded – and then choose the “Pay by Credit Card” option. Please note that there is a $24,999.99 limit on credit card transactions.
• Payment by ACH must be made by using the Commission’s Fee Filer website at https://apps.fcc.gov/FeeFiler/login.cfm. To pay by ACH, log in using the FRN captioned above. If payment must be split across FRNs, complete this process for each FRN. Next, select “Pay bills” on the Fee Filer Menu and then select the bill number associated to the NAL Account – the bill number is the NAL Account number with the first two digits excluded – and choose the “Pay from Bank Account” option. Please contact the appropriate financial institution to confirm the correct Routing Number and the correct account number from which payment will be made and verify with that financial institution that the designated account has authorization to accept ACH transactions.
20. Any request for making full payment over time under an installment plan should be sent to: Chief Financial Officer—Financial Operations, Federal Communications Commission, 445 12th Street, SW, Room 1-A625, Washington, DC 20554.48 Questions regarding payment procedures should be directed to the Financial Operations Group Help Desk by phone, 1-877-480-3201, or by e-mail, [email protected].
21. The written statement seeking reduction or cancellation of the proposed forfeiture, if any, must include a detailed factual statement supported by appropriate documentation and affidavits pursuant to sections 1.16 and 1.80(f)(3) of the rules.49 The written statement must be mailed to the Office of the Secretary, Federal Communications Commission, 445 12th Street, SW, Washington, DC 20554, ATTN:
45 Payments made using the Commission’s Fee Filer system do not require the submission of an FCC Form 159. 46 For questions regarding payment procedures, please contact the Financial Operations Group Help Desk by phone at 1-877-480-3201 (option #6), or by e-mail at [email protected]. 47 Instructions for completing the form may be obtained at http://www.fcc.gov/Forms/Form159/159.pdf. 48 See 47 CFR § 1.1914. 49 47 CFR §§ 1.16, 1.80(f)(3). 7 OUCC Admin Notice 1 Federal Communications Commission DA 19-950
Enforcement Bureau, Investigations and Hearings Division, and must include the NAL/Account Number referenced in the caption. The statement must also be e-mailed to Jeffrey Gee and to Genevieve Ross, Enforcement Bureau, Federal Communications Commission, at [email protected] and [email protected].
22. The Commission will not consider reducing or canceling a forfeiture in response to a claim of inability to pay unless the petitioner submits: (1) federal tax returns for the most recent three- year period; (2) financial statements prepared according to generally accepted accounting practices; or (3) some other reliable and objective documentation that accurately reflects the petitioner’s current financial status. Any claim of inability to pay must specifically identify the basis for the claim by reference to the financial documentation.
23. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability For Forfeiture shall be sent, by Certified Mail Return Receipt Requested, to Corey Hauer, CEO, LTD Broadband LLC, 69 Teahouse Street, Las Vegas, NV 89138.
FEDERAL COMMUNICATIONS COMMISSION
______Rosemary C. Harold Chief Enforcement Bureau
8 Exhibit B
Federal Communications Commission DA 19-763
Before the Federal Communications Commission Washington, D.C. 20554
In the Matter of ) ) Connect America Fund ) WC Docket No. 10-90 ) Connect America Fund Phase II Auction ) AU Docket No. 17-182
ORDER
Adopted: August 9, 2019 Released: August 9, 2019
By the Chief, Wireline Competition Bureau:
I. INTRODUCTION 1. In this Order, the Wireline Competition Bureau (Bureau), in conjunction with the Rural Broadband Auctions Task Force and the Office of Economics and Analytics, grants LTD Broadband LLC’s (LTD Broadband) petition for waiver of the February 25, 2019 deadline for filing audited financial statements for the Connect America Fund Phase II auction (Auction 903).1 II. BACKGROUND 2. To further the Commission’s progress toward closing the digital divide for all Americans, including those living in rural areas of our country, Auction 903 made available up to $1.98 billion over 10 years to service providers that commit to offer voice and broadband services meeting certain requirements to fixed locations in unserved high-cost areas.2 On August 28, 2018, we announced that there were 103 winning bidders in the auction, with the 10-year support amount totaling $1.488 billion, and established the deadlines for winning bidders or their assignees to submit their long-form applications for Connect America Phase II support.3 3. In the Phase II Auction Order, the Commission adopted a two-phased auction application process.4 In the first phase, entities seeking to participate in the auction must have filed a short-form application (FCC Form 183) by March 30, 2018 in which they provided specific information and certified, under penalty of perjury, their qualifications.5 Commission staff reviewed these applications
1 Petition for Waiver (or Extension) of CAF II Deadline to Submit Audited Financial Statements, AU Docket No. 17-182, WC Docket No. 10-90 (filed Feb. 25, 2019) (LTD Broadband Petition). 2 See Connect America Fund Phase II Auction Scheduled for July 24, 2018; Notice and Filing Requirements and Other Procedures for Auction 903, Public Notice, 33 FCC Rcd 1428 (2018) (Auction 903 Procedures Public Notice). 3 Connect America Fund Phase II Auction (Auction 903) Closes; Winning Bidders Announced; FCC Form 683 Due October 15, 2018, Public Notice, 33 FCC Rcd 8257 (WTB/WCB 2018) (Auction 903 Closing Public Notice). 4 Connect America Fund et al., Report and Order and Further Notice of Proposed Rulemaking, 31 FCC Rcd 5949, 5980, para. 92 (2016) (Phase II Auction Order). 5 47 CFR § 54.315(a); Phase II Auction Order, 31 FCC Rcd at 5981-86, paras. 95-110; Auction 903 Procedures Public Notice, 33 FCC Rcd at 1438-89, paras. 20-179. Federal Communications Commission DA 19-763 and determined whether the applicants were qualified to bid in the auction.6 In the second phase of the process, each winning bidder or its assignee must file a more comprehensive long-form application (FCC Form 683), which Commission staff is reviewing to determine if a long-form applicant should be authorized to receive support for its winning bids.7 Any long-form applicant that defaults prior to being authorized to receive support, including by failing to meet the long-form application submission deadlines, is subject to a forfeiture.8 4. The Commission adopted the requirement, in the 2016 Phase II Auction Order, that all Auction 903 applicants submit financial statements, including balance sheets, net income, and cash flow, that have been audited by an independent certified public accountant.9 The Commission concluded that the additional cost of obtaining audited financial statements is outweighed by the importance of assuring the financial health of auction support recipients.10 To the extent an entity that had provided voice and broadband service for at least two years and does not already obtain an audit of its financial statements in the ordinary course of business, the Commission permitted that entity to wait until it was announced as a winning bidder to submit audited financial statements.11 The Commission required winning bidders that took advantage of this option to submit audited financial statements no later than 180 days after the public notice identifying them as winning bidders, i.e., February 25, 2019.12 5. LTD Broadband’s Petition. LTD Broadband participated in Auction 903 and was assigned $1,193,419.40 in total 10 years support to serve 1,018 locations in Illinois, Iowa, and Minnesota.13 LTD Broadband is not audited in the ordinary course of business and filed unaudited financial statements with its short-form application. LTD filed a long-form application but did not submit audited financials by the February 25, 2019 deadline, and seeks waiver of the deadline. 6. LTD Broadband explains that it is a small business with a limited number of employees and administrative resources. LTD Broadband argues that, although it has done everything under its control to submit timely information to demonstrate its technical and financial capabilities, its attempts to retain and engage accountants within the required time frame were unsuccessful. LTD suggested that recent changes in the tax code may be one reason for the apparent lack of available accounting resources for smaller companies like LTD during the past six months. LTD states that when it finally found accountants willing to audit its financials, none were able to complete the work by the February 25 deadline.14 LTD Broadband submitted unaudited financial statements for 2018 on February 25, 2019 and audited financial statements on April 16, 2019, while its long-form application remained pending review by Commission staff.
6 220 Applicants Qualified to Bid in the Connect America Fund Phase II Auction; Bidding to Begin on July 24, 2018, Public Notice, 33 FCC Rcd 6171 (WCB/WTB 2018) (Auction 903 Qualified Bidders Public Notice); Auction 903 Procedures Public Notice, 33 FCC Rcd at 1512-20, paras. 289-313. 7 47 CFR § 54.315 (b)-(c); Phase II Auction Order, 31 FCC Rcd at 5987-99, paras. 113-41. 8 Phase II Auction Order, 31 FCC Rcd at 6000-01, paras. 143-45. 9 47 CFR § 54.315(a)(7)(i); Phase II Auction Order, 31 FCC Rcd at 5983, para. 101. 10 Phase II Auction Order, 31 FCC Rcd at 5983, para. 101. 11 47 CFR § 54.315(a)(7)(i); Phase II Auction Order, 31 FCC Rcd at 5983-84, para. 102. 12 47 CFR § 54.315(b)(4); Phase II Auction Order, 31 FCC Rcd at 5984, para. 103; Auction 903 Closing Public Notice, 34 FCC Rcd at 8263, para. 16. 13 Auction 903 Closing Public Notice, 33 FCC Rcd 8257, Attach A. LTD Broadband notified the Commission that it did not intend to pursue its winning bids in Nebraska and Nevada. See Connect America Funds Phase II Support for 611 Winning Bids Ready to Be Authorized, DA 19-535, Attach. B (WCB/OEA June 7, 2019) (Listing bids in default). 14 LTD Broadband Petition at 4-5.
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III. DISCUSSION 7. Generally, the Commission’s rules may be waived for good cause shown.15 Waiver of the Commission’s rules is appropriate only if both: (1) special circumstances warrant a deviation from the general rule, and (2) such deviation will serve the public interest.16 We find good cause to grant LTD Broadband’s petition for waiver. Therefore, we waive the February 25, 2019 deadline for filing audited financial statements. 8. First, we find that special circumstances warrant deviation from the Commission’s audited financial statements deadline. Auction 903 participants had the responsibility to conduct due diligence regarding the Auction 903 requirements and obligations prior to participating in the auction.17 Nevertheless, in the context of other auctions, Commission bureaus have granted waivers of post-auction long-form application filing deadlines “when minor, inadvertent, post-auction delinquencies did not disrupt the auction process, nor undermine the Commission’s policy of facilitating rapid implementation of service to the public.”18 9. In Auction 903, the Bureau granted Casey Mutual Telephone Company’s (Casey Mutual) petition for waiver of the November 5, 2018 deadline for filing letter of credit commitment letters.19 Casey Mutual was able to obtain a letter of credit commitment letter from a qualified bank while Commission staff was still reviewing the other portions of Casey Mutual’s otherwise timely filed application. The Bureau concluded this did not delay the Commission’s long-form application review process or the provision of voice and broadband service to consumers living in the areas where Casey Mutual was awarded support.20 Similarly here, LTD Broadband was able to obtain and submit audited financial statements while Commission staff are still in the process of reviewing long-form applications and authorizing Auction 903 winners to begin receiving support. Accordingly, even though LTD Broadband missed the February 25, 2019 audited financials deadline, this did not delay the Commission’s
15 47 CFR § 1.3. 16 See Northeast Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (citing WAIT Radio v. FCC, 418 F.2d 1153, 1157-59 (D.C. Cir. 1969), cert. denied, 93 S.Ct. 461 (1972)) (Northeast Cellular). 17 Auction 903 Procedures Public Notice, 33 FCC Rcd at 1471-72, paras. 111-19. The Commission required an Auction 903 participant that did not submit audited financial statements with the short-form application to certify that the long-form applicant will submit its audited financial statements from the prior fiscal year within 180 days after being announced as a winning bidder. Id. at 1445, para. 44. 18 See, e.g., Request of Tallie Colville for Waiver of Auction 91 Form 301 Filing Deadline for Construction Permit for New FM Station, Diamond Lake, Oregon, Memorandum Opinion and Order and Notice of Apparent Liability for Forfeiture, 26 FCC Rcd 14216 (AD-MB 2011) (Tallie Colville Order) (granting a waiver of the long-form application filing deadline where the applicant explained that it ‘was not ready to submit the application by the filing deadline’); Request of BKM Enterprises for Waiver of Auction No. 68 Form 301 Filing Deadline Application for Construction Permit for New FM Station, Perry, Florida, Memorandum Opinion and Order and Notice of Apparent Liability, 22 FCC Rcd 15221 (AD-MB 2007) (BKM Enterprises Order) (granting the petition for waiver of an applicant that submitted its long-form application late because the applicant did not understand that it was required to file a long-form application); Silver Palm Communications, Inc., Order, 17 FCC Rcd 6606 (CWD-WTB 2002) (Silver Palm Communications Order) (granting the petition for waiver of an applicant that missed the deadline “due to inadvertence and unawareness that the long-form application was due”); City Page & Cellular Services, Inc. d/b/a City Beepers et al., Order, 17 FCC Rcd 26109 (CWD-WTB 2002) (granted the petitions for waiver of seven applicants that claimed to miss the deadline “due to inadvertence and/or unawareness that the long-form applications were due”). 19 Connect America Fund, Connect America Fund Phase II Auction, WC Docket No. 10-90, AU Docket 17-182, Order, DA 19-428 (WCB May 15, 2019) (Casey Mutual Waiver Order). 20 Id. at para. 10. Unlike the situation here, the Bureau found that enforcement of the filing requirements was appropriate for the rural broadband experiments, so as not to delay to the offer of support to price cap carriers or in order to identify the next-in-line bidders. See id. at note 10.
3 Federal Communications Commission DA 19-763 long-form review process or the provision of voice and broadband service to consumers in the areas for which LTD was awarded support. 10. Second, we find that it serves the public interest to grant LTD Broadband’s waiver petition. The Commission adopted the long-form application filing process so that Commission staff could “conduct a more extensive review of the winning bidders’ qualifications to receive support . . ..”21 LTD Broadband submitted unaudited financial statements for 2018 on February 25, 2019 and audited financial statements on April 16, 2019, during the application review process. Commission staff still had the opportunity to fully evaluate LTD Broadband’s qualifications in a timely fashion, as was the case in the Casey Mutual decision.22 We conclude that it will serve the public interest for Commission staff to take this opportunity to evaluate the qualifications of an applicant that has otherwise substantially complied with the application deadlines, has expressed a willingness to serve the consumers in its winning bid areas, and demonstrated the company’s financial capabilities.23 Had we found LTD Broadband in default for missing the deadline, we may have precluded an otherwise qualified applicant from being authorized to receive support, delaying the provision of voice and broadband service in these areas.24 11. Our decision to grant LTD Broadband’s petition for waiver does not necessarily mean that LTD Broadband will be found qualified to receive Auction 903 support. Whether a long-form applicant is qualified to receive Auction 903 support will be announced in a future public notice. If we announce that LTD Broadband is ready to be authorized, it will have 10 business days to submit a letter of credit and bankruptcy opinion letter meeting the Commission’s requirements and will not be authorized to receive Auction 903 support until such documentation is deemed acceptable. IV. ORDERING CLAUSES
12. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 5(c), and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 155(c), 254, and sections 0.91, 0.291, and 1.3 of the Commission’s rules, 47 CFR §§ 0.91, 0.291, 1.3, that this Order IS ADOPTED.
21 Phase II Auction Order, 31 FCC Rcd at 5980, para. 92. 22 Casey Mutual Waiver Order, DA 19-428, at para. 11. 23 LTD Broadband Petition at 5 (stating that it “has already commenced planning for buildout to the CAF II locations, and has already invested nearly $200,00 in backbone upgrades and power backup systems”). 24 Id. at 6 (arguing that denial of its waiver request would “effectively ensure that the persons living in these rural, less-densely populated areas will continue without any broadband service for years to come”).
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13. IT IS FURTHER ORDERED that the petition for waiver filed by LTD Broadband LLC IS GRANTED as described herein. 14. IT IS FURTHER ORDERED that, pursuant to section 1.102(b)(1) of the Commission’s rules, 47 CFR § 1.102(b)(1), this Order SHALL BE EFFECTIVE upon release. FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith Chief Wireline Competition Bureau
5 Exhibit C
Federal Communications Commission FCC 20-5
Before the Federal Communications Commission Washington, D.C. 20554
In the Matter of ) ) Rural Digital Opportunity Fund ) WC Docket No. 19-126 ) Connect America Fund ) WC Docket No. 10-90 )
REPORT AND ORDER
Adopted: January 30, 2020 Released: February 7, 2020
By the Commission: Chairman Pai and Commissioners O’Rielly and Carr issuing separate statements; Commissioners Rosenworcel and Starks approving in part, dissenting in part and issuing separate statements.
TABLE OF CONTENTS
Heading Paragraph #
I. INTRODUCTION ...... 1 II. BACKGROUND ...... 3 III. DISCUSSION ...... 5 A. Term of Support ...... 7 B. Budget ...... 8 C. Areas Eligible for the Phase I and Phase II Auctions ...... 9 D. Framework for Rural Digital Opportunity Fund Phase I ...... 17 E. Deployment Obligations ...... 31 1. Public Interest Obligations ...... 31 2. Service Milestones ...... 45 3. Reporting Requirements ...... 56 4. Non-Compliance Measures ...... 58 5. Additional Performance Targets...... 65 F. Auction Application Process ...... 67 1. Short-Form Application Process ...... 69 2. Long-Form Application Process ...... 86 G. Defaults ...... 114 H. Rural Digital Opportunity Fund Transitions ...... 118 1. Transition for Legacy High-Cost Support Areas ...... 122 2. Transition for Areas Receiving CAF Phase II Model-Based Support ...... 126 3. Additional Transition Issues ...... 133 IV. PROCEDURAL MATTERS ...... 140 V. ORDERING CLAUSES ...... 143 APPENDIX A—Final Rules APPENDIX B—Final Regulatory Flexibility Analysis APPENDIX C—Illustrative Form of Letter of Credit Federal Communications Commission FCC 20-5
I. INTRODUCTION 1. Bringing digital opportunity to Americans living on the wrong side of the digital divide continues to be the Federal Communication Commission’s top priority. It is imperative that the Commission take prompt and expeditious action to deliver on its goal of connecting all Americans, no matter where they live and work. Without access to broadband, rural communities cannot connect to the digital economy and the opportunities for better education, employment, healthcare, and civic and social engagement it provides. 2. In recent years, the Commission has made tremendous strides toward its goal of making broadband available to all Americans. But while the digital divide is closing, more work remains to be done. Therefore, in this Order, we adopt the framework for the Rural Digital Opportunity Fund. It builds on the successful model from 2018’s Connect America Fund (CAF) Phase II auction, which allocated $1.488 billion to deploy networks serving more than 700,000 unserved rural homes and businesses across 45 states. The Rural Digital Opportunity Fund represents the Commission’s single biggest step to close the digital divide by providing up to $20.4 billion to connect millions more rural homes and small businesses to high-speed broadband networks. It will ensure that networks stand the test of time by prioritizing higher network speeds and lower latency, so that those benefitting from these networks will be able to use tomorrow’s Internet applications as well as today’s.1 II. BACKGROUND 3. In the more than two decades since the Commission established the Universal Service Fund pursuant to Congress’s directive, broadband has gone from being a luxury to a necessity integrated into nearly every facet of our economy and society. For that reason, the FCC comprehensively reformed the Universal Service Fund and Intercarrier Compensation systems to promote deployment of communications networks to those Americans who lack access to infrastructure capable of providing high-speed broadband. In 2011, the Commission adopted a new universal service funding approach in areas served by the incumbent local exchange carriers, known as price cap areas, through a combination of a “new forward-looking model of the cost of constructing modern multi-purpose networks” and a competitive bidding process.2 The Commission delegated to the Wireline Competition Bureau (Bureau) the task of developing a specific engineering cost model that would estimate, at a granular level, the support needed to serve areas where costs are above a specified cost benchmark, but below an “extremely high-cost” benchmark.3 In 2015, following the development of the Connect America Cost Model (CAM), the Commission provided the incumbent price cap carriers an opportunity to accept fixed support based on the CAM in exchange for defined deployment obligations in each state where they were providing service. Nine price cap carriers accepted over $1.5 billion in annual support to deploy broadband networks serving more than 3.6 million homes and businesses by the end of 2020 in 45 states and one U.S. territory.4 In areas where the price cap carriers declined the model-based support, and for certain
1 Letter from Senator John Thune et al., U.S. Senate, to Ajit Pai, Chairman, FCC (Dec. 9, 2019) (on file in WC Docket No. 19-126) (emphasizing “the importance of sustainable networks that meet the needs of consumers now and in the future”); Letter from Peter Welch et al., Members of Congress, to Ajit Pai, Chairman, FCC (Dec. 13, 2019) (on file in WC Docket No. 19-126) (requesting “further steps be taken to promote the deployment of sustainable networks that are capable of meeting consumer demands now and into the future”). 2 Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17725, para. 156 (2011) (USF/ICC Transformation Order), aff’d sub nom. In re FCC 11-161, 753 F.3d 1015 (10th Cir. 2014). 3 Id. at 17725, paras. 156-57; see also Connect America Fund et al., WC Docket Nos. 10-90 et al., 28 FCC Rcd 5301 (WCB 2013) (adopting cost model platform); Connect America Fund et al., WC Docket Nos. 10-90 et al., 29 FCC Rcd 3964 (WCB 2014) (finalizing cost model’s engineering assumptions and adopting inputs) (CAM Inputs Order). 4 FCC News Release, August 27, 2015, https://www.fcc.gov/document/carriers-accept-over-15-b-support-expand- rural-broadband; see also USF/ICC Transformation Order, 26 FCC Rcd at 17725, paras. 156-57.
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other high-cost areas nationwide, support was to be allocated through the subsequent CAF Phase II auction,5 “a competitive bidding process in which all eligible providers [were] given an equal opportunity to compete.”6 The auction yielded 103 winning bidders, with the 10-year support amount totaling $1.488 billion and covering 713,176 locations in 45 states.7 As of December 2019, the Commission has authorized the Universal Service Administrative Company (USAC) to obligate and disburse funding totaling about $1.2 billion over the ten-year term to support almost 550,000 locations in 45 states for which support was made available in the CAF Phase II auction. 4. Recognizing that market realities have changed since the CAF framework was first established in 2011, and that demand for greater speeds continues to grow, on August 2, 2019, the Commission proposed the Rural Digital Opportunity Fund, a reverse auction that would build on the success of the CAF Phase II auction and bring broadband service to millions of Americans living in the areas that need it most.8 To that end, we proposed to adopt a budget of at least $20.4 billion over the next ten years, to increase the minimum supported speed from 10/1 Mbps to 25/3 Mbps, to make eligible for the auction most areas that do not have an unsubsidized provider of 25/3 Mbps broadband, and to implement a framework that prioritizes faster broadband speeds of up to a gigabit per second. III. DISCUSSION 5. To ensure continued and rapid deployment of broadband networks to unserved Americans, we establish the Rural Digital Opportunity Fund, which will commit up to $20.4 billion over the next decade to support up to gigabit speed broadband networks in rural America. We opt to allocate this funding through a multi-round, reverse, descending clock auction that favors faster services with lower latency and encourages intermodal competition in order to ensure that the greatest possible number of Americans will be connected to the best possible networks, all at a competitive cost. In light of the need to bring service both to consumers in areas wholly unserved by 25/3 Mbps, as well as those living in areas partially served, we will assign funding in two phases: Phase I will target those areas that current data confirm are wholly unserved; and, Phase II will target unserved locations within areas that data demonstrates are only partially served, as well as any areas not won in Phase I. By relying on a two- phase process, we can move expeditiously to commence an auction in 2020 for those areas we already know with certainty are currently unserved, while also ensuring that other areas are not left behind by holding a second auction once we have identified any additional unserved locations through improvements to our broadband deployment data collection.9 6. The Rural Digital Opportunity Fund Phase I auction will make use of many of the rules that made the CAF Phase II auction a success, with some exceptions to account for the passage of time
5 See generally Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order and Further Notice of Proposed Rulemaking, 31 FCC Rcd 5949 (2016) (CAF Phase II Auction Order and/or FNPRM); Connect America Fund Phase II Auction Scheduled for July 24, 2018; Notice and Filing Requirements and Other Procedures for Auction 903, Public Notice, AU Docket No. 17-182, WC Docket No. 10-90, 33 FCC Rcd 1428 (2018) (Auction 903 Procedures Public Notice); Connect America Fund Phase II Auction (Auction 903) Closes; Winning Bidders Announced; FCC Form 683 Due October 15, 2018, AU Docket No. 17-182, WC Docket No. 10-90, Public Notice, 33 FCC Rcd 8257 (WTB and WCB 2018) (Auction 903 Closing Public Notice). 6 USF/ICC Transformation Order, 26 FCC at 17732, para. 178. 7 Auction 903 Closing Public Notice, 33 FCC Rcd at 8257. 8 Rural Digital Opportunity Fund; Connect America Fund; WC Docket Nos. 10-90, 19-126, Notice of Proposed Rulemaking, 34 FCC Rcd 6778 (2019) (Rural Digital Opportunity Fund NPRM). 9 See, e.g., Establishing the Digital Opportunity Data Collection, Modernizing the FCC 477 Data Program, WC Docket Nos. 19-195, 11-10, Report and Order and Second Further Notice of Proposed Rulemaking, 34 FCC 7505 (2019) (Digital Opportunity Data Collection Order and/or NPRM).
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and other changed circumstances.10 Most importantly, in addition to the weighting of performance tiers and latency, we will assign support in the auction’s clearing round to the bidder with the lowest weight. After the auction, we will require Phase I support recipients to offer the required voice and broadband service to all eligible homes and small businesses within the awarded areas, without regard to the number of locations identified by the CAM, and instead as determined subsequently by the Bureau. This approach differs from that used in the CAF Phase II auction, which tied the deployment and service obligations to a specific number of locations within awarded areas but allowed the recipients to demonstrate that their obligations should be reduced (along with a corresponding reduction in support) where there were fewer locations than the CAM specified. As discussed below, we will use the Commission’s cost model and current data to establish initial service milestones and to monitor interim progress, but we emphasize that Phase I bidders will be competing for support amounts to offer service to all locations ultimately identified in an area, not just to the specific number of locations in that area identified prior to the auction, without adjusting awarded support amounts. A. Term of Support 7. We adopt a term of support of 10 years for the Rural Digital Opportunity Fund. We believe that the stability of a 10-year term of support was partially responsible for the robust participation that occurred in the CAF Phase II auction. We expect that the same principles regarding encouraging long-term investments and auction participation will also apply to the Rural Digital Opportunity Fund.11 Most commenters addressing this issue agree that a 10-year term of support will provide the certainty and stability needed to encourage broadband deployment in unserved and underserved locations and attract participation from a wide variety of participants.12 Moreover, disbursing support over a 10-year term minimizes the impact on the contribution factor. We do not agree that adopting a 10-year term risks funding unsustainable projects, as one commenter suggests, because we expect bidders to seek sufficient support to build and maintain their network without an expectation of ongoing support after the 10-year support term expires.13 Nor do we agree that bidders proposing 25/3 Mbps deployments should be offered only a five-year term.14 First, given that bids will be weighted to prioritize faster services, we expect bidders seeking support for the 25/3 Mbps tier will win support only in areas where higher speeds are not economical, and that a five-year term may simply increase the amount sought in order to recover the same amount of costs in a shorter timeframe. We also more generally find no benefit to having multiple terms of support within the same program. B. Budget 8. We adopt our proposal to establish a budget of $20.4 billion for the Rural Digital Opportunity Fund. We also adopt our proposal to make available $16 billion for Phase I, and to make available for Phase II a budget based on the remaining $4.4 billion, along with any unawarded funds from
10 We note that the Remote Areas Fund has been superseded by the Rural Digital Opportunity Fund, which includes the extremely high-cost areas that would have been included in that auction. See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6796, para. 15 (finding that it would be inefficient to conduct a separate Remote Areas Fund auction). 11 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6783, para. 15. 12 See, e.g., Utilities Technology Council Comments at 5 (UTC); ADTRAN, Inc. Comments at 3 (ADTRAN); Wireless Internet Service Provider Association Comments at 7 (WISPA). 13 See Pacific Dataport Comments at 14 (questioning whether a proposed buildout is sustainable if the Commission needs to offer a minimum 10-year support term). 14 See Illinois Department of Innovation and Technology Comments at 7-8 (Illinois DoIT) (proposing accelerated deployment and a five-year term for bidders proposing 25/3 Mbps deployments). Moreover, recipients will be required to deploy all CAM locations within six years.
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Phase I.15 We sought comment on whether we should reassess the adequacy of the budget after the Phase I auction.16 Although commenters generally supported the proposed budget,17 several commenters suggested that the size of the budget may be insufficient to serve all the unserved locations and supported reassessing the adequacy of the budget after Phase I.18 We expect $16 billion to be sufficient, given the areas eligible for Phase I, to balance our objectives of encouraging robust competition for support below the reserve price and closing the digital divide. We agree that it may be appropriate after the Phase I auction, when we know the areas eligible for Phase II and how many unserved locations will be eligible for Phase II within those areas, to reassess the total amount of funds available for Phase II and expect to revisit this issue at that time. C. Areas Eligible for the Phase I and Phase II Auctions 9. The Rural Digital Opportunity Fund will target support to areas that lack access to both fixed voice and 25/3 Mbps broadband services in two stages. For Phase I, we target census blocks that are wholly unserved with broadband at speeds of 25/3 Mbps. For Phase II, we target census blocks that we later determine through the Digital Opportunity Data Collection, or suitable alternative data source, are only partially served, as well as census blocks unawarded in the Phase I auction.19 Because we will have an additional opportunity to seek comment on how best to target Phase II support as we gather more granular data on where broadband has been actually deployed, we focus here on the areas eligible for Phase I of the auction. 10. A number of commenters support moving forward to the extent we can identify unserved areas using existing data.20 We agree. We currently have the tools and the data to identify census blocks that are wholly unserved, and direct the Bureau to use the CAM with updated coverage data using the most recent publicly available FCC Form 477 data to identify census blocks that are unserved with broadband at speeds of at least 25/3 Mbps for the auction. The FCC Form 477 data have been criticized for identifying partially served blocks as “served,” but we are not aware of cases in which the data have identified as “unserved” a census block that is in fact served.21 11. We disagree with commenters who argue that the Commission should delay the auction until it has more granular data.22 The primary shortcomings of FCC Form 477 data do not come into play under the two-phased framework we adopt here. Thus, we see no value in denying the benefits of broadband to those rural Americans we know lack service because there may be other unserved Americans living in other areas that we have not yet identified. Waiting for the availability of more
15 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6783-84, paras. 16-17. 16 Id. at 6784, para. 18. 17 See, e.g., Muscogee Creek Nation Comments at 1 (Muscogee); ADTRAN Comments at 3; UTC Comments at 5. 18 See, e.g., USTelecom – The Broadband Association Comments at 34-36 (USTelecom); CenturyLink Comments at 9; National Rural Electric Cooperative Association Comments at 4 (NRECA); United States Cellular Corporation Reply at 23 (U.S. Cellular). Although WISPA agrees the Commission should reassess its budget after Phase I, it suggests the proposed budget may overstate the amount of support necessary and argues the Commission should defer establishing a budget until it finalizes its rules. WISPA Comments at 7-8. 19 Digital Opportunity Data Collection Order and NPRM, 34 FCC 7505. 20 See, e.g., CenturyLink Comments at 8 (arguing that it makes sense to move forward to the extent “wholly unserved” areas can be identified quickly using existing tools). 21 There currently is no alternative source of publicly available nationwide broadband coverage data that the Commission could use to help ensure that support is not provided to overbuild areas where another provider already is providing voice and broadband service meeting the Commission’s requirements. 22 See, e.g., U.S. Cellular Comments at 10-11; California Public Utilities Commission Comments at 3-5 (California PUC); WISPA Reply at 17-18; Windstream Services, Inc. Reply at 4-5 (Windstream).
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granular data before moving forward would only further disadvantage those millions of Americans that we know do not currently have access to digital opportunity. 12. We direct the Bureau to compile a preliminary list of eligible areas for Phase I of the Rural Digital Opportunity Fund auction using the following methodology. First, we will include: (1) the census blocks for which price cap carriers currently receive CAF Phase II model-based support;23 (2) any census blocks that were eligible for, but did not receive, winning bids in the CAF Phase II auction; (3) any census blocks where a CAF Phase II auction winning bidder has defaulted; (4) the census blocks excluded from the offers of model-based support and the CAF Phase II auction because they were served with voice and broadband of at least 10/1 Mbps; (5) census blocks served by both price cap carriers and rate-of-return carriers to the extent that the census block is in the price cap carrier’s territory,24 using the most recent study area boundary data filed by the rate-of-return carriers to identify their service areas and determine the portion of each census block that is outside this service area;25 (6) any unserved census blocks that are outside of price cap carriers’ service areas where there is no certified high-cost eligible telecommunications carrier (ETC) providing service, such as the Hawaiian Homelands,26 and any other populated areas unserved by either a rate-of-return or price cap carrier; and (7) any census blocks identified by rate-of-return carriers in their service areas as ones where they do not expect to extend broadband (as we did with the CAF Phase II auction).27 Not included in these categories for Phase I eligibility are census blocks where a winning bidder in the CAF Phase II auction is obligated to deploy broadband service,28 and census blocks where a Rural Broadband Experiment support recipient is obligated to offer at least 25/5 Mbps service over networks capable of delivering 100/25 Mbps.29
23 We exclude areas served by price cap carriers in Alaska, Puerto Rico, and the U.S. Virgin Islands, all of which declined model-based support and for which the Commission has already adopted other programs to close the digital divide. See generally Connect America Fund, WC Docket No. 10-90, Order, 31 FCC Rcd 12086 (2016) (ACS Phase II Service Obligations Order; The Uniendo a Puerto Rico Fund and the Connect USVI Fund, et al., WC Docket No. 18-143, et al., 34 FCC Rcd 9109 (2019). 24 See CAF Phase II Auction Order, 31 FCC Rcd at 5972, para. 66 & n.133. 25 We will include those price cap areas that are currently served by a rate-of-return carrier due to a transfer of control. See, e.g., Connect America Fund et al, WC Docket No. 10-90 et al., Order, 31 FCC Rcd 10683 (WCB 2016) (granting study area waiver to Mutual Telephone Company of Sioux Center Iowa d/b/a Premier Communications and Winnebago Cooperative Telecom Association after acquisition of Consolidated Communications’ company in Iowa (Heartland Communications Company of Iowa)). 26 See Sandwich Isles Communications, Inc., WC Docket No. 10-90, Order on Reconsideration, FCC 18-172 (Jan. 3, 2019); Sandwich Isles Communications, Inc., WC Docket No. 10-90, Order, 31 FCC Rcd 12999 (2016). In 2015, the Commission directed USAC to withhold support from Sandwich Isles Communications due to its owner being convicted of federal tax fraud; since 2015, the Hawaiian Public Utilities Commission has not certified Sandwich Isles Communications per section 54.314(a), making it ineligible for high-cost support. 27 See Wireline Competition Bureau Releases Updated List of Census Blocks Eligible for the Connect America Phase II Support and Announces Deadlines for Certain Additional Updates in Price Cap and Rate-of-Return Areas, Public Notice, 32 FCC Rcd 4775, 4778 & n.16 (2017). 28 Thus, we exclude the blocks where a winning bidder in the CAF Phase II auction is only obligated to deploy 10/1 Mbps (less than .3% of locations in the auction). See Auction 903 Closing Public Notice, 33 FCC Rcd at 8257, para. 1. We also exclude from Phase I those areas awarded CAF Phase II support allocated through the New NY Broadband Program. See Connect America Fund; ETC Annual Reports and Certifications, WC Docket Nos. 10-90, 14-58, Order, 32 FCC Rcd 968 (2017) (New York Auction Order). Any areas within a pending CAF Phase II long- form application that have not been authorized to receive support at the time the Bureau announces the final eligible areas list shall likewise be excluded from eligibility for the Rural Digital Opportunity Fund. 29 Although much of this Rural Broadband Experiment deployment should be reflected in the FCC Form 477 data, because of the lag time between reporting and public release of the data, and because some support terms do not end (continued….) 6 Federal Communications Commission FCC 20-5
13. Second, we will exclude those census blocks where a terrestrial provider offers voice and 25/3 Mbps broadband service according to the most recent publicly available FCC Form 477 data.30 In addition, we will exclude those census blocks which have been identified as having been awarded funding through the U.S. Department of Agriculture’s ReConnect Program, or awarded funding through other similar federal or state broadband subsidy programs to provide 25/3 Mbps or better service.31 This is consistent with our overarching goal of ensuring that finite universal service support is awarded in an efficient and cost-effective manner and does not go toward overbuilding areas that already have service.32 Although we sought comment on whether there are any other areas that we should include in the initial list of eligible areas, such as areas in legacy rate-of-return areas that are almost entirely overlapped by an unsubsidized competitor, we decline to expand the list of eligible areas at this time and instead focus Phase I on the known wholly unserved census blocks.33 14. After compiling the preliminary list of eligible areas, the Bureau will conduct a limited challenge process for the Rural Digital Opportunity Fund Phase I auction consistent with the process the
(Continued from previous page) until 2021, we do not want to fund overbuilds in these areas that will soon have better than 25/3 Mbps broadband service. 30 The Commission defined an unsubsidized competitor as a “facilities-based provider of residential terrestrial fixed voice and broadband service that does not receive high-cost support.” USF/ICC Transformation Order, 26 FCC Rcd at 17701, para. 103; see also 47 CFR § 54.5 (defining “unsubsidized competitor”). Whether or not a broadband provider offers voice is based on FCC Form 477 subscription data and determined at the state level. The subscription data are proprietary and the publicly available FCC Form 477 filers list indicates whether the filer provides local exchange telephone or interconnected VoIP service in a state. See https://www.fcc.gov/general/form- 477-filers-state-0. For purposes of determining areas eligible for the Phase I auction, a price cap carrier currently receiving model-based support or legacy support will be considered an unsubsidized competitor. 31 See U.S. Dept. of Agriculture, Rural Development Broadband ReConnect Program, https://www.usda.gov/reconnect. We direct the Bureau to consult with the U.S. Department of Agriculture’s Rural Utilities Service prior to publication of the final eligible areas and exclude the portions of any census blocks from eligibility for the Rural Digital Opportunity Fund Phase I that are substantially overlapped by a ReConnect awardee as of a date certain. 32 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6782, paras. 12-13 (seeking to “ensure that [the Commission’s] limited universal service support is awarded in an efficient and cost-effective manner, without overbuilding to areas that already have service” and proposing that the Rural Digital Opportunity Fund framework be guided, by, among other goals, “reducing waste and inefficiency in the high-cost program”). See also id. at 6796, para. 48 n.91 (proposing to exclude areas awarded CAF Phase II support allocated through the New NY Program). Several commenters addressed the issue of duplicative support. See NCTA Comments at 4-5 (pointing out that “it would be an inefficient and wasteful use of universal service funding to award duplicative Rural Digital Opportunity Fund support” and therefore arguing “[t]here is no need to provide universal service funding in areas where ReConnect Program grants will be supporting the deployment of broadband at 25/3 Mbps. The Commission also should consider eliminating from eligibility areas that have received or are committed to receive funding to reach 25/3 Mbps broadband through state support programs”); Verizon Comments at 8-9; NTCA Comments at notes 30 and 68; NCTA Reply at 9; AT&T Reply Comments at 18; Pennsylvania PUC Reply Comments at 30 (“Because state funding coupled with additional federal funding will help ensure that areas that need broadband deployment receive it in a cost-effective manner, the PA Joint Commenters disagree with NCTA’s and Verizon’s suggestion that the Commission exclude from the RDOF auction any census block where a winning bidder is also receiving other additional funding support.”). Our intent is to exclude areas where 25/3 Mbps or better service has been or will be deployed without Rural Digital Opportunity Fund support, not to prevent winning bidders from accessing other funding sources, including from states. 33 See Connect America Fund et al., WC Docket No. 10-90 et al, Report and Order, Further Notice of Proposed Rulemaking, and Order on Reconsideration, FCC Rcd 11893, 11945-48, paras. 183-99 (December 2018 Rate-of- Return Order).
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Bureau used for the CAF Phase II auction.34 Because there is an inevitable lag between the time when areas are served and the time that service is reflected in publicly available FCC Form 477 data, parties will be given an opportunity to identify areas that have subsequently become served, and the Bureau will have the opportunity to compare the preliminary list of eligible areas with the final list to identify any obvious reporting errors. As discussed above, good policy requires us to avoid making limited federal funding available in areas where broadband providers already are receiving support to deploy 25/3 Mbps broadband service. Thus, in order to identify which areas to exclude, we direct the Bureau to provide an opportunity to identify census blocks that have been awarded support by a federal or state broadband subsidy program to provide 25/3 Mbps or better service. We do this to ensure that the Commission’s auction does not award duplicative or unnecessary support. We do not agree with commenters who argue that a limited challenge process is insufficient and that we should provide a “robust” challenge process to identify census blocks that are not actually served, and thus should be eligible for Phase I.35 We find that such a challenge process would be administratively burdensome, time-consuming, and unnecessary. In a previous challenge process, the Commission found that it was very difficult to prove a negative – that is, that an area was not served.36 We also note that in Phase II, any areas that are reported as served based on our current data but are ultimately deemed unserved will be eligible, and expect that Phase II will occur sooner if Phase I is not delayed by a more burdensome challenge process. We direct the Bureau to release a list and map of initially eligible census blocks based on the most recent publicly available FCC Form 477 data.37 If more recent FCC Form 477 data is available when the Commission adopts the specific procedures for the Phase I auction, the Bureau should use the more recent data and publish a final list.38 15. CAF Phase II support was targeted to “census blocks where the cost of service is likely to be higher than can be supported through reasonable end-user rates alone” by using a cost benchmark that reflected the expected amount of revenue that could reasonably be recovered from end users.39 In the CAF Phase II auction, we included high-cost areas where the CAM estimated the cost per location to exceed $52.50 per month. We depart from that decision here in the Rural Digital Opportunity Fund auction and we also will include some census blocks where the CAM suggests the costs of deployment are below that $52.50 high-cost threshold, but deployment has nonetheless not yet occurred. When we proposed including at least some low-cost blocks, then-current data indicated that 6.3 million locations with costs below a $52.50 per month benchmark still lacked 25/3 Mbps broadband (including 3.4 million locations that lacked even 10/1 Mbps broadband based on staff analysis of current FCC Form 477 data),40 suggesting that potential end-user revenue alone had not incentivized deployment despite the model’s
34 See CAF Phase II Auction Order, 31 FCC Rcd at 5969-70, para. 57; Wireline Competition Bureau Releases Preliminary List and Map of Eligible Census Blocks for Connect America Fund Phase II, WC Docket No. 10-90, Public Notice, 31 FCC Rcd 8870 (WCB 2016) (Preliminary Phase II Auction Areas Public Notice). 35 See NTCA - The Rural Broadband Association Comments at 36-39 (NTCA); ACA Connects – America’s Communications Association Comments at 19 (ACA Connects). 36 See CAF Phase II Auction Order, 31 FCC Rcd at 5971, para. 58. 37 For example, the most recent publicly available FCC Form 477 was released on January 8, 2020, and reports deployment as of December 31, 2018. 38 For the CAF Phase II auction, more recent FCC Form 477 data were available and the Bureau published an updated list. See Wireline Competition Bureau Releases List and Map of Eligible Census Blocks for the Connect America Fund Phase II Auction (Auction 903), Public Notice, 32 FCC Rcd 10381 (WCB 2017) (Final Eligible Census Block List Public Notice); see also Revised List and Map of Eligible Census Blocks for the Connect America Phase II Auction (Auction 903), AU Docket No. 17-182, WC Docket No. 10-90, 33 FCC Rcd 1166 (WCB 2018) (Revised Final Eligible Census Block List Public Notice). 39 USF/ICC Transformation Order, 26 FCC Rcd at 17728, para. 167; CAM Inputs Order, 29 FCC Rcd at 4040, para. 180 (WCB 2014). 40 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6796, para. 51.
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predictions. Therefore, to encourage deployment of high-speed broadband in rural census blocks that are wholly unserved, we will use a lower funding threshold to include blocks where the CAM estimates the cost per location equals or exceeds $40 per month, rather than $52.50. Although some commenters do not agree with providing support in such lower cost areas,41 we find that a modest reduction in the funding threshold is warranted given the number of census blocks where market forces alone have been insufficient to bring broadband to these areas. 16. To account for the unique challenges of deploying broadband to rural Tribal communities, we will use a funding threshold of $30 per month. This approach is consistent with the Tribal Broadband Factor established for Tribal areas for carriers that elected model-based rate-of-return support, which used a 25% decrease compared to the $52.50 benchmark.42 Because we will use a $40 benchmark for the Phase I auction, the $30 benchmark for Tribal areas reflects a 25% decrease compared to the $40 funding threshold. Using a $30 funding threshold for census blocks in Tribal areas, in addition to including blocks below the $40 threshold, has the effect of increasing the reserve price in all Tribal areas by $10 per location.43 Finally, to provide additional incentives in wholly unserved areas that even lack 10/1 Mbps, we also will use a $30 per month funding threshold in these areas. A number of commenters agree that we should prioritize these areas,44 and we find that an increased reserve price could encourage deployment in areas where rural consumers have been left behind. D. Framework for Rural Digital Opportunity Fund Phase I 17. Consistent with the approach the Commission took in the CAF Phase II auction, we adopt a general auction framework and eligibility criteria in this Order and leave the specific procedures to be established as part of the pre-auction process, including determining auction-related timing and dates, identifying areas eligible for support, and establishing detailed bidding procedures consistent with this Order. 18. Auction Framework. For Phase I, we adopt a single nationwide, multi-round reverse auction with competition within and across eligible geographic areas to identify areas that will receive support and determine support amounts, as we did for the CAF Phase II auction.45 Our experience in the CAF II auction demonstrates that reverse auctions allow for market forces to maximize the impact of finite universal service resources while awarding support to those providers that will make the most
41 See e.g., NTCA Comments at 19 (opposing including lower-cost census blocks in Phase I); ACA Comments at 21-22 (arguing that the Commission should hold off on lowering high-cost threshold until Phase II). 42 December 2018 Rate-of-Return Order, FCC Rcd at 11910-11, paras. 55-56. 43 In addition, the capped support amount in Tribal areas will be $10 higher than the capped amount in areas using a $40 benchmark. 44 See, e.g., Pennsylvania Public Utilities Commission Comments at 17 (Pennsylvania PUC); WISPA Comments at 30-31, Colorado Broadband Office Reply at 2. 45 We received several generalized requests to waive the auction rules and instead authorize federal-state partnerships for the Rural Digital Opportunity Fund. See, e.g., California PUC Comments at 5-6; Colorado Broadband Office Reply at 2; Letter from Marybel Batjer, President of the California PUC, to Ajit Pai, Chairman, FCC, at 2 (filed Jan. 22, 2020); Letter from Ralph Northam, Governor of the State of Virginia, to Ajit Pai, Chairman, FCC, at 1-2 (filed Nov. 13, 2019); see also ACA Connects Comments at 28-29 (asserting that “the Commission should adopt principles to facilitate state broadband program engagement while establishing safeguards to ensure support is allocated in a transparent and efficient manner.”). In response to these requests, we do not find special circumstances that merit waiver. Unlike the Commission’s 2017 decision to waive CAF Phase II auction rules for locations in New York, here creating separate mechanisms for particular states would cause significant delay in getting support to needy rural areas lacking broadband because we would need to establish new and state- specific rules for each state and also ensure that each state’s mechanism for awarding support operated consistently with our decision to allocate support using market-based forces.
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efficient use of the budgeted funds.46 Utilizing an auction mechanism will allow us to distribute support consistent with our policy goals and priorities in a transparent manner.47 An auction provides a straightforward means of identifying those providers that are willing to provide voice and broadband at a competitive cost to the Fund, targeting support to prioritized areas, and determining support levels that awardees are willing to accept in exchange for the obligations we impose. Moreover, a reverse auction is consistent with our decision to provide support to at most one provider per area.48 19. Commenters broadly support the use of a reverse auction to distribute Rural Digital Opportunity Fund support. For example, commenters state that based on the success of the CAF Phase II auction, reverse auctions can be expected to produce robust deployment cost-effectively.49 The Nebraska Public Service Commission, on the other hand, raised concerns that a reverse auction focuses on “the cheapest way to get to the minimum speed of a given speed tier to a coverage area” rather than “focusing on robust and scalable technology.”50 We disagree. As demonstrated in CAF Phase II, reverse auctions are the best available tool to achieve our overall goal of closing the digital divide in a transparent and efficient manner while maintaining fiscal responsibility and cost-effectiveness. Moreover, in most instances, CAF Phase II winning bidders agreed to provide a higher speed than the minimum; thus, we were able to push finite universal service support to many more locations at a much lower cost and higher speeds. We therefore maintain that a reverse auction is the most efficient means of awarding Rural Digital Opportunity Fund support, consistent with our goal of supporting the buildout of the best possible networks in the most cost-effective manner possible. 20. Similar to the CAF Phase II auction, we adopt an auction design in which bidders committing to different performance levels will have their bids weighted to reflect our preference for higher speeds, greater usage allowances, and lower latency. However, in addition to the weights for each performance tier and latency combination adopted below, we adopt bid processing procedures specific to the “clearing round” of the Rural Digital Opportunity Fund Phase I auction.51 In the clearing round, the bidding system will take into account the combined performance tier and latency weight when assigning support to bidders competing for support in the same area at the base clock percentage.52 Among other modifications to the procedures used in the CAF II auction, the bidding system will assign support in the clearing round to the bidder with the lowest performance tier and latency weight instead of, as was done in the CAF II auction, carrying forward all bids at the base clock percentage for the same area for bidding
46 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1431, para. 2. 47 CAF Phase II Auction Order, 31 FCC Rcd at 5978-79, para. 88. 48 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1493, para. 200. 49 See, e.g., California PUC Comments at 8 (stating that “the reverse auction process has proven to produce more robust higher speed networks at lower deployment costs”); UTC Comments at 7 (agreeing with the Commission “that such an auction will help to promote efficient bidding, which should result in bids that significantly beat the budget, similar to what happened in CAF II”); Muscogee Comments at 2 (stating that it supports using a substantially similar reverse auction format as was used in CAF Phase II); WISPA Comments at 9 (supporting the Commission in “retain[ing] the same basic nationwide, multiple-round, descending clock auction design. . . [t]here is no reason for the Commission to depart from its proposal.”). 50 Nebraska Public Service Commission Comments at 5 (Nebraska PSC). 51 The budget is said to clear in the first round in which an estimated aggregate cost of bids at the current round’s base clock percentage is less than or equal to the budget. This round is referred to as the “clearing round.” 52 See, e.g., Conexon Comments at 8-9; Mississippi Public Service Commission Comments at 2 (Mississippi PSC); NRECA Comments at 9-10; Verizon Comments at 6; Institute for Local Self-Reliance Comments at 2; NTCA Reply at 5; Letter from Bennett L. Ross, Counsel for Corning, to Marlene H. Dortch, Secretary, FCC, at 1 (filed Dec. 20, 2019).
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in additional clock rounds.53 If two or more bids were submitted with the same lowest performance tier and latency weight in the clearing round, bidding for an area will continue in additional clock rounds. 21. In the CAF II auction, the Commission adopted an auction that considered all bids simultaneously, “so that bidders that propose to meet one set of performance standards will be directly competing against bidders that propose to meet other performance standards.”54 In the Rural Digital Opportunity Fund auction, we will continue to accept bids committing to different performance levels. In Phase I, however, once the budget has cleared, we will prioritize bids with lower tier and latency weights, thereby encouraging the deployment of networks that will be sustainable even as new advancements are made and which will be capable of delivering the best level of broadband access for many years to come, all while keeping funding within the Phase I budget.55 Although this approach could result in less intra- area competition after the clearing round in some areas, the auction will have selected the best possible service, at a competitive level of support, for the same number of consumers living in those areas, and this will result in more rapid and efficient funding for such deployment.56 In other words, our goal to close the digital divide is balanced against our goal to support the deployment of future-proof networks by this auction.57 Overall, we do not expect this approach to adversely impact competition.58 We still will accept competitive bids proposing to offer performance that meets or exceeds the minimums at each performance tier and latency, but for those areas where there is still competition as of the clearing round, we will prioritize selection of bidders that propose to offer the highest speeds, most usage, and lowest latency for each area.59 22. We also adopt the same general competitive bidding rules, which allow for the subsequent determination of additional, specific final auction procedures based on additional public input during the pre-auction process, and the Commission will apply as appropriate any modifications to those rules that it may adopt.60 Those competitive bidding rules, together with the additional rules we adopt
53 Details of the specific processing mechanism, as well as any associated changes to bidding procedures required based on this decision, will be considered during the pre-auction process. 54 CAF Phase II Auction Order, 31 FCC Rcd at 5977, para. 84. 55 See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6783, para. 15 (encouraging companies to “make the necessary long-term investments to build robust, future-proof networks”), and 6786, para. 25 (“recognizing that terrestrial fixed networks may serve as a backbone for 5G deployments”). 56 NRECA Comments at 9-10 (arguing awarding support to the lowest weight “does not affect the inter-area competition that drives the bidding until the budget clears”); Verizon Comments at 6 (arguing “the benefits of supporting the deployment of scalable, low-latency terrestrial broadband infrastructure outweigh the value of any further price competition from high-latency tier bidders”); NTCA Reply at 5 (arguing “the Commission would connect just as many Americans as it would if the auction were to continue thereafter – the only difference being that, with this approach, the Commission would [be] ensuring the best possible networks are built to the same number of locations for the available budget”). 57 But see, ACA Connects Reply at 12 (arguing the Commission should prioritize “the most efficient allocation” of support); Letter from Tom Stroup, President, Satellite Industry Association, to Marlene Dortch, Secretary, FCC (filed Jan. 7, 2020) (arguing the Commission should select “the most efficient provider” to serve each area). 58 Letter from Matthew T. Murchison, Counsel for Viasat, Inc., to Marlene H. Dortch, Secretary, FCC, at 2 (filed Dec. 20, 2019) (noting that 99.99% of locations won by Viasat had no competing terrestrial bids in the clearing round). 59 Given the benefits from this clearing round rule of maximizing bids at the fastest speeds, highest usage, and lowest latency, we decline to continue bidding beyond the clearing round, as proposed by WISPA. See Letter from, Louis Peraertz, Vice President of Public Policy, WISPA, to Marlene H. Dortch, Secretary, FCC, at 1-2 (filed Jan. 22, 2020). 60 47 CFR § 1, Subpart AA. In the CAF Phase II Auction Order, the Commission provided some basic guidance on choosing an auction design furthering its objectives for CAF Phase II competitive bidding. See, e.g., CAF Phase II (continued….) 11 Federal Communications Commission FCC 20-5
today, will establish Rural Digital Opportunity Fund winning bidders’ performance obligations, eligible areas, and post-auction obligations and oversight.61 As it typically does for Commission auctions, the Commission will seek further comment on auction procedures at a future date, so we do not address the comments in this Order that speak to those issues.62 A number of commenters propose specific changes to the auction that would be better evaluated during the process to develop detailed auction procedures.63 23. Reserve Prices. Consistent with the CAF Phase II auction procedures, we will use the CAM to establish area-specific reserve prices.64 We make several adjustments to the Commission’s approach in the CAF II auction to include some unserved areas that were excluded from the CAF Phase II auction and to potentially provide additional funding to extremely high-cost areas.65 Specifically, we conclude it is appropriate to reduce the high-cost support threshold to $40 per location. We also increase the per-location support cap to $212.50.66 This approach will add additional locations above the new
(Continued from previous page) Auction Order, 31 FCC Rcd at 5975-5977, para. 82-85. See also Auction 903 Procedures Public Notice, 33 FCC Rcd at 1493-1512, paras. 199-288. 61 See, e.g., U.S. Cellular Reply at 22, n.67 (asserting that it agrees with USTelecom’s argument that “[i]t is essential for the Commission to set clear obligations and rules for auction winners in advance of the auction”); Windstream Reply at 13 (encouraging the Commission to set clear and certain service requirements in advice of the auction so that providers can formulate their bids); see also Frontier Communications Reply at 13 (Frontier) (stating that access to additional CAF auction information would allow for meaningful comment on Rural Digital Opportunity Fund auction design and rules). 62 See Auction 903 Procedures Public Notice, 33 FCC Rcd 1428 (2018). 63 Several parties commented that rules affecting eligibility and activity should be more stringent to avoid behavior that is arguably anti-competitive. See, e.g., Viasat Comments at 28-29 (recommending the Commission specify eligibility by area, rather than by state to prevent “insincere bids in the pre-clearing rounds”); CenturyLink Reply at 5, Viasat Comments at 28 (each recommending the Commission prohibit bids by a single bidder that exceed the total Rural Digital Opportunity Fund budget); USTelecom Reply at 29-30, Appendix A (recommending modification to the information rule to avoid switching bids only intended to gather information on level of competition); Windstream Comments at 20, AT&T Reply at 16, n.70 (each recommending capping the total amount that a provider can bid based on the provider’s annual revenues or its customer base); but see WISPA Reply at 39-40 (arguing capping bids based on annual revenues is anti-competitive and short-sighted). Commenters also suggested other modifications to bid processing procedures, including USTelecom Reply at 29-30, Appendix A (recommending the auction freeze clock prices for uncontested areas in package bids after the budget clears); see also UTC Reply at 5 (on an additional weighting factor); Viasat Reply at 23-24 (suggesting that weights be applied by multiplying the amount of the bid by a decimal value rather than by subtracting the weight). Several parties asserted that the Commission should adopt procedures to ensure that a greater share of the budget is assigned under the auction. See, e.g., Conexon Comments at 6; ADTRAN Reply at 1-2, n.2-5; CenturyLink Reply at 4; Viasat Comments at 27. Finally, WISPA requests that information about the tier and latency weights associated with the bids in each area be made available to bidders in order to increase the transparency of the auction. See Letter from, Louis Peraertz, Vice President of Public Policy, WISPA, to Marlene H. Dortch, Secretary, FCC, at 2 (filed Jan. 15, 2020). 64 See 47 CFR § 1.21003(c)(3). The Commission has the discretion to establish reserve prices, and prior to the auction, can establish those reserve prices, separate and apart from any maximum opening bids, and may elect whether or not to disclose those reserves; see also Auction 903 Procedures Public Notice, 33 FCC Rcd at 1495, para. 210. 65 We will set the reserve prices based on the recent A-CAM offering to rate-of-return carriers. See December 2018 Rate-of-Return Order, 33 FCC Rcd at 11900, para. 20. 66 The CAM contains two modules. The first is a cost module that calculates costs for all areas of the country. The second module of CAM is the support module, which calculates the support for each area based on those costs, or, in this case, the reserve price allocation. In the CAF Phase II auction, the Commission capped the amount of support per location provided to extremely high-cost census blocks. CAF Phase II Auction Order, 31 FCC Rcd at 5979, para. 90. We therefore decline West Virginia Broadband Enhancement Council’s suggestion that instead of the (continued….) 12 Federal Communications Commission FCC 20-5
threshold and increase inter-area bidding. Finally, we will prioritize areas entirely lacking 10/1 Mbps and Tribal areas by further lowering the funding threshold for such areas by 25% to $30.67 24. The reserve price in each wholly-unserved, eligible census block will be equal to the average per-location cost of deploying and operating a network (as calculated by the CAM)68 above the $40 support threshold and up to the per-location support cap of $212.50, multiplied by the number of locations in the block.69 Lowering the support threshold from $52.50 to $40 per locations will provide support to unserved areas in which the CAM may be understating costs, while still being cognizant about not offering support in areas market forces alone are likely to extend broadband. The Commission previously determined that a CAM-calculated average per-location cost of $52.50 reflected an appropriate line between areas requiring support and those where market forces would be sufficient.70 Where some areas have not yet seen unsubsidized deployment of broadband networks, it could be an indication that the assumptions underlying the CAM do not always reflect the reality facing service providers, and we now conclude it is appropriate to revisit the high-cost threshold. Likewise, we increase the per-location support cap to ensure that the highest-cost areas, many of which did not receive winning bids in the CAF II auction, will see sufficient interest from bidders in the Rural Digital Opportunity Fund. Thus, we will set the reserve price based on a lower support threshold of $40 for all areas and raise the per-location support cap from $146.10 to $212.50, ultimately helping promote participation and competition in the Rural Digital Opportunity Fund Phase I auction.71 25. Our goal with this auction is to target support and provide incentives to serve areas that are known to currently lack service at speeds of at least 25/3 Mbps. Whereas the CAF Phase II auction targeted support to high-cost areas where the incumbent price cap carrier declined the offer of model- based support and extremely high-cost areas nationwide, here we expand our focus to include certain areas that remain unserved despite being identified by the CAM as lower cost. As we stated in the NPRM, the new lower support threshold of $40 will ensure that only census blocks above the new support threshold will be eligible for the auction.72 Buckeye Hills Regional Council asserts that the Commission should lower the cost threshold to $20 or $30 for difficult to serve parts of the country such as
(Continued from previous page) high-cost and extremely high-cost thresholds based on the CAM, the Commission instead should base the threshold on affordability benchmarks using the Median Household Income from the U.S. Census Bureau’s most recent American Community Survey data, when the Commission already has a robust cost model that calculates both the cost to deploy and includes certain revenue assumptions. See West Virginia Broadband Enhancement Council Comments at 9-10 (West Virginia Council Comments). 67 Wireline Competition Bureau Announces Alternative Connect America Cost Model II Support Amounts Offered to Rate-of-Return Carriers to Expand Rural Broadband, WC Docket No. 10-90, Public Notice, 34 FCC Rcd 2868 (WCB 2019). 68 Several commenters support using the CAM to determine reserve prices. See, e.g., ACA Connects Comments at 23-24; Muscogee Comments at 7-8; NRECA Comments at 12; NTCA Comments at 18; UTC Comments at 16. But see USTelecom Comments at 9 (arguing that the CAM is out of date because the location counts have changed). 69 47 CFR § 1.21003(c)(3). 70 CAM Inputs Order, 29 FCC Rcd at 4040, para. 180. 71 See also NRECA Comments at 11 (stating “[t]he increase in the extremely high cost threshold is important for census blocks and bidding areas having a blend of high cost and extremely high cost locations.”). Verizon disagrees with increasing the per-location support cap for extremely high-cost areas, arguing as it would limit the reach of the program by spending more support on fewer locations that are more expensive to serve. Verizon Comments at 10. But see NCTA – The Internet & Television Association Reply at 8-9 (NCTA) (disagreeing with Verizon that the Commission should limit the amount of support available for the most expensive to serve parts of the country). 72 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6798, para. 57.
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Appalachia.73 However, lowering the threshold any further than $40 would provide more support than needed and many locations could be included that are more likely to be served without universal service support. 26. Certain commenters oppose including unserved low-cost census blocks in Phase I of the auction,74 raising concerns that the auction would shift funding to more densely populated areas at the expense of more rural consumers and census blocks.75 We note that these areas remain unserved, despite being identified as low cost by CAM more than five years ago. Moreover, we are lowering the support threshold in all eligible census blocks, thereby increasing reserve prices (and potentially available support) throughout. We decline to adopt NCTA’s proposal to reduce the cost threshold only to account for the costs of upgrading an already deployed network capable of providing 10/1 Mbps to one capable of providing 25/3 Mbps,” to “ensure the . . . fund does not . . . pay more than necessary to serve these areas.”76 We disagree. NCTA’s approach focuses on areas that already have 10/1 Mbps but not 25/3 Mbps and presumes that the existing provider would be the auction winner. While an existing provider should in many cases be able to seek less support from the auction in order to upgrade existing facilities, it may ultimately be more efficient for a new provider to serve that same biddable unit with new facilities, in addition to serving neighboring areas that lack 10/1 Mbps broadband services. 27. We also adopt our proposal in the NPRM to prioritize census blocks that lack 10/1 Mbps over eligible census blocks that have 10/1 Mbps service, but lack service at 25/3 Mbps based on Form 477 data. Specifically, we accomplish this by reducing the support threshold for such census blocks by an additional 25% to $30, which will have the effect of raising the support cap for these blocks to $222.50. Some commenters support prioritizing areas that lack 10/1 Mbps and some suggest the reserve prices in such areas should be increased to incentivize bidders in those areas.77 USTelecom opposes focusing first on areas that lack 10/1 Mbps stating that it would be difficult to implement “absent mapping” and due to ongoing CAF Phase II deployment.78 Pacific Dataport objects to a 10/1 Mbps prioritization and argues it is a “desperate attempt to force-fit a terrestrial solution whether or not the economics make sense.”79 We
73 See Buckeye Hills Council Comments at 15; Letter from Tom Reid, Broadband Consultant for Buckeye Hills Regional Commission, to Marlene H. Dortch, Secretary, FCC, at 2 (filed Jan. 14, 2020); see also ITTA – The Voice of America’s Broadband Providers Comments at 13-14 (ITTA) (asserting that the Commission should set the reserve price based on a $30 eligibility threshold incentivizing providers to include these unserved census blocks in their bids, reflecting a more realistic view of take rates, for 25/3 in rural areas). 74 See ACA Comments at 18 (stating that the Commission should “only consider lowering the high-cost threshold in later rounds to provide funding to areas where potential end-user revenue alone has not sufficiently incentivized deployment.”); NTCA Comments at 19 (recommending against including low-cost census blocks in Phase I of the auction). 75 See NTCA Comments at 19, 33-34. 76 See NCTA Comments at 3-4. 77 California Internet d/b/a GeoLinks Comments at 2-3 (GeoLinks) (stating that supporting the idea of higher reserve prices and/or additional bidding credits for areas that entirely lack 10/1 Mbps or better fixed service and would support a separate auction phase to encourage rapid deployment in these areas); NCTA Comments at 2-3 (suggesting that the Commission increase the reserve price by a certain percentage to encourage providers to bid in areas that lack 10/1 Mbps); UTC Comments at 16 (supporting prioritizing areas that entirely lack 10/1 Mbps or better fixed service, increasing the reserve price by 10% for these areas); Pennsylvania PUC Reply at 6 (stating that it is imperative that the Commission ensure that areas lacking 10/1 Mbps service will be prioritized and supports a 10% increase in the reserve price for these areas). 78 USTelecom Comments at 43. Other commenters also oppose prioritizing 10/1 Mbps. See, e.g., NTCA Comments at 19 (urging the Commission to “refrain at this time from increasing the reserve price to funnel support specifically toward areas that appear to be lacking 10/1 Mbps broadband”). 79 Pacific Dataport Comments at 16.
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disagree with both commenters. As stated above, we have the data to identify census blocks that are wholly unserved by broadband speeds of at least 10/1 Mbps and are not aware of cases where Form 477 data have identified as “unserved” a census block that is in fact served.80 One of the Commission’s goals in this proceeding is to provide incentives to serve locations that lack any terrestrial option. Prioritizing areas that lack 10/1 entirely is consistent with our statutory mandate that such services are deployed to areas lacking broadband and makes sure this auction does not leave on the wrong side of the digital divide those areas lacking even basic broadband access.81 28. For Tribal areas, we similarly adopt the Tribal Broadband Factor as a 25% decrease, to $30, of the support threshold applied to Tribal areas.82 More specifically, with regard to census blocks located within the geographic area defined by the boundaries of the Tribal land,83 all eligible census blocks for which the CAM-derived cost is more than $30 will be included in the auction, and the reserve price for such blocks will be the CAM-derived cost minus $30, up to a per-location support cap of $222.50. We recognize the difficulty Tribal lands have faced in obtaining broadband deployment, and by incorporating this Tribal Broadband Factor, we seek to incentivize network buildout to ensure that Tribal Nations and their members obtain access to advanced communications services.84 The record before us provides ample support for adopting a 25% decrease of the cost benchmark to incentivize Rural Digital Opportunity Fund participants to bid on and serve rural Tribal census blocks.85 A Tribal Broadband
80 See supra para. 10. 81 47 U.S.C. § 254(b). The Universal Service Fund’s goal is that “access to advanced telecommunications and information services should be provided in all regions of the Nation.” 82 With this, we conclude our statutory obligation to complete a proceeding to address unserved Tribal areas by September 2020. See Consolidated Appropriations Act, 2018, Pub. L. No. 115-141, Div. P—RAY BAUM’S Act of 2018, § 508(a)(1), 132 Stat. 348, 1095-96 (2018) (RAY BAUM’S Act of 2018) (directing the Commission to conduct a proceeding to address unserved Tribal areas); see also Report on Broadband Deployment in Indian Country, Pursuant to the Repack Airwaves Yielding Better Access for Users of Modern Services Act of 2018 (CGB/WCB/WTB May 1, 2019), available at https://docs.fcc.gov/public/attachments/DOC-357269A1.pdf (Tribal Broadband Report); Wireline Competition Bureau Announces Alternative Connect America Cost Model II Support Amounts Offered to Rate-of-Return Carriers to Expand Rural Broadband, WC Docket No. 10-90, Public Notice, 34 FCC Rcd 2868 (WCB 2019). 83 Consistent with past precedent in the high-cost program, “Tribal lands” include any federally recognized Indian tribe’s reservation, pueblo or colony, including former reservations in Oklahoma, Alaska Native regions established pursuant to the Alaska Native Claims Settlements Act (85 Stat. 688), and Indian Allotments, as well as Hawaiian Home Lands—areas held in trust for native Hawaiians by the state of Hawaii, pursuant to the Hawaiian Homes Commission Act, 1920, Act July 9, 1921, 42 Stat. 108, et seq., as amended. See USF/ICC Transformation Order, 26 FCC Rcd at 17711, n.197. This definition was adopted in that Order for purposes of the comprehensive reforms adopted to the high-cost program. Id. It was also used for the Tribal Mobility Fund Phase I. Id. at 17819-20, paras. 481-483. Carriers serving Alaska Native regions will not be eligible to obtain additional support under the measures adopted today, however, because the Commission has already established a separate plan tailored to meet the needs of carriers serving Alaska. See Alaska Plan Order, 31 FCC Rcd at 10139 (2016). See Lifeline & Link Up Reform & Modernization, WC Docket Nos. 11-42, 09-197, 10-90, Second Further Notice of Proposed Rulemaking, Order on Reconsideration, Second Report and Order, and Memorandum Opinion and Order, 30 FCC Rcd 7818, 7903, para. 257 (2015). 84 See CAF Phase II Auction Order, 31 FCC Rcd at 6026, para. 225. See also Statement of Policy on Establishing a Government-to-Government Relationship with Indian Tribes, Policy Statement, 16 FCC Rcd 4078, 4080-81 (2000). See also Federal-State Joint Board on Universal Service et al., CC Docket No. 96-45, Twelfth Report and Order, Memorandum Opinion and Order, and Further Notice of Proposed Rulemaking, 15 FCC Rcd 12208, 12212-15, paras. 4-11 (2000 Tribal Order); see generally Improving Communications for Native Nations, CG Docket No. 11- 41, Notice of Inquiry, 26 FCC Rcd 2672 (2011) (Native Nations NOI) (reviewing Commission actions regarding Native Nations). 85 See, e.g., Muscogee Comments at 8-9 (stating that it supports prioritizing areas where broadband is significantly lacking, and support should be particularly geared to Tribal lands); Sacred Wind Comments at 9 (asserting that it (continued….) 15 Federal Communications Commission FCC 20-5
Factor will attach to the eligible Tribal areas, and thus reflect the additional cost of serving Tribal lands.86 While we remain committed to promoting deployment on Tribal lands, we decline to extend a Tribal- specific preference to Tribal entities or to require a nontribal entity to “prove an established partnership” prior to the auction.87 We conclude that it serves the public interest to maximize participation, and to award support to the most cost-effective bids, subject to the performance and latency weights we adopt below. 29. Bidding Credits. We decline to adopt bidding credits for offsetting bidding weights or committing to certain buildout requirements, as proposed by some bidders.88 Adopting bidding credits to reward bidders for simply having met prior regulatory obligations, for example, would be contrary to the competitive nature of the auction, and, could ultimately reduce the potential reach of the Rural Digital Opportunity Fund. While we decline to adopt a Tribal bidding credit, above, we have incorporated into the reserve prices for Tribal lands a Tribal Broadband Factor,89 similar to what the Commission previously incorporated into the recent offer of model-based support to rate-of-return carriers serving Tribal lands, which will reflect the higher costs unique to deploying service on Tribal lands that may not otherwise already be included in the CAM, and satisfy our goal of bridging the digital divide.90
(Continued from previous page) supports the Tribal Broadband Factor to assist with the “unique challenges of deploying to rural Tribal communities”); WTA – Advocates for Rural Broadband Comments at 22 (WTA) (agreeing that the Commission should implement the Tribal Broadband Factor); National Tribal Telecommunications Association Reply at 4, n.11- 12 (asserting that the “[Tribal Broadband Factor] will serve to enhance the opportunities for carriers serving Tribal areas to participate in the auctions and, presumably, bring broadband services to areas currently lacking access.”); see also California PUC Comments at 10 (expressing support for a 35% bidding credit for rural Tribal areas); California Emerging Technology Fund Comments at 15-16 (supporting a Tribal bidding credit between 25 percent and 50 percent for less densely populated Tribal lands); Milan Mitra Express Comment (stating that the Rural Digital Opportunity Fund should carve out some of its funding for reservations); UTC Comments at 16 (asserting that it supports a 25% bidding credit for rural Tribal areas); Navajo Nation and NNTRC Reply at 8-9 (asserting that a 35 percent Tribal bidding credit is necessary for Tribal lands). 86 See Internet Society Comments at 4 (asserting that an issue with the bidding credit process is that it “may allow non-Tribal carriers to work with a tribe to provide services without any explicit guarantee of Tribal partnership.”). 87 See Letter from Mariel Triggs, CEO, MuralNet, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 et al., at 2 (filed Jan. 17, 2020). 88 See, e.g., Viasat Comments at 28 (stating that “the Commission could also consider a mechanism that would credit bidders for coverage in a manner that could offset penalties associated with speed and latency.”); WISPA Comments at 15 (asserting that “the Commission could award a bidding credit to a bidder that agrees to accelerated buildout”); WTA Comments at 6-7 (proposing the grant of a substantial 25% RDOF bidding credit to existing CAF support recipients that have met their build-out requirements under the current support mechanism). But see ACA Connects Reply at 13 (opposing WTA’s proposal of 25% bidding credit for incumbent model-based price cap carriers as it contradicts the auction’s competitive bidding goals); NCTA Reply at 4-5 (asserting that it does not support WTA’s preferential treatment proposal of a 25% bidding credit for incumbent LECs) and Windstream Reply at 11 (disagreeing with WISPA that bidding credits could be given to bidder agreeing to accelerate buildout). 89 See California PUC Comments at 10 (supporting a 35% bidding credit for rural Tribal areas); California Emerging Technology Fund Comments at 15-16 (supporting a Tribal bidding credit between 25% and 50% for less densely populated Tribal lands); UTC Comments at 16 (supporting a 25% bidding credit for rural Tribal areas); Navajo Nation and NNTRC Reply at 8-9 (asserting that a 35% Tribal bidding credit is necessary for Tribal lands). But see Internet Society Comments at 5 (asserting that an issue with the bidding credit process is that it “may allow non- Tribal carriers to work with a tribe to provide services without any explicit guarantee of Tribal partnership”). 90 See Wireline Competition Bureau Announces Alternative Connect America Cost Model II Support Amounts Offered to Rate-of-Return Carriers to Expand Rural Broadband, WC Docket No. 10-90, Public Notice, 34 FCC Rcd 2868 (WCB 2019).
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30. Minimum Geographic Area for Bidding. We conclude that the minimum geographic area for bidding will be no smaller than a census block group, as identified by the U.S. Census Bureau, containing one or more eligible census blocks.91 As we determined in the CAF Phase II Procedures PN, using census block groups ensures that all interested bidders, including small entities, have flexibility to design a network that matches their business model and the technologies they intend to use.92 Nevertheless, as the Commission did in the CAF Phase II auction, we reserve the right to select census tracts, or other groupings of areas, when we finalize the auction design if necessary to limit the number of discrete biddable units.93 While some commenters support bidding based on eligible census blocks,94 we decline to adopt individual census blocks as the minimum geographic area for bidding because of the significantly larger number of eligible census blocks, increasing the complexity of the bidding process both for bidders and the bidding system and minimizing the potential for broad coverage by winning bidders.95 Furthermore, using census blocks as the minimum geographic area could create more challenges for providers in putting together a bidding strategy that aligns with their intended network construction or expansion. E. Deployment Obligations 1. Public Interest Obligations 31. We adopt technology-neutral standards for voice and broadband services supported by the Rural Digital Opportunity Fund, based on our experience in the CAF Phase II auction and its success in awarding support to a variety of service providers to deploy broadband in unserved rural areas, and consistent with long-standing Commission policy.96 Specifically, we will permit bids in four performance tiers, and for each tier will differentiate between bids that would offer either low- or high-latency service. The Minimum performance tier means 25/3 Mbps with a usage allowance that is the greater of 250 GB per month or the average usage of a majority of fixed broadband customers as announced by the Bureau
91 A census block group is a cluster of census blocks having the same first digit of their four-digit identifying numbers within a census tract. 92 Many commenters support the use of census blocks groups as an appropriate minimum bidding unit for the Rural Digital Opportunity Fund. See, e.g., ITTA Comments at 6-7; NTCA Comments at 16-18; NRECA Comments at 12; Sacred Wind Comments at 2; Institute for Local Self-Reliance Reply at 10; GVNW Consulting Reply at 4-5 (GVNW); NTCA Reply at 23; WISPA Reply at 22, n.57. 93 CAF Phase II Auction Order, 31 FCC Rcd at 5979, para. 89. See also GeoLinks Comments at 8-9 (supporting the idea of a larger geographic unit such as census tracts). 94 See, e.g., UTC Comments at 7-8 (stating that establishing a smaller bidding unit will help promote competition and “provide a more level playing field for smaller entities to bid against larger entities”); ACA Connects Comments at 3, 5, 9-12 (stating that census block bidding “would further maximize participation by service providers, increasing competition and the overall cost-effectiveness of the program”); Internet Society Comments at 3 (arguing that “[l]arger geographic units may make it more difficult for small and rural providers to apply for funding because they may have less specific broadband access data.”); Navajo Nation and NNTRC Reply at 5 (stating that the Commission should use “the smallest manageable areas to auction,” which will help focus on “truly unserved areas”); Windstream Reply at 9-11 (asserting that census blocks would maximize auction participation and network deployment to unserved areas); WTA Reply at 14-15 (stating that it supports “census blocks because they are more likely to encourage small existing broadband service providers to bid for areas on the edges of their existing service territories.”). 95 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1436-1437, para. 18. But see UTC Comments at 8 (asserting that the auction software should be capable of allowing bidders to bid for census blocks). 96 Federal-State Joint Board on Universal Service, Report and Order, CC Docket No. 96-45, 12 FCC Rcd 8776, 8799-8803, paras. 43-51 (1997) (adopting universal service principles identified in section 254(b) of the Act and the additional principle of competitive neutrality, which includes technological neutrality) (Universal Service First Report and Order) (subsequent history omitted).
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on an annual basis;97 the Baseline performance tier means 50/5 Mbps speeds with a 250 GB monthly usage allowance or a monthly usage allowance that reflects the average usage of a majority of fixed broadband customers as announced by the Bureau on an annual basis, whichever is higher;98 the Above- Baseline performance tier means 100/20 Mbps speeds with 2 TB of monthly usage; and the Gigabit performance tier means 1 Gbps/500 Mbps speeds with a 2 TB monthly usage allowance. We adopt 250 GB as the minimum monthly usage allowance for the Baseline performance tier rather than the 150 GB as proposed because based on Measuring Broadband America October 2018-September 2019 usage data, the average monthly usage for fixed broadband customers is 251.45 GBs per month.99 32. Low- or high-latency bids will be required to meet the same latency requirements as the CAF Phase II auction high- and low-latency bidders. Low latency means 95% or more of all peak period measurements of network round trip latency are at or below 100 milliseconds,100 and high latency means 95% or more of all peak period measurements of network round trip latency are at or below 750 milliseconds and a demonstration of a score of 4 or higher using the Mean Opinion Score with respect to voice performance.101 33. We maintain a Minimum performance tier for the Rural Digital Opportunity Fund but increase the speed from 10/1 Mbps to 25/3 Mbps. In the CAF Phase II auction, winning bids in a Minimum performance tier, which required only 10/1 Mbps broadband, covered less than 1% of locations awarded support. The record generally supports eliminating the 10/1 Mbps performance tier.102 Although the Navajo Nation and the Navajo Nation Telecommunications Regulatory Commission (NNTRC) request that the Commission establish a 10/1 Mbps bidding tier for Indian Country because costs of deploying 25/3 Mbps on reservations may discourage bidders, they provided no specific, detailed information about differences in cost.103 Moreover, allowing another performance tier only in certain areas would complicate the bidding system and we believe the Tribal Broadband Factor will be sufficient to increase support on Tribal lands and incent providers to bid on Tribal lands. 34. Some commenters argue that a Baseline tier of 25/3 Mbps is too low and the Commission should establish a higher speed tier as the minimum eligible for the auction, or that bidders proposing 25/3 Mbps should be required to deploy to all locations in three years and receive only five years of
97 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6785-86, para. 23; see also WCB and OEA Announce Results of 2020 Urban Rate Survey for Fixed Voice and Broadband Services, Posting of Survey Data and Explanatory Notes, and Required Minimum Usage Allowance for Eligible Telecommunications Carriers, WC Docket No. 10-90, Public Notice, DA 19-1237, at 4 (WCB Dec. 5, 2019) (2020 Urban Rate Survey Public Notice) (announcing minimum usage allowance of 250 GB). 98 Letter from John Badal, Sacred Wind, Steve Coran, WISPA, Mary Henze, AT&T, Ted Osborn, Nextlink, Michael Saperstein, USTelecom, Nicole Tupman, Midco, Thomas Whitehead, Windstream, to Marlene H. Dortch, Secretary, FCC (Dec. 13, 2019) (50 Mbps Tier Coalition Ex Parte). 99 See 2020 Urban Rate Survey Public Notice at 2; Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6785, para. 23. 100 CAF Phase II Auction Order, 31 FCC Rcd at 5960, para. 29. 101 Id. at 5960-61, para. 30; Connect America Fund, WC Docket No. 10-90, Order, 33 FCC Rcd 6509, 6525-26, paras. 44-46 (WCB/WTB/OET 2018) (CAF Performance Measurements Order); Connect America Fund, WC Docket No. 10-90, Order on Reconsideration, 34 FCC Rcd 10109, 10119-23, paras. 27-38 (2019). 102 See, e.g., Muscogee Comments at 3; Big River Communications Comments at 2, GeoLinks Comments at 2; UTC Reply Comments at 5 (recommending increasing baseline tier to 100/20 Mbps); Institute for Local Self-Reliance Comments at 3 (arguing that the minimum proposed speed of 25/3 Mbps is too low); FiberRise Reply Comments at 3 (arguing 25/3 Mbps networks will be “woefully obsolete”). 103 Navajo Nation and NNTRC Reply at 7-8.
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support.104 Although we have a preference for higher speeds, we recognize that some sparsely populated areas of the country are extremely costly to serve and providers offering only 25/3 Mbps may be the only viable alternative in the near term.105 Accordingly, we decline to raise the required speeds in the Minimum tier and we are not persuaded that bidders proposing 25/3 Mbps should be required to build out more quickly or have their support term reduced by half. 35. Several others argue that the Commission should include a fourth performance tier between the Minimum and Gigabit tiers, some suggesting a tier between 25/3 Mbps and 100/20 Mbps, and others suggesting a tier between 100/20 Mbps and the Gigabit tier.106 We agree, and accordingly, add an additional performance tier. We find that allowing bidders to offer 50/5 Mbps service is “critical to reaching the truly high-cost areas in a cost effective way” while meeting the “immediate broadband needs” of consumers today.107 Adding a performance tier at 50/5 Mbps furthers our goal of incentivizing providers to deploy networks that will deliver services that consumers need today as well as in the future, but also ensures Minimum speed service will be available in the hardest to serve areas. 36. We decline to make any modifications to our two latency tiers. Some commenters propose a third, very low-latency tier.108 Commenters have provided no persuasive evidence that suggests technologies meeting latency standards below 100 milliseconds would have such a material benefit for consumers when compared to services meeting our existing long-standing low-latency requirements that we should potentially divert support to those lower-latency technologies and would not expect consumers to notice the lower latency that would make it worth weighting the auction differently. We note that providers are encouraged to offer service that improves upon our minimum tier thresholds.
104 See, e.g., Illinois DoIT Comments at 4-8 (arguing minimum should 100/20 Mbps or accelerated deployment if Commission retains 25/3 Mbps); UTC Comments at 9-10 (recommending increasing Baseline performance tier to 100/20 Mbps and Above Baseline to 250/50 Mbps); Institute for Local Self-Reliance Comments at 3 (arguing Baseline should be closer to what Canada has adopted at 50/10 Mbps); WTA Comments at 10-11 (recommending evolving baseline tier of 25/3 Mbps years 1-5, and 50/6 Mbps, years 6-10). 105 See, e.g., Letter from Mike Saperstein, Vice President, Policy& Advocacy, USTelecom, to Marlene H. Dortch, Secretary, FCC, WC Docket Nos. 19-126, 10-90 (filed Jan. 3, 2020) (USTelecom Jan. 3, 2020 Ex Parte Letter). 106 See, e.g., NTCA Comments at 7 (proposing 500/100 Mbps tier); Sacred Wind Comments at 6 (proposing 50/6 Mbps tier); NRECA Comments at 6 (proposing 100/100 Mbps tier); AT&T Reply at 11 (supporting proposal for 50/6 Mbps tier); Midco Reply at 7-9 (supporting 50/5 Mbps tier); WISPA Reply (supporting addition of 50/5 Mbps tier); Letter from Mike Saperstein, Vice President, Policy & Advocacy USTelecom, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 at 5 (filed Nov. 29, 2019) (USTelecom Nov. 29, 2019, Ex Parte Letter) (supporting 50/5 Mbps tier and 100/10 Mbps instead of 100/20 Mbps). See also, Letter from AJ Burton, Vice President, Federal Regulatory, Frontier Communications, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 (filed Dec. 23, 2019) (supporting changing 100/20 Mbps tier to 100/10 Mbps tier). We decline to decrease the upload speed in the Above Baseline tier to accommodate the limitations of certain technologies and equipment. See Letter from Michael R. Romano, Senior Vice President, Industry Affairs& Business Development , NTCA, and Ross J. Lieberman, Senior Vice President, Government Affairs, ACA Connects, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 at 3-4 (arguing proposal is driven primarily by concerns of certain spectrum-based providers) (filed Jan. 6, 2020); Letter from Lisa R. Younger, President and CEO, Fiber Broadband Association, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 (filed Jan. 3, 2020) (stating that market research data show average upload speeds in the U.S. surpassed 10 Mbps over two years ago). 107 50 Mbps Tier Coalition Ex Parte at 1. See also, Letter from Louis Peraertz, Vice President of Policy, WISPA, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126, et al. (filed Jan. 21, 2020) (WISPA Jan. 21, 2020 Ex Parte Letter); Letter from Betsy Huber, President, National Grange, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 (filed Jan. 14, 2020); Letter from Jack Alexander, President & Chairman, Rural & Agricultural Council of America, and Brooke Miller, President, United States Cattlemen’s Association, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 (filed Jan. 14, 2020). 108 NRECA Comments at 7 (proposing very low 50 ms latency tier and decreasing high-latency threshold from 750 ms to 600 ms; WTA Comments at 16 (proposing very low 25 ms latency tier).
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37. Satellite providers argue that our existing latency tiers do not account for certain satellites capable of providing lower latency, and that the high-latency weight discourages hybrid networks. SES Americom, which offers middle-mile capacity on its satellites to telecommunications carriers, argues its medium earth orbit satellites can provide broadband service with a latency between 120 milliseconds and 150 milliseconds.109 Viasat and Hughes ask that we permit a provider to qualify at the low-latency weight if it demonstrates a mean opinion score of 4 or more for VoIP service and routes latency-sensitive traffic over links in which 95% or more of all peak period measurements of network round trip latency are at or below 100 milliseconds.110 Although medium earth orbit satellites and hybrid satellite technologies have the potential to deliver high-speed broadband to previously unserved rural areas, these technologies have not been deployed widely to deliver service to residential consumers; therefore, it would be premature to modify our latency standards based on the record before us to qualify these technologies in the Phase I auction to bid with a lower-latency weight, or add an additional interim latency weight.111 This decision does not preclude the Commission from reconsidering the feasibility of modifying latency standards to accommodate medium earth orbit satellite and hybrid satellite technologies for Phase II of the Rural Digital Opportunity Fund. 38. As in the CAF Phase II auction, we adopt weights that reflect our preference for higher speeds, higher usage allowances, and low latency.112 We also anticipate that terrestrial fixed networks will likely result in significant fiber deployment that can serve as a backhaul for rural 5G networks. Accordingly, we choose performance tier and latency weights to encourage the deployment of higher speed, low-latency services. Specifically, we adopt weights of 50 for the Minimum performance tier, 35 for the Baseline performance tier, 20 for the Above Baseline performance tier, and 0 for the Gigabit performance tier, as well as a weight of 40 for high-latency bids and 0 for low-latency bids to favor higher-than Baseline speeds and low-latency services. Under the descending clock auction format we will use the weights, when subtracted from the clock percentage for the round, to indicate the percentage of an area’s reserve price that a winning bidder would receive in per-location support for serving the locations in that area.113
109 See SES Americom, Inc. and O3b Limited Comments at 5 (SES Americom) (arguing its satellites can provide broadband service with a latency between 120 and 150 ms); see also OptimERA Reply at 2 (arguing Commission fails to justify 100 ms latency requirement); Letter from David Goldman, Director of Satellite Policy, Space Exploration Technologies (SpaceX), to Marlene H. Dortch Secretary, FCC, WC Docket Nos. 19-126, 10-90, filed Jan. 21, 2020 (stating that its low-earth-orbiting Starlink system can provide service that well-exceed the standards the Commission set for truly low-latency service). 110 See Viasat Comments at 24-27; Hughes Reply at 7-8; SES Americom Comments at 5 (arguing its medium earth orbit satellites can provide broadband service with a latency between 120 and 150 ms); Letter from Jennifer A. Manner, Senior Vice President, Regulatory Affairs, Hughes Network Systems, LLC, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 et al., (filed Dec. 11, 2019); Letter from Jennifer A. Manner, Senior Vice President, Regulatory Affairs, Hughes Network Systems, LLC, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 et al., (filed Nov. 18, 2019); see also OptimERA Reply at 2 (arguing Commission fails to justify 100 ms latency requirement). 111 See Letter from Stephen L. Goodman, Counsel for ADTRAN, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 19-126 et al., at 2-3 (filed Jan. 23, 2020) (noting privacy implications of monitoring details of customers’ traffic to determine whether traffic is “latency-sensitive”). 112 In the CAF Phase II auction, the Commission adopted weights of 65 for the Minimum performance tier, 45 for the Baseline performance tier, 15 for the Above Baseline performance tier, and 0 for the Gigabit performance tier, and a weight of 25 for high-latency bids and 0 for low-latency bids. Phase II Auction FNPRM Order, 32 FCC Rcd at 1629-39, paras. 19-34. 113 For example, if the clock percentage is 120%, the support amount corresponding to a bid with a combined weight of 20 would be 100% of the area’s reserve price per location. Although the clock percentage may start above 100%, a winning bidder would not receive more than 100% of the reserve price.
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39. The following charts summarize our approach: Performance Tiers, Latency, and Weights
Monthly Usage Performance Tier Speed Weight Allowance ≥ 250 GB or U.S. average, Minimum ≥ 25/3 Mbps 50 whichever is higher
≥ 250 GB or U.S. average, Baseline ≥ 50/5 Mbps 35 whichever is higher
Above Baseline ≥ 100/20 Mbps ≥ 2 TB 20 Gigabit ≥ 1 Gbps/500 Mbps ≥ 2 TB 0
Latency Requirement Weight
Low Latency ≤ 100 ms 0
≤ 750 ms & High Latency 40 MOS ≥ 4
40. We decline to modify the 90-point maximum spread between the tiers that the Commission used in the CAF II auction. Many commenters argued that we should increase the 90-point spread between the highest and lowest tiers to favor higher speeds even more.114 Others argue that the Commission should narrow the weighting spread.115 Although we do value higher speed services, we also recognize that different technologies may be better suited for different areas.116 Based on our experience
114 See, e.g., Illinois DoIT Comments at 7; North Carolina Department of Information Technology at 4; ACA Connects Comments at 8 (“[T]he Commission should widen the spread between the highest and lowest performance tier by significantly raising the weight associated with the RDOF Baseline performance tier beyond the relatively minor five percent increase proposed in the NPRM.”); Fiber Broadband Comments at 7 (urging Commission to increase the discount of lower service tiers to better reflect relative value of the higher tier services); ADTRAN Comments at 10 (urging Commission to adopt 95-point spread by increasing weight of high-latency service to from 40 to 50, while decreasing weight for baseline speed from 50 to 45); UTC Comments at 10 (recommending 120-point spread and weighting factor to favor symmetrical speeds); NTCA Comments at 7 (Commission should adjust weights and tiers to better anticipate the increased need for high-speed broadband in the future); INCOMPAS Comments at 12 (supports Commission increasing weight for baseline and high-latency services to total of 95 or above in order to account for consumer preferences, and positive externalities associated with terrestrial, fixed broadband services that increase fiber deployment; WTA Comments at 11-15 (proposing weighting preference for symmetrical service; unlimited monthly usage; localized maintenance; voice service integrated into local E911 services); North Dakota Joint Comments at 2-3 (arguing that the point spread between the gigabit tier and the above baseline tier should not merely recognize differences in speed but should also consider longevity, ubiquity of service, and service consistency, and that the 25-point spread is too low to take these factors into account); Conexon Comments at 11 (arguing Commission should award different weight to bids with full authorization and available spectrum. Bidders with licensed spectrum should have 0 weight and bidders with secondary, shared, or unlicensed spectrum should get 40 weight). 115 U.S. Cellular at 7 (urging Commission to adopt a weighting mechanism that does not freeze out lowest tier applicants from realistic participation in auction); Sacred Wind comments at 6 (arguing that 25-point spread between Gigabit and Above-Baseline is unnecessarily high). 116 See WISPA Reply at 11 (citing Verizon Comments).
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with the CAF Phase II auction and its weights, we believe the weights we adopt will provide an opportunity for providers using various technologies to participate in the auction and to compete for appropriate levels of support while providing a minimum level of service to consumers in all awarded areas. 41. We adopt our proposal to establish a weight of 40 points as the weight for high-latency services, which is an increase from the CAF Phase II weight of 25. Satellite providers oppose increasing the weight for high latency.117 Viasat claims that substantially increasing the latency weight would effectively preclude meaningful participation by geostationary orbit (GSO) satellite providers in the auction and would give Viasat and other GSO satellite providers virtually no chance of participating successfully.118 Moreover, Viasat argues that increasing the latency weight would significantly reduce the number of supported locations, leaving behind areas where no terrestrial provider bids, and substantially increase the average per-location subsidies in areas where terrestrial providers do bid.119 On the other side, several commenters argue we should assign an even greater weight to high-latency bids.120 USTelecom argues that satellite broadband service is not a bridge to next-generation 5G broadband services and suggests that the Commission exclude satellite from bidding in the Phase I auction, or at a minimum, increase the high-latency weighting to 60.121 Our decision to introduce a more moderate increase to the high-latency weight reflects the importance of latency to interactive, real-time applications and voice services, as well as the secondary benefits of terrestrial facilities, but also recognizes the importance of allowing all technologies the ability to participate in the auction and offer service to unserved areas. Moreover, adopting a fourth performance tier will moderate some of the effects of the NPRM’s proposed weights. The 90-point spread we adopt today will allow high-latency bidders to compete for appropriate levels of support in a much larger auction. 42. All Rural Digital Opportunity Fund support recipients, like all other high-cost ETCs, will be required to offer standalone voice service and offer voice and broadband services at rates that are reasonably comparable to rates offered in urban areas.122 Some commenters urge the Commission to eliminate the standalone voice requirement. WISPA argues that RDOF recipients should not be required to offer standalone voice service, because, consumers increasingly are subscribing to voice as a
117 SES Americom Comments at 1-8 (arguing that the proposed standards are too harsh for satellite providers and would ultimately discourage satellite providers from participating in the auction); Pacific Dataport Comments at 15 (penalty for high latency has the effect of all but blocking the use of GEO High Throughput Satellite Systems as a critical complement to terrestrial networks); Satellite Industry Association Reply at 2 (increasing high-latency penalty from 25 to 40 would significantly impair the ability of geostationary satellite providers to participate). 118 Viasat Comments at 6-7. 119 Viasat attaches a report by Paul Milgrom and Ilya Seagal, “Lessons from the CAF II Auction for the RDOF Auction,” showing that increasing the latency penalty from 25% to 40% would take away meaningful participation from GSOs. According to the report, absent participation by Viasat, the auction would still have cleared in round 12, albeit at a price point of 79.5% instead of 78.35% and this would have allowed terrestrial providers to cover at most 43 additional CBGs beyond those that were provisionally awarded to terrestrial providers. 120 ITTA Comments at 21 (urging Commission to assign greater weight than 40 to high-latency bids, which reflects extra caution warranted); 121 USTelecom Comments at 21-24; see also Visionary Broadband Comments at 2 (arguing that satellite providers should be excluded, or if not, required to demonstrate technical compliance with voice requirement prior to participation). Viasat argues that any consideration of a proposal to exclude GSO providers would require, at a minimum, a new notice of proposed rulemaking and an additional round of comments and replies. Viasat Reply Comments at 7. 122 USF/ICC Transformation Order, 26 FCC Rcd at 17693-94, 17708, paras. 80, 84, 113; December 2014 Connect America Order, 29 FCC Rcd at 15686-87, paras. 120-23; WCB Reminds Connect America Fund Phase II Auction Participants of the Process for Obtaining a Federal Designation as an Eligible Telecommunications Carrier, 33 FCC Rcd 6696, 6697-99; see also 47 CFR § 54.313(a)(2), (3); 2020 Urban Rate Survey Public Notice.
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component of their broadband connections.123 SpaceX claims the standalone voice requirement is no longer useful for nearly all consumers because Americans no longer choose to buy standalone voice, and the requirement adds costs to develop and make available voice equipment and provide voice-specific customer support.124 GeoLinks urges the Commission to simply require that auction winners offer a voice service option, which can be available via a service bundle.125 The National Association of Counties states that “unfortunately, the unintended consequence of this requirement would prevent willing and able entities from providing high-speed broadband internet services solely because they do not provide voice services in addition to broadband.”126 43. Section 254 of the Communications Act of 1934, as amended, gives the Commission the authority to support telecommunications services, which the Commission has defined as “voice telephony service.”127 The Commission made clear when it adopted the standalone voice requirement as a condition of receiving Connect America Fund support in 2011 that the definition of the supported service, voice telephony service, is technologically neutral, allowing ETCs to provision voice service over many platforms.128 When it adopted the broadband reasonable rate comparability requirement in 2014, the Commission explained that “high-cost recipients are permitted to offer a variety of broadband service offerings as long as they offer at least one standalone voice service plan and one service plan that provides broadband that meets our requirements.”129 In 2018, the Commission dismissed requests to eliminate the standalone voice requirement.130 The Commission reasoned that auction funding recipients, unlike funding recipients of other USF mechanisms, “may be the only ETC offering voice in some areas and not all consumers may want to subscribe to broadband service.”131 The record does not show that these facts have changed, and voice telephony is still the supported service. Therefore, we require all ETCs receiving Rural Digital Opportunity Fund support to provide standalone voice service meeting the reasonable comparability requirements in the areas in which they receive support. 44. Some commenters suggest the we adopt additional public interest obligations. For example, the Schools, Health & Libraries Broadband Coalition argues that the Commission should specifically require recipients of Rural Digital Opportunity Fund support to deploy high-quality broadband to anchor institutions in their service territories.132 The California Emerging Technology Fund argues that the Commission should require every provider to propose a low-income package with a rate not to exceed $20.133 We note that support recipients, like all high-cost ETCs, will be required to report annually the number of anchor institutions to which they newly began providing service and to comply
123 WISPA Comments at 10-11. WISPA claims that, so long as voice is offered along with broadband service and the voice service meets the functional “voice-grade” requirements of section 54.101, the statutory obligation will have been satisfied. 124 SpaceX Comments at 4. 125 GeoLinks Comments at 8; see also Pacific Dataport Comments at 5; ADTRAN Reply Comments at 17. 126 National Association of Counties Comments at 2 (also arguing non-ETCs should be allowed to participate if only option for connecting a community). 127 47 U.S.C. § 254(c)(1); 47 CFR § 54.101. 128 USF/ICC Transformation Order, 26 FCC Rcd at 17692, paras. 77-78. 129 December 2014 Connect America Order, 29 FCC Rcd at 156887, para. 120 (footnote omitted). 130 Phase II Auction Reconsideration Order, 32 FCC Rcd at 1387, para. 20. 131 Id.; but see SpaceX Comments at 5 (arguing the Commission has deemphasized voice services in other types of universal service support). 132 Schools, Health & Libraries Broadband (SHLB) Coalition Comments at 7. 133 California Emerging Technology Fund Comments at 12.
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with all relevant Lifeline rules.134 Additional obligations regarding anchor institutions and low-income subscribers are more properly addressed in the Commission’s other universal service programs. 2. Service Milestones 45. We adopt interim service milestones for the Rural Digital Opportunity Fund that are based on those the Commission adopted for the CAF Phase II auction for monitoring progress in meeting deployment obligations.135 We will require support recipients to commercially offer voice and broadband service to 40% of the CAM-calculated number of locations in a state by the end of the third full calendar year following funding authorization, and 20% each year thereafter. We modify that approach, however, in the way we account for possible disparities between the CAM location counts and the actual number of locations in a winning bidder’s service territory in a state. Although initial service milestones will be based on the number of locations identified by the CAM, we are confident that the Commission will have access to more accurate location data in the next few years, whether as a result of the Digital Opportunity Data Collection, the development of a broadband serviceable location database, the 2020 Census and/or some other data source. We conclude that winning bidders will be required to serve the number of locations subsequently identified in each respective area. We are persuaded by commenters who argue that the costs of building and operating broadband networks are predominantly governed by the size and characteristics of the areas served rather than the precise number of locations.136 We accordingly direct the Bureau to seek comment on the updated location data and publish revised location counts no later than the end of service milestone year six, which we expect to be 2027. We will then use the new location counts to determine whether a Rural Digital Opportunity Fund support recipient offers the required voice and broadband service throughout the designated area by the end of milestone year eight. 46. We take this approach because the record reflects considerable concern about the proposed pro rata reductions in a winning bidder’s support if, ultimately, there are fewer locations than originally identified by the Commission.137 For the CAF Phase II auction, the Commission created a process to facilitate appropriate adjustments to the defined deployment obligations, with associated support reductions,138 and delegated the implementation of this process to the Bureau.139 Most commenters in this proceeding oppose the pro rata support reductions, and argue that we should not penalize support recipients when the location data used to establish milestones overstates the number of
134 47 CFR § 54.313(e)(2)(i)(A); 47 CFR § 54.400 et seq. 135 A provider’s deployment of broadband service in satisfaction of its Rural Digital Opportunity Fund obligation shall be independent from any other deployment obligations made as part of any other regulatory obligation or to satisfy a provider’s separate commitments made to the Commission or a state or local regulatory body as part of any other proceeding. 136 See WTA Comments at 18-20; NTCA Comments at 21-23. 137 See, e.g., USTelecom Reply Comments at 28-29 (arguing that the Commission should reduce bidders’ risk of bad location data by holding provider’s harmless for the Commission’s inaccurate counts, and that placing all risk on potential bidders has potential to drive down participation increase costs and provide broadband to fewer rural Americans). 138 Phase II Auction Reconsideration Order, 33 FCC Rcd at 1389-90, paras. 23, 25-26. 139 See Connect America Fund, WC Docket No. 10-90, Order, 34 FCC Rcd 10395 (WCB 2019); see also Wireline Competition Bureau Seeks Comment on Procedures to Identify and Resolve Discrepancies in Eligible Census Blocks Within Winning Bid Areas, WC Docket No. 10-90, Public Notice, 33 FCC Rcd 8620 (WCB 2018) (Locations Adjustment Public Notice).
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locations in an area.140 We agree and will not reduce support if the Bureau’s updated location counts indicate fewer actual locations in the awarded areas in most circumstances. 47. Location counts in the CAM are based on 2011 Census data and we recognize that there may be some disparity between the number of locations identified before the auction occurs and the “facts on the ground.” Moreover, circumstances may change before the end of the 10-year support term. Some rural areas may experience a decrease in population, and in other areas new housing developments may be built. By requiring build-out to the entire designated area even in light of the possibility that location numbers could change, we seek to ensure the availability of broadband and voice services to as many rural consumers and small businesses within the Phase I auction areas by the end of the ten-year term as possible. 48. Until the Bureau adopts new location counts, we will measure compliance with service milestones against the CAM location counts across the awarded areas for each Phase I support recipient.141 We will require support recipients to commercially offer voice and broadband service to 40% of the CAM-calculated number of locations in a state by the end of the third full calendar year following funding authorization, and 20% each year thereafter, consistent with the CAF Phase II deployment obligations. Below we explain how service milestones will be revised in various circumstances after the Bureau gathers more accurate location counts. 49. More Locations. After the Bureau adopts updated location counts, in areas where there are more locations than the number of CAM locations, we will not require a support recipient to commercially offer voice and qualifying broadband to 100% of the new number of locations until year eight. We will continue to use the CAM location counts to measure compliance with interim service milestones up to 100% of the CAM locations by the end of the sixth calendar year. If there are more new locations than CAM locations, recipients should be able to meet those milestones, and measuring compliance against the new number of locations later in the term will give carriers the opportunity to revise and update deployment plans after the Bureau announces the new number of locations. We do not adopt an interim milestone for the end of year seven, although carriers will be required to report to USAC, consistent with current high-cost rules, any locations deployed in that calendar year. Support recipients will be required to offer service to 100% of the new location count by the end of year eight.142 Carriers for which the new location count exceeds the CAM locations within their area in each state by more than 35% will have the opportunity to seek additional support or relief from the Commission.143 50. Any such ETC with increased deployment obligations may also seek to have its new location count adjusted to exclude additional locations, beyond the number identified by CAM, that it determines before the end of year eight are ineligible (e.g., are not habitable), unreasonable to deploy to (e.g., if it would require a carrier to install new backhaul facilities or other major network upgrades solely
140 See e.g., USTelecom Comments at 12-16; CenturyLink Comments at 21-22; ITTA Comments at 11-12; NTCA Comments at 20-21; WTA Comments at 18-20; AT&T Reply at 6-8; Pennsylvania PUC Reply at 7; CenturyLink Reply at 5-6; WISPA Reply at 41-42; NTCA Reply at 25-26; USTelecom Reply at 26-29. 141 The Bureau provided guidance about the types of residential and small business locations a support recipient can report in the HUBB to meet its service obligations. Wireline Competition Bureau Provides Guidance to Carriers Receiving Connect America Fund Support Regarding Their Broadband Location Reporting Obligations, WC Docket No. 10-90, Public Notice, 31 FCC Rcd 12900 (WCB 2016) (HUBB Reporting Guidance Public Notice). See also HUBB Frequently Asked Questions, https://www.usac.org/wp-content/uploads/high-cost/documents/Tools/HC- HUBB-FAQ.pdf. 142 47 CFR § 54.310(c). 143 Letter from Letter from Mike Saperstein, Vice President, Policy & Advocacy, USTelecom, to Marlene H. Dortch, Secretary, FCC, at 4 (filed Dec. 23, 2019) (USTelecom Dec. 23, 2019 Ex Parte Letter) (proposing 25% threshold). We find that 35% is a more appropriate increase in locations before which carriers may seek additional support.
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to provide broadband to that location), or part of a development newly built after year six for which the cost and/or time to deploy before the end of the support term would be unreasonable. 51. Fewer Locations. In areas where there are fewer locations than CAM locations, a support recipient must notify the Bureau no later than the March 1 following the fifth year of deployment. Upon confirmation by the Bureau, we will require support recipients to reach 100% of the new number by the end of the sixth calendar year. While planning and deploying its network, a support recipient that discovers there are not enough locations to even meet its service milestones in years three and four, which are based on the number of CAM locations, should seek a waiver from the Bureau. Carriers for which the new location count is less than 65% of the CAM locations within their area in each state shall have their support amount reduced on a pro rata basis by the number of reduced locations. 52. Newly Built Locations. In addition to offering voice and broadband service to the updated number of locations identified by the Bureau, we require support recipients to offer service on reasonable request to locations built subsequently.144 Support recipients are not obligated to offer service to these newly built locations that do not request service, or to those with exclusive arrangements with other providers. Assuming a two-year deployment cycle, support recipients similarly are not required to deploy to any locations built after milestone year eight. 53. We align the service milestones and related reporting deadlines with those of other high- cost programs to minimize the administrative burdens on the Commission, USAC, and support recipients.145 Regardless of when a Rural Digital Opportunity Fund recipient is authorized to begin receiving support, each service milestone will occur on December 31. We acknowledge that, by aligning the service milestones, some Rural Digital Opportunity Fund support recipients likely will have more than three years to complete their 40% milestone.146 CenturyLink suggests that the Commission authorize funding for all winning bidders to begin on January 1, 2022 to align all Rural Digital Opportunity Fund support recipients on calendar year basis for receipt of support and corresponding obligations.147 We find that our method of aligning service milestones is preferable because it establishes December 31 as the service milestone date for all participants regardless of authorization date but still allows us to authorize support for a participant and thus to begin broadband deployment in unserved areas as soon as possible.148 54. We conclude that a support recipient will be deemed to be commercially offering voice and/or broadband service to a location if it provides service to the location or could provide it within 10
144 Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order et al., 29 FCC Rcd 7051, 7070, paras. 59-72 (2014) (issuing declaratory ruling regarding which requests should be deemed unreasonable under our current rules and policies to provide greater clarity to all affected stakeholders). 145 See 47 CFR § 54.316; Connect America Fund, Connect America Phase II Auction, WC Docket No. 10-90, AU Docket No. 17-182, Order, DA20-108 (WCB Jan. 27, 2020) (establishing uniform service milestone deadlines and annual location filing and certification deadlines for all CAF Phase II auction support recipients). See also CAF Phase II Auction Order, 31 FCC Rcd at 5963, para. 39 (citing December 2014 Connect America Order, 29 FCC Rcd at 15657-59, paras. 36-37). 146 For example, if recipient is authorized to begin receiving support on October 10, 2021, it must compete its 40% milestone by December 31, 2024. 147 CenturyLink Comments at 7. 148 We also reject WISPA’s request that support recipients be given the option to submit their location information in the HUBB by either the deadline specified in section 54.316 or by the July 1 deadline for the annual report specified in section 54.313. Having all participants adhere to the same deadline set forth in section 54.316 furthers administrative simplicity. Moreover, employing optional deadlines does not minimize the administrative burdens. See WISPA Comments at 19.
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business days upon request.149 All ETCs must advertise the availability of their voice services through their service areas, and we require support recipients also to advertise the availability of their broadband services within their service area.150 Compliance with service milestone requirements will be determined on a state-level basis, so that a support recipient would be in compliance with a service milestone if it offers service meeting the relevant performance requirements to the required percentage of locations across all of the awarded areas included in its winning bids in a state.151 55. We also sought comment on whether we should require support recipients to build out more quickly earlier in their support terms by offering voice and broadband to 50% of the requisite number of locations in a state by the end of the third year.152 A few commenters supported an accelerated buildout schedule,153 while the Navajo Nation and NNTRC asked the Commission to extend build-out milestones on Tribal Lands to recognize the difficulty in deploying infrastructure in Indian Country.154 Upon consideration, we find that using the same interim milestones as in the CAF II auction strikes the appropriate balance and, thus, adopt the identical first service milestone that we used there. Recipients have ample incentive to reach their buildout milestones as quickly as possible to increase their subscribership and revenues. However, we also recognize that deploying broadband in some areas will be more challenging than in others and may require all the time allowed by the deployment milestones. 3. Reporting Requirements 56. To ensure that support recipients are meeting their deployment obligations, we adopt essentially the same reporting requirements for the Rural Opportunity Digital Fund that the Commission adopted for the CAF Phase II auction. Consistent with our decision above to align the interim service milestones, we require Rural Digital Opportunity Fund support recipients to file annually location and technology data in the HUBB at the same time and to make the same certifications when they have met their service milestones.155 We also amend section 54.316 of the Commission’s rules to require all Rural Digital Opportunity Fund support recipients, as all high-cost support recipients currently do, to file their annual location data in the HUBB by March 1, and we encourage them to file such data on a rolling basis.156
149 See generally, HUBB Reporting Guidance Public Notice, 31 FCC Rcd 12900; HUBB Frequently Asked Questions, https://www.usac.org/wp-content/uploads/high-cost/documents/Tools/HC-HUBB-FAQ.pdf. See also, Auction 903 Procedures Public Notice, 33 FCC Rcd at 1435, para. 14. 150 See 47 U.S.C. § 214(e)(1)(B). This requirement is justified because the Commission has a compelling interest in consumers knowing about the availability of broadband service offered in satisfaction of an ETC’s deployment obligations. 151 Because we will rely on deployment to all locations, we do not find it necessary to separately monitor compliance specifically for deployment on Tribal lands. See Wireline Competition Bureau Provides Guidance Regarding Alternative Connect America Model Final Deployment Obligations, WC Docket No. 10-90, Public Notice, 34 FCC Rcd 5337 (WCB 2019) (enforcing separate buildout obligations for ACAM II recipients on Tribal lands to avoid windfall in support amounts for some carriers and to accomplish Commission’s goal of broadband deployment in rural Tribal communities). 152 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6787, para. 28. 153 West Virginia Council Comments at 12, Brick Association Comments at 1, National Association of Counties Comments at 2. If the Commission decides to require support recipients to build more quickly, GeoLinks urges the Commission to front-load support. GeoLinks Comments at 3-4. 154 Navajo Nation and NNTRC Reply at 9 (recommending extending the first milestone by at least a year and reduce incremental deployment to 15% each year for years five through nine). 155 See CAF Phase II Auction Order, 31 FCC Rcd at 6011, para. 173. 156 See id. The Commission explained that it would be a “best practice” to submit location information “no later than 30 days after service is initially offered to locations in satisfaction of deployment obligations.” Id.
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57. We also require Rural Digital Opportunity Fund support recipients to file the same information in their annual FCC Form 481s that we require of the CAF Phase II auction support recipients.157 Specifically, in addition to the certifications and information required of all high-cost ETCs in the FCC Form 481,158 Rural Digital Opportunity Fund support recipients will be required to certify each year after they have met their final service milestone that the network they operated in the prior year meets the Commission’s performance requirements.159 In addition, they will be required to identify the number, names, and addresses of community anchor institutions to which they newly began providing access to broadband service in the preceding calendar year160 as well as identify the total amount of support that they used for capital expenditures in the previous calendar year.161 Moreover, support recipients will need to certify that they have available funds for all project costs that will exceed the amount of support they will receive in the next calendar year.162 Finally, Rural Digital Opportunity Fund support recipients will be subject to the same annual section 54.314 certifications, the same record retention and audit requirements, and the same support reductions for untimely filings as all other high- cost ETCs.163 4. Non-Compliance Measures 58. In the event a support recipient does not meet a service milestone, we adopt the same non-compliance measures that are applicable to all high-cost ETCs, the same framework for support reductions applicable to high-cost ETCs that are required to meet defined service milestones, and the same process the Commission adopted for drawing on letters of credit for the CAF Phase II auction.164 We also adopt additional non-compliance measures for a support recipient that fails to meet its third-year service milestone by more than 50%. Specifically, we rely on the following non-compliance tiers (which are described in more detail in section 54.320 of our rules):
157 47 CFR § 54.313. 158 47 CFR § 54.313(a). 159 47 CFR § 54.313(e)(2)(iii); see also CAF Phase II Auction Order, 31 FCC Rcd at 6011-12, para. 176. 160 47 CFR § 54.313(e)(2)(i)(A). 161 47 CFR § 54.313(e)(2)(i)(B); see also CAF Phase II Auction Order, 31 FCC Rcd at 6012, para. 178. 162 47 CFR § 54.313(e)(2)(ii); see also CAF Phase II Auction Order, 31 FCC Rcd at 6012, para. 179. Once the requirement has been fully implemented, CAF Phase II auction support recipients must also annually make a certification regarding their bidding in the schools and libraries universal service support program (E-rate). 47 CFR § 54.313(e)(1)(ii)(C). 163 47 CFR §§ 54.313(j), 54.314, 54.316(c), 54.320. Those support recipients that are designated by the Commission will need to self-certify. 47 CFR § 54.314(b). 164 47 CFR § 54.320(d)(1)(i)-(iv); December 2014 Connect America Order, 29 FCC Rcd at 15695-98, paras. 147-50. A compliance gap is the percentage of required locations that a recipient has not served by the relevant service milestone. For example, assume a Rural Digital Opportunity Fund recipient is required to serve 100 locations by the end of the build-out period. The recipient will be required to serve 40% of those locations by the end of the third year of support (i.e., 40 locations). If at the end of the third year of support the recipient has only built out to 36 locations, it will have Tier 1 status (this would be a compliance gap of 10%: 40 minus 36 = 4, 4 is 10% of 40).
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Non-Compliance Framework Compliance Gap Non-Compliance Measure Tier 1: 5% to less than 15% of the required number of locations165 Quarterly reporting
Tier 2: 15% to less than 25% of the Quarterly reporting + withhold 15% of required number of locations monthly support
Tier 3: 25% to less than 50% of the Quarterly reporting + withhold 25% of required number of locations monthly support
Quarterly reporting + withhold 50% of monthly support for six months; after six Tier 4: 50% or more of the required months withhold 100% of monthly support number of locations and recover percentage of support equal to compliance gap plus 10% of support disbursed to date166 59. A support recipient will have the opportunity to move tiers as it comes into compliance and will receive any withheld support as it increases build-out and moves from one of the higher tiers (i.e., Tiers 2-4) to Tier 1 status during the build-out period.167 If a support recipient misses the six year or eight year service milestone as applicable, it will have 12 months from the date of the service milestone deadline to come into full compliance.168 60. Given that we are modifying the service deployment milestones to account for the Bureau’s updated location counts, we make commensurate modifications to the consequences if an ETC does not come into full compliance after the grace period for its sixth-year service milestone or, for an ETC with a new location count that is greater than its CAM location count, its eighth-year service milestone.169 At the sixth-year service milestone, support will be recovered as follows: (1) if an ETC has deployed to 95% or more of the CAM location count, or of the adjusted CAM location count if there are fewer locations, but less than 100%, USAC will recover an amount of support that is equal to 1.25 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (2) if an ETC has deployed to 90% or more of the CAM location count, or
165 In the CAF Phase II auction, the Commission did not impose reporting obligations if an ETC missed an interim milestone by less than 5% of the required number of locations for that interim milestone. However, it did reserve the right to impose quarterly reporting in individual instances if the ETC shows no progress in addressing the shortfall by the fifth year of support. December 2014 Connect America Order, 29 FCC Rcd at 15695, para. 147 & n.323. 166 Except that year three non-compliance of 50% or more will result in default with no additional time to come back into compliance. 167 47 CFR § 54.320(d)(1)(v); December 2014 Connect America Order, 29 FCC Rcd at 15695, para. 147 (“If at any point during the support term, the eligible telecommunications carrier reports that it is eligible for Tier 1 status, it will have its support fully restored, USAC will repay any funds that were recovered or withheld, and it will move to Tier 1 status).” A support recipient’s support will not be eligible to have its support restored if it only moves between the higher tiers (e.g., from Tier 4 to Tier 3; from Tier 4 to Tier 2). 168 47 CFR § 54.320(d)(2); December 2014 Connect America Order, 29 FCC Rcd at 15697, para. 148. For purposes of 47 CFR § 54.320(d)(2) & (3), both the sixth-year milestone and the eighth-year milestone are considered final milestones. 169 See USTelecom Dec. 23, 2019 Ex Parte Letter at 4-5; see also 47 CFR § 54.320(d); December 2014 Connect America Order, 29 FCC Rcd at 15697, para. 148.
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of the adjusted CAM location count if there are fewer locations, but less than 95%, USAC will recover an amount of support that is equal to 1.5 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 5% of the support recipient’s total Rural Digital Opportunity Fund support authorized over the ten-year support term for that state; and (3) if an ETC has deployed to fewer than 90% of the CAM location count, or of the adjusted CAM location count if there are fewer locations, USAC will recover an amount of support that is equal to 1.75 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 10% of the support recipient’s total Rural Digital Opportunity Fund support authorized over the ten-year support term for that state. 61. If the ETC’s new location count is greater than its CAM location count, and recognizing the increased obligations of such ETCs, support will be recovered as follows if the ETC does not meet the eighth year service milestone: (1) if an ETC has deployed to 95% or more of its new location count, but less than 100%, USAC will recover an amount of support that is equal to the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (2) if an ETC has deployed to 90% or more of its new location count, but less than 95%, USAC will recover an amount of support that is equal to 1.25 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (3) if an ETC has deployed to 85% or more of its new location count, but less than 90%, USAC will recover an amount of support that is equal to 1.5 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 5% of the support recipient’s total Rural Digital Opportunity Fund support authorized over the ten-year support term for that state; and (4) if an ETC has deployed to less than 85% of its new location count, USAC will recover an amount of support that is equal to 1.75 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 10% of the support recipient’s total Rural Digital Opportunity Fund support authorized over the ten-year support term for that state. 62. The same support reductions will apply if USAC later determines in the course of a compliance review that a support recipient does not have sufficient evidence to demonstrate that it was offering service to all of the locations required by the sixth or eighth service milestones.170 63. As in the CAF Phase II auction, USAC will be authorized to draw on an ETC’s letter of credit to recover all of the support that is covered by the letter of credit in the event that a support recipient does not meet the relevant service milestones, does not come into compliance during the cure period, and does not timely repay the Commission the support associated with the non-compliance gap.171 If a support recipient is in Tier 4 status during the build-out period or has not deployed to 100% of CAM locations by the end of year six (or the adjusted location total if there are fewer locations), and USAC has initiated support recovery as described above, the support recipient will have six months to pay back the support that USAC seeks to recover.172 If the support recipient does not repay USAC by the deadline, the Bureau will issue a letter to that effect and USAC will draw on the letter of credit to recover all of the support that is covered by the letter of credit.173 If a support recipient has closed its letter of credit and it is later determined that the support recipient does not have sufficient evidence to demonstrate that it was offering service to the total number of required locations, that support recipient will be subject to additional non-compliance measures if it does not repay the Commission after six months.174 And like
170 47 CFR § 54.320(d)(3); December 2014 Connect America Order, 29 FCC Rcd at 15697-98, para. 149. 171 47 CFR § 54.315(c)(4)(i)-(ii); CAF Phase II Auction Order, 31 FCC Rcd at 6016-18, paras. 189-94. 172 47 CFR § 54.315(c)(4)(i); CAF Phase II Auction Order, 31 FCC Rcd at 6017, paras. 190-91. 173 47 CFR § 54.315(c)(4)(ii); CAF Phase II Auction Order, 31 FCC Rcd at 6017, paras. 190-91. 174 CAF Phase II Auction Order, 31 FCC Rcd at 6017, para. 192.
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other high-cost ETCs, support recipients will be subject to other sanctions for non-compliance with the terms and conditions of high-cost funding, including but not limited to the Commission’s existing enforcement procedures and penalties, reductions in support amounts, potential revocation of ETC designations, and suspension or debarment.175 64. We sought comment on whether there are additional measures we could adopt that would help ensure that Rural Digital Opportunity Fund support recipients will meet their third-year service milestones, and on what steps we should take if it appears support recipients will not be able to meet their service milestones. The National Rural Electric Cooperative Association (NRECA) suggested the Commission make more detailed inquiries of a support recipient to the extent it substantially misses the 40% service obligation at the three-year benchmark and possibly terminate support payments.176 We agree with NRECA that it is unlikely that a recipient that substantially misses its third-year milestone would be able to come into compliance in the following year. We therefore direct any support recipient that believes it cannot meet its year three milestone to notify the Bureau and provide information explaining this expected deficiency. If a support recipient has not made such notification by March 1 following the third-year service milestone and has deployed by the end of the third-year milestone to fewer than 20% of its required locations in that state, we will find the recipient to be in default, rather than withholding support and providing an additional six months to come into compliance.177 5. Additional Performance Targets 65. We decline to adopt additional performance targets to provide greater incentives for Rural Digital Opportunity Fund support recipients to enroll customers in the eligible areas. We specifically sought comment on a proposal to adopt subscribership milestones set at 70% of the yearly deployment benchmarks and reduce support accordingly for failure to meet the subscription target.178 Most commenters opposed a subscription requirement and argued that a 70% subscription requirement was too high and unrealistic in rural areas.179 Even some commenters supporting the concept of a subscription requirement thought 70% was too high and suggested any subscribership requirement should be as low as 35%.180 Commenters argued that a subscribership requirement with reductions in support for failure to meet those targets would discourage participation in the auction, and change the focus of the Rural Digital Opportunity Fund program from a deployment program to an adoption program.181
175 47 CFR § 54.320(c). 176 NRECA Comments at 14 (“Withholding funds and requiring additional reporting for entity in the 4th non- compliance tier at the end of year three may only make a bad situation worse or prove to be too little, too late.”). 177 We would expect any carrier that falls behind significantly in year one or year two of its deployment term will not wait until year three to bring any special circumstances to the attention of the Commission, but require such a carrier to report its non-compliance to the Commission no later than 10 business days after the three-year deadline. See 47 CFR § 54.320(d). 178 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at paras. 41-42. 179 See, e.g., USTelecom Comments at 39 (arguing that proposal would punish carriers for agreeing to deploy broadband in high-cost areas where broadband adoption lags far behind less rural parts of the country and change focus of a broadband deployment program to adoption); WTA Comments at 21 (arguing that it is unlikely that most rural broadband service providers would be able to achieve a broadband adoption rate of 50% or more); U.S. Cellular Comments at 8-9 (arguing a carrier would be penalized for failing to meet subscribership milestones even though it had built the required service, priced the service at optimal level to achieve at least 70% subscribership, and took whatever other actions are prudent to market the service and conduct outreach to the served communities). 180 See ACA Connects Comments at 16-18, NTCA Comments at 27-28. 181 See, e.g., ITTA Comments at 25-26 (arguing that subscriber milestones would depress interest in the auction because potential bidders would find it too risky); NCTA Comments at (arguing that subscribership proposal changes focus of the RDOF from a broadband deployment mechanism to a broadband adoption mechanism, placing the burden of guaranteeing adoption on the provider; USTelecom Comments at 36-37; (arguing that proposal will (continued….) 31 Federal Communications Commission FCC 20-5
66. We agree that requiring specific subscription milestones is likely to discourage many bidders from participating in the auction because they would risk losing funding when they likely need it most to complete the buildout of their networks. Commenters pointed out that support recipients have a statutory obligation to advertise the availability of their services throughout their service areas and argue that they have the incentive to attract customers to increase their revenues.182 Commenters also argued that subscription rates of 70% in some rural, low-income areas would be almost impossible to attain.183 In addition, support recipients must be prepared to provide service meeting the relevant public interest obligations within 10 business days to any locations they report in the HUBB for purposes of meeting the service milestones, which will give support recipients added incentive to ensure their networks have sufficient capacity to serve the required number of locations. Given these requirements, the risk of discouraging participation in the auction, and the administrative complexity of monitoring subscribership, we decline to require a certain level of subscription as a condition of Rural Digital Opportunity Fund support. F. Auction Application Process
67. Consistent with prior Commission auctions and based on our recent experience with the CAF Phase II auction, we adopt the two-stage application process that will govern the auction process for the Rural Digital Opportunity Fund, including pre-auction and post-auction requirements.184 68. We conclude that participants in the Rural Digital Opportunity Fund Phase I auction process will be required to comply with the same short-form and long-form application process.185 Specifically, in the pre-auction short-form application, a potential bidder will be required to establish its eligibility to participate in the auction by providing, among other things, basic ownership information and certifying to its qualifications to receive support.186 Once approved as qualified to bid by the Bureau, the company may participate in the auction. After the auction, winning bidders must file more extensive information for the long-form application, demonstrating to the Commission that they are legally, technically and financially qualified to receive support.187 As in CAF Phase II, we stress that each potential bidder has the sole responsibility to perform its due diligence research and analysis before
(Continued from previous page) materially suppress participation in the auction and would punish carriers for agreeing to deploy broadband in high- cost areas where broadband adoption lags far behind less rural parts of the country and changes focus of a broadband deployment program to adoption); WISPA Comments at 25 (arguing that subscription rate benchmarks will have a chilling effect on auction participate). 182 See, e.g., ITTA Comments at 24-25; CenturyLink Comments at 18; WISPA Comments at 26 (arguing there is no evidence to show that existing rules are insufficient); see also 47 U.S.C. § 214(e)(1)(B). Above, we adopt a requirement that support recipients must also advertise their broadband offerings. 183 See, e.g., ACA Comments at 16-18; WTA Comments at 21; Buckeye Hills Regional Council Comments at 13; NTCA Comments at 28-29. 184 See GeoLinks Comments at 15 (supporting the Commission’s two-step application “believe[ing] it strikes the right balance to ensure the Commission can properly vet would-be auction participants prior to the auction”); UTC Comments at 17-20 (stating that the two-step process is the appropriate approach); see also Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6799, para 65, 6800, 6804, paras. 68, 70, 81; CAF Phase II Auction Order, 31 FCC Rcd at 5980-99, paras. 92-141. 185 See CAF Phase II Auction Order, 31 FCC Rcd at 5980, para. 92. 186 As we concluded in CAF Phase II, any entity that files a short-form application to participate in the Phase II competitive bidding process will be considered “an applicant for any common carrier license, permit, certificate, or other instrument of authorization issued by the Commission” pursuant to section 503(b)(2)(B) of the Communications Act of 1934, as amended (the Act), and therefore subject to a forfeiture in the event of a default. 47 U.S.C. § 503(b)(2)(B). 187 CAF Phase II Auction Order, 31 FCC Rcd at 5980-5981, paras. 92, 97
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proceeding to participate in the Rural Digital Opportunity Fund auction.188 We direct the Bureau, the Office of Economics and Analytics, and the Rural Broadband Auctions Task Force, to adopt the format and deadlines for the submission of documentation for the short-form and long-form applications.189 1. Short-Form Application Process 69. Consistent with the approach in the CAF Phase II auction and proposed in the NPRM,190 we adopt the Commission’s existing universal service competitive bidding rules so that applicants will be required to provide information that will establish their identity, including disclosing parties with ownership interests and any agreements the applicants may have relating to the support to be sought through the Rural Digital Opportunity Fund auction.191 Interested parties will submit a pre-auction short- form application, providing basic information and certifications regarding their eligibility to receive support. Commission staff will then review the short-form applications, determining whether the applicants are eligible to participate in the auction. Thereafter, Commission staff will release a public notice indicating which short-form applications are deemed complete and which are deemed incomplete. Consistent with CAF Phase II, applicants whose short-form applications are deemed incomplete will be given a limited opportunity to cure defects and to resubmit correct applications, excluding major modifications.192 As in CAF Phase II, a second public notice will be released designating the applicants that are qualified to participate in the Rural Digital Opportunity Fund auction. 70. Ownership. We will require that each auction applicant provide information in its short- form application to establish its identity, including information concerning its real parties in interest and its ownership,193 and to identify all real parties in interest to any agreements relating to the participation of the applicant in the competitive bidding.194 We will also require an applicant to provide in its short-form application a brief description of any such agreements, including any joint bidding arrangements.195 Commission staff would use such information to identify relationships among applicants, including those that might be commonly controlled or members of a joint bidding arrangement.196 We will also require every applicant to certify in its short-form application that it has not entered into any explicit or implicit agreements, arrangements, or understandings of any kind related to the support to be sought through the Rural Digital Opportunity Fund auction, other than those disclosed in the short-form application.
188 This is consistent with bidders’ responsibility for CAF Phase II. 189 47 CFR §§ 1.21000 – 1.21004, pt. 54. Consistent with CAF Phase II, applicants will be able to make minor modifications to amend their applications or correct defects. CAF Phase II Procedures PN at 171. Minor modifications include correcting typographical errors in the application and supplying non-material information that was inadvertently omitted or was not available at the time the application was submitted. Applications to which major modifications are made after the deadline for submitting applications shall be dismissed. Major modifications include, but are not limited to, any changes in the ownership of the applicant that constitute an assignment or change of control, or the identity of the applicant, or the certifications required in the application. 190 See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6799, para 65. 191 47 CFR § 1.21001(b). 192 See 47 CFR § 1.21001(d)(5); cf. id. § 1.2105(b)(2); see id. § 1.21001(d)(4). Major modifications would include, for example, changes in ownership of the applicant that would constitute an assignment or transfer of control. 193 47 CFR §§ 1.2112(a), 54.315(a)(1). 194 See id. §§ 1.21001(b), 54.315(a). As noted above, applicants will only be able to make minor modifications to their short-form applications. Major amendments, for example, changes in an applicant’s ownership that constitute an assignment or transfer of control, will make the applicant ineligible to bid. See id. § 1.21001(d)(4). 195 This requirement is consistent with the agreement disclosure requirements for short-form applications to participate in our spectrum auctions. See id. § 1.2105(a)(2)(viii). 196 47 CFR § 1.21001(b)(3)-(4).
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71. Types of Technologies. We will also require all applicants to indicate the type of bids that they plan to make and describe the technology or technologies they will use to provide service for each bid. This information is imperative to establishing bidders’ eligibility for the bidding weights we adopt.197 Consistent with CAF Phase II, we will allow an applicant to use different technologies within a state as well as hybrid networks to meet its public interest obligations.198 72. Technical and Financial Qualifications Certifications. Likewise, applicants will be required to certify that they are financially and technically qualified to meet the public interest obligations in each area for which they seek Rural Digital Opportunity Fund support.199 Based on our experience with CAF Phase II, this approach is an appropriate screening process to ensure serious participation, without being overly burdensome to applicants and recipients. 73. Operational History. Applicants will be required to provide additional assurances to the Commission that the entities that intend to bid in the auction have experience operating networks.200 We adopt a requirement that applicants certify in their short-form application that they have provided voice, broadband, and/or electric distribution or transmission services for at least two years and that they specify the number of years they have been operating, or that they are the wholly-owned subsidiary of an entity that meets these requirements.201 Applicants that have provided voice or broadband services must also certify that they have filed FCC Form 477s as required during that time period. As we determined in CAF Phase II, we also will accept certifications from entities that have provided electric distribution or transmission services for at least two years (or their wholly owned subsidiaries).202 74. An applicant that can certify it has provided voice, broadband, and/or electric distribution or transmission services for at least two years, or that it is a wholly-owned subsidiary of such an entity,
197 See 47 CFR §§ 1.21001(b), 54.315(a)(4). 198 See 47 CFR § 54.315(a)(4); see Auction 903 Procedures Public Notice, 33 FCC Rcd at 1452, para. 64. 199 See 47 CFR § 54.315(a)(2). 200 CAF Phase II Auction Order, 31 FCC Rcd at 5982-5983, paras. 100-101. 201 See id. at 5982-5983, para. 100. But see INCOMPAS Comments at 13 (proposing that entities be required to demonstrate at least five years of operation to customers, including voice) and Miller/Loy Comments at 1 (asserting that existing providers should be required to provide evidence of five years of both voice and broadband service). We conclude that requiring that an entity to have operated a network for at least two years will give us sufficient assurance that an entity has the qualifications to maintain a network. As we concluded in CAF Phase II, adopting a two-year operational requirement for bidders is reasonable, particularly when we offer an alternative for entities that cannot meet this requirement. Finally, as we previously stated, we do not require entities to have operated both a voice network and a broadband network, because those entities may have made business decisions not to offer a certain service that are independent of their qualifications to offer such a service. Id. 202 Applicants that have operated only an electric distribution or transmission network must submit qualified operating or financial reports for the relevant time period that they have filed with the relevant financial institution along with a certification that the submission is a true and accurate copy of the forms that were submitted to the relevant financial institution. See UTC Comments at 18 (supporting a requirement that applicants demonstrate their operational history and financial qualifications by certifying that it or its parent company has provided voice, broadband and/or electric distribution or transmission services for at least two years prior to the short-form application filing deadline). As we did for CAF Phase II, we will accept the Rural Utilities Service (RUS) Form 7, Financial and Operating Report Electric Distribution; the RUS Form 12, Financial and Operating Report Electric Power Supply; the National Rural Utilities Cooperative Finance Corporation (CFC) Form 7, Financial and Statistical Report; the CFC Form 12, Operating Report; or the CoBank Form 7; or the functional replacement of one of these reports.
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will provide the Commission with sufficient assurance before the auction that it has the ability to build and maintain a network.203 75. We will require each applicant that does not have two years of operational experience, to submit with its short-form application its (or its parent company’s) financial statements that have been audited by an independent certified public accountant from the three prior fiscal years, including the balance sheets, incomes, and cash flow statements, along with a qualified opinion letter.204 Our interest in having a level of insight into the financial health of a potential Rural Digital Opportunity Fund auction bidder over a longer period of time is a necessary prequalification to bid, particularly because this subset of bidders will not able to demonstrate that they have operated and maintained a voice, broadband and/or electric distribution or transmission network for at least two years. Likewise, such applicants will also be required to submit a letter of interest from a bank meeting the Commission’s eligibility requirements stating that the bank would provide a letter of credit to the applicant if the applicant becomes a winning bidder and is awarded support of a certain dollar magnitude.205 A letter of interest from the bank will provide the Commission with an independent basis for some additional assurance regarding the financial status of the entity. 76. We decline to adopt a suggestions from USTelecom and Windstream to limit the total bid based on the bidder’s annual revenues,206 while Verizon proposes further pre-auction scrutiny “on applicants that are seeking authority to bid for a large number of locations, relative to the size of their existing customer base, or are planning to bid for performance tiers in which they currently provide little or no commercial service.”207 We are not persuaded that either of these proposals are an effective method to guarantee the financial qualifications of bidders to perform; instead, they would more likely limit competition by arbitrarily excluding bidders with more limited revenues or existing customer bases.208 We are generally reluctant to adopt additional measures that limit competition from bidders and any concerns with financial qualifications will be resolved during the short-form applications. 77. We decline to collect less financial and technical information from existing USF support recipients on the short-form than we did in CAF Phase II as suggested by some commenters.209 It is
203 See 47 CFR § 315(a)(7). NRECA Comments at 12 (stating that electric cooperatives should continue to be allowed to demonstrate operational expertise based on operation and management of electric distribution and transmission networks). 204 See 47 CFR § 54.315(a)(7)(ii); CAF Phase II Auction Order, 31 FCC Rcd at 5985, paras. 106-07; Auction 903 Procedures Public Notice, 33 FCC Rcd at 1445, para. 45. 205See id. 206 USTelecom Comments at 19-20 (asserting that limiting a bidder’s total amount of support based on its annual revenue); Windstream Comments at 20 (capping the total amount that a provider can bid for the ten-year support period to some portion of the provider’s annual revenues will provide additional scrutiny of carriers seeking to bid on a large number of locations relative to their existing customer base). See AT&T Reply at 16 (supporting Windstream’s comments to cap the total amount that a provider can bid for the ten-year support period); see also Frontier Reply at 14-15 (stating that the Commission should require bid bonds, which would place a cap on the bidders maximum bid based on an upfront payment). 207 Verizon Comment at 7-8 (stating that further scrutiny should be placed on applicants that “are planning to bid for performance tiers in which they currently provide little or no commercial service”); see also AT&T Reply at 16 (agreeing that the Commission “should consider additional short form filing requirements to ensure that recipients of RDOF funds are up to the challenge of providing broadband in rural areas.”) 208 See also WISPA Reply 39-40 (stating that it disagrees with Windstream and USTelecom’s proposals to limit bidding to bidder’s annual revenue as it is anti-competitive and short-sighted). 209 See, e.g., ACA Connects Comments at 25-26 (proposing that instead bidders who are existing service providers should submit a certification stating they are technically and financially capable of meeting their RDOF public interest obligations); NCTA Comments at 9 (asserting that less technical information should be required at the short- (continued….) 35 Federal Communications Commission FCC 20-5
important for Commission staff to review the same specific information from each carrier when evaluating carriers’ qualifications to bid. However, CAF Phase II auction participants that subsequently defaulted on their entire award will be barred from participating in the Rural Digital Opportunity Fund.210 We decline to bar participants that defaulted in other universal service programs as well as decline to subject participants to additional scrutiny that subsequently defaulted in CAF Phase II, as suggested by other commenters,211 or that have filed for bankruptcy or that have been bankrupt in the recent past.212 We are capable of evaluating the circumstances of a prior default and the outcome of any subsequent enforcement action without collecting additional information in the short-form application. All applicants will be subject to a thorough financial and technical review in both the short-form application stage and the long-form application stage prior to bidding and ultimately receiving support. 78. Conversely, some commenters stated that we should increase the short-form requirements. For instance, NTCA asserted that we should require that a prospective bidder demonstrate “more thorough qualifications at the short-form stage” focusing on technical and operational qualifications.213 NRECA proposes shifting to the short-form review more of the detailed technical and financial showings conducted at the long-form review.214 USTelecom states that we should require an applicant to provide information about subscribership trends and employee expertise to show that it has the expertise and experience “to scale its network.”215 Subscribership and employee expertise do not necessarily suggest that the entity is unqualified to bid in the Rural Digital Opportunity Fund auction. Our interest in maximizing participation in the Rural Digital Opportunity Fund auction outweighs the potential risk of qualifying a less experienced entity to participate in the auction without reviewing that bidder’s subscribership and employee counts, particularly given that we adopt the requirement that
(Continued from previous page) form stage from existing providers); Sacred Wind Comments at 3-4 (arguing that Commission should have an abbreviated short-form process for authorized CAF Phase II recipients). But see Frontier Reply at 14 (asserting that the Commission should reject proposals that suggest less information at the short-form stage should be provided); USTelecom Reply at 23 (arguing that the Commission should decline to require less information at the short-form stage and instead consider requiring more information at that stage). 210 We note that CAF Phase II auction participants that subsequently defaulted on only a portion of their winning bid will not be barred from participating. 211 See, e.g., Sacred Wind Comments at 4 (stating that “parties that have defaulted on their entire awards in prior universal service programs should be restricted from participating in RDOF”); GeoLinks Comments at 15 (asserting that CAF Phase II defaulters should be subject to additional scrutiny but should not be precluded from participating in the auction); Miller/Loy Comments (proposing that CAF Phase II defaulters should disclose their default, and if they do not, they should be prohibited from applying to the new auction). 212 NRECA Comments at 13 (asserting that the Commission should carefully weigh the risks of applicants that have filed for bankruptcy or that have been bankrupt in the recent past). But see Windstream Reply at 18 (stating the Commission should not exclude bidders that have been bankrupt in the recent past as it would exclude experienced providers). Title 11 of the United States Code prohibits government actions that discriminate against a party on the basis that (a) the party filed for bankruptcy protection or (b) such party failed to pay a debt that is dischargeable in bankruptcy. 11 U.S.C. § 525(a). 213 NTCA Comments at 23 (arguing that the Commission should require potential bidders to “carefully evaluat[e] the geographic realities and corresponding technical challenges in areas where they intend to bid”); NTCA Reply at 14-15 (stating that the Commission should require “the leveraging of technical standards that will be adopted in the mapping proceeding to ensure an “apples-to-apples” comparison of capabilities when providers submit service proposal”); see also USTelecom Comments at 18 (stating that the Commission should enhance its the standards that it will use to determine a bidder’s ability to complete service obligations and seek more information up front from potential bidders to ensure their operational readiness). 214 NRECA Comments at 12-13 (asserting that “only competent, qualified entities utilizing proven technologies [should be able to] participate in both the Phase I and the Phase II auctions”). 215 See USTelecom Comments at 19.
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bidders will be required to submit their audited financial statements.216 This will allow us to scrutinize the bidder’s audited financial statements at the long-form application stage before authorizing that entity to begin receiving support. We believe that requiring more technical and operational information before the auction begins will provide significant barriers to entry for some participants and unnecessarily extend the short-form review period and delay the auction.217 Moreover, additional technical information at the short-form stage would be speculative based on a presumption of what a winning area would look like. 79. Similarly, we decline NTCA’s proposal to require applicants to submit propagation maps to show where they intend to bid,218 as it would be burdensome on applicants “particularly given the maps may not be relevant if an applicant does not become qualified or does become qualified but does not win support in that area.”219 We conclude on balance that our short-form process provides significant assurances for serious participation and our long-form post-auction process, as discussed below, will provide an in-depth extensive review of the winning bidders’ qualifications.220 80. Audited Financials. We will require each applicant that has certified that it has at least two years of operational experience to submit financial statements that have been audited by an independent certified public accountant from the prior fiscal year, including balance sheets, net income and cash flow, along with a qualified opinion letter with its short-form application.221 If such an applicant (or its parent company) is not audited in the ordinary course of business, we will require the applicant to submit unaudited financial statements from the prior fiscal year with its short-form application and to certify that it will submit audited financials during the long-form application process.222 We will require winning bidders that take advantage of this option to submit their audited financials no later than the deadline for submitting their proof of ETC designation (which is within 180 days of the public notice announcing winning bidders). If the audit process is expected to exceed 180 days, a winning bidder will have the option of seeking a waiver of this deadline.223 In considering such waiver requests, we direct the Bureau to determine whether the entity demonstrated in its waiver petition that it took steps to prepare for an audit prior to being named a winning bidder and that it took immediate steps to obtain an audit after being announced as a winning bidder. Applicants that certify that they have at least two years of operational experience and fail to submit audited financial statements as required, will be subject to the same base forfeiture of $50,000 that we adopted for the CAF Phase II auction.224 We note that most CAF
216 See infra para. 80. 217 See, e.g., WISPA Reply at 35-37 (stating that proposals to increase short-form requirements are “appropriately viewed as simply raising the cost of doing business for smaller competitors and the Commission should reject them.”); AT&T Reply at 16-17 (arguing that NTCA’s short-form proposal is intended to create barriers to participation by fixed wireless providers and should be rejected). 218 NTCA Comments at 24-25 (stating the Commission should require propagation maps to show where applicants intend to bid “with a reasonably detailed justification for their purported capability to deliver service to every corner throughout those areas based upon reasonable assumptions regarding technological capability and subscription”); see also GVNW Reply at 4 (asserting that in addition requiring rural topographies, the Commission require applicants to give a detailed explanation of their capabilities based on where they intend bid). 219 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1456, para. 76. 220 See infra section F.2 (discussing long-form applications); see also California PUC Comments at 9 (asserting that the Commission’s screening process should provide assurances to prevent defaults). 221 See 47 CFR § 54.315(a)(3). Complete audited financial statements include the accompanying notes. No commenters addressed the Commission’s proposed pre-auction application processes for audited financials. 222 See 47 CFR § 54.315(a)(7)(i); CAF Phase II Auction Order, 31 FCC Rcd at 5983-84, paras. 102-03; Auction 903 Procedures Public Notice, 33 FCC Rcd at 1445, para. 44. 223 47 CFR § 1.3. 224 See CAF Phase II Auction Order, 31 FCC Rcd at 5984-85, paras. 104-05; Auction 903 Procedures Public Notice, 33 FCC Rcd at 1445, para. 44. Such forfeiture would be subject to the adjustment upward or downward as (continued….) 37 Federal Communications Commission FCC 20-5
Phase II auction support recipients were able to obtain audited financial statements by the required deadlines. As with the CAF Phase II auction,225 we do not extend to applicants that lack two years of operational history the option of submitting audited financial statements during the long-form application stage. They must submit audited financial statements from the three prior fiscal years with their short- form application, as described above. 81. Eligible Telecommunications Carrier Designation. We adopt the same CAF Phase II flexibility with respect to ETC designations and do not require an applicant to obtain its designation as an ETC in the areas where it seeks support prior to bidding in the Rural Digital Opportunity Fund auction.226 We do, however, require an applicant to disclose in its short-form application its status as an ETC in any area for which it will seek support or if it will become an ETC in any area where it wins support.227 We are not persuaded that we should require an applicant to secure its ETC designation prior to the auction.228 As we determined in CAF Phase II, permitting entities to obtain ETC designation after the announcement of winning bidders for support, encourages broader participation in the competitive process by a wider range of entities.229 Additionally, our experience with CAF Phase II indicates that most applicants were ultimately designated within the long form review period, even if it took them longer than the ETC designation proof deadline.230 We will continue to presume that an entity acted in good faith if it files its ETC application within 30 days of the release of the public notice announcing that it is a winning bidder, but as with both the rural broadband experiments and the CAF Phase II auction, we discovered there were various circumstances impacting the ability of individual bidders to file their ETC applications and that when an application was filed did not always determine whether an applicant was designated within the 150 remaining days.231 82. Spectrum Access. Additionally, with respect to eligibility requirements relating to spectrum access, applicants will be required to disclose and certify the source of the spectrum they plan to use to meet Rural Digital Opportunity Fund obligations in the particular area(s) for which they plan to
(Continued from previous page) appropriate based on the criteria set forth in the Commission’s forfeiture guidelines. CAF Phase II Auction Order, 31 FCC Rcd at 5984-85, para. 104. 225 See 47 CFR § 54.315(a)(7)(ii); CAF Phase II Auction Order, 31 FCC Rcd at 5985, paras. 106-07 & n.210 (explaining the Commission’s “interest in having a level of insight into the financial health of a potential Phase II auction bidder over a longer period of time” given that “this subset of bidders will not be able to demonstrate that they have operated and maintained a voice, broadband, and/or electric distribution or transmission network for at least two years”). 226 See 47 CFR § 54.315(a)(3); CAF Phase II Auction Order, 31 FCC Rcd at 6001, para. 147. 227 See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6815, Appendix A, Proposed Rules, Sec. 54.804(a)(3). 228 See Frontier Comments at 12-13. Frontier states that the Commission should require bidders to be an ETC from the beginning, demonstrating they provide reliable services and that “the ETC designation process is the states’ opportunity to vet auction bidders and their service proposals.” But see AT&T Reply at 17 (asserting that the Commission should reject commenters proposals to require ETC designation prior to the auction as it would discourage participation and ultimately competition). 229 CAF Phase II Auction Order, 31 FCC Rcd at 6001, para. 147; see Mississippi PSC Comments at 2-3 (stating that “the FCC correctly concludes that allowing these service providers, specifically electric utilities, to bid without ETC status will encourage participation from service providers that may be hesitant to invest resources in this process”). 230 If the ETC process takes longer than 180 days, winning bidders will have the option of seeking a waiver of the ETC deadline. 47 CFR § 1.3; see also West Virginia Council Comments at 11 (asking the Commission to extend the 180-day window for long-form applicants to get an ETC designation because some state commissions do not operate on a continual basis). 231 CAF Phase II Auction Order, 31 FCC Rcd at 6002-03, para. 153.
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bid.232 Specifically, applicants will be required to disclose whether they currently hold a license or lease the spectrum, including any necessary renewal expectancy, and whether such spectrum access is contingent on obtaining support in the auction.233 Consistent with CAF Phase II, we will require applicants intending to use spectrum to indicate the spectrum band(s) they will use for the last mile, backhaul, and any other parts of the network; and the total amount of uplink and downlink bandwidth (in megahertz) that they have access to in each spectrum band for last mile. Applicants must also describe the authorizations they have obtained to operate in the spectrum and list the call signs and/or application file numbers associated with their spectrum authorizations, if applicable.234 Applicants must have secured any Commission approvals necessary for the required spectrum access prior to submitting an auction application, if applicable.235 Moreover, applicants will be required to certify that they will retain their access to the spectrum for at least ten years from the date support is authorized.236 NTCA argues that applicants who do not have access to spectrum should be required to show how they would acquire it.237 We agree and, consistent with our treatment of this situation in CAF Phase II, we will find a recipient in default if it is unable to meet its obligations, including if the authorization is not renewed during the support term.”238 83. Also, any applicant that intends to provide service using satellite technology will be required to identify in its short-form application its expected timing for applying for any earth station licenses it intends to use in the areas where it intends to bid, if it has not already obtained these licenses. We do not require satellite providers to obtain all necessary earth station licenses by the short-form application deadline.239 An earth station license requires that a satellite provider bring the station into operation within one year of obtaining a license and a satellite provider may not be ready to meet this requirement by the short-form filing deadline. Moreover, because an applicant can apply to obtain a microwave license at any time,240 we will permit an applicant that intends to obtain microwave license(s) for backhaul to meet its public interest obligations for the Rural Digital Opportunity Fund by describing in its short-form application its expected timing for applying for such license(s), if it has not already obtained them.241 84. Due Diligence Certification. Consistent with the procedures adopted for the CAF Phase II auction, we adopt the requirement that an applicant certify that it has performed due diligence
232 See 47 CFR § 54.315(a)(6); see, e.g., WISPA Comments at 33 (stating that the spectrum disclosure requirement was fair and balanced). 233 See 47 CFR § 54.315(a)(6); Phase II Auction Order, 31 FCC Rcd at 5981, para. 98. 234 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1452, para. 64. 235 We acknowledge that the Commission has scheduled the auction of Priority Access Licenses for the 3550-3650 MHz band for June 25, 2020 (Auction 105). Auction of Priority Access Licenses for the 3550-3650 MHz Band; Comment Sought on Competitive Bidding Procedures for Auction 105, AU Docket No. 19-244, Public Notice, 34 FCC Rcd 9215 (2019). A number of CAF Phase II applicants indicated that they would be participating in this auction. Because this auction will likely coincide with the Rural Digital Opportunity Fund pre-auction process, we will permit Rural Digital Opportunity Fund applicants that plan to use this spectrum to meet their obligations to indicate the status of their participation in the auction as part of their spectrum showing in their applications. However, such an applicant must also provide alternatives for how it intends to meet its Rural Digital Opportunity Fund obligations if it is not able to obtain a license through Auction 105. 236 47 CFR § 54.315(a)(6); CAF Phase II Auction Order, 31 FCC Rcd at 5981, para. 98. 237 NTCA Comments at 25. 238 Auction 903 Procedures Public Notice, 33 FCC Rcd at 1462, para. 89. 239 Id. at 1461-62, para. 88 (citing CAF Phase II Auction Comment Public Notice, 32 FCC Rcd at 6251, para. 41). 240 See, e.g., 47 CFR § 101.21(f) (describing the steps an applicant must take to obtain a microwave license). 241 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1461-62, para. 88.
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concerning its potential participation in the Rural Digital Opportunity Fund auction so the applicant understands its obligations.242 Specifically, we adopt the requirement that each applicant make the following certification in its short-form application under penalty of perjury: The applicant acknowledges that it has sole responsibility for investigating and evaluating all technical and marketplace factors that may have a bearing on the level of Rural Digital Opportunity Fund support it submits as a bid, and that if the applicant wins support, it will be able to build and operate facilities in accordance with the Rural Digital Opportunity Fund obligations and the Commission’s rules generally.243 85. This proposed certification will help ensure that each applicant acknowledges and accepts responsibility for its bids and any forfeitures imposed in the event of default,244 and that the applicant will not attempt to place responsibility for the consequences of its bidding activity on either the Commission or third parties.245 2. Long-Form Application Process 86. Winning bidders for the Rural Digital Opportunity Fund support will be required to comply with the same long-form application process we adopted for CAF Phase II.246 The rules we adopt below provide the basic framework and requirements for winning bidders to demonstrate their qualifications for support. After the close of the auction, the Bureau will release a public notice declaring the auction closed, identifying the winning bidders, and establishing details and deadlines for next steps. Winning bidders will then be required to submit extensive information detailing their respective qualifications in their long-form applications, allowing for a further in-depth review of their qualifications prior to authorization of support. Any additional information that is required to establish whether an applicant is eligible for Rural Digital Opportunity Fund support will be announced by public notice.247 We note that very few commenters addressed the Commission’s proposed post-auction long-form application processes248 and none of those commenters raised significant concerns. We therefore conclude the rules we adopt today will best serve the Commission’s ability to determine whether the applicants are ultimately eligible for Rural Digital Opportunity Support authorization funding, providing a fair and efficient review process.
242 See id. at 1472, para. 119. 243 See id.; Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6803, para. 78. 244 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1472, para. 119; Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6803-04, para. 79. 245 See id. 246 47 CFR § 54.315(b)(2)(i-viii); see also Phase II Auction Order, 31 FCC Rcd at 5986-5999, paras. 111-141. 247 See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6815-6816, Appendix A, Proposed Rules, Sec. 54.804(a). 248 See UTC Comments at 17-20 (agreeing with all of the Commission’s long-form proposals). However, Windstream and Frontier both requested that the Commission adopt a protective order to allow for access to long- form applications. Windstream asserts that this process would allow for careful vetting of Rural Digital Opportunity Fund applicants and the safeguarding of commercial information from competitors. See Windstream Reply at 17- 18. Furthermore, Frontier states that review of CAF Phase II long-form applications, including sensitive material, would provide for meaningful design for the Rural Digital Opportunity Fund. See Frontier Reply at 13. We are not persuaded that we should allow outside parties to review confidential information in the winning bidders’ applications. As we did in CAF Phase II, a request for public inspection can be made under section 0.461 of the Commission’s rules, and the applicant will be notified and will be required to justify confidential treatment of its request if the applicant has any objections to disclosure. See id. § 0.461. Likewise, certain information in each application will be made publicly available after the close of the auction pursuant to our limited information procedures currently in place. See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1473‐76, paras. 122‐27.
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87. Ownership Disclosure. We adopt the ownership disclosure requirements proposed in the NPRM.249 Specifically, an applicant for Rural Digital Opportunity Fund support must fully disclose its ownership structure as well as information regarding the real party- or parties-in-interest of the applicant or application. Ownership disclosure reports from the short-form process must be updated if any information reported in the short-form has changed.250 88. Financial and Technical Capability Certification. Consistent with CAF Phase II, we will require a long-form applicant to certify that it is financially and technically capable of providing the required coverage and performance levels within the specified timeframe in the geographic areas in which it won support.251 89. Public Interest Obligations Certifications. We next adopt proposed rule 54.804(b)(2)(iii), concluding that a long-form applicant must certify in its long-form application that it will meet the relevant public interest obligations for each performance tier and latency combination for which it was deemed a winning bidder, including the requirement that it will offer service at rates that are equal to or lower than the Commission’s reasonable comparability benchmarks for fixed services offered in urban areas.252 90. Description of Technology and System Design. Due to the varying types of technologies that entities may use to fulfill their Rural Digital Opportunity Fund competitive bidding process obligations, we find that it is also reasonable to require each winning bidder to submit a description of the technology and system design it intends to use to deliver voice and broadband service, including a network diagram, which must be certified by a professional engineer.253 The professional engineer must certify that the network is capable of delivering, to at least 95% percent of CAM locations in each relevant state, voice and broadband service that meets the requisite performance requirements.254 There must be sufficient capacity to meet customer demand at or above the prescribed levels during peak usage periods. Entities proposing to use wireless technologies also must provide a description of their spectrum access in the areas for which they seek support and demonstrate that they have the required licenses to use that spectrum if applicable.255 This documentation will enable Commission staff to have assurance from an engineer that the proposed network will be able to fulfill the service obligations to which the bidders will have to commit. Filing deadlines will be strictly enforced, and bidders should not presume that they may obtain a waiver absent extraordinary circumstances.256
249 See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6816, Appendix A, Proposed Rules, at § 54.804(b)(2)(i). 250 See id. at 6815, Appendix A, Proposed Rules, at § 54.804(a)(1). 251 See id. at 6816, Appendix A, Proposed Rules, at § 54.804(b)(2)(ii). 252 See id. at 6816, Appendix A, Proposed Rules, at § 54.804(b)(2)(iii). 253 For CAF Phase II, winning bidders were required to submit a detailed project description that described each specific phase of the project, e.g., network design, construction, deployment, and maintenance. Auction 903 Procedures Public Notice, 33 FCC Rcd at 1515-1516, paras. 302-303. 254 See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6816-17, Appendix A, Proposed Rules, at § 54.804(b)(2)(iv); Auction 903 Procedures Public Notice, 33 FCC Rcd at 1514-15, para. 300. 255 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1516-1517, para. 304. 256 See 47 CFR § 0.406 (“Persons having business with the Commission should familiarize themselves with those portions of its rules and regulations pertinent to such business.”). See also, e.g., Universal Service Contribution Methodology, WC Docket No. 06-122, Order, 26 FCC Rcd 11213, 11215-16, para. 7 (WCB 2011) (declining to review rejection of company’s late-filed revisions to form which were caused by company’s misunderstanding of form instructions, because “[b]usinesses have a responsibility to familiarize themselves with the rules and regulations that are relevant to their industry”).
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91. Available Funds Certification. Next we adopt proposed rule 54.804(b)(2)(v), concluding that an applicant must certify in its long-form application that it will have the funds available for all project costs that exceed the amount of support to be received, and that it will comply with all program requirements.257 Simultaneously, we will also require that winning bidders describe in their long-form application how the required construction will be funded and include financial projections that demonstrate that they can cover the necessary debt service payments over the life of the loan.258 Additionally, these requirements include the public interest obligations contained in the Commission’s rules.259 92. ETC Eligibility and Documentation. Consistent with the CAF Phase II auction rules, a winning bidder in the Rural Digital Opportunity Fund auction will be permitted to obtain its ETC designation after the close of the auction, submitting proof within 180 days of the public notice identifying winning bidders.260 We decline to forbear from the ETC requirement.261 We recognize the statutory role that Congress created for state commissions and the FCC with respect to ETC designations, and we do not disturb that framework.262 Nothing in the record addresses the standards necessary to find forbearance in the public interest, even if some interested parties may prefer not to become ETCs with all of the associated obligations. Therefore, we will continue to require service providers to obtain ETC status to qualify for universal service support.263 A winning bidder must demonstrate with appropriate documentation that it has been designated as an ETC covering each of the geographic areas for which it seeks to be authorized for support.264 For example, in addition to providing the relevant state or Commission orders, each winning bidder will need to demonstrate that its ETC designation covers the areas of its winning bid(s) (e.g., census blocks, wire centers, etc.). Such documentation could include
257 See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6817, Appendix A, Proposed Rules, at § 54.804(b)(2)(v). 258 See id. at 6817, Appendix A, Proposed Rules, at § 54.804 (b)(2)(vi). 259 See id. at 6817, Appendix A, Proposed Rules, at § 54.804(b)(2)(v). 260 Id. at 6817, Appendix A, Proposed Rules, at § 54.804(b)(5). In considering such waiver requests, we direct the Bureau to determine whether an entity engaged in good faith efforts to obtain an ETC designation. 261 Some commenters argued that the ETC designation requirement is a barrier to entry and should be eliminated. See NCTA Comments at 6 (asserting that “the focus of the [Rural Digital Opportunity Fund] is on providing broadband to unserved areas, it makes little sense to continue to require providers to be certified telecommunications carriers.”); Pacific Dataport Comments at 5 (stating that the ETC requirements are onerous and “will likely dissuade highly capable service providers . . . who could make significant near-term contributions to bridging the digital divide.”); NACO Comments at 2 (encouraging the Commission “to establish a formula to allow fair consideration for non-ETC providers to compete against ETC entities in the overall competitive bidding process.”); Muscogee Comments at 12-13 (asserting that the “use of good faith [should be applied] when including those applicants that may not be an ETC but feel qualified to carry out the scope of work should be they be support recipient.”); UTC Reply at 8-10 (requesting that the ETC requirement is eliminated “for utilities that are restricted from providing retail broadband services.”). But see AT&T Reply at 17, n.76 (disagreeing with NCTA’s proposal to forbear from requiring providers to be designated as an ETC and that forbearance “undermines fair competition by allowing bids by providers that would not have to factor the costs imposed by ETC requirements into their bids.”); and NRECA Reply at 11-12 (asserting that forbearance from requiring winning bidders to become ETCs is not warranted and the obligation to retain voice-services should be retained); Windstream Reply at 18 (asserting that the Commission should not eliminate the ETC requirement). 262 April 2014 Connect America Order, 29 FCC Rcd at 7064, para. 42 (reaffirming that Connect America Fund recipients are required to obtain an ETC Designation). 263 Likewise, § 254(e) limits the distribution of support to ETCs designated under § 214(e). See Windstream Reply at 18 (arguing the ETC requirement “ensure[s] that states, or the Commission . . . , have authority to monitor a provider’s use of high-cost support and enforce the obligation to provide supported service”). 264 47 CFR § 54.315(b)(5).
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map overlays of the winning bid areas, or charts listing designated areas. Furthermore, each winning bidder will be required to submit a letter with its documentation from an officer of the company certifying that its ETC designation for each state covers the relevant areas where the winning bidders will receive support.265 As we experienced with CAF Phase II, these requirements will help the Commission verify that each winning bidder is permitted to operate in the areas where it will be receiving support. 93. Forbearance from Service Area Redefinition Process. We adopt our proposal to forbear from the statutory requirement that the ETC service area of a Rural Digital Opportunity Fund participant conform to the service area of the rural telephone company serving the same area.266 As in the CAF Phase II auction, the Commission will be maximizing the use of Rural Digital Opportunity Fund support by making it available for only one provider per geographic area.267 Moreover, we expect that the incumbent rural telephone company’s service area will no longer be relevant because the incumbent service provider may be replaced by another Rural Digital Opportunity Fund recipient in portions of its service area. Thus, forbearance is appropriate and in the public interest. 94. Accordingly, for those entities that obtain ETC designations as a result of being selected as winning bidders for the Rural Digital Opportunity Fund, we forbear from applying section 214(e)(5) of the Act, insofar as this section requires that the service area of such an ETC conform to the service area of any rural telephone company serving an area eligible for Rural Digital Opportunity Fund support. We note that forbearing from the service area conformance requirement eliminates the need for redefinition of any rural telephone company service areas in the context of the Rural Digital Opportunity Fund competitive bidding process.268 However, if an existing ETC seeks support through the Rural Digital Opportunity Fund competitive bidding process for areas within its existing service area, this forbearance will not have any impact on the ETC’s pre-existing obligations with respect to other support mechanisms and the existing service area. Likewise, as in CAF Phase II, some of the price cap carrier study areas that may become eligible for the Rural Digital Opportunity Fund competitive bidding process meet the statutory definition so that the carrier serving those study areas would be classified as a rural telephone company.269 95. Thus, we conclude that forbearance is warranted in these limited circumstances. Our objective is to distribute support to winning bidders as soon as possible so that they can begin the process of deploying new broadband to consumers in those areas. Case-by-case forbearance would likely delay our post-selection review of entities once they are announced as winning bidders. The Act requires the Commission to forbear from applying any requirement of the Act or our regulations to a telecommunications carrier if the Commission determines that: (1) enforcement of the requirement is not
265 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6817, Appendix A, Proposed Rules, at § 54.804(b)(5). 266 Id. at 6807, para. 92. See also Phase II Auction Order, 31 FCC Rcd at 6005-09, paras. 157-68. The Act and the Commission’s rules define the term “service area” as a geographic area within which an ETC has universal service obligations and may receive universal service support. 47 U.S.C. § 214(e)(5); see also 47 CFR § 54.207(a). Section 214(e)(5) of the Act requires that a competitive ETC’s service area must conform to the incumbent rural telephone company’s service area “unless and until the Commission and the States, after taking into account recommendations of a Federal-State Joint Board . . . establish a different definition of service area for such company.” 47 U.S.C. § 214(e)(5). 267 Phase II Auction Order, 31 FCC Rcd at 6006, para. 159 (concluding that “forbearance from the section 214(e)(5) service area conformance requirement for recipients of the [CAF] Phase II competitive bidding process is appropriate and in the public interest”). See also Muscogee Comments at 13 (stating that it “supports [the] proposal to forebear the statutory requirement listed to maximize the area and impact of the RDOF by limiting it to one provider per geographic area”). 268 Accordingly, Commission rules regarding the redefinition process are inapplicable to petitions that are subject to this order. See 47 CFR § 54.207(c), (d). 269 CAF Phase II Auction Order, 31 FCC Rcd at 6005-06, paras. 157-68.
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necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of that requirement is not necessary for the protection of consumers; and (3) forbearance from applying that requirement is consistent with the public interest.270 For the same reasons set forth in the CAF Phase II Auction Order, we conclude each of these statutory criteria is met for winning bidders of the Rural Digital Opportunity Fund competitive bidding process.271 96. Letters of Credit. We next adopt letter of credit rules that provide appropriate protection for Rural Digital Opportunity Fund support, with reduced burdens on participants.272 In CAF Phase II, the Commission found that requiring bidders to obtain an irrevocable standby letter of credit, covering the first year of support of a recipient’s winning bid, was an effective means to safeguard the universal service funds.273 Moreover, the letter of credit was subject to a phase-down schedule, reducing the burdens on the recipients.274 The letter of credit requirement did not deter broad participation in the CAF Phase II auction where we awarded $1.488 billion in support to 103 winning bidders and,275 as of December 2019, nearly 90 percent of carriers have been authorized after securing valid letters of credit.276 Thus, we are not persuaded to adopt suggestions from commenters that we remove the letter of credit requirement entirely, either for all winning bidders or for certain groups of winning bidders such as Tribally owned and controlled carriers or established rural carriers.277 97. We find appropriate, however, certain modifications to the letter of credit requirements proposed in the Notice. We make these changes after hearing from commenters concerned about the fees associated with maintaining the larger letters of credit required because of the size of the Rural Digital Opportunity Fund. We conclude that the modified letter of credit requirements we adopt below, which establish a mechanism to easily recover disbursed funding in the event of non-compliance, fulfill our responsibility to protect program funds while also reducing for applicants the costs of participating in the Rural Digital Opportunity Fund. 98. First, our revised approach allows a support recipient to reduce the amount of its letter of credit as it meets—and USAC verifies that a support recipient has completed—service milestones.278
270 47 U.S.C. § 160(a). See also 47 U.S.C. § 160(b) (directing the Commission, in “making the determination under subsection (a)(3) of this section, [to] consider whether forbearance from enforcing the provision or regulation will promote competitive market conditions, including the extent to which such forbearance will enhance competition among providers of telecommunications services”). 271 We incorporate by reference here the analysis of forbearance factors that we considered and found warranted forbearance in CAF Phase II. See CAF Phase II Auction Order, 31 FCC Rcd at 6005-06, paras. 157-68. 272 Id. at 5990, 6045, paras. 119-21, Appx. B. 273 Id. at 5990, para. 120. 274 Id. 275 See 220 Applicants Qualified to Bid in the Connect America Fund Phase II Auction (Auction 903) Bidding to Begin on July 24, 2018, AU Docket No. 17-182, WC Docket No. 10-90, Public Notice, 33 FCC Rcd 6171 (2018); Auction 903 Closing Public Notice, 33 FCC Rcd at 8257. 276 See Authorized Auction 903 Long-Form Applicants, https://www.fcc.gov/file/17188/download (last updated Dec. 16, 2019). 277 See, e.g., INCOMPAS Comments at 13 (asserting that the Commission should allow “small providers to demonstrate capability through means other than the letter of credit,” like participation in other build projects like E- Rate); Internet Society Comments at 5 (proposing a vouching system and validation of interest from a Tribal government rather than a bank). 278 In instances where the amount of the letter of credit fails to satisfy the amount owed, such deficiency will be a debt due to the Commission and, if not paid, will be collected pursuant to the Commission’s rules. See 47 C.F.R. (continued….) 44 Federal Communications Commission FCC 20-5
Specifically, we require support recipients to report their deployed locations in the HUBB by March 1 following each support year.279 Upon verification of the buildout by USAC, we will then allow the recipient to reduce its letter of credit to an amount equal to only one year of total support. And once a support recipient reduces its letter of credit obligation to one year of total support, it will be able to maintain its letter of credit at that level for the remainder of the deployment term, as long as USAC verifies that the support recipient successfully and timely meets its remaining service milestones.280 99. Second, we create an optional 20% service milestone in year two. Doing so allows a support recipient to demonstrate concrete progress in building its network earlier than existing milestones (40% in year three), thus allowing it to reduce its letter of credit earlier than it could otherwise. We reiterate that this 20% buildout benchmark is optional; if a support recipient does not meet this milestone, it will not be able to reduce its letter of credit, but it will not face any reductions in support. 100. Third, we find that support recipients do not need to wait for the specific support years to end to meet their deployment milestones. For example, if a support recipient is able to deploy to 20% of its locations by the end of year one, it may report those locations and request that USAC complete the verification process for those locations in order to allow it to reduce its letter of credit to one year of support. In those instances, we require that these support recipients be able to immediately produce the necessary documentation to minimize the time required for USAC to verify its milestone. 101. Fourth, we adopt a modified letter of credit requirement for the time periods before any required service milestones must be met and verified by USAC. Specifically, at the beginning of the first year of its support term, a support recipient must obtain a letter of credit equal to one year of the total support it will receive. In year two, it will be required to obtain a letter of credit equal to eighteen months of its total support. In year three, it will be required to obtain a letter of credit equal to two years of its total support. And in year four, it will be required to obtain a letter of credit equal to three years of its total support. This schedule balances the need to protect federal funds against the costs of a letter of credit for those that decline to meet the optional 20% deployment milestone. 102. Fifth, we find it necessary to maintain larger letters of credit for support recipients that fail to meet service milestones.281 If the support recipient misses a required service milestone, it will be required to obtain a letter of credit covering an additional year of total support for the next applicable support year, up to a letter of credit covering a total of three years of support. Likewise, any support recipient failing to meet two or more service milestones will be required to maintain a letter of credit in the amount of three years of support and will be subject to additional non-compliance penalties as outlined above.282 We find these increased letter of credit requirements will both protect federal funds from potential default and serve as an incentive to timely deployment.
(Continued from previous page) 1.1901 et seq. Where the draw on the letter of credit results in a greater recovery than is required to satisfy the default, we direct the Bureau to take appropriate measures promptly to return the excess funds. 279 See supra para. 56. 280 Letter from Mike Saperstein, Vice President, Policy & Advocacy, USTelecom, to Marlene H. Dortch, Secretary, FCC (Jan. 20, 2020) (advocating that the letter of credit be limited to one year of annual support) (USTelecom Jan. 20, 2020 Ex Parte Letter). 281 A support recipient that fails to meet any required service milestone must file a letter informing the Commission of the missed milestone within 10 business days of the conclusion of the relevant support year for which that milestone was applicable (i.e., 10 business days after year three for the 40% milestone, after year four for the 60% milestone and after year five for the 80% milestone). See § 54.320(d). This will allow the Bureau to determine whether it is necessary to direct USAC to suspend disbursements to the recipient. 282 See supra paras. 58-64.
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103. Sixth, consistent with CAF Phase II, we will require that the letter of credit only remain open until the recipient has certified that it has deployed broadband and voice service meeting the Commission’s requirements to 100% of the CAM locations by the end of year six, and USAC has verified that the recipient has fully deployed its network.283 We do not expect new additional locations in years seven and eight to be significant enough that it would be necessary to secure that additional deployment with a letter of credit, but recipients will be subject to other sanctions for non-compliance with the terms and conditions of Rural Digital Opportunity Fund support, including but not limited to the Commission’s existing enforcement procedures and penalties, reductions in support amounts, potential revocation of ETC designations, and suspension or debarment.284 104. In short, we provide a letter of credit trajectory that recognizes that once support recipients have demonstrated significant and verifiable steps toward meeting their deployment obligations, they should have the opportunity to avoid some of the more significant credit requirements, consistent with their proven performance in the Rural Digital Opportunity Fund. For those support recipients that elect to deploy quickly and meet the 20% optional milestone early in the support term, and continue to meet all milestones, their letters of credit may never exceed 18 months’ support at any time during the support term. At the same time, the more gradual increase in the letter of credit requirements we adopt for support recipients that do not elect to make use of the optional 20% milestone will reduce potential financial strain on support recipients, and still allow those support recipients to maintain a smaller letter of credit once their first mandatory deployment milestone is met in year three. 105. We decline to adopt the specific parameters of the letter of credit proposals advanced and supported by several parties.285 After thorough review of these constructive proposals, we determine that they fail to sufficiently account for the Commission’s interests in ensuring that universal service dollars are being used efficiently and for their intended purposes, as well as protecting against the potential for those carriers that may fail to fulfill their broadband deployment obligations. However, the approach we adopt here is consistent with the proposals advocated by parties in that it recognizes that the letter of credit rules, as originally proposed, would impose a disproportionate financial burden on support recipients and result in less funding going directly to broadband deployment.286 Moreover, given that the Rural Digital Opportunity Fund will award up to almost 15 times the amount of funding as the CAF Phase II auction, we acknowledge that a one-size-fits-all approach to letter of credit requirements may not
283 CAF Phase II Auction Order, 31 FCC Rcd at 5991, para. 123. 284 47 CFR § 54.320(c). 285 See USTelecom Nov. 29, 2019, Ex Parte Letter at 3-4 (calling for “cumulative funding that would be subject to the [letter of credit] obligation . . . reduced by an amount commensurate with that deployment”); USTelecom Jan. 20, 2020 Ex Parte Letter (advocating letter of credit approaches that provide “appropriate levels of protection to mitigate risk while not over-insuring for that risk”); Letter from Louis Peraertz, Vice President of Policy, WISPA, to Marlene H. Dortch, Secretary, FCC (Jan. 21, 2020) (proposing that letters of credit be limited to one year if the recipient was making substantial progress towards its buildout milestone in years one and two and reduced as service milestones are met); Letter from Robert F. West, Executive Vice president, Infrastructure Banking Group, CoBank, to Marlene H. Dortch, Secretary, FCC (Jan. 22, 2020) (supporting USTelecom’s letter of credit proposal). 286 See, e.g., Letter from Angie Kronenberg, Chief Advocate and General Counsel, INCOMPAS; Patrick R. Halley, Senior Vice President, Policy & Advocacy, USTelecom; Jennifer McKee, Vice President and Associate General Counsel, NCTA; Louis Peraertz, Vice President of Policy, WISPA; Brian O’Hara, Senior Director Regulatory Issues – Telecom & Broadband, NRECA; Derrick B. Owens, Senior Vice President of Government & Industry Affairs, WTA; and Michael R. Romano, Senior Vice President, Industry Affairs and Business Development, NTCA, to Marlene H. Dortch, Secretary, FCC (Jan. 16, 2020) (urging the Commission to modify the letter of credit requirements to “minimize the direct and indirect costs associated with obtaining and maintaining” letters of credit); Letter from John Scrivner, Vice president of Broadband Lending, Red Oak Bank, to Marlene H. Dortch, Secretary, FCC (Jan. 23, 2020) (explaining that requiring letters of credit of significant financial value hinders the ability of providers to deploy broadband networks).
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properly reflect the realities of a particular auction. Thus, our revised approach strives to carefully balance the interest of potential support recipients in minimizing their financial cost over the course of the deployment term with the Commission’s interest in ensuring that universal funding is protected as the Rural Digital Opportunity Fund progresses. 106. Consistent with CAF Phase II, we will only authorize USAC to draw on the letter of credit for the entire amount of the letter of credit if the entity does not repay the Commission for the support associated with its compliance gap.287 Additionally, as stated in CAF Phase II, “if the entity fails to pay this support amount, we conclude that the risk that the entity will be unable to continue to serve its customers or may go into bankruptcy is more likely, and thus it is necessary to ensure that the Commission can recover the entire amount of support that it has disbursed.”288 We also require each winning bidder to submit a commitment letter from a bank no later than the number of days provided by public notice.289 A long-form applicant must submit a letter from a bank acceptable to the Commission, committing to issue an irrevocable stand-by letter of credit, to the long-form applicant.290 The letter must, at a minimum, provide the dollar amount of the letter of credit and the issuing bank’s agreement to follow the terms and conditions of the Commission’s model letter of credit in Appendix C. 107. Once a winning bidder has been authorized, we will require an irrevocable standby letter of credit from a bank that is acceptable to the Commission291 in substantially the same form as the model letter of credit set forth in Appendix C.292 The letters of credit for winning bidders must be obtained from a domestic or foreign bank meeting the requirements adopted herein. For U.S. banks, the bank must be insured by the Federal Deposit Insurance Corporation (FDIC) and have a Weiss bank safety rating of B- or higher committing to issue a letter of credit.293 Similarly, for non-U.S. banks, we require that the bank be among the 100 largest non-U.S. banks in the world (determined on the basis of total assets as of the end of the calendar year immediately preceding the issuance of the letter of credit, determined on a U.S. dollar equivalent basis as of such date).294 Winning bidders also have the option of obtaining a letter of credit from CoBank or the National Rural Utilities Cooperative Finance Corporation so long as they continue to meet the Commission’s requirements.295 When a winning applicant obtains a letter of credit, it must be at least equal to the amount of the first year of authorized support.296 Before the winning applicant can receive its next year’s support, it must modify, renew, or obtain a new letter of credit. We conclude that requiring recipients to obtain a letter of credit on at least an annual basis will help minimize
287 See supra Section III.E and; CAF Phase II Auction Order, 31 FCC Rcd at 5992, para. 124. 288 CAF Phase II Auction Order, 31 FCC Rcd at 5992, para. 124. 289 See Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6817, Appendix A, at § 54.804(b)(3). 290 See Auction 903 Procedures Public Notice, 33 FCC Rcd at 1519, para. 309. 291 47 CFR § 54.315(c), (c)(3); CAF Phase II Auction Order, 31 FCC Rcd at 5991-92, paras. 122, 125. 292 A Rural Digital Opportunity Fund support recipient’s letter of credit must be issued in substantially the same form as one of our model LOCs and, in any event, must be acceptable in all respects to the Commission. 293 CAF Phase II Auction Order, 31 FCC Rcd at 5991, paras. 120. 294 See CAF Phase II Auction Order, 31 FCC Rcd at 5996, para. 131. The bank must also have a branch in the District of Columbia or other agreed-upon location in the United States, have a long-term unsecured credit rating issued by a widely-recognized credit rating agency that is equivalent to a BBB- or better rating by Standard & Poor’s, and must issue the letter of credit payable in United States dollars. 295 See 47 CFR § 54.315(c)(2)(ii) & (iii). 296 CAF Phase II Auction Order, 31 FCC Rcd at 6016-18, paras. 189-94.
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administrative costs for USAC and the recipient rather than having to negotiate a new letter of credit for each monthly disbursement.297 108. However, we will require all winning bidders to provide a single letter of credit covering all of their winning bids within a single state.298 We decline to allow multiple letters of credit that cover all bids in a state as we did for CAF Phase II,299 as this option was not used and is administratively burdensome on the Commission and USAC. Thus, a default in one census block could result in a draw on the entire letter of credit. 109. As we have previously recognized, we will again allow for the option of greater flexibility regarding letter of credit for Tribally owned and controlled winning bidders.300 Consistent with CAF Phase II, if any Tribally owned and controlled Rural Digital Opportunity Fund winning bidder is unable to obtain a letter of credit, it may file a petition for a waiver of the letter of credit requirement. Consistent with our precedent, waiver applicants must show, with evidence acceptable to the Commission, that the Tribally owned and controlled winning bidder is unable to obtain a letter of credit.301 110. The determinations we reach today take into consideration the comments submitted on the burdens associated with the letter of credit requirement. We conclude, however, that the letter of credit requirement best protects the Fund. While we understand that there are costs associated with the letter of credit, we continue to believe bidders can incorporate these costs when determining their strategies prior to the auction. The universal service program provides significant benefits when weighed against the costs of the letter of credits, which in turn provide significant security of public funding. As we have previously stated, letters of credit have “the added advantage of minimizing the possibility that the support becomes property of a recipient’s bankruptcy estate for an extended period of time, thereby preventing the funds from being used promptly to accomplish our goals.”302 111. Commenters renewed requests for other safeguard measures, yet none of the measures fully guarantee that the Commission will be able to recover past support disbursements from a defaulting recipient. Several commenters suggested performance bonds or sureties. For example, WISPA and WTA assert the Commission should require auction winners to obtain performance bonds as an alternative to obtaining letters of credit, costing participants substantially less than a letter of credit.303 USTelecom
297 See id. at 5997, para. 135. Note that in accordance with the model letter of credit in Appendix C hereto, annual letters of credit must contain an evergreen provision. 298 See id. at 5991, para. 122. 299 See id. 300 Id. at 5999, para. 140. See Muscogee Comments at 12; Navajo and NNTRC Reply at 12. It is also important to note that, as of December 2019, at least three CAF Phase II winning bidders that are entirely or partially owned by a Tribe have been able to obtain letters of credit complying with the Commission’s rules without the need for a waiver. 301 CAF Phase II Auction Order, 31 FCC Rcd at 5999, para. 140. 302 Id. at 5990, para. 120. 303 WISPA Comments at 36-38 (stating further that some CAF Phase II recipients are finding that the cost to obtain and maintain a letter of credit can approach 10% of the annual support amount. Performance bonds cost .5-1.5% of the cost of the letter of credit). Other commenters also support Performance Bonds. See, e.g., WTA Reply at 17-18 (agreeing that “performance bonds would appear to be a more efficient alternative to LOCs because they are generally able to provide comparable protection to the Commission against loss of RDOF funds at a much lower cost . . . .”); see GeoLinks Comments at 12-13 (urging the Commission to adopt performance bonds because they are a less costly alternative and carries far fewer collateral/credit requirements while still offering the Commission the same amount of coverage); NTCA Reply at 26-27 (stating that a performance bond is equally as effective as a letter of credit); West Virginia Council Reply at 1-4 (asserting that performance bonds cost much less than a letter of (continued….) 48 Federal Communications Commission FCC 20-5
agrees, commenting that the Commission should reconsider its proposals requiring Rural Digital Opportunity Fund winners to obtain a letter of credit as it is a substantial barrier to participation.304 Letters of credit, unlike performance bonds, allow for an immediate reclamation of support in the event the recipient is not properly using those funds. Performance bonds, on the other hand, would not provide the same level of protection and would require the involvement of a third party to adjudicate any disputes that arise, which would complicate our process and unnecessarily limit the authority of the Commission to allocate funds. A letter of credit, unlike a performance bond, has the benefit of the “independence principle” in that the letter of credit is independent of the underlying transaction.305 The bank’s obligation to pay under the letter of credit does not depend on the auction winner’s default but on the presentation of documents evidencing the default.306 Being independent in this way assures that USAC can collect monies due to it promptly without engaging in disputes with the winning bidder, the performance bond guarantor or the winning bidder’s trustee in bankruptcy over whether the funds should be paid or even whether the funds are available to the Fund due to competing claims of creditors. 112. Similarly, Frontier and Windstream recommend placing money in escrow prior to bidding because they claim letters of credit are too expensive.307 The record also includes several comments opposing letter of credits or suggesting other means of protecting our interests.308 However,
(Continued from previous page) credit to secure); Letter from Thomas Cohen and J. Bradford Currier, counsel to ACA Connects, to Marlene H. Dortch, Secretary, FCC WC Docket No. 19-126 et al., at 5 (filed Nov. 21, 2019) (agreeing with commenters that “the Commission should consider allowing performance bonds and other alternative arrangements” instead of the letter of credit); Letter from Stephen E. Coran, counsel to Aristotle, GeoLinks and WISPA, to Marlene H. Dortch, Secretary, FCC WC Docket No. 19-126 et al., at 1-3 (filed Dec. 9, 2019) (discussing first-hand experiences with letters of credit, equating the maintenance cost to the amount it would cost to serve broadband to a community, and arguing that performance bonds are “significantly less difficult and less expensive.”); Letter from C. Douglas Jarrett, counsel to NRECA, to Marlene H. Dortch, Secretary, FCC WC Docket No. 19-126 et al., at 4 (filed Dec. 19, 2019) (asserting that the Commission should consider allowing applicants the option of a performance bond). Likewise, some commenters support Surety Bonds. See, e.g, SFAA Comments at 2-3 (stating that a surety bond has advantages over a letter of credit because while a default on a letter of credit only leads to the bank issuing the LOC releasing funds, a surety bond obligates the issuer to finish the work that the surety bond originally secured); CoBank Reply at 3 (stating that companies may find the process and costs of obtaining LOC prohibitive and agrees with SFAA that during the construction phase there are “possible benefits of surety bonds.”). 304 USTelecom Comments at 43-44; USTelecom Reply at 19-20. See also CenturyLink Comments at 10-12 (asserting that the letter of credit is “ancient” and would likely divert at least 5% of the winning bidder’s rural broadband investment funds away to banks). 305 In re Lancaster Steel Co., 284 B.R. at 159. 306 Andy Marine, Inc. v. Zidell, Inc.¸812, F.2d 534, 536 (9th Cir.1987). 307 Frontier Comment at 14; Windstream Comment at 19-20; see also USTelecom Comments at 46-47. The Commission could consider having the provider put an amount in escrow at the beginning of the funding period, which could either be drawn down or released based on later performance. The Commission can backstop any of these approaches via its existing enforcement mechanism. Id. at 46. 308 See, e.g., @Link Comments at 5-6 (arguing that “the letter of credit requirement poses a needless complication and expense” and the Commission should work with the USDA to develop coordinated policies or agreements that would make the borrowers and lenders efforts); INCOMPAS Comments at 13 (asserting that the Commission should allow small providers to demonstrate capability through means other than the letter of credit, like participation in other build projects like E-Rate); NCTA Comments at 9 (asserting that “the Commission should eliminate the letter of credit requirement for well-established broadband providers that can demonstrate financial stability in less cumbersome ways. . . .”); NRECA Reply at 10-11 (offering the Commission different proposals including freezing the aggregate amount of the LOC, such that “if the award recipient achieves [the initial] milestone the amount of the LOC does not increase for the next year”); West Virginia Council Comments at 11 (stating that applicants “should also be given the option of providing a personal guaranty of the refund obligation rather than providing a letter of credit”).
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we are not persuaded that escrow agreements, or other alternatives, would provide protection equal to the letters of credit that we now require. Escrow agreements would put an amount of money with a third party who releases it when a contingency is satisfied. The auction winner would be a party to the escrow agreement, with the possibility that the support becomes the property of an auction winner’s bankruptcy.309 Additionally, the auction winner would be required to place the same amount of funds in escrow as were disbursed by USAC, which could cause “administrative burdens” on the Commission and “could potentially delay the auction.”310 The Commission itself would need to create an escrow account, attain the money of all recipients, and manage and ensure proper payment to all recipients, an unnecessary and inefficient duplication of a system banks already have in place with letters of credit, with none of the advantages. Instead, we can rely on the expertise of banks’ experience in managing letters of credit, guaranteeing payment, and ensuring security for the Commission and ultimately the Fund. Therefore, we decline to implement escrow accounts and maintain the letter of credit requirement. 113. Finally, consistent with CAF Phase II, we will require each winning bidder to submit a bankruptcy opinion letter from outside legal counsel.311 That opinion letter must clearly state, subject only to customary assumptions, limitations, and qualifications, that in a proceeding under the Bankruptcy Code, the bankruptcy court would not treat the letter of credit or proceeds of the letter of credit as property of the account party’s bankruptcy estate, or the bankruptcy estate of any other competitive bidding process recipient-related entity requesting issuance of the letter of credit under section 541 of the Bankruptcy Code.312 The West Virginia Council argues that the bankruptcy opinion letter requirement is unduly burdensome and should be eliminated “to accommodate non-traditional service providers like co- ops, non-profits, and government entities . . . .”313 However, it is important to receive confirmation from each winning bidder that its letter of credit would not be consolidated in the estate. Therefore, we decline to eliminate this requirement and conclude that the limited burden imposed on winning bidders to obtain this letter is outweighed by our policy goal to be fiscally responsible with finite universal service funds. G. Defaults 114. We next adopt rules that establish the framework under which a Rural Digital Opportunity Fund winning bidder will be subject to a forfeiture under section 503 of the Act if it defaults on its winning bid(s) before it is authorized to begin receiving support.314 A recipient will be considered in default and will be subject to forfeiture if it fails to timely file a long-form application, fails to meet the document submission deadlines outlined above, is found ineligible or unqualified to receive support, or otherwise defaults on its bid or is disqualified for any reason prior to the authorization of support.315 Consistent with CAF Phase II, a winning bidder will be subject to the base forfeiture for each separate violation of the Commission’s rules. 115. For Rural Digital Opportunity Fund competitive bidding purposes, we define a violation as any form of default with respect to each geographic unit subject to a bid. We maintain that each violation should not be unduly punitive and expect the forfeiture to be proportionate to the overall scope
309 CAF Phase II Auction Order, 31 FCC Rcd at 5990, para. 120. 310 See id. at 5985, para. 105. 311 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6819, Appendix A 54.804(c)(3); see also CAF Phase II Auction Order, 31 FCC Rcd at 5992, para. 125. 312 11 U.S.C. § 541. 313 West Virginia Council Comments at 11. 314 See 47 CFR § 1.21004. This forfeiture payment shall be in lieu of the requirements of Section 1.21004(b) of the Commission’s rules with respect to default payments. See id. § 1.21004(b). 315 CAF Phase II Auction Order, 31 FCC Rcd at 6000, para. 144.
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of the winning bidder’s bid.316 We conclude that it is reasonable to subject all bidders to the same $3,000 base forfeiture per violation subject to adjustment based on the criteria set forth in our forfeiture guidelines.317 To determine the final forfeiture amount, the Commission’s Enforcement Bureau will consider the “nature, circumstances, extent and gravity of the violations.”318 116. No commenter specifically opposed the Commission’s original proposal to establish the forfeiture owed for an auction default. However, Windstream characterized the CAF Phase II forfeiture as “modest” and “apparently insufficient to prevent [defaulters] from bidding.”319 Windstream further noted that “the forfeiture penalties proposed against [defaulters], which range from $1,242 to $30,000 did not deter these entities from bidding.”320 USTelecom suggested that the Commission raise the base forfeitures, as the CAF Phase II base amounts were “not substantial enough to dissuade” uncommitted applicants from participating.321 117. We agree with commenters. Thus, to ensure that the amount of the base forfeiture is not disproportionate to the amount of an entity’s bid, we also limit the total base forfeiture to 15% of the bidder’s total bid amount for the support term, which is an increase from the CAF Phase II auction limit of 5%.322 We expect this will further ensure serious participation, without being overly burdensome and punitive to defaulters. As a condition of participating in the Rural Digital Opportunity Fund auction, entities will acknowledge that they are subject to a forfeiture in the event of an auction default. Thus, we maintain that by adopting rules governing forfeitures for defaults, “we will impress upon recipients the importance of being prepared to meet all our requirements for the post-selection review process, and emphasize the requirement that they conduct a due diligence review to ensure that they are qualified to participate in the . . . competitive bidding process and meet its terms and conditions.”323 H. Rural Digital Opportunity Fund Transitions 118. In this section, we address several issues relating to the implementation of the Rural Digital Opportunity Fund in areas currently served by price cap carriers receiving either legacy high-cost or CAF Phase II model-based support. To ensure continuity of service for consumers, we adopt specific support transition paths for census blocks served by these price cap carriers. We also consider additional issues related to the transition from CAF Phase II model-based support to Rural Digital Opportunity Fund
316 Id. 317 47 CFR § 1.80(b)(8), note to paragraph (b)(8). As the Commission reasoned in its CAF Phase II decision, $3,000 base forfeiture amount is equivalent to the base forfeiture that is imposed for failing to file required forms or information with the Commission. CAF Phase II Auction Order, 31 FCC Rcd at 6000, para. 143. 318 47 CFR § 1.80(b)(8). See also 47 U.S.C. § 503(b)(2)(B) (describing per-violation caps); 47 CFR § 1.80(b)(8), note to paragraph (b)(8) (Guidelines for Assessing Forfeiture). 319 See Windstream Comments at 19. 320 See Windstream Reply Comments at 16-17. 321 USTelecom November 29, 2019, Ex Parte Letter at 4. 322 This would occur in situations where the dollar amount associated with the bid is low. For example, assume Bidder A bids to serve 100 census block groups for $100,000 over the support term. We would impose a base forfeiture of $15,000 (15% of $100,000) because otherwise the base forfeiture would be $300,000, three times the entire bid amount ($3,000 x 100 CBGs). In contrast, if Bidder B bids to serve 50 census block groups for $1,000,000 over the support term, we would impose a base forfeiture of $150,000 ($3,000 x 50 CBGs), which is 15% of the total bid. 323 CAF Phase II Auction Order, 31 FCC Rcd at 6000, para. 145; see also UTC Comments at 19 (asserting “these enforcement mechanisms are necessary to ensure that applicants and winning bidders demonstrate their qualifications and comply with their performance requirements, so that available funding is put to good use”).
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support, including the continuing responsibilities of incumbent price cap carriers no longer receiving support to serve specific areas. 119. In the NPRM, the Commission sought comment on adopting a transition period methodology for incumbent price cap carriers receiving disaggregated legacy support similar to the approach employed following the CAF Phase II auction.324 Specifically, the Commission proposed that, in areas where an incumbent price cap carrier receives disaggregated legacy support and subsequently it or another provider becomes the authorized Rural Digital Opportunity Fund support recipient, the incumbent will cease receiving disaggregated legacy support on the first day of the month after it is authorized to receive Rural Digital Opportunity Fund support.325 In legacy high-cost support areas where no Rural Digital Opportunity Fund support is authorized, the Commission proposed allowing the incumbent to continue receiving disaggregated support until further Commission action.326 Finally, the Commission proposed ceasing disaggregated legacy support payments to incumbent carriers in any census block deemed ineligible for the Rural Digital Opportunity Fund on the first day of the month after the final Rural Digital Opportunity Fund eligible areas list is released.327 120. Likewise, the Commission sought comment on transitioning support in areas served by CAF Phase II model-based support recipients.328 In particular, the Commission asked whether these carriers should receive an additional seventh year of model-based support, given the potential timing of a Rural Digital Opportunity Fund auction, and, if so, whether that additional support should be made available to all carriers receiving model-based support or only a certain subset of those carriers.329 The Commission also sought comment on whether the seventh year of support should be modified in any way, including whether it should cover all of 2021 or just a portion of the year, as well as whether any additional obligations should be tied to this support.330 Finally, the Commission asked parties to highlight any additional issues related to the transition of support.331 121. Commenters broadly supported ensuring appropriate transitions to Rural Digital Opportunity Fund auction support and encouraged the Commission to affirm that all CAF Phase II model- based support recipients are entitled to a full seventh year of funding.332 In areas won by bidders in the Rural Digital Opportunity Fund auction, CenturyLink proposed that the Commission authorize all auction winners on January 1, 2022, with legacy transition support and CAF Phase II model-based support continuing through that time.333 Frontier argued that, in areas where the Rural Digital Opportunity Fund auction winner is not the incumbent price cap carrier, the Commission must provide continued support to existing CAF Phase II providers to ensure continued voice and broadband services, proposing a six-year
324 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6808-09, paras. 95-99. 325 Id. at 6809, para. 98. 326 Id. 327 Id. at 6809, para. 97. 328 Id. at 6809-10, paras. 100-104. 329 Id. at 6810, para. 101. 330 Id. at para. 103. 331 Id. at para. 104. 332 USTelecom Comments at 31-33; ACA Connects Comments at 26-28; Muscogee Comments at 13-14; Windstream Comments at 23; NTCA Comments at 34-35; ITTA Comments at 28-29. ACA Connects Reply Comments at 31-32; AT&T Reply Comments at 8-9; Frontier Reply Comments at 7-8; PennPUC Reply Comments at 23; USTelecom Reply Comment at 16; WISPA Replay Comments at 42-43; Windstream Reply Comments at 22- 23. 333 CenturyLink Comments at 5, 7-8.
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phase out of this support at periods equal to the inverse of the new provider’s deployment milestones.334 ITTA also argued for continued support for the incumbent price cap carriers in these areas, but instead proposed that the incumbent receive support at the level of the winning bidder in the respective service area until the winning bidder is able to serve all the locations currently served by the incumbent.335 In areas where there is no Rural Digital Opportunity Fund auction winner, Frontier and ITTA encouraged the Commission to provide existing price cap carriers with sufficient support to continue providing broadband and voice service.336 USTelecom, Windstream, and ITTA further advocated for continued support to incumbent price cap carriers in areas where auction winners are not authorized by the end of 2021.337 Additionally, CenturyLink and NTCA proposed extending ongoing support in areas deemed ineligible for the Rural Digital Opportunity Fund.338 Other commenters highlighted the need for transitional support and encouraged the Commission to tie specific metrics or obligations to this support.339 1. Transition for Legacy High-Cost Support Areas 122. For incumbent price cap carriers currently receiving support through the disaggregated legacy high-cost support mechanism, we determine that adopting a transition to Rural Digital Opportunity Fund auction support that builds on the approach employed following the CAF Phase II auction will provide necessary clarity as we implement a new support mechanism.340 As we noted when we adopted the transitions to CAF Phase II auction support, such an approach will “protect customers of current support recipients from a potential loss of service, and minimize the disruption to recipients of frozen legacy support from a loss of funding” while at the same time ensuring that finite universal service funds are used responsibly.341 123. First, in areas currently funded by disaggregated legacy support that are subsequently won in the Rural Digital Opportunity Fund auction by the incumbent price cap carrier, the incumbent will cease receiving disaggregated legacy support on the first day of the month following its authorization to receive Rural Digital Opportunity Fund support. Likewise, in legacy high-cost support areas won in the Rural Digital Opportunity Fund auction by new providers, the incumbent will cease receiving disaggregated legacy support the first day of the month after the new ETC is authorized to receive such support. In these instances, we believe it is appropriate to transition to the new support mechanism as soon as possible to ensure that finite support dollars are used most efficiently.342
334 Frontier Comments at 17-18. 335 ITTA Comments at 31-32. 336 Frontier Comments at 18-19; ITTA Comments at 32. 337 USTelecom Comments at 29-31; Windstream Comments at 22-23; ITTA Comments at 29-30. 338 CenturyLink Comments at 5, 7-8; NTCA Comments at 35. 339 Nebraska PSC Comments at 6-7; ADTRAN Comments at 15. 340 See e.g., Connect America Fund et al., WC Docket No. 10-90, Report and Order, FCC 19-8, at 4-6, paras. 11-16 (Feb. 15, 2019) (Phase II Transitions Order). We note that Alaska Communications submitted comments highlighting “specific issues associated with the end of the CAF Phase II support for price cap carriers because these issues are likely to recur when CAF Phase II Frozen Support expires in Alaska.” See Comments of Alaska Communications, WC Docket Nos. 19-126, 10-90, at 1 (Sept. 20, 2019). Because we have determined that census blocks that are served by price cap carriers that serve non-contiguous areas and elected to receive frozen support in lieu of CAF Phase II model-based support will not be included in the Rural Digital Opportunity Fund auction, we do not address the issues raised by Alaska Communications at this time. 341 Phase II Transitions Order, FCC 19-8, at para. 11. 342 To the extent that any carrier believes additional support is necessary, it may request a waiver pursuant to section 1.3 of the Commission’s rules. See 47 CFR § 1.3. See also Phase II Transitions Order, FCC 19-8, at para. 26 (“In (continued….) 53 Federal Communications Commission FCC 20-5
124. We recognize that there may be eligible areas in the Rural Digital Opportunity Fund auction that see significant interest, but do not receive a winning bid. For these areas, we revisit the Commission’s prior approach of extending disaggregated legacy support on an interim basis until further Commission action.343 As we previously noted, continued legacy support in auction-eligible, high-cost areas was provided on an interim basis pending further Commission action.344 Thus, carriers receiving legacy support have been on notice that this support would not be provided in perpetuity. We now conclude that price cap carriers receiving legacy support in areas that do not receive a winning bid will cease receiving such support on the first day of the month following the close of Phase I of the auction. These support amounts will instead be included as part of the budget for Phase II of the auction. We also decline to extend additional support to these carriers to maintain fixed voice services in these areas. As the Commission’s most recent data indicate, mobile voice subscriptions constitute almost 75% of the overall consumer voice subscriptions in the United States.345 Given the increasing ubiquity of fixed and mobile voice services, dedicating continued support for fixed voice services would be an inefficient use of our finite universal service dollars. Instead, we conclude that directing support toward deploying more robust broadband services, rather than continuing to maintain current minimum service levels, is the best use of this funding. We note, however, that these areas will be included in Phase II of the Rural Digital Opportunity Fund auction and thus price cap carriers currently serving these areas will have the opportunity to bid on and again receive support to provide voice and broadband services in these areas. 125. In all census blocks deemed ineligible for the Rural Digital Opportunity Fund auction, incumbent price cap carriers will no longer receive legacy support beginning the first day of the month following release of the final Rural Digital Opportunity Fund eligible areas list for Phase I of the auction.346 Because these areas will be excluded from Phase I of this auction, the Commission has determined that continued legacy support for these areas is no longer necessary. Thus, we will cease distributing legacy support as soon as possible in order to preserve our finite universal service funds, instead focusing support to areas in the greatest need of broadband deployment.
(Continued from previous page) evaluating requests for a waiver, the Commission will consider any relevant facts presented by the carrier that demonstrate it is necessary and in the public interest for the price cap carrier to receive that additional funding to maintain reasonably priced voice service. Examples of such facts would include not only all revenues derived from network facilities that are supported by universal service but also revenues derived from unregulated and unsupported services. We do not, however, expect to grant these requests routinely, and caution petitioners that we generally intend to subject such requests to a rigorous, thorough and searching review comparable to a total company earnings review”). 343 Phase II Transitions Order, FCC 19-8, at para. 13. 344 Id. at para. 11. 345 See FCC, Office of Economics and Analytics, Industry Analysis Division, Voice Telephone Services: Status as of December 31, 2017, at 2 (Aug. 2019), https://docs.fcc.gov/public/attachments/DOC-359343A1.pdf. 346 Rural Digital Opportunity Fund NPRM, 34 FCC Rcd at 6809, para. 97.
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Transition of Price Cap Carriers’ Legacy Support
Rural Digital Opportunity Fund Census Block Type Incumbent Transition Schedule
Receives legacy support until the first day of the Won at auction by month following its authorization, then the incumbent price cap carrier transitions to Rural Digital Opportunity Fund support Receives legacy support until the first day of the month following the new provider’s authorization; Won at auction by new provider then receives Rural Digital a new provider Opportunity Fund support
Receives legacy support until the first day of the Not won at auction month following close of the auction
Receives legacy support until the first day of the Not eligible for auction month following release of the final eligible areas list
2. Transition for Areas Receiving CAF Phase II Model-Based Support 126. Next, we address support transitions in areas where incumbent price cap carriers currently receive CAF Phase II model-based support. As with our approach for legacy support transitions, we have attempted to strike a balance between properly allocating our finite resources and ensuring that consumers across the country have access to uninterrupted services. We note at the outset that the Commission, in establishing the six-year term of support for model-based support recipients that would extend through 2020, intended to conduct a competitive bidding process in areas served by these carriers “no later than the end of 2019 to ensure there is continuity and a transition path” to the next support mechanism.347 Though we did not meet this initial goal, we intend to conduct Phase I of the Rural Digital Opportunity Fund before the end of 2020. However, we have learned from our experience with the CAF Phase II competitive bidding process that additional work will remain post-auction before winning bidders will be authorized to receive Rural Digital Opportunity Fund support and provide the required voice and broadband service. Because this work likely will stretch into 2021, we revisit the previously established term of support for incumbent price cap carriers.348 127. In the December 2014 CAF Phase II Order, the Commission recognized the importance of providing a transition path between recipients of CAF Phase II model-based support and recipients of funding under a new support mechanism. Specifically, the Commission determined that it would offer incumbent price cap carriers the option of electing an additional year of support—through calendar year 2021—if they did not win at, or chose not to participate in, the subsequent competitive bidding process.349 Because of the timing considerations regarding Phase I of Rural Digital Opportunity Fund explained above, we now determine that an additional seventh year for carriers receiving model-based support is necessary to ensure continuity in service for consumers and to provide a reasonable support glide path as we transition from one support mechanism to another. This additional seventh year will not be limited to
347 December 2014 Connect America Order, 29 FCC Rcd at 15666, para. 31. 348 Id. at 15666-67, para. 32. 349 Id.
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carriers that do not win in Phase I of the Rural Digital Opportunity Fund auction or carriers that do not participate in the auction; instead it will be available to all price cap carriers that elected the offer of model-based support in exchange for meeting defined service obligations. We direct the Bureau to determine and implement a mechanism that will enable these price cap carriers to elect whether to receive an additional seventh year of support. 128. We clarify that in census blocks where a price cap carrier elects not to receive a seventh year of model-based support, it is indicating that ongoing model-based support is not necessary to maintain voice and broadband services in these areas. Thus, the carrier will receive no further support after the conclusion of its six-year term (i.e., December 31, 2020), even if these areas are eligible for the Rural Digital Opportunity Fund auction. Following Phase I of the auction, the provider authorized to receive funding in these areas—whether the incumbent price cap carrier or a new provider—will begin receiving Rural Digital Opportunity Fund support the first day of the month after it is authorized. For areas where no qualifying bid is received in Phase I of the Rural Digital Opportunity Fund auction, as well as for areas deemed ineligible for Phase I of the Rural Digital Opportunity Fund auction, the incumbent price cap carrier’s model-based support will cease on December 31, 2020 and no further support will be provided in these areas.350 Transition for Price Cap Carriers in Areas Where a Carrier Declines a Seventh Year of Model-Based Support Rural Digital Opportunity Fund Incumbent Transition Schedule Census Block Type Receives model-based support through 2020; Won at auction by begins receiving Rural Digital Opportunity the incumbent price cap carrier Fund support the first day of the month after it is authorized Receives model-based support through 2020; Won at auction by new provider begins receiving Rural Digital a new provider Opportunity Fund support the first day of the month after it is authorized Not won at auction Receives model-based support through 2020 Not eligible for auction Receives model-based support through 2020 129. In census blocks where a price cap carrier elects to receive a seventh year of model-based support, we clarify that the carrier will receive a full seventh calendar year of support—from January 2021 through December 2021—regardless of whether Rural Digital Opportunity Fund support is authorized in these areas in 2021. Thus, in areas where a price cap carrier currently receives model-based support that are subsequently won in the Rural Digital Opportunity Fund auction by a new provider, the incumbent price cap carrier will continue to receive model-based support through 2021, even if the new provider is authorized to receive Rural Digital Opportunity Fund support in 2021. We conclude providing support to both the incumbent price cap carrier and the new Rural Digital Opportunity Fund provider in these areas for the limited duration of 2021 will help facilitate an appropriate transition to a new ETC.351 We note that price cap carriers receiving the seventh year of model-based support will “be required to continue providing broadband with performance characteristics that remain reasonably
350 See supra para. 124 (explaining that providing additional support to maintain fixed voice services would be an inefficient use of funding, given the prevalence of mobile voice services). 351 December 2014 Connect America Order, 29 FCC Rcd at 15666-67, para. 32.
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comparable to the performance characteristics of terrestrial fixed broadband service in urban America, in exchange for ongoing CAF Phase II support.”352 130. Similarly, in census blocks where a price cap carrier elects to receive a seventh year of model-based support and ultimately becomes the authorized Rural Digital Opportunity Fund support recipient, the price cap carrier will continue to receive support at its model-based levels through 2021, with Rural Digital Opportunity Fund support levels commencing in January 2022.353 We decline to adopt USTelecom’s proposal that incumbent price cap carriers be allowed to choose the greater of their model- based support or RDOF support amount to receive during the remainder of 2021.354 We observe that the reserve price for the RDOF auction is based on the support amounts calculated by the model and likely will be bid down by participants in the auction. Thus, in most, if not all, cases a price cap carrier’s model-based support amount will be greater than its Rural Digital Opportunity Fund support amount. Relatedly, in some instances, the incumbent price cap carrier may wish to expand its service area from its current CAF Phase II model-based supported areas and may bid on and be authorized to receive support in census blocks eligible for the Rural Digital Opportunity Fund that are adjacent to areas in which the carrier receives model-based support. Because we expect the amount of model-based support that a carrier is receiving in a certain area to be higher than the amount of Rural Digital Opportunity Fund support it will receive, we expect these carriers to use the additional model-based support they receive in 2021 to begin the process of planning their buildouts for any adjacent, non-model-based support census blocks they may win. 131. In auction-eligible census blocks where a price cap carrier elects to receive a seventh year of model-based support and no qualifying bid is received in Phase I of the Rural Digital Opportunity Fund auction, the incumbent price cap carrier will continue to receive model-based support until the end of 2021. At that point, no further support will be provided to carriers serving these areas. As the Commission previously noted, the state-level commitment procedure for incumbent price cap carriers was intended to be limited in scope and duration.355 Though we are providing carriers with a potential seventh year of support, this option is limited in duration and, as previously contemplated by the Commission, is a “a gradual transition to the elimination of support.”356 We therefore conclude that extending support in these areas beyond the seven-year term simply to maintain substandard broadband levels would be an inefficient use of our limited universal service funds. Moreover, providing additional support simply to maintain fixed voice services in these areas is an inefficient use of funding given the ubiquity of mobile voice services.357 Instead, we determine that these funds should be aimed at deploying high-speed broadband networks in rural communities across the country. 132. Likewise, census blocks where a price cap carrier elects to receive a seventh year of model-based support that are deemed ineligible for the Rural Digital Opportunity Fund auction will cease receiving model-based support at the end of 2021. Because the Commission, by excluding these blocks from Phase I of this auction, has determined that ongoing model-based support for these areas is no longer necessary, no further support will be provided to carriers serving these blocks after 2021. This approach is consistent with our decision to stop providing legacy support in areas deemed ineligible for both the CAF Phase II auction and the Rural Digital Opportunity Fund auction and allows funding to flow to areas in the greatest need of broadband deployment.
352 USF/ICC Transformation Order, 26 FCC Rcd at 17726- 27, para. 163. 353 See supra para. 53 (aligning service milestones to occur on December 31 of each year). 354 US Telecom Comments at 22; Letter from Mike Saperstein, Vice President, Policy & Advocacy, USTelecom, to Marlene H. Dortch, Secretary, FCC, at 1-2 (Nov. 29, 2019). See also AT&T Reply Comments at 9. 355 USF/ICC Transformation Order, 26 FCC Rcd at 17732, para. 178. 356 December 2014 Connect America Order, 29 FCC Rcd at 15666-67, para. 32. 357 See supra para. 124.
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Transition for Price Cap Carriers in Areas Where a Carrier Elects to Receive a Seventh Year of Model-Based Support Rural Digital Opportunity Fund Incumbent Transition Schedule Census Block Type Receives model-based support through 2021; Won at auction by transitions to Rural Digital Opportunity Fund the incumbent price cap carrier support on January 1, 2022 Receives model-based support through 2021; Won at auction by new provider receives RDOF support the first a new provider day of the month following authorization Not won at auction Receives model-based support through 2021 Not eligible for auction Receives model-based support through 2021
3. Additional Transition Issues 133. Several commenters sought clarification from the Commission on the responsibilities of an incumbent price cap carrier once a new provider is authorized to receive Rural Digital Opportunity Fund support in an area previously served by the incumbent. Frontier contended that price cap carriers must be released from incumbent obligations, including the obligation to provide voice services, in areas where they cease to receive Rural Digital Opportunity Fund support.358 USTelecom proposed requiring Rural Digital Opportunity Fund auction winners to offer voice services beginning in the first month after they receive Rural Digital Opportunity Fund support.359 Likewise, Windstream and INCOMPAS stated that new providers should be able to provide voice service on day one of their support term.360 Commenters also encouraged the Commission to address additional issues regarding the responsibilities of price cap carriers no longer receiving support to serve specific areas.361 Conversely, some opposed commenters’ requests to eliminate ETC obligations and preempt state and discontinuance requirements.362 134. The Commission previously addressed the issue of ETC obligations as funding transitions to new mechanisms. In the December 2014 CAF Phase II Order, the Commission concluded that it was in the public interest to forbear, pursuant to section 10 of the Communications Act of 1934, as amended, from enforcing a federal high-cost requirement that price cap carriers offer voice telephony service throughout their service areas pursuant to section 214(e)(1)(A) in three types of geographic areas: (1) low-cost census blocks, (2) census blocks served by an unsubsidized competitor, as defined in our rules, offering voice and broadband at speeds of 10/1 Mbps to all eligible locations, and (3) census blocks where another ETC is receiving federal high-cost support to deploy modern networks capable of providing voice and broadband to fixed locations.363 At that time, the Commission also noted that price
358 Frontier Comments at 19-22; Frontier Reply Comments at 10. See also AT&T Reply Comments at 10. 359 USTelecom Comments at 27. 360 Windstream Comments at 23; INCOMPAS Comments at 13. 361 Windstream Comments at 25-26 (proposing the adoption of streamlined requirements governing Section 214 discontinuance, ETC relinquishment, and relief from COLR obligations); USTelecom Comments at 28-29 (noting that existing providers should “not be bound by Section 214 discontinuance processes once a new high-cost ETC is funded in an area”); Frontier Comments at 19-22 (encouraging the commission to release price cap carriers from their incumbent obligations, forbear from section 214, and preempt state application of COLR obligations in areas where another provider is authorized to receive support); Frontier Reply Comments at 8-9; USTelecom Reply Comments 14-16. 362 NASUCA Reply Comments at 6-8; PennPUC Reply Comments at 10-21. 363 December 2014 Connect America Order, 29 FCC Rcd at 15673-74, para. 51.
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cap carriers would remain obligated to maintain existing voice service “unless and until they receive authority under section 214(a) to discontinue that service.”364 135. The same limited circumstances that required the Commission to grant forbearance to price cap carriers from the federal high-cost requirement to offer voice services in certain areas also exist here. As a result, in areas where a new provider is granted ETC status and is authorized to receive Rural Digital Opportunity Fund support, the incumbent price cap carrier will be relieved of its federal high-cost ETC obligation to offer voice telephony services in that area. As we explained when we initially granted such forbearance, because there is another ETC in these areas required to offer voice and broadband services to fixed locations that meet the Commission’s public service obligations, we conclude that enforcement of the requirement that price cap carriers offer voice telephony in these areas “is not necessary to ensure that the charges, practices, or classifications of price cap carriers are just and reasonable and not unjustly or unreasonably discriminatory in specific geographic areas.”365 We also clarify that this forbearance applies to census blocks deemed ineligible for the Rural Digital Opportunity Fund by virtue of being served by an unsubsidized competitor. 136. Our decision to extend this limited forbearance to the Rural Digital Opportunity Fund context does not redefine price cap carriers’ service areas or revoke price cap carriers’ ETC designations in these areas. Thus, our action does not relieve ETCs of their other “incumbent-specific obligations” like interconnection and negotiating unbundled network elements pursuant to sections 251 and 252 of the Act.366 Moreover, these price cap carriers must continue to satisfy all Lifeline ETC obligations by offering voice telephony service to qualifying low-income households in areas in which they are subject to this limited forbearance.367 Finally, price cap carriers in these areas remain subject to other Title II requirements, including ensuring that voice telephony rates remain just and reasonable and the nondiscrimination obligations of sections 201 and 202 of the Act.368 Additionally, we decline to preempt any state regulations or obligations to which these carriers may be subject.369 Commenters make only vague, unsubstantiated claims about burdensome state obligations in support of these requests. Price cap carriers must continue to comply with state requirements, including carrier of last resort obligations, to the extent applicable. We similarly defer to the states’ judgment in assuring that the local rates that price cap carriers offer in the areas from which we forbear remain just and reasonable. Price cap carriers will remain subject to ETC obligations other than those covered by our forbearance unless or until they relinquish their ETC designations in those areas pursuant to section 214(e)(4). As we transition to a new funding mechanism to further our goal of supporting the deployment of both voice and broadband- capable networks, the existing service areas and corresponding obligations will help preserve existing voice service for consumers until the Rural Digital Opportunity Fund is fully implemented, and ensure that even the most remote, extremely high-cost areas are served, consistent with our universal service goals and principles. 137. More generally, price cap carriers must continue to maintain existing voice service until they receive discontinuance authority under section 214(a) of the Act and section 63.71 of the
364 Id. 365 Id. at 15676, para. 56. 366 Id. at 15679-80, para. 67. See also 47 U.S.C. §§ 251, 252. 367 See Wireline Competition Bureau Provides Guidance Regarding Filing Procedures for Eligible Telecommunications Carriers Seeking to Invoke Forbearance Granted by Lifeline Modernization Order, 31 FCC Rcd 12672 (WCB 2016). 368 December 2014 Connect America Order, 29 FCC Rcd at 15676, para. 58. See also 47 U.S.C. §§ 201, 202. 369 December 2014 Connect America Order, 29 FCC Rcd at 15680, para. 68 (noting that the decision to not preempt state obligations does not constitute a taking).
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Commission’s rules.370 As noted above, several commenters have requested that the Commission adopt a streamlined section 214 discontinuance process for price cap carriers that are replaced by a new provider receiving high-cost support. We are not persuaded that such a process would benefit consumers in these areas. The Commission’s discontinuance rules are designed to ensure that customers are fully informed of any proposed change that will reduce or end service, ensure appropriate oversight by the Commission of such changes, and provide an orderly transition of service, as appropriate. This process allows the Commission to minimize harm to customers and to satisfy its obligation under the Act to protect the public interest.371 138. In evaluating a section 214 discontinuance application, the Commission generally considers a number of factors, including the existence, availability, and adequacy of alternatives.372 By examining these factors, the Commission can ensure that the removal of a voice service option from the marketplace occurs in a manner that respects consumer expectations and needs. Thus, the Commission will deny a discontinuance application if it would leave customers or other end users in the proposed area without the ability to receive voice service or a reasonable alternative, or if the public convenience and necessity would be otherwise adversely affected. In such circumstances, the Commission will require price cap carriers to continue offering voice telephony services in those areas in those instances where there is no reasonable alternative. We note that an authorization to receive Rural Digital Opportunity Fund support includes an expectation that the provider will offer a reasonable voice service alternative satisfying section 63.602(b) of the Commission’s rules, but we will retain the discontinuance process to confirm that it is doing so. Adopting a streamlined process for areas in which we grant limited forbearance would prevent us from conducting the thorough review process necessary to ensure whether appropriate alternatives are available to consumers or the present or future public convenience and necessity would be adversely affected by such a discontinuance. 139. Finally, we clarify the specific timing to the grant of limited forbearance to incumbent price cap carriers that are replaced by a new provider. First, we find that these carriers will be relieved of their federal high-cost ETC obligation to offer voice telephony in specific census blocks on the first day of the month after a new ETC is authorized to receive Rural Digital Opportunity Fund support in those blocks. Thus, the new provider receiving Rural Digital Opportunity Fund support should be prepared to provide voice service throughout its service areas, either through its own facilities or a combination of its own and other ETC’s facilities, on the first day of that month. Price cap carriers electing to receive a seventh year of model-based support will maintain their obligation to provide both voice and broadband service throughout 2021, as explained above.373 These carriers will be relieved of their federal high-cost ETC obligation to offer voice telephony in specific census blocks on January 1, 2022, regardless of when a new ETC is authorized to receive Rural Digital Opportunity Fund support. Finally, incumbent price cap carriers that decline a seventh year of model-based support will be relieved of the federal high-cost ETC obligation to offer voice telephony on the first day of the month after a new Rural Digital Opportunity Fund support recipient is authorized to receive support. IV. PROCEDURAL MATTERS 140. Paperwork Reduction Act Analysis. This document contains new and modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA) Public Law
370 47 U.S.C. § 214(a), 47 C.F.R. § 63.71. 371 See 47 U.S.C. § 201. 372 Southwestern Bell Tel. Co., US West Commc’ns, Bell Atlantic Tel. Cos., Bellsouth Tel. Cos. Applications for Authority Pursuant to Section 214 of the Communications Act of 1934 to Cease Providing Dark Fiber Service, File Nos. W–P–C–6670, W–P–D–364, Memorandum Opinion and Order, 8 FCC Rcd 2589, 2600, para. 54 (1993); see also Verizon Expanded Interconnection Discontinuance Order, 18 FCC Rcd at 22742, para. 8. 373 See supra para. 129.
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104-13. It will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002,374 we previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees. We describe impacts that might affect small businesses, which includes most businesses with fewer than 25 employees, in the Final Regulatory Flexibility Analysis (FRFA) in Appendix B, infra. 141. Final Regulatory Flexibility Analysis. The Regulatory Flexibility Act of 1980 (RFA) requires that an agency prepare a regulatory flexibility analysis for notice and comment rulemakings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” Accordingly, we have prepared a FRFA concerning the possible impact of the rule changes contained in the Report and Order on small entities. The FRFA is set forth in Appendix B. 142. Congressional Review Act. The Commission has determined, and the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, concurs that this rule is non-major under the Congressional Review Act, 5 U.S.C. § 804(2). The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to 5 U.S.C. § 801(a)(1)(A). V. ORDERING CLAUSES 143. Accordingly, IT IS ORDERED, pursuant to the authority contained in sections 4(i), 214, 254, 303(r), and 403 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 214, 254, 303(r), and 403, and sections 1.1 and 1.425 of the Commission’s rules, 47 CFR §§ 1.1 and 1.425 this Report and Order IS ADOPTED. The Report and Order SHALL BE EFFECTIVE 30 days after publication in the Federal Register, except for portions containing information collection requirements in sections 54.313, 54.316, 54.804, and 54.806 that have not been approved by OMB. The Federal Communications Commission will publish a document in the Federal Register announcing the effective date of these provisions. 144. IT IS FURTHER ORDERED that Part 54 of the Commission’s rules IS AMENDED as set forth in Appendix A, and that any such rule amendments that contain new or modified information collection requirements that require approval by the Office of Management and Budget under the Paperwork Reduction Act SHALL BE EFFECTIVE after announcement in the Federal Register of Office of Management and Budget approval of the rules, and on the effective date announced therein. 145. IT IS FURTHER ORDERED that the Commission SHALL SEND a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. § 801(a)(1)(A).
374 Small Business Paperwork Relief Act of 2002, Pub. L. No. 107-198, 116 Stat 729 (2002); see 44 U.S.C. § 3506(c)(4).
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IT IS FURTHER ORDERED that the Commission’s Consumer and Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch Secretary
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APPENDIX A
Final Rules
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR Part 54 to read as follows: PART 54- UNIVERSAL SERVICE 1. The authority citation for part 54 continues to read as follows: Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 229, 254, 303(r), 403, 1004, and 1302, unless otherwise noted. 2. Amend § 54.310 by adding paragraphs (g) and (h) to read as follows: § 54.310 Connect America Fund for Price Cap Territories—Phase II. * * * * * (g) Extended term of model-based support. Eligible telecommunications carriers receiving model-based support may elect to receive a seventh year of such support. An eligible telecommunications carrier electing to receive this additional year of support makes a state-level commitment to maintain the required voice and broadband services in the areas for which it receives support during this extended term. The Wireline Competition Bureau will implement a mechanism to enable an eligible telecommunications carrier to elect whether to receive an additional seventh year of support. (h) Transition to Rural Digital Opportunity Fund support. (1) In areas where the eligible telecommunications carrier elects to receive an optional seventh year of model-based support pursuant to paragraph (g) of this section, it shall receive such support for a full calendar year, regardless of the disposition of these areas in the Rural Digital Opportunity Fund auction. (i) If the eligible telecommunications carrier becomes the winning bidder in the Rural Digital Opportunity Fund auction in these areas, it shall continue to receive model-based support through December 31, 2021. Thereafter, it shall receive monthly support in the amount of its Rural Digital Opportunity Fund winning bid. (ii) If another provider is the winning bidder in the Rural Digital Opportunity Fund auction in these areas, the new provider shall receive monthly support in the amount of its Rural Digital Opportunity Fund winning bid starting the first day of the month following its authorization by the Wireline Competition Bureau. The eligible telecommunications carrier shall continue to receive model- based support for these areas through December 31, 2021. (iii) If there is no authorized Rural Digital Opportunity Fund auction support recipient in these areas or if these areas are deemed ineligible for the Rural Digital Opportunity Fund auction, the eligible telecommunications carrier shall continue to receive model-based support for these areas through December 31, 2021. Thereafter, it shall receive no additional support. (2) In areas where the eligible telecommunications carrier declines to receive an optional seventh year of model-based support pursuant to paragraph (g) of this section, it shall cease receiving model- based support for these areas on December 31, 2020. 3. Amend § 54.312 by adding paragraph (e) to read as follows: § 54.312 Connect America Fund for Price Cap Territories—Phase I. * * * * * (e) Eligibility for support after Rural Digital Opportunity Fund auction.
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(1) A price cap carrier that receives monthly baseline support pursuant to this section and is a winning bidder in the Rural Digital Opportunity Fund auction shall receive support at the same level as described in paragraph (a) of this section for such area until the Wireline Competition Bureau determines whether to authorize the carrier to receive Rural Digital Opportunity Fund auction support for the same area. Upon the Wireline Competition Bureau’s release of a public notice approving a price cap carrier’s application submitted pursuant to §54.315(b) and authorizing the carrier to receive Rural Digital Opportunity Fund auction support, the carrier shall no longer receive support at the level of monthly baseline support pursuant to this section for such area. Thereafter, the carrier shall receive monthly support in the amount of its Rural Digital Opportunity Fund winning bid. (2) Starting the first day of the month following the release of the final eligible areas list for the Rural Digital Opportunity Fund auction, as determined by the Wireline Competition Bureau, no price cap carrier that receives monthly baseline support pursuant to this section shall receive such monthly baseline support for areas that are ineligible for the Rural Digital Opportunity Fund auction. (3) Starting the first day of the month following the close of Phase I of the Rural Digital Opportunity Fund auction, no price cap carrier that receives monthly baseline support pursuant to this section shall receive such monthly baseline support for areas where Rural Digital Opportunity Fund auction support is not awarded at auction for an eligible area. (4) Starting the first day of the month following the authorization of Rural Digital Opportunity Fund auction support to a winning bidder other than the price cap carrier that receives monthly baseline support pursuant to this section for such area, the price cap carrier shall no longer receive monthly baseline support pursuant to this section. * * * * * 4. Amend § 54.313 to revise paragraph (e) to read as follows: § 54.313 Annual reporting requirements for high-cost recipients. * * * * * (e) In addition to the information and certifications in paragraph (a) of this section, the requirements in paragraphs (e)(1) and (2) of this section apply to recipients of Phase II, Rural Digital Opportunity Fund, Uniendo a Puerto Rico Fund Stage 2 fixed support, and Connect USVI Fund Stage 2 fixed support: * * * * * (2) Any recipient of Phase II, Rural Digital Opportunity Fund, Uniendo a Puerto Rico Fund Stage 2 fixed, or Connect USVI Fund Stage 2 fixed support awarded through a competitive bidding or application process shall provide: * * * * * (iii) Starting the first July 1st after meeting the final service milestone in § 54.310(c) or § 54.802(c) of this chapter until the July 1st after the Phase II recipient's or Rural Digital Opportunity Fund recipient’s support term has ended, a certification that the Phase II–funded network that the Phase II auction recipient operated in the prior year meets the relevant performance requirements in § 54.309 of this chapter, or that the network that the Rural Digital Opportunity Fund recipient operated in the prior year meets the relevant performance requirements in § 54.805 for the Rural Digital Opportunity Fund. * * * * * 5. Amend § 54.316 to revise paragraph (a), (b), and (c) to read as follows: § 54.316 Broadband deployment reporting and certification requirements for high-cost recipients. (a) * * * * * * * *
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(4) Recipients subject to the requirements of § 54.310(c) shall report the number of locations for each state and locational information, including geocodes, where they are offering service at the requisite speeds. Recipients of Connect America Phase II auction support shall also report the technology they use to serve those locations. * * * * * (8) Recipients subject to the requirements of § 54.802(c) shall report the number of locations for each state and locational information, including geocodes, where they are offering service at the requisite speeds. Recipients of Rural Digital Opportunity Fund support shall also report the technology they use to serve those locations. (b) * * * (5) Recipients of Rural Digital Opportunity Fund support shall provide: No later than March 1 following each service milestone specified by the Commission, a certification that by the end of the prior support year, it was offering broadband meeting the requisite public interest obligations to the required percentage of its supported locations in each state. * * * * * (c) * * * (1) Price cap carriers that accepted Phase II model-based support, rate-of-return carriers, and recipients of Rural Digital Opportunity Fund support must submit the annual reporting information required by March 1 as described in paragraphs (a) and (b) of this section. Eligible telecommunications carriers that file their reports after the March 1 deadline shall receive a reduction in support pursuant to the following schedule: * * * * * 6. Revise subpart J to part 54 to read as follows: Subpart J- Rural Digital Opportunity Fund § 54.801 Use of competitive bidding for Rural Digital Opportunity Fund. The Commission will use competitive bidding, as provided in part 1, subpart AA of this chapter, to determine the recipients of Rural Digital Opportunity Fund support and the amount of support that they may receive for specific geographic areas, subject to applicable post-auction procedures. § 54.802 Rural Digital Opportunity Fund geographic areas, deployment obligations, and support disbursements. (a) Geographic areas eligible for support. Rural Digital Opportunity Fund support may be made available for census blocks or other areas identified as eligible by public notice. (b) Term of support. Rural Digital Opportunity Fund support shall be provided for ten years. (c) Deployment obligation. (1) All recipients of Rural Digital Opportunity Fund support must complete deployment to 40 percent of the required number of locations as determined by the Connect America Cost Model by the end of the third year, to 60 percent by the end of the fourth year, and to 80 percent by the end of the fifth year. The Wireline Competition Bureau will publish updated location counts no later than the end of the sixth year. A support recipient’s final service milestones will depend on whether the Wireline Competition Bureau determines there are more or fewer locations than determined by the Connect America Cost Model in the relevant areas as follows: (i) More Locations. After the Wireline Competition Bureau adopts updated location counts, in areas where there are more locations than the number of locations determined by the Connect America Cost Model, recipients of Rural Digital Opportunity Fund support must complete deployment to 65 Federal Communications Commission FCC 20-5
100 percent of the number of locations determined by the Connect America Cost Model by the end of the sixth year. Recipients of Rural Digital Opportunity Fund support must then complete deployment to 100 percent of the additional number of locations determined by the Wireline Competition Bureau’s updated location count by end of the eighth year. If the new location count exceeds 35% of the number of locations determined by the Connect America Cost Model within their area in each state, recipients of Rural Digital Opportunity Fund support will have the opportunity to seek additional support or relief. (ii) Fewer Locations. In areas where there are fewer locations than the number of locations determined by the Connect America Cost Model, a Rural Digital Opportunity Fund support recipient must notify the Wireline Competition Bureau no later than March 1 following the fifth year of deployment. Upon confirmation by the Wireline Competition Bureau, Rural Digital Opportunity Fund support recipients must complete deployment to the number of locations required by the new location count by the end of the sixth year. Support recipients for which the new location count is less than 65 percent of the Connect America Cost Model locations within their area in each state shall have the support amount reduced on a pro rata basis by the number of reduced locations. (iii) Newly Built Locations. In addition to offering the required service to the updated number of locations identified by the Wireline Competition Bureau, Rural Digital Opportunity Fund support recipients must offer service to locations built since the revised count, upon reasonable request. Support recipients are not required to deploy to any location built after milestone year eight. (d) Disbursement of Rural Digital Opportunity Fund funding. An eligible telecommunications carrier will be advised by public notice when it is authorized to receive support. The public notice will detail how disbursements will be made. § 54.803 Rural Digital Opportunity Fund provider eligibility. (a) Any eligible telecommunications carrier is eligible to receive Rural Digital Opportunity Fund support in eligible areas. (b) An entity may obtain eligible telecommunications carrier designation after public notice of winning bidders in the Rural Digital Opportunity Fund auction. (c) To the extent any entity seeks eligible telecommunications carrier designation prior to public notice of winning bidders for Rural Digital Opportunity Fund support, its designation as an eligible telecommunications carrier may be conditioned subject to receipt of Rural Digital Opportunity Fund support. (d) Any Connect America Phase II auction participant that defaulted on all of its Connect America Phase II auction winning bids is barred from participating in the Rural Digital Opportunity Fund. § 54.804 Rural Digital Opportunity Fund application process. (a) In addition to providing information specified in § 1.21001(b) of this chapter and any other information required by the Commission, any applicant to participate in competitive bidding for Rural Digital Opportunity Fund support shall: (1) Provide ownership information as set forth in § 1.2112(a) of this chapter; (2) Certify that the applicant is financially and technically qualified to meet the public interest obligations established for Rural Digital Opportunity Fund support; (3) Disclose its status as an eligible telecommunications carrier to the extent applicable and certify that it acknowledges that it must be designated as an eligible telecommunications carrier for the area in which it will receive support prior to being authorized to receive support; (4) Describe the technology or technologies that will be used to provide service for each bid; (5) Submit any information required to establish eligibility for any bidding weights adopted by the Commission in an order or public notice;
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(6) To the extent that an applicant plans to use spectrum to offer its voice and broadband services, demonstrate it has the proper authorizations, if applicable, and access to operate on the spectrum it intends to use, and that the spectrum resources will be sufficient to cover peak network usage and deliver the minimum performance requirements to serve all of the fixed locations in eligible areas, and certify that it will retain its access to the spectrum for the term of support; (7) Submit operational and financial information. (i) If applicable, the applicant should submit a certification that it has provided a voice, broadband, and/or electric transmission or distribution service for at least two years or that it is a wholly- owned subsidiary of such an entity, and specifying the number of years the applicant or its parent company has been operating, and submit the financial statements from the prior fiscal year that are audited by an independent certified public accountant. If the applicant is not audited in the ordinary course of business, in lieu of submitting audited financial statements it must submit unaudited financial statements from the prior fiscal year and certify that it will provide financial statements from the prior fiscal year that are audited by an independent certified public accountant by a specified deadline during the long-form application review process. (A) If the applicant has provided a voice and/or broadband service it must certify that it has filed FCC Form 477s as required during this time period. (B) If the applicant has operated only an electric transmission or distribution service, it must submit qualified operating or financial reports that it has filed with the relevant financial institution for the relevant time period along with a certification that the submission is a true and accurate copy of the reports that were provided to the relevant financial institution. (ii) If an applicant cannot meet the requirements in paragraph (a)(7)(i) of this section, in the alternative it must submit the audited financial statements from the three most recent fiscal years and a letter of interest from a bank meeting the qualifications set forth in paragraph (c)(2) of this section, that the bank would provide a letter of credit as described in paragraph (c) of this section to the bidder if the bidder were selected for bids of a certain dollar magnitude. (8) Certify that the applicant has performed due diligence concerning its potential participation in the Rural Digital Opportunity Fund. (b) Application by winning bidders for Rural Digital Opportunity Fund support— (1) Deadline. As provided by public notice, winning bidders for Rural Digital Opportunity Fund support or their assignees shall file an application for Rural Digital Opportunity Fund support no later than the number of business days specified after the public notice identifying them as winning bidders. (2) Application contents. An application for Rural Digital Opportunity Fund support must contain: (i) Identification of the party seeking the support, including ownership information as set forth in § 1.2112(a) of this chapter; (ii) Certification that the applicant is financially and technically qualified to meet the public interest obligations for Rural Digital Opportunity Fund support in each area for which it seeks support; (iii) Certification that the applicant will meet the relevant public interest obligations, including the requirement that it will offer service at rates that are equal or lower to the Commission's reasonable comparability benchmarks for fixed wireline services offered in urban areas; (iv) A description of the technology and system design the applicant intends to use to deliver voice and broadband service, including a network diagram which must be certified by a professional engineer. The professional engineer must certify that the network is capable of delivering, to at least 95 percent of the required number of locations in each relevant state, voice and broadband service
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that meets the requisite performance requirements for Rural Digital Opportunity Fund support; (v) Certification that the applicant will have available funds for all project costs that exceed the amount of support to be received from the Rural Digital Opportunity Fund for the first two years of its support term and that the applicant will comply with all program requirements, including service milestones; (vi) A description of how the required construction will be funded, including financial projections that demonstrate the applicant can cover the necessary debt service payments over the life of the loan, if any; (vii) Certification that the party submitting the application is authorized to do so on behalf of the applicant; and (viii) Such additional information as the Commission may require. (3) No later than the number of days provided by public notice, the long-form applicant shall submit a letter from a bank meeting the eligibility requirements outlined in paragraph (c) of this section committing to issue an irrevocable stand-by letter of credit, in the required form, to the long-form applicant. The letter shall at a minimum provide the dollar amount of the letter of credit and the issuing bank's agreement to follow the terms and conditions of the Commission's model letter of credit. (4) No later than the number of days provided by public notice, if a long-form applicant or a related entity did not submit audited financial statements in the relevant short-form application as required, the long-form applicant must submit the financial statements from the prior fiscal year that are audited by an independent certified public accountant. (5) No later than 180 days after the public notice identifying it as a winning bidder, the long-form applicant shall certify that it is an eligible telecommunications carrier in any area for which it seeks support and submit the relevant documentation supporting that certification. (6) Application processing. (i) No application will be considered unless it has been submitted in an acceptable form during the period specified by public notice. No applications submitted or demonstrations made at any other time shall be accepted or considered. (ii) Any application that, as of the submission deadline, either does not identify the applicant seeking support as specified in the public notice announcing application procedures or does not include required certifications shall be denied. (iii) An applicant may be afforded an opportunity to make minor modifications to amend its application or correct defects noted by the applicant, the Commission, the Administrator, or other parties. Minor modifications include correcting typographical errors in the application and supplying non- material information that was inadvertently omitted or was not available at the time the application was submitted. (iv) Applications to which major modifications are made after the deadline for submitting applications shall be denied. Major modifications include, but are not limited to, any changes in the ownership of the applicant that constitute an assignment or change of control, or the identity of the applicant, or the certifications required in the application. (v) After receipt and review of the applications, a public notice shall identify each long- form applicant that may be authorized to receive Rural Digital Opportunity Fund support after the long- form applicant submits a letter of credit and an accompanying opinion letter as described in paragraph (c) of this section, in a form acceptable to the Commission. Each such long-form applicant shall submit a letter of credit and accompanying opinion letter as required by paragraph (c) of this section, in a form acceptable to the Commission no later than the number of business days provided by public notice. (vi) After receipt of all necessary information, a public notice will identify each long- 68 Federal Communications Commission FCC 20-5
form applicant that is authorized to receive Rural Digital Opportunity Fund support. (c) Letter of credit. Before being authorized to receive Rural Digital Opportunity Fund support, a winning bidder shall obtain an irrevocable standby letter of credit which shall be acceptable in all respects to the Commission. (1) Value. Each recipient authorized to receive Rural Digital Opportunity Fund support shall maintain the standby letter of credit in an amount equal to, at a minimum, one year of support, until the Universal Service Administrative Company has verified that the recipient has served 100 percent of the Connect America Cost Model-determined location total (or the adjusted Connect America Cost Model location count if there are fewer locations) by the end of year six. (i) For year one of a recipient’s support term, it must obtain a letter of credit valued at an amount equal to one year of support. (ii) For year two of a recipient’s support term, it must obtain a letter of credit valued at an amount equal to eighteen months of support. (iii) For year three of a recipient’s support term, it must obtain a letter of credit valued at an amount equal to two years of support. (iv) For year four of a recipient’s support term, it must obtain a letter of credit valued at an amount equal to three years of support. (v) A recipient may obtain a new letter of credit or renew its existing letter of credit so that it is valued at an amount equal to one year of support once it meets its optional or required service milestones. The recipient may obtain or renew this letter of credit upon verification of its buildout by the Universal Service Administrative Company. The recipient may maintain its letter of credit at this level for the remainder of its deployment term, so long as the Universal Service Administrative Company verifies that the recipient successfully and timely meets its remaining required service milestones. (vi) A recipient that fails to meet its required service milestones must obtain a new letter of credit or renew its existing letter of credit at an amount equal to its existing letter of credit, plus an additional year of support, up to a maximum of three years of support. (vii) A recipient that fails to meet two or more required service milestones must maintain a letter of credit in the amount of three year of support and may be subject to additional non- compliance penalties as described in § 54.320(d). (2) The bank issuing the letter of credit shall be acceptable to the Commission. A bank that is acceptable to the Commission is: (i) Any United States bank (A) That is insured by the Federal Deposit Insurance Corporation, and (B) That has a bank safety rating issued by Weiss of B- or better; or (ii) CoBank, so long as it maintains assets that place it among the 100 largest United States Banks, determined on basis of total assets as of the calendar year immediately preceding the issuance of the letter of credit and it has a long-term unsecured credit rating issued by Standard & Poor's of BBB- or better (or an equivalent rating from another nationally recognized credit rating agency); or (iii) The National Rural Utilities Cooperative Finance Corporation, so long as it maintains assets that place it among the 100 largest United States Banks, determined on basis of total assets as of the calendar year immediately preceding the issuance of the letter of credit and it has a long- term unsecured credit rating issued by Standard & Poor's of BBB- or better (or an equivalent rating from another nationally recognized credit rating agency); or (iv) Any non–United States bank:
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(A) That is among the 100 largest non–U.S. banks in the world, determined on the basis of total assets as of the end of the calendar year immediately preceding the issuance of the letter of credit (determined on a U.S. dollar equivalent basis as of such date); (B) Has a branch office in the District of Columbia or such other branch office agreed to by the Commission; (C) Has a long-term unsecured credit rating issued by a widely- recognized credit rating agency that is equivalent to a BBB- or better rating by Standard & Poor's; and (D) Issues the letter of credit payable in United States dollars (3) A long-form applicant for Rural Digital Opportunity Fund support shall provide with its letter of credit an opinion letter from its legal counsel clearly stating, subject only to customary assumptions, limitations, and qualifications, that in a proceeding under Title 11 of the United States Code, 11 U.S.C. 101 et seq. (the “Bankruptcy Code”), the bankruptcy court would not treat the letter of credit or proceeds of the letter of credit as property of the winning bidder's bankruptcy estate under section 541 of the Bankruptcy Code. (4) Authorization to receive Rural Digital Opportunity Fund support is conditioned upon full and timely performance of all of the requirements set forth in this section, and any additional terms and conditions upon which the support was granted. (i) Failure by a Rural Digital Opportunity Fund support recipient to meet its service milestones for the location totals determined by the Connect America Cost Model, or the location total that is adjusted by the Wireline Competition Bureau for those areas where there are fewer locations than the number of locations determined by the Connect America Cost Model, as required by § 54.802 will trigger reporting obligations and the withholding of support as described in § 54.320(d). Failure to come into full compliance during the relevant cure period as described in § 54.320(d)(1)(iv)(B) or 54.320(d)(2) will trigger a recovery action by the Universal Service Administrative Company as described in § 54.320(d)(1)(iv)(B) or § 54.806(c)(1)(i), as applicable. If the Rural Digital Opportunity Fund recipient does not repay the requisite amount of support within six months, the Universal Service Administrative Company will be entitled to draw the entire amount of the letter of credit and may disqualify the Rural Digital Opportunity Fund support recipient from the receipt of Rural Digital Opportunity Fund support or additional universal service support. (ii) The default will be evidenced by a letter issued by the Chief of the Wireline Competition Bureau, or its respective designees, which letter, attached to a standby letter of credit draw certificate, shall be sufficient for a draw on the standby letter of credit for the entire amount of the standby letter of credit. § 54.805 Rural Digital Opportunity Fund public interest obligations. (a) Recipients of Rural Digital Opportunity Fund support are required to offer broadband service with latency suitable for real-time applications, including Voice over Internet Protocol, and usage capacity that is reasonably comparable to comparable offerings in urban areas, at rates that are reasonably comparable to rates for comparable offerings in urban areas. For purposes of determining reasonable comparable usage capacity, recipients are presumed to meet this requirement if they meet or exceed the usage level announced by public notice issued by the Wireline Competition Bureau. For purposes of determining reasonable comparability of rates, recipients are presumed to meet this requirement if they offer rates at or below the applicable benchmark to be announced annually by public notice issued by the Wireline Competition Bureau, or no more than the non-promotional prices charged for a comparable fixed wireline service in urban areas in the state or U.S. Territory where the eligible telecommunications carrier receives support. (b) Recipients of Rural Digital Opportunity Fund support are required to offer broadband service meeting the performance standards for the relevant performance tier.
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(1) Rural Digital Opportunity Fund support recipients meeting the minimum performance tier standards are required to offer broadband service at actual speeds of at least 25 Mbps downstream and 3 Mbps upstream and offer a minimum usage allowance of 250 GB per month, or that reflects the average usage of a majority of fixed broadband customers as announced annually by the Wireline Competition Bureau over the 10–year term. (2) Rural Digital Opportunity Fund support recipients meeting the baseline performance tier standards are required to offer broadband service at actual speeds of at least 50 Mbps downstream and 5 Mbps upstream and offer a minimum usage allowance of 250 GB per month, or that reflects the average usage of a majority of fixed broadband customers as announced annually by the Wireline Competition Bureau over the 10–year term.. (2) Rural Digital Opportunity Fund support recipients meeting the above-baseline performance tier standards are required to offer broadband service at actual speeds of at least 100 Mbps downstream and 20 Mbps upstream and offer at least 2 terabytes of monthly usage. (3) Rural Digital Opportunity Fund support recipients meeting the Gigabit performance tier standards are required to offer broadband service at actual speeds of at least 1 Gigabit per second downstream and 500 Mbps upstream and offer at least 2 terabytes of monthly usage. (4) For each of the tiers in paragraphs (b)(1) through (3) of this section, bidders are required to meet one of two latency performance levels: (i) Low-latency bidders will be required to meet 95 percent or more of all peak period measurements of network round trip latency at or below 100 milliseconds; and (ii) High-latency bidders will be required to meet 95 percent or more of all peak period measurements of network round trip latency at or below 750 ms and, with respect to voice performance, demonstrate a score of four or higher using the Mean Opinion Score (MOS). (c) Recipients of Rural Digital Opportunity Fund support are required to bid on category one telecommunications and Internet access services in response to a posted FCC Form 470 seeking broadband service that meets the connectivity targets for the schools and libraries universal service support program for eligible schools and libraries (as described in § 54.501) located within any area in a census block where the carrier is receiving Rural Digital Opportunity Fund support. Such bids must be at rates reasonably comparable to rates charged to eligible schools and libraries in urban areas for comparable offerings. § 54.806 Rural Digital Opportunity Fund reporting obligations, compliance, and recordkeeping. (a) Recipients of Rural Digital Opportunity Fund support shall be subject to the reporting obligations set forth in § 54.313, § 54.314, and § 54.316. (b) Recipients of Rural Digital Opportunity Fund support shall be subject to the compliance measures, recordkeeping requirements and audit requirements set forth in § 54.320(a)-(c). (c) Recipients of Rural Digital Opportunity Fund support shall be subject to the non-compliance measures set forth in § 54.320(d) subject to the following modifications related to the recovery of support. (1) If the support recipient does not report it has come into full compliance after the grace period for its sixth year or eighth year service milestone as applicable or if USAC determines in the course of a compliance review that the eligible telecommunications carrier does not have sufficient evidence to demonstrate that it is offering service to all of the locations required by the sixth or eighth year service milestone as set forth in § 54.320(d)(3): (i) Sixth year service milestone. Support will be recovered as follows after the sixth year service milestone grace period or if USAC later determines in the course of a compliance review that a support recipient does not have sufficient evidence to demonstrate that it was offering service to all of the locations required by the sixth year service milestone:
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(A) If an ETC has deployed to 95 percent or more of the Connect America Cost Model location count or the adjusted Connect America Cost Model location count if there are fewer locations, but less than 100 percent, USAC will recover an amount of support that is equal to 1.25 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (B) If an ETC has deployed to 90 percent or more of the Connect America Cost Model location count or the adjusted Connect America Cost Model location count if there are fewer locations, but less than 95 percent, USAC will recover an amount of support that is equal to 1.5 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 5 percent of the support recipient’s total Rural Digital Opportunity Fund support authorized over the 10-year support term for that state; (C) If an ETC has deployed to fewer than 90 percent of the Connect America Cost Model location count or the adjusted Connect America Cost Model location count if there are fewer locations, USAC will recover an amount of support that is equal to 1.75 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 10 percent of the support recipient’s total Rural Digital Opportunity Fund support authorized over the 10-year support term for that state. (ii) Eighth year service milestone. If a Rural Digital Opportunity Fund support recipient is required to serve more new locations than determined by the Connect America Cost Model, support will be recovered as follows after the eighth year service milestone grace period or if USAC later determines in the course of a compliance review that a support recipient does not have sufficient evidence to demonstrate that it was offering service to all of the locations required by the eighth year service milestone: (A) If an ETC has deployed to 95 percent or more of its new location count, but less than 100 percent, USAC will recover an amount of support that is equal to the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (B) If an ETC has deployed to 90 percent or more of its new location count, but less than 95 percent, USAC will recover an amount of support that is equal to 1.25 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (C) If an ETC has deployed to 85 percent or more of its new location count, but less than 90 percent, USAC will recover an amount of support that is equal to 1.5 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 5 percent of the support recipient’s total Rural Digital Opportunity Fund support authorized over the 10-year support term for that state; (D) If an ETC has deployed to less than 85 percent of its new location count, USAC will recover an amount of support that is equal to 1.75 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 10 percent of the support recipient’s total Rural Digital Opportunity Fund support authorized over the 10- year support term for that state. (2) Any support recipient that believes it cannot meet the third-year service milestone must notify the Wireline Competition Bureau within 10 business days of the third-year service milestone deadline and provide information explaining this expected deficiency. If a support recipient has not made such a notification by March 1 following the third-year service milestone, and has deployed to fewer than 20 percent of the required number of locations by the end of the third year, the recipient will immediately be in default and subject to support recovery. The Tier 4 status six-month grace period as set forth in § 54.320(d)(iv) will not be applicable.
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APPENDIX B
Final Regulatory Flexibility Analysis
1. As required by the Regulatory Flexibility Act of 1980,1 as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Rural Digital Opportunity Fund NPRM.2 The Commission sought written public comment on the proposals in the Rural Digital Opportunity Fund NPRM, including comment on the IRFA. The Commission did not receive any comments in response to this IRFA. This Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.3 A. Need for, and Objectives of, the Report and Order 2. Bringing digital opportunity to Americans living on the wrong side of the digital divide continues to be the Federal Communication Commission’s top priority. It is imperative that the Commission take prompt and expeditious action to deliver on its goal of connecting all Americans, no matter where they live and work. Without access to broadband, rural communities cannot connect to the digital economy and the opportunities for better education, employment, healthcare, and civic and social engagement it provides. 3. In recent years, the Commission has made tremendous strides toward its goal of making broadband available to all Americans. But while the digital divide is closing, more work remains to be done. Therefore, in this Order, we adopt the framework for the Rural Digital Opportunity Fund. It builds on the successful model from 2018’s Connect America Fund (CAF) Phase II auction, which allocated $1.488 billion to deploy networks serving more than 700,000 unserved rural homes and businesses across 45 states. The Rural Digital Opportunity Fund represents the Commission’s single biggest step to close the digital divide by providing up to $20.4 billion to connect millions more rural homes and small businesses to high-speed broadband networks. It will ensure that networks stand the test of time by prioritizing higher network speeds and lower latency, so that those benefitting from these networks will be able to use tomorrow’s Internet applications as well as today’s. B. Summary of Significant Issues Raised by Public Comments in Response to the IRFA 4. There were no comments filed that specifically addressed the rules and policies proposed in the Rural Digital Opportunity Fund NPRM. C. Response to Comments by the Chief Counsel for Advocacy of the Small Business Administration 5. Pursuant to the Small Business Jobs Act of 2010,4 which amended the RFA, the Commission is required to respond to any comments filed by the Chief Counsel of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed rule(s) as a result of those comments. 6. The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.
1 5 U.S.C. § 603. The RFA, 5 U.S.C. §§ 601-12 has been amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). Public Law No. 104-121, 110 Stat. 857 (1996). 2 Rural Digital Opportunity Fund et al., WC Docket Nos. 19-126, 10-90, Notice of Proposed Rulemaking, 34 FCC Rcd 6778 (2019). 3 See 5 U.S.C. § 604. 4 5 U.S.C. § 604(a)(3).
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D. Description and Estimate of the Number of Small Entities to which the Rules Would Apply 7. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein.5 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.”6 In addition, the term “small business” has the same meaning as the term “small-business concern” under the Small Business Act.7 A “small-business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.8 1. Total Small Entities 8. Our actions, over time, may affect small entities that are not easily categorized at present. We therefore describe here, at the outset, three comprehensive small entity size standards that could be directly affected herein.9 First, while there are industry specific size standards for small businesses that are used in the regulatory flexibility analysis, according to data from the SBA’s Office of Advocacy, in general a small business is an independent business having fewer than 500 employees.10 These types of small businesses represent 99.9% of all businesses in the United States which translates to 28.8 million businesses.11 9. Next, the type of small entity described as a “small organization” is generally “any not- for-profit enterprise which is independently owned and operated and is not dominant in its field.”12 Nationwide, as of August 2016, there were approximately 356,494 small organizations based on registration and tax data filed by nonprofits with the Internal Revenue Service (IRS).13
5 See 5 U.S.C. § 603(a)(3). 6 See 5 U.S.C. § 601(6). 7 See 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register.” 8 See 15 U.S.C. § 632. 9 See 5 U.S.C. § 601(3)-(6). 10 See SBA, Office of Advocacy, “Frequently Asked Questions, Question 1 – What is a small business?” https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2016_WEB.pdf (June 2016). 11 See SBA, Office of Advocacy, “Frequently Asked Questions, Question 2- How many small businesses are there in the U.S.?” https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2016_WEB.pdf (June 2016). 12 5 U.S.C. § 601(4). 13 Data from the Urban Institute, National Center for Charitable Statistics (NCCS) reporting on nonprofit organizations registered with the IRS was used to estimate the number of small organizations. Reports generated using the NCCS online database indicated that as of August 2016 there were 356,494 registered nonprofits with total revenues of less than $100,000. Of this number, 326,897 entities filed tax returns with 65,113 registered nonprofits reporting total revenues of $50,000 or less on the IRS Form 990-N for Small Exempt Organizations and 261,784 nonprofits reporting total revenues of $100,000 or less on some other version of the IRS Form 990 within 24 months of the August 2016 data release date. See http://nccs.urban.org/sites/all/nccs-archive/html//tablewiz/tw.php where the report showing this data can be generated by selecting the following data fields: Report: “The Number and Finances of All Registered 501(c) Nonprofits”; Show: “Registered Nonprofits”; By: “Total Revenue Level (years 1995, Aug to 2016, Aug)”; and For: “2016, Aug” then selecting “Show Results”.
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10. Finally, the small entity described as a “small governmental jurisdiction” is defined generally as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.”14 U.S. Census Bureau data from the 2012 Census of Governments15 indicate that there were 90,056 local governmental jurisdictions consisting of general purpose governments and special purpose governments in the United States.16 Of this number there were 37, 132 General purpose governments (county17, municipal and town or township18) with populations of less than 50,000 and 12,184 Special purpose governments (independent school districts19 and special districts20) with populations of less than 50,000. The 2012 U.S. Census Bureau data for most types of governments in the local government category show that the majority of these governments have populations of less than 50,000.21 Based on this data we estimate that at least 49,316 local government jurisdictions fall in the category of “small governmental jurisdictions.”22 2. Wireline Providers 11. Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a
14 5 U.S.C. § 601(5). 15 See 13 U.S.C. § 161. The Census of Government is conducted every five (5) years compiling data for years ending with “2” and “7”. See also Program Description Census of Government, https://factfinder.census.gov /faces/affhelp/jsf/pages/metadata.xhtml?lang=en&type=program&id=program.en.COG#. 16 See U.S. Census Bureau, 2012 Census of Governments, Local Governments by Type and State: 2012 - United States-States., https://factfinder.census.gov/bkmk/table/1.0/en/COG/2012/ORG02.US01. Local governmental jurisdictions are classified in two categories - General purpose governments (county, municipal and town or township) and Special purpose governments (special districts and independent school districts). 17 See U.S. Census Bureau, 2012 Census of Governments, County Governments by Population-Size Group and State: 2012 - United States-States, https://factfinder.census.gov/bkmk/table/1.0/en/COG/2012/ORG06.US01. There were 2,114 county governments with populations less than 50,000. 18 See U.S. Census Bureau, 2012 Census of Governments, Subcounty General-Purpose Governments by Population- Size Group and State: 2012 - United States – States. https://factfinder.census.gov/bkmk/table/1.0/en/COG/2012/ORG07.US01. There were 18,811 municipal and 16,207 town and township governments with populations less than 50,000. 19 See U.S. Census Bureau, 2012 Census of Governments, Elementary and Secondary School Systems by Enrollment-Size Group and State: 2012 - United States-States, https://factfinder.census.gov /bkmk/table/1.0/en/COG/2012/ORG11.US01. There were 12,184 independent school districts with enrollment populations less than 50,000. 20 See U.S. Census Bureau, 2012 Census of Governments, Special District Governments by Function and State: 2012 - United States-States, https://factfinder.census.gov/bkmk/table/1.0/en/COG/2012/ORG09.US01. The U.S. Census Bureau data did not provide a population breakout for special district governments. 21 See U.S. Census Bureau, 2012 Census of Governments, County Governments by Population-Size Group and State: 2012 - United States-States, https://factfinder.census.gov/bkmk/table/1.0/en/COG/2012/ORG06.US01; Subcounty General-Purpose Governments by Population-Size Group and State: 2012 - United States–States, https://factfinder.census.gov/bkmk/table/1.0/en/COG/2012/ORG07.US01; and Elementary and Secondary School Systems by Enrollment-Size Group and State: 2012 - United States-States, https://factfinder.census.gov/ bkmk/table/1.0/en/COG/2012/ORG11.US01. While U.S. Census Bureau data did not provide a population breakout for special district governments, if the population of less than 50,000 for this category of local government is consistent with the other types of local governments the majority of the 38, 266 special district governments have populations of less than 50,000. 22 Id.
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combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.”23 The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer employees.24 U.S. Census Bureau data for 2012 show that there were 3,117 firms that operated that year.25 Of this total, 3,083 operated with fewer than 1,000 employees.26 Thus, under this size standard, the majority of firms in this industry can be considered small. 12. Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers and under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees.27 U.S. Census data for 2012 show that there were 3,117 firms that operated that year. Of that total, 3,083 operated with fewer than 1,000 employees.28 Thus under this category and the associated size standard, the Commission estimates that the majority of local exchange carriers are small entities. 13. Incumbent Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers.29 Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees.30 U.S. Census Bureau data indicate that 3,117 firms operated the entire year.31 Of this total, 3,083 operated with fewer than 1,000 employees.32 Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by our actions. According to Commission data, one thousand three hundred and seven (1,307) Incumbent Local Exchange Carriers reported that they were
23 See 13 CFR § 120.201. The Wired Telecommunications Carrier category formerly used the NAICS code of 517110. As of 2017 the U.S. Census Bureau definition shows the NAICS code as 517311 for Wired Telecommunications Carriers. See U.S. Census Bureau, 2017 NAICS Definition, https://www.census.gov/cgi- bin/sssd/naics/naicsrch?code=517311&search=2017. 24 See 13 CFR § 120.201, NAICS Code 517311 (previously 517110). 25 See U.S. Census Bureau, 2012 Economic Census of the United States, Table No. EC1251SSSZ5, Information: Subject Series - Estab & Firm Size: Employment Size of Firms: 2012 (517110 Wired Telecommunications Carriers). https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ5//naics~517110. 26 Id. 27 See id. § 121.201. The Wired Telecommunications Carrier category formerly used NAICS code 517110. As of 2017 the U.S. Census Bureau definition shows NAICs code 517311 for Wired Telecommunications Carriers. See https://www.census.gov/cgibin/sssd/naics/naicsrch?code=517311&search=2017. 28 See U.S. Census Bureau, American Fact Finder (Jan. 08, 2016), http://factfinder.census.gov/faces/tableservices /jsf/pages/productview.xhtml?pid=ECN_2012_US_51SSSZ5&prodType=table. 29 See 13 CFR § 121.201. The Wired Telecommunications Carrier category formerly used the NAICS code of 517110. As of 2017 the U.S. Census Bureau definition shows the NAICs code as 517311 for Wired Telecommunications Carriers. See https://www.census.gov/cgibin/sssd/naics/naicsrch?code=517311&search=2017. 30 Id. 31 See U.S. Census Bureau, 2012 Economic Census of the United States, Table No. EC1251SSSZ5, Information: Subject Series - Estab & Firm Size: Employment Size of Firms: 2012 (517110 Wired Telecommunications Carriers). https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ5//naics~517110. 32 Id.
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incumbent local exchange service providers.33 Of this total, an estimated 1,006 have 1,500 or fewer employees.34 Thus using the SBA’s size standard the majority of incumbent LECs can be considered small entities. 14. Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate NAICS Code category is Wired Telecommunications Carriers, as defined above. Under that size standard, such a business is small if it has 1,500 or fewer employees.35 U.S. Census data for 2012 indicate that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees.36 Based on this data, the Commission concludes that the majority of Competitive LECS, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers, are small entities. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. Also, 72 carriers have reported that they are Other Local Service Providers. Of this total, 70 have 1,500 or fewer employees. Consequently, based on internally researched FCC data, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities. 15. We have included small incumbent LECs in this present RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.”37 The SBA’s Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope.38 We have therefore included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts. 16. Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a definition for Interexchange Carriers. The closest NAICS Code category is Wired Telecommunications Carriers.39 The applicable size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees.40 U.S. Census Bureau data for 2012 indicate that 3,117 firms operated for the entire
33 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service). 34 Id. 35 13 CFR § 121.201 (NAICS Code 517311). 36 See U.S. Census Bureau, American Fact Finder (Jan. 08, 2016), http://factfinder.census.gov/faces/ tableservices/jsf/pages/productview.xhtml?pid=ECN_2012_US_51SSSZ2&prodType=table. 37 5 U.S.C. § 601(3). 38 Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (filed May 27, 1999). The Small Business Act contains a definition of “small business concern,” which the RFA incorporates into its own definition of “small business.” 15 U.S.C. § 632(a); 5 U.S.C. § 601(3). SBA regulations interpret “small business concern” to include the concept of dominance on a national basis. 13 CFR § 121.102(b). 39 See 13 CFR § 121.201. The Wired Telecommunications Carrier category formerly used the NAICS code of 517110. As of 2017, the U.S. Census Bureau definition shows the NAICs code as 517311 for Wired Telecommunications Carriers. See https://www.census.gov/cgi- bin/sssd/naics/naicsrch?code=517311&search=2017. 40 Id.
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year.41 Of that number, 3,083 operated with fewer than 1,000 employees.42 According to internally developed Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services.43 Of this total, an estimated 317 have 1,500 or fewer employees.44 Consequently, the Commission estimates that the majority of interexchange service providers that may be affected are small entities. 17. Operator Service Providers (OSPs). Neither the Commission nor the SBA has developed a small business size standard specifically for operator service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.45 According to Commission data, 33 carriers have reported that they are engaged in the provision of operator services. Of these, an estimated 31 have 1,500 or fewer employees and two have more than 1,500 employees.46 Consequently, the Commission estimates that the majority of OSPs are small entities. 18. Prepaid Calling Card Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for prepaid calling card providers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.47 According to Commission data, 193 carriers have reported that they are engaged in the provision of prepaid calling cards.48 Of these, an estimated all 193 have 1,500 or fewer employees and none have more than 1,500 employees.49 Consequently, the Commission estimates that the majority of prepaid calling card providers are small entities. 19. Local Resellers. The SBA has developed a small business size standard for Telecommunications Resellers which includes Local Resellers.50 The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households.51 Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry.52 Under the SBA’s size standard, such a business is small if it has 1,500 or fewer employees.53 U.S. Census Bureau data for 2012 show that 1,341
41 See U.S. Census Bureau, 2012 Economic Census of the United States, Table No. EC1251SSSZ5, Information: Subject Series - Estab & Firm Size: Employment Size of Firms: 2012 (517110 Wired Telecommunications Carriers). https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ5//naics~517110. 42 Id. 43 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service). 44 Id. 45 13 CFR § 121.201, NAICS code 517311. 46 Trends in Telephone Service, tbl. 5.3. 47 See 13 CFR § 121.201, NAICS code 517911. 48 See Trends in Telephone Service at Table 5.3. 49 See id. 50 See 13 CFR § 121.201; NAICS Code 517911. 51 U.S. Census Bureau, 2012 NAICS Definition, NAICS Code 517911 “Telecommunications Resellers,”, https://www.census.gov/cgi-bin/sssd/naics/naicsrch?input=517911&search=2017+NAICS+Search&search=2017. 52 Id. 53 13 CFR § 121.201, NAICS code 517911.
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firms provided resale services during that year.54 Of that number, all operated with fewer than 1,000 employees.55 Thus, under this category and the associated small business size standard, the majority of these resellers can be considered small entities. According to Commission data, 213 carriers have reported that they are engaged in the provision of local resale services.56 Of these, an estimated 211 have 1,500 or fewer employees.57 Consequently, the Commission estimates that the majority of Local Resellers are small entities. 20. Toll Resellers. The Commission has not developed a definition for Toll Resellers. The closest NAICS Code Category is Telecommunications Resellers. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. MVNOs are included in this industry.58 The SBA has developed a small business size standard for the category of Telecommunications Resellers.59 Under that size standard, such a business is small if it has 1,500 or fewer employees.60 2012 Census Bureau data show that 1,341 firms provided resale services during that year.61 Of that number, 1,341 operated with fewer than 1,000 employees.62 Thus, under this category and the associated small business size standard, the majority of these resellers can be considered small entities. According to Commission data, 881 carriers have reported that they are engaged in the provision of toll resale services.63 Of this total, an estimated 857 have 1,500 or fewer employees.64 Consequently, the Commission estimates that the majority of toll resellers are small entities. 21. Other Toll Carriers. Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling card providers, satellite service carriers, or toll resellers. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.65 U.S. Census data for 2012 indicate that 3,117 firms operated during that
54 See U.S. Census Bureau, 2012 Economic Census of the United States, Table No. EC1251SSSZ5, Information: Subject Series - Estab & Firm Size: Employment Size of Firms: 2012 (517911 Telecommunications Resellers), https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ5//naics~517911. 55 Id. 56 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service). 57 Id. 58 U.S. Census Bureau, 2017 NAICS Definition, 517911 Telecommunications Resellers, https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=517911&search=2017%20NAICS%20Search. 59 13 CFR § 121.201, NAICS code 517911. 60 Id. 61 See U.S. Census Bureau, 2012 Economic Census of the United States, Table No. EC1251SSSZ5, Information: Subject Series - Estab & Firm Size: Employment Size of Firms: 2012 NAICS Code 517911, https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ5//naics~517911. 62 Id. Available census data does not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is for firms with “1000 employees or more.” 63 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service). 64 See id. 65 See 13 CFR § 121.201, NAICS code 517311.
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year. Of that number, 3,083 operated with fewer than 1,000 employees.66 According to Commission data, 284 companies reported that their primary telecommunications service activity was the provision of other toll carriage.67 Of these, an estimated 279 have 1,500 or fewer employees and five have more than 1,500 employees.68 Consequently, the Commission estimates that most Other Toll Carriers are small. 22. 800 and 800-Like Service Subscribers.69 Neither the Commission nor the SBA has developed a small business size standard specifically for 800 and 800-like service (toll free) subscribers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees.70 The most reliable source of information regarding the number of these service subscribers appears to be data the Commission collects on the 800, 888, 877, and 866 numbers in use.71 According to our data, as of September 2009, the number of 800 numbers assigned was 7,860,000; the number of 888 numbers assigned was 5,588,687; the number of 877 numbers assigned was 4,721,866; and the number of 866 numbers assigned was 7,867,736.72 We do not have data specifying the number of these subscribers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of toll free subscribers that would qualify as small businesses under the SBA size standard. Consequently, we estimate that there are 7,860,000 or fewer small entity 800 subscribers; 5,588,687 or fewer small entity 888 subscribers; 4,721,866 or fewer small entity 877 subscribers; and 7,867,736 or fewer small entity 866 subscribers. 3. Wireless Providers (Except Satellite) 23. Wireless Telecommunications Carriers (except Satellite). This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular services, paging services, wireless internet access, and wireless video services.73 The appropriate size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees.74 For this industry, U.S. Census Bureau data for 2012 show that there were 967 firms that operated for the entire year.75 Of this total, 955 firms had employment of 999 or fewer employees and 12 had employment of 1000 employees or more.76 Thus under this category and the
66 See http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2012_US_51SSSZ5 &prodType=table. 67 See Trends in Telephone Service at Table 5.3. 68 See id. 69 We include all toll-free number subscribers in this category, including those for 888 numbers. 70 See 13 CFR § 121.201, NAICS code 517911. 71 See Trends in Telephone Service at Tables 18.7-18.10. 72 See id. 73 U.S. Census Bureau, 2012 NAICS Definitions, “517210 Wireless Telecommunications Carriers (Except Satellite),” See https://factfinder.census.gov/faces/affhelp/jsf/pages/metadata.xhtml?lang=en&type= ib&id=ib.en./ECN.NAICS2012.517210. 74 13 CFR § 121.201, NAICS code 517210. 75 U.S. Census Bureau, 2012 Economic Census of the United States, Table EC1251SSSZ5, Information: Subject Series: Estab and Firm Size: Employment Size of Firms for the U.S.: 2012 NAICS Code 517210. https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ5//naics~517210. 76 Id. Available census data does not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is for firms with “1000 employees or more.”
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associated size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities. 24. The Commission’s own data—available in its Universal Licensing System—indicate that, as of August 31, 2018 there are 265 Cellular licensees that will be affected by our actions.77 The Commission does not know how many of these licensees are small, as the Commission does not collect that information for these types of entities. Similarly, according to internally developed Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR) Telephony services.78 Of this total, an estimated 261 have 1,500 or fewer employees, and 152 have more than 1,500 employees.79 Thus, using available data, we estimate that the majority of wireless firms can be considered small. 25. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years.80 The SBA has approved these small business size standards.81 In the Commission’s auction for geographic area licenses in the WCS there were seven winning bidders that qualified as “very small business” entities, and one winning bidder that qualified as a “small business” entity. 26. Wireless Telephony. Wireless telephony includes cellular, personal communications services, and specialized mobile radio telephony carriers. The closest applicable SBA category is Wireless Telecommunications Carriers (except Satellite).82 Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees.83 For this industry, U.S. Census Bureau data for 2012 show that there were 967 firms that operated for the entire year.84 Of this total, 955 firms had fewer than 1,000 employees and 12 firms had 1000 employees or more.85 Thus under this category and the associated size standard, the Commission estimates that a majority of these entities can be considered small. According to Commission data, 413 carriers reported that they were engaged in wireless
77 See http://wireless.fcc.gov/uls. For the purposes of this IRFA, consistent with Commission practice for wireless services, the Commission estimates the number of licensees based on the number of unique FCC Registration Numbers. 78 See Federal Communications Commission, Wireline Competition Bureau, Industry Analysis and Technology Division, Trends in Telephone Service at Table 5.3 (Sept. 2010) (Trends in Telephone Service), https://apps.fcc.gov/edocs_public/attachmatch/DOC-301823A1.pdf. 79 See id. 80 Amendment of the Commission’s Rules to Establish Part 27, the Wireless Communications Service (WCS), Report and Order, 12 FCC Rcd 10785, 10879, para. 194 (1997). 81 See Letter from Aida Alvarez, Administrator, SBA, to Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, FCC (filed Dec. 2, 1998) (Alvarez Letter 1998). 82 U.S. Census Bureau, 2012 NAICS Definitions, 517210 Wireless Telecommunications Carriers (Except Satellite), https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=517210&search=2012+NAICS+Search. 83 13 CFR § 121.201, NAICS code 517210. 84 U.S. Census Bureau, 2012 Economic Census of the United States, Table EC1251SSSZ5, Information: Subject Series: Estab and Firm Size: Employment Size of Firms for the U.S.: 2012 NAICS Code 517210 (Jan. 8, 2016). https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ5//naics~517210. 85 Id. Available census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is for firms with “1000 employees or more.”
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telephony.86 Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees.87 Therefore, more than half of these entities can be considered small. 4. Internet Service Providers (Broadband) 27. Broadband Internet service providers include wired (e.g., cable, DSL) and VoIP service providers using their own operated wired telecommunications infrastructure fall in the category of Wired Telecommunication Carriers.88 Wired Telecommunications Carriers are comprised of establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies.89 The SBA size standard for this category classifies a business as small if it has 1,500 or fewer employees.90 U.S. Census Bureau data for 2012 show that there were 3,117 firms that operated that year.91 Of this total, 3,083 operated with fewer than 1,000 employees.92 Consequently, under this size standard the majority of firms in this industry can be considered small. 5. Satellite Telecommunications 28. This category comprises firms “primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.”93 Satellite telecommunications service providers include satellite and earth station operators. The category has a small business size standard of $35 million or less in average annual receipts, under SBA rules.94 For this category, U.S. Census Bureau data for 2012 show that there were a total of 333 firms that operated for the entire year.95 Of this total, 299 firms had annual receipts of less than $25 million.96 Consequently, we estimate that the majority of satellite telecommunications providers are small entities.
86 See Federal Communications Commission, Wireline Competition Bureau, Industry Analysis and Technology Division, Trends in Telephone Service at Table 5.3 (Sept. 2010) (Trends in Telephone Service), https://apps.fcc.gov/edocs_public/attachmatch/DOC-301823A1.pdf. 87 Id. 88 See, 13 CFR § 121.201. The Wired Telecommunications Carrier category formerly used the NAICS code of 517110. As of 2017 the U.S. Census Bureau definition show the NAICs code as 517311. See, https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=517311&search=2017 89 Id. 90 Id. 91 See U.S. Census Bureau, 2012 Economic Census of the United States, Table No. EC1251SSSZ5, Information: Subject Series - Estab & Firm Size: Employment Size of Firms: 2012 NAICS Code 517110 https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ5//naics~517110. 92 Id. 93 U.S. Census Bureau, 2017 NAICS Definitions, “517410 Satellite Telecommunications”; https://www.census.gov/cgi-bin/sssd/naics/naicsrch?input=517410&search=2017+NAICS+Search&search=2017. 94 13 CFR § 121.201, NAICS code 517410. 95 U.S. Census Bureau, 2012 Economic Census of the United States, Table EC1251SSSZ4, Information: Subject Series - Estab and Firm Size: Receipts Size of Firms for the United States: 2012, NAICS code 517410 https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ4//naics~517410. 96 Id.
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6. Electric Power Generators, Transmitters, and Distributors 29. Electric Power Generators, Transmitters, and Distributors. The Census Bureau defines an industry group comprised of “establishments, primarily engaged in generating, transmitting, and/or distributing electric power. Establishments in this industry group may perform one or more of the following activities: (1)operate generation facilities that produce electric energy; (2) operate transmission systems that convey the electricity from the generation facility to the distribution system; and (3) operate distribution systems that convey electric power received from the generation facility or the transmission system to the final consumer.”97 The SBA has developed a small business size standard for firms in this category: “A firm is small if, including its affiliates, it is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours.”98 Census Bureau data for 2012 show that there were 1,1635 firms that operated for the entire year in this category.99 Of these firms, 63 had 1,000 employees or more, and 1,572 had fewer than 1,000 employees.100 Based on this data, a majority of these firms can be considered small. 7. All Other Telecommunications 30. All Other Telecommunications. The “All Other Telecommunications” category is comprised of establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation.101 This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems.102 Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.103 The SBA has developed a small business size standard for All Other Telecommunications, which consists of all such firms with annual receipts of $35 million or less.104 For this category, U.S. Census Bureau data for 2012 shows that there were 1,442 firms that operated for the entire year.105 Of those firms, a total of 1,400 had annual receipts less than $25 million and 15 firms had annual receipts of $25 million to $49, 999,999.106 Thus, the Commission estimates that the majority of “All Other Telecommunications” firms potentially affected by our action can be considered small.
97 U.S. Census Bureau, 2012 NAICS Definitions, “2211 Electric Power Generation, Transmission and Distribution,” https://www.census.gov/econ/isp/sampler.php?naicscode=2211&naicslevel=4# (last visited Aug.31, 2018). 98 13 CFR § 121.201, NAICS codes 221111, 221112, 221113, 221119, 221121, 221122, n. 1. 99 See U.S. Census Bureau, American FactFinder, Utilities: Subject Series - Establishment and Firm Size: Summary Statistics by Revenue Size of Firms for the United States: 2012, NAICS code 221122, https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/22SSSZ5//naics~2211 (last visited Aug. 31, 2018). 100 See id. 101 See U.S. Census Bureau, 2017 NAICS Definitions, NAICS Code “517919 All Other Telecommunications”, https://www.census.gov/cgi-bin/sssd/naics/naicsrch?input=517919&search=2017+NAICS+Search&search=2017. 102 Id. 103Id. 104 See 13 CFR § 121.201, NAICS code 517919. 105 U.S. Census Bureau, 2012 Economic Census of the United States, Table EC1251SSSZ4, Information: Subject Series - Estab and Firm Size: Receipts Size of Firms for the United States: 2012, NAICS code 517919, https://factfinder.census.gov/bkmk/table/1.0/en/ECN/2012_US/51SSSZ4//naics~517919. 106 Id.
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E. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements 31. In the Order we adopt rules that will apply in the Rural Digital Opportunity Fund auction. We establish four technology-neutral tiers of bids available for bidding with varying broadband speed and usage allowances, and for each tier will differentiate between bids that would offer either lower or higher latency. Like all high-cost ETCs, we require that Rural Digital Opportunity Fund recipients offer standalone voice service and offer voice and broadband service meeting the relevant performance requirements at rates that are reasonably comparable to rates offered in urban areas. All ETCs must advertise the availability of their voice services through their service areas, and we require support recipients also to advertise the availability of their broadband services within their service area. Rural Digital Opportunity Fund support recipients will also be subject to the same uniform framework for measuring speed and latency performance along with the accompanying compliance framework as all other recipients of high-cost support required to serve fixed locations. 32. In the Order, we adopt a 10-year support term for Rural Digital Opportunity Fund support recipients along with interim service milestones by which support recipients must offer the required voice and broadband service to a required number of locations. The final service milestones will differ based on whether the Wireline Competition Bureau determines that there are more or fewer locations than initially determined by the Connect America Cost Model. Rural Digital Opportunity Fund recipients must also offer service to newly built locations upon reasonable request if those locations were built before milestone year eight. 33. For entities that are interested in participating in the Rural Digital Opportunity Fund, we adopted a two-step application process. We require applicants to submit a pre-auction short-form application that includes information regarding their ownership, technical and financial qualifications, the technologies they intend to use and the types of bids they intend to place, their operational history, and an acknowledgement of their responsibility to conduct due diligence. Commission staff will review the applications to determine if applicants are qualified to bid in the auction. 34. We also require winning bidders to submit a long-form application in which they will submit information about their qualifications, funding, and the networks they intend to use to meet their obligations. During the long-form application period, we will require long-form applicants to obtain an ETC designation from the state or the Commission as relevant that covers the eligible areas in their winning bids. Prior to being authorized to receive support, we will require long-form applicants to obtain an irrevocable stand-by letter of credit that meets our requirements from an eligible bank along with a bankruptcy opinion letter. The amount of support the letter of credit must cover will vary based on whether the support recipient has met certain service milestones. Commission staff will review the applications and submitted documentation to determine whether long-form applicants are qualified to be authorized to receive support. We will subject winning bidders or long-form applicants that default during the long-form application process to forfeiture. 35. To monitor the use of Rural Digital Opportunity Fund support to ensure that it is being used for its intended purposes, we will require support recipients to file location and technology data on an annual basis in the online High Cost Universal Broadband (HUBB) portal and to make certifications when they have met their service milestones. We also will require applicants to file certain information in their annual FCC Form 481 reports including information regarding the community anchor institutions they serve, the support they used for capital expenditures, and certifications regarding meeting the Commission’s performance obligations and available funds. Support recipients will also be subject to the annual section 54.314 certifications, the same record retention and audit requirements, and the same support reductions for untimely filings as other high-cost ETCs. 36. For support recipients that do not meet their Rural Digital Opportunity Fund obligations, we will subject such support recipients to the framework for support reductions that is applicable to all high-cost ETCs that are required to meet defined service milestones and to the process the Commission adopted for drawing on letters of credit for the Connect America Fund (CAF) Phase II auction, subject to 84 Federal Communications Commission FCC 20-5
some modifications regarding the amount of support that will be recovered after the sixth and eighth service milestones, as applicable. Additionally, if a Rural Digital Opportunity Fund support recipient believes it cannot meet the 40% service milestone, it must notify the Wireline Competition Bureau and provide information explaining this expected deficiency. If a support recipient has not made such a notification and has deployed to fewer than 20% of the required number of locations by the third year service milestone, we will find the recipient to be default rather than withholding the support and giving the support recipient an additional year to come into compliance. Support recipients may also seek waiver if as they are deploying their networks there are not enough locations to meet their interim milestones. 37. We also adopt specific support transition paths for census blocks served by price cap carriers receiving both legacy high-cost and model-based support, including delegating to the Wireline Competition Bureau the task of determining and implementing a mechanism that will enable price cap carriers to elect whether to receive an additional, seventh year of Phase II model-based support. Additionally, we clarify the continuing responsibilities of price cap carriers no longer receiving support to serve specific areas. F. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered 38. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its approach, which may include the following four alternatives, among others: “(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.”107 39. The Commission has considered the economic impact on small entities in reaching its final conclusions and taking action in this proceeding. The rules that we adopt in the Order will provide greater certainty and flexibility for all carriers, including small entities. For example, we adopt different performance standards for bidders to maximize the types of entities that can participate in the Rural Digital Opportunity Fund auction. Additionally, while we decline to adopt any bidding credits, we do incorporate into the reserve prices for Tribal areas a Tribal Broadband Factor to provide an incentive for service providers, including small entities, to bid on and serve Tribal lands. 40. We also expect that the minimum geographic area for bidding will be a census block group containing one or more eligible census blocks, but reserve the right to select census tracts when we finalize the auction design if necessary to limit the number of discrete biddable units. We find that this approach is preferable because it ensures that all interested bidders, including small entities, have flexibility to design a network that matches their business model and the technologies they intend to use. We decline to adopt census blocks as the minimum geographic unit because there are significantly more eligible census blocks, increasing the complexity of the bidding process both for bidders, including small entities, and the bidding system and minimizing the potential for broad coverage by winning bidders. 41. We decline to adopt a resource-intensive challenge process and instead have decided to rely on FCC Form 477 data and conduct a more streamlined challenge process to determine areas that are eligible for the Rural Digital Opportunity Fund auction. This means that service providers, including small entities, will have to file a FCC Form 477 as they are already required to do to ensure that the areas they serve are not overbuilt. Through the challenge process, interested parties may also identify areas that have been served since they have submitted the most recent publicly available FCC Form 477 data or identify areas that have been awarded funding through federal or state broadband subsidy programs to provide 25/3 Mbps or better service.
107 5 U.S.C. § 603(c)(1)-(c)(4).
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42. Based on lessons learned from the CAF Phase II auction, we also adopt a two-step application process that will allow entities interested in bidding to submit a short-form application to be qualified in the auction that we found to be an appropriate but not burdensome screen to ensure participation by qualified providers, including small entities. Only if an applicant becomes a winning bidder will it be required to submit a long-form application which requires a more thorough review of an applicant’s qualifications to be authorized to receive support. Like the CAF Phase II auction, we provide two pathways for eligibility for the auction—both 1) for entities that have at least two years’ experience providing a voice, broadband, and/or electric transmission or distribution service, and 2) for entities that have at least three years of audited financials and can obtain an acceptable letter of interest from an eligible bank. We expect that by proposing to adopt two pathways for eligibility and to permit experienced entities that do not audit their financial statements in the ordinary course of business to wait to submit audited financials until after they are announced as winning bidders, more small entities will be able to participate in the auction. We decline to collect less financial and technical information from experienced providers, finding that all existing service providers are not necessarily qualified to bid for additional universal service support and that the passage of time since our last review may impact qualifications. At the same time, we also decline to require more detailed technical and operational showings as suggested by some commenters because we found these proposals would provide significant barriers to entry for participation by interested entities, including small entities. 43. We also permit all long-form applicants, including small entities, to obtain their ETC designations after becoming winning bidders so that they do not have to go through the ETC designation process prior to finding out if they won support through the auction. We decline to adopt the alternatives to letters of credit that were suggested by commenters because letters of credit better achieve our objective of protecting the public’s funds. But recognizing that some CAF Phase II auction participants, including small entities, have expressed concerns about the costs of obtaining and maintaining a letter of credit, we make a modification to our requirements to allow support recipients to cover less support with their letters of credit and further reduce the value of their letters of credit once it has been verified that they have met certain service milestones. 44. We decline to adopt additional performance requirements, like requiring specific subscription milestones, because we find that they are likely to discourage many bidders, including small entities, from participating in the auction because they would risk losing funding in areas with low subscribership rates. We also decline to adopt more aggressive service milestones and instead explain that entities with smaller projects have the opportunity to build-out faster than the service milestones. 45. The reporting requirements we adopt for all Rural Digital Opportunity Fund support recipients are tailored to ensuring that support is used for its intended purpose and so that we can monitor the progress of recipients in meeting their service milestones. We find that the importance of monitoring the use of the public’s funds outweighs the burden of filing the required information on all entities, including small entities, particularly because much of the information that we require they report is information we expect they will already be collecting to ensure they comply with the terms and conditions of support and they will be able to submit their location data on a rolling basis to help minimize the burden of uploading a large number of locations at once. G. Report to Congress. 46. The Commission will send a copy of the Report and Order, including this FRFA, in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act.108 In addition, the Commission will send a copy of the Report and Order, including this
108 5 U.S.C. § 801(a)(1)(A).
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FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register.109.
109 See id. § 604(b).
87 Federal Communications Commission FCC 20-5
APPENDIX C
Illustrative Form of Letter Of Credit
[Subject to Issuing Bank Requirements] No. ______
[Name and Address of Issuing Bank]
[Date of Issuance]
[AMOUNT]
[EXPIRATION DATE]
BENEFICIARY [USAC]
[Address]
LETTER OF CREDIT PROVIDER [Winning Bidder Name]
[Address]
Ladies and Gentlemen:
We hereby establish, at the request and for the account of [Winning Bidder], in your favor, as required under the Order, adopted on January 30, 2020, issued by the Federal Communications Commission (“FCC”) in the matter of [Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket 10-90] (the “Order”), our Irrevocable Standby Letter of Credit No. ______, in the amount of [State amount of Letter of Credit in words and figures. NOTE: The amount of the Letter of Credit shall increase/additional letter(s) of credit shall be issued as additional funds are disbursed pursuant to the terms of the Order], expiring at the close of banking business at our office described in the following paragraph, on [the date which is ___ years from the date of issuance/ or the date which is one year from the date of issuance, provided the Issuing Bank includes an evergreen clause that provides for automatic renewal unless the Issuing Bank gives notice of non-renewal to USAC by a nationally recognized overnight delivery service, with a copy to the FCC, at least sixty days but not more than 90 days prior to the expiry thereof], or such earlier date as the Letter of Credit is terminated by [USAC] (the “Expiration Date”). Capitalized terms used herein but not defined herein shall have the meanings accorded such terms in the Order. Funds under this Letter of Credit are available to you against your draft in the form attached hereto as Annex A, drawn on our office described below, and referring thereon to the number of this Letter of Credit, accompanied by your written and completed certificate signed by you substantially in the form of Annex B attached hereto. Such draft and certificates shall be dated the date of presentation or an earlier date, which presentation shall be made at our office located at [BANK ADDRESS] and shall be effected either by personal delivery or delivery by a nationally recognized overnight delivery service. We hereby commit and agree to accept such presentation at such office, and if such presentation of documents appears on its face to comply with the terms and conditions of this Letter of Credit, on or prior to the 88 Federal Communications Commission FCC 20-5
Expiration Date, we will honor the same not later than the first banking day after presentation thereof in accordance with your payment instructions. Payment under this Letter of Credit shall be made by [check/wire transfer of Federal Reserve Bank of New York funds] to the payee and for the account you designate, in accordance with the instructions set forth in a draft presented in connection with a draw under this Letter of Credit. Partial drawings are not permitted under this Letter of Credit. This Letter of Credit is not transferable or assignable in whole or in part. This Letter of Credit shall be canceled and terminated upon receipt by us of the [USAC’s] certificate purportedly signed by two authorized representatives of [USAC] in the form attached as Annex C. This Letter of Credit sets forth in full the undertaking of the Issuer, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein, except only the certificates and the drafts referred to herein and the ISP (as defined below); and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except for such certificates and such drafts and the ISP. This Letter of Credit shall be subject to, governed by, and construed in accordance with, the International Standby Practices 1998, International Chamber of Commerce Publication No. 590 (the “ISP”), which is incorporated into the text of this Letter of Credit by this reference, and, to the extent not inconsistent therewith, the laws of the State of New York, including the Uniform Commercial Code as in effect in the State of New York. Communications with respect to this Letter of Credit shall be addressed to us at our address set forth below, specifically referring to the number of this Letter of Credit.
[NAME OF BANK] [BANK SIGNATURE]
89 Federal Communications Commission FCC 20-5
ANNEX A
Form of Draft
To: [Issuing Bank]
DRAWN ON LETTER OF CREDIT No: ______
AT SIGHT
PAY TO THE ORDER OF [USAC] BY [CHECK/WIRE TRANSFER OF FEDERAL
RESERVE BANK OF NEW YORK]
FUNDS TO: ______
______
______
Account (______)
AS [RURAL DIGITAL OPPORTUNITY FUND REPAYMENT]
[AMOUNT IN WORDS] DOLLARS AND NO/CENTS
$[AMOUNT IN NUMBERS]
Universal Service Administrative Company
By:______Name: Title:
90 Federal Communications Commission FCC 20-5
ANNEX B
Draw Certificate
The undersigned hereby certifies to [Name of Bank] (the “Bank”), with reference to (a) Irrevocable Standby Letter of Credit No. [Number] (the “Letter of Credit”) issued by the Bank in favor of the Universal Service Administrative Company (“USAC”) and (b) [paragraph ___] of the Order, adopted on January 30, 2020, issued by the Federal Communications Commission in the matter of [Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket 10-90] (the “Order”), pursuant to which [Name of Winning Bidder] (the “LC Provider”) has provided the Letter of Credit (all capitalized terms used herein but not defined herein having the meaning stated in the Order), that:
[The [Name of Winning Bidder] has [describe the event that triggers the draw],and is evidenced by a letter signed by the Chief of the [Wireline Competition Bureau] or [his/her] designee, dated _ , 20__ , a true copy of which is attached hereto.] Accordingly, a draw of the entire amount of the Letter of Credit No. ______is authorized.]
OR
[USAC certifies that given notice of non-renewal of Letter of Credit No. ______and failure of the account party to obtain a satisfactory replacement thereof, pursuant to the Order, USAC is entitled to receive payment of $______representing the entire amount of Letter of Credit No. ______.]
IN WITNESS WHEREOF, the undersigned has executed this certificate as of [specify time of day] on the ____ day of ______, 20__.
Universal Service Administrative Company
By: ______Name: Title:
91 Federal Communications Commission FCC 20-5
ANNEX C
Certificate Regarding Termination of Letter of Credit
The undersigned hereby certifies to [Name of Bank] (the “Bank”), with reference to (a) Irrevocable Standby Letter of Credit No. [Number] (the “Letter of Credit”) issued by the Bank in favor of the Universal Service Administrative Company (“USAC”), and (b) paragraph [____] of the Report and Order adopted on January 30, 2020, issued by the Federal Communications Commission (“FCC”) in the matter of [Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket 10-90] (the “Order”), (all capitalized terms used herein but not defined herein having the meaning stated or described in the Order), that:
(1) [include one of the following clauses, as applicable]
(a) The Order has been fulfilled in accordance with the provisions thereof; or
(b) [LC Provider/Winning Bidder] has provided a replacement letter of credit satisfactory to the FCC.
(2) By reason of the event or circumstance described in paragraph (1) of this certificate and effective upon the receipt by the Bank of this certificate (countersigned as set forth below), the Letter of Credit is terminated.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the ____ day of ______, 20__. Universal Service Administrative Company
By:______Name: Title:
By:______Name: Title: COUNTERSIGNED: Federal Communications Commission
By: ______Name: Its Authorized Signator
92 Federal Communications Commission FCC 20-5
STATEMENT OF CHAIRMAN AJIT PAI
Re: Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket No. 10-90. Last September, I visited the outskirts of Mandan, North Dakota—which is west of Bismarck— where BEK Communications was deploying fiber broadband as part of its Connect America Phase II auction deployment. That afternoon, I met Jamie Wetsch, Erica Hagar, and Cullen Quill. Jamie and Erica had recently gotten high-speed Internet access; Cullen was getting access to gigabit fiber that very day. Jamie is a software engineer. He told me he’s now able to work from home and spend more time with his family. Speaking of, he also said he no longer has to use the phrase “[Get] off the Internet, kids, we’re using it.” Erica is a self-made entrepreneur. She started an online infant-clothing store, Bison Booties, after her daughter was born. Now, she can finish orders and respond to customers more quickly, and otherwise grow her business. I asked Cullen how he was planning on using the new service. He said he’d never had a problem like that, but after thinking about it, he said he and his wife now wouldn’t have to drive to Bismarck so their kids could upload their homework using a fast-food restaurant’s Wi-Fi connection. Stories like Jamie’s, Erica’s, and Cullen’s illustrate how broadband access can improve the lives of American families and the strength of America’s rural communities. And they explain why closing the digital divide is my top priority as Chairman. Millions of rural Americans like these three North Dakotans want to participate in the digital economy. Over the last three years, we’ve done a lot to make that happen, and the evidence is clear that that we’re making incredible strides toward that goal. Through 2018’s successful Connect America Phase II auction, we are supporting the deployment of broadband networks to more than 713,000 unserved rural homes and businesses. And through other Universal Service Fund reforms, small, rural telephone companies in the rate-of-return program have committed to serving 25/3 Mbps broadband to more than 940,000 locations in their service areas. These steps, together with our efforts over the last three years to remove unnecessary barriers to broadband deployment and modernize our regulations, are helping to rapidly close the digital divide. In the first two years of this Administration, the number of Americans lacking access to 25/3 Mbps broadband fell by 30%, and the number of Americans lacking access to 250/25 Mbps broadband plummeted nearly 75%. Fiber was deployed to a record 7.2 million new homes in 2019, smashing 2018’s then-record of 5.9 million homes. But there’s more to do. FCC data show there are still millions of American homes and businesses in rural areas completely lacking broadband at the 25/3 Mbps standard. Many of these locations can’t even get a 10/1 Mbps connection, and right now there simply is no business case for deploying broadband there. This means that millions of Americans can’t start a business, advance their children’s and their own education, use precision agriculture, access telemedicine, or benefit from the digital economy. This demands the Commission take immediate, concrete action. And today, we proceed to do just that with our boldest step yet to ensure that digital opportunity reaches all Americans, no matter where they live: the Rural Digital Opportunity Fund, a $20 billion initiative that targets $16 billion in just the first phase for deploying up to gigabit speed broadband to as many as six million American homes and businesses we already know are unserved. The Rural Digital Opportunity Fund is building on the success of the Connect America Phase II auction. For instance, we’re going to use a reverse auction format that will rely on market forces to direct subsidies to the provider willing to build the fastest network at the lowest cost. But we’re also making some significant changes to our CAF II approach—changes that will mean better networks covering more Americans. We’re more than doubling the minimum speeds that the auction will support from 10/1 Mbps in CAF II to 25/3 Mbps. We’re increasing the weights on bids to favor higher speeds and lower latency. We’ll assign support to the bidder offering the best combination 93 Federal Communications Commission FCC 20-5
of speed and latency, once the combined price of bids in each area in the auction falls below the available budget. We’re also making changes that will help ensure maximum participation—and therefore maximum broadband deployment—in the auction. In response to concerns about the financial strain some carriers might face, we’re changing the letter of credit requirement to reduce costs to carriers by up to 80% in a given year from those initially proposed—while still protecting these scarce federal funds. At the same time, we’re giving bidders an all-new incentive to deploy their networks more quickly than ever. This will ensure that more carriers can participate in the auction while both safeguarding taxpayer funds and getting rural Americans connected as soon as possible. And those aren’t the only improvements. We’re including in the auction many areas that were previously excluded from some of our rural broadband programs but where market forces alone still have not brought about broadband deployment. We’re increasing support to bidders serving Tribal lands, where deployment is often especially challenging. And we’re adding a new, intermediate speed tier of 50/5 Mbps to the auction that will give bidders greater flexibility to design networks and use technologies that make sense for the area where they’re bidding. Together, these changes mean that we’re more likely to have greater eligibility for rural areas to get funding through the auction; stronger participation among bidders in the auction; faster, future- proofed networks that will support not only today’s Internet applications, but tomorrow’s, too; and better (and quicker) bang for the buck. In other words, better, faster, cheaper broadband for more Americans. Indeed, our approach has won widespread support from those representing rural America, from the National Grange to the Rural & Agricultural Council of America, from the National Association of Wheat Growers to the U.S. Cattlemen’s Association, from Republican North Dakota Governor Doug Burgum to Democratic Kansas Governor Laura Kelly, from Congressman Bill Johnson to Congressman Tim Walberg. I could go on, but you get the point. Those who know rural America best support the Rural Digital Opportunity Fund. We also know there are Americans living in areas where some, but not all, homes have service. How do we determine who those Americans are and where they live? Well, last August, the FCC adopted the Digital Opportunity Data Collection, a fresh new look at broadband mapping that will collect granular, precise, and crowdsourced broadband coverage data so that we can target support to those Americans in partially served areas in Phase II of the Rural Digital Opportunity Fund. Today, we allocate $4.4 billion to Phase II, plus any of the Phase I budget that remains after competitive bidding drives down costs, to target those additional homes and businesses. Now, we recognize that once we know precisely how large this part of the job is, we may need to revisit the Phase II budget. But none of these questions—who is in Phase II or how much it’ll cost to serve them—undercuts our obligation to ensure that the millions of Americans who we know are completely unserved have access to broadband as soon as possible through Phase I. While the details may be complicated, our goal here is pretty simple: We want every rural American who for too long has been on the wrong side of the digital divide to benefit from broadband, as Jamie Wetsch, Erica Hagar, and Cullen Quill have. I believe the Rural Digital Opportunity Fund will permanently change the broadband landscape in America for the better. I can’t wait to see the auction begin later this year and see its impact on the digital divide. I would like to thank the many dedicated staffers who contributed to this item, including Talmage Cox, Ian Forbes, Lauren Garry, Trent Harkrader, Jesse Jachman, Katie King, Heidi Lankau, Sue McNeil, Alex Minard, Kris Monteith, and Ryan Palmer from the Wireline Competition Bureau; Kirk Burgee, Nathan Eagan, Michael Janson, and Jonathan McCormack from the Rural Broadband Auctions Task Force; Valerie Barrish, Jonathan Campbell, Audra Hale-Maddox, Eliot Maenner, Kate Matraves, Giulia McHenry, Murtaza Nasafi, Jeffrey Prince, Kelly Quinn, Steve Rosenberg, Patrick Sun, and Margy Wiener from the Office of Economics and Analytics; and Malena Barzilai, Neil Dellar, Tom Driscoll, Richard Mallen, and Linda Oliver from the Office of General Counsel. 94 Federal Communications Commission FCC 20-5
STATEMENT OF COMMISSIONER MICHAEL O’RIELLY
Re: Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket No. 10-90. I applaud the Chairman and staff for their extremely hard work in pushing forward with the Rural Digital Opportunity Fund (RDOF) auction. While there is a long road ahead, especially in terms of finalizing auction procedures, this Report and Order makes considerable progress in the effort to bring broadband to unserved Americans. And, to make clear at the outset, by limiting Phase I eligibility to those census blocks that have no broadband whatsoever and targeting those consumers truly deserving of FCC assistance, our action should not in any way trigger or exacerbate the rightful concerns raised over our broadband mapping procedures. This item also attempts to correct errors of the past, including the decision to offer price cap carriers a right of first refusal to $9 billion in Connect America Fund Phase II funding. That policy resulted in tremendously poor incentives for funding recipients and left millions of rural Americans without service. It is also no secret that I would have preferred to implement the Remote Areas Fund (RAF) auction at the outset. After all, it is easier to serve the less challenging areas once the more challenging areas have service, than vice versa. Since we can’t reverse the past, I am encouraged that the RDOF may very well bring service to those locations that otherwise would have comprised the RAF. The mechanism to incentivize bidding on areas entirely lacking 10/1 Mbps service should be helpful to that end, and I applaud the Chairman for including it in this item. According to our most recent Form 477 Data, which is profoundly underinclusive, approximately 8.4 million Americans, living in over 2.7 million census blocks, still don’t even have access to 10/1 Mbps service, and I believe those consumers have waited long enough and deserve to be prioritized. At the same time, I am hopeful that service to the RAF areas won’t be undermined by various measures to prioritize fiber-based technologies. Don’t get me wrong: fiber-based broadband is an incredible technology, and, in an ideal world, every American would have access to fiber-to-the-home or something even better. However, our funds are limited, and it’s unfair to leave unserved areas in the dust in order to upgrade service in areas that already have broadband. I do worry that the decision to effectively end bidding after the budget clears could result in spending more than necessary on areas that are easier to serve and leave the harder to serve areas behind. I have observed that we tend to be somewhat erratic when it comes to trusting free market mechanisms and seem to embrace competitive forces unevenly. Given the success of our reverse auction mechanism in CAF II, I am hopeful that our intervention in the process won’t prove detrimental to the overall program. By tilting the scales against certain technologies, through both the increased latency penalty and the new bid assignment system, we should be concerned that these steps undermine the sound principle to operate in a technology neutral manner. I would have preferred to allow the private sector’s engineers to prove what various technologies are capable of before indiscriminately confining certain providers to particular service tiers. I hope these decisions won’t disrupt competition by unduly discouraging the participation of certain technology sectors. Speaking of stretching scarce USF dollars as far as possible, I applaud the Chairman for rejecting demands from certain self-serving politicians to use RDOF funds to overbuild areas in the New NY Broadband Program, as well as other areas in New York subject to enforceable deployment obligations. While I never quite loved the decision to undermine inter-area competition in the CAF II auction by reserving special funding for New York, backtracking on our previous agreement and including funded areas in Phase I would have been beyond foolish and incredibly wasteful, and undermined longstanding Commission policy against awarding duplicative support in areas already served by an existing provider. Back in 2016, the governor of New York represented to this agency that allocating the full $170 million in CAF II support to the state broadband program would allow full broadband buildout throughout the 95 Federal Communications Commission FCC 20-5
Empire State, when combined with the state’s own funding. The Commission granted that request even though much of the funding likely would have gone elsewhere, and been spent in a more efficient manner, in the absence of New York’s special treatment. To now claim that New York is being shortchanged is completely ludicrous. As further efforts to guard against waste, I also support the Chairman’s decision to expand the scope of the Phase I challenge process, and to maintain the Letter of Credit obligation for auction winners. While I certainly want as much funding as possible to be spent on deployment, some of the potential bidders are in precarious financial situations, and it would be highly irresponsible to totally eliminate this important safeguard and put our precious funding at risk. At the same time, I recognize the interest in minimizing the requirement’s impact on potential participation and buildout. While the final landing spot may not be ideal to everyone, it promotes these fundamental goals. Despite some concerns, I am hopeful the decisions we make today result in a successful auction and look forward to further implementing the process in an expeditious manner. I approve.
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STATEMENT OF COMMISSIONER BRENDAN CARR
Re: Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket No. 10-90. For about a dozen years, Misti Hostutler worked for an IT company based in White River, South Dakota. It’s a town of about 600 people surrounded by miles of farms and ranches. Back then, growing her high-tech business meant hitting the road. So every week, Misti put another thousand miles on her car—crisscrossing the Great Plains as she visited client sites. Misti says she spent so many hours behind the wheel that she taught herself Spanish while on the road. After she married her husband, Brian, they decided to move back to his family’s 7,000-acre farm outside of Midland, South Dakota—a town of only about a hundred people. Misti wanted to stay home and raise their young kids. She also wanted to maintain her high-tech career, which helped support the family. Working from home with a high-speed Internet connection would let her do all of that. And that was the problem. They only had dial-up. Misti gave it a shot. It didn’t work. She would try to connect remotely to a client’s site only to lose the connection and the customer. And she found it nearly impossible to upload and download the files she needed. That all changed in 2017. Down miles of dirt road leading to their farm, an Internet provider built a high-speed fiber line with support from the FCC’s Universal Service Fund. Misti says the change “was night and day.” She now can connect remotely from her farm to a customer’s network and quickly troubleshoot their equipment. The high-speed connection also provides a big boost to their farming operation. Brian and Misti now use a range of Smart Ag technologies on their combines and sprayers—Internet-powered tools that are increasing their yields and saving money. Driving through one of his fields, Brian pointed out that his tractor now connects to a tablet and cloud-based software that lets him make precise, inch-by-inch adjustments. Misti says that the new, high-speed connection is “helping our farm in leaps and bounds.” She says “the technology on our farmland is as critical to his business as it is to mine.”1 Misti and Brian show what hard work and an Internet connection can mean for rural communities. They provide a helpful reminder of why we at the FCC are so focused on closing the digital divide. We want every community in this country to have the opportunity that fast Internet connections can bring. We have made significant progress in achieving that goal. The digital divide narrowed by nearly 20 percent in the prior year alone. Internet providers built out more miles of high-speed fiber in 2019 than ever before—enough, in fact, to wrap around the Earth 18 times. And all of that is on top of the mobile, fixed wireless, and satellite builds that are creating the world’s best 5G and next-gen platforms here in the U.S. Today’s vote represents our most significant step yet towards connecting the hardest-to-serve parts of the country. It will allow providers to bring millions of Americans across the digital divide. I want to highlight three features of our decision today. First, we support the type of high-speed networks that are key to building 5G in communities across the country. So our decision marks another significant step forward for U.S. leadership in wireless. Second, when we launched this proceeding last summer, I proposed that we prioritize truly unserved communities over those that might already have fast Internet connections. Instead of treating every community with less than 25 Mbps the same, I suggested that we first focus on communities that
1 https://twitter.com/BrendanCarrFCC/status/1169412887053590528
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have dial-up or nothing. I am pleased that we moved forward with that idea. The Order prioritizes and provides maximum incentives for providers to serve areas that have no high-speed service today. Third, I want to thank my colleagues for working with me on ways to improve on the item that circulated a few weeks ago. In particular, we made important changes to our letter of credit requirement. The original draft could have required winning bidders to spend over $600 million more than necessary on fees to financial institutions. And it could have prevented providers from participating in the program altogether, which would only decrease our chances of getting more broadband built out. So rather than tying up scarce dollars in financial institutions, we now free up more capital to go directly into the ground building out Internet infrastructure. In doing so, we also put new milestones in place that incentivize providers to build out on an accelerated basis. Finally, I want to thank the Chairman for laying out and following through on this long-term commitment to close the digital divide. And as always, I thank the staff of the Wireline Competition Bureau, the Office of Economics and Analytics, and the Rural Broadband Auctions Task Force for their hard work on this item. It has my support.
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STATEMENT OF COMMISSIONER JESSICA ROSENWORCEL APPROVING IN PART, DISSENTING IN PART
Re: Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket No. 10-90. To go to Duanesburg, New York, you head north of Albany and then west on Route 88 by Schenectady. As the crow flies, it is probably less than thirty minutes from the capitol, but the drive will take longer the way the roads are laid out in this picturesque corner of the Empire State. It’s a town of roughly 6000 people. There are some old farms and trails through the woods that are popular for snowmobiling during the winter months when the community is blanketed in deep, white snow. If you go, you should check out Johnson’s Restaurant. Way back when, Harrison Ford was reported to have been a repeat visitor when he was up in the area some years ago. But history in this place goes back much further, because Duanesburg was founded in the 18th century when a group of English Quakers decided to make it home. These days, however, its residents are worried about its future. Annabel Felton is a longtime resident. She’s making a ruckus because she wants the town to have access to broadband. She can’t get high-speed service at home. At first, it was just an inconvenience, she told me when I met her late last year in upstate New York with Congressman Paul Tonko. But when she had children in school, she said it was apparent her household required access to broadband. As she put it: “It gets difficult when their classroom studies are online. We have kids who need to compete in the global economy.” Her children were falling into the homework gap. And her town—the rural community she loves—was falling into the digital divide. She wondered how it would attract businesses, thrive, and compete with so many more connected places across the country. She also wondered about the simple things, like without having online access how would she ever sell her house? Annabel is a doer, so she got to work. She helped set up the Duanesburg Broadband Committee and took the reins. The mission of the committee was clear: Help get broadband to every resident, farm, and small business. The first order of business was simple: Create a map. After all, you can’t know with precision how to fix a lack of broadband access without knowing in detail where service is and is not. As Annabel said, this was essential because the existing maps from the Federal Communications Commission “are notoriously inaccurate” and “just plain wrong.” So the committee did what feels obvious. They used old- fashioned shoe leather and boots on the ground to survey all residents about the state of broadband in town. What the committee found was not surprising if you’ve been watching the mess this agency has made with its broadband maps. Right now, if a single subscriber in a census block is identified as having broadband, we conclude broadband is available throughout. That’s not right. It masks so many people who are unserved and erroneously suggests our broadband efforts are done. As a result, these are the maps that a Cabinet Secretary pronounced “fake news” and a Senator on our oversight committee said memorably and bluntly, they just “stink.” With a whole lot more precision, Annabel and her team proved they are right. They found that in Duanesburg the FCC maps are wrong as much as half the time. That means there are a lot of people in her town stuck on the wrong side of the digital divide. And there are a whole lot of communities just like Duanesburg—all across the country. Places where our maps are devastatingly wrong, where it has fallen on folks like Annabel to try and prove to local, state, and federal authorities that they do not have the infrastructure they need to succeed in the digital age. Let’s salute them for their grit, their savvy, and their persistence. But it shouldn’t have to be this way.
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Instead, the FCC should know in detail where service truly is and is not. It should be that we figure this out before sending federal funds to who knows where to build who knows what. But that is not what we do today. We rush billions of dollars out the door in what feels like a broadband publicity stunt without taking a broad view of what the nation needs. So while the spirit of this effort is right on—we have a broadband problem—the way we go about addressing it is not right. It will leave so many people, so many communities, and so many places like Duanesburg behind. Let me explain why. First: We need maps before money and data before deployment. With today’s decision we commit the vast majority of universal service funds—$16 billion!—for the next ten years without first doing anything to improve our maps, survey service accurately, or fix the data disaster we have about the state of service today. That means if your home is marked as served by the FCC’s maps today and it is not, then for the next decade you are on your own. Good luck. It means millions of Americans will slip deeper into the digital divide. Don’t take my word for it. Consider that the association representing some of the nation’s largest broadband providers did a pilot project and found that 38 percent of the homes and businesses the FCC counted as served had no service at all. When the very providers that seed the data behind the FCC’s broadband maps acknowledge just how bad it is, it should set off alarm bells. It does for me. That’s because when I was frustrated with the mess this agency has made of its maps I did something simple. I set up an e-mail inbox: [email protected]. I asked people I met to write in and tell me what our maps got wrong. Now that may be the last new e-mail I’ll be permitted to set up in my office, but it was worth the effort. That’s because I heard from hundreds of people frustrated with the FCC’s data and furious that Washington was telling them they had service at home when they knew clear as day they did not. One individual from Kentucky told me that the provider that offers service according to the FCC map will only do so if he pays a $46,000 installation charge. He didn’t think that meant he was served. He’s right. Another individual from Tennessee complained that because his address was misrepresented on our maps he was not able to get broadband at home. In Indiana, someone else told me he has never had service and questioned why the agency’s official data suggested otherwise. From Texas I learned that a household stuck on dial-up is reported as served by broadband on our maps. Then there was the resident from the White Mountains of New Hampshire who told me just how wrong our mapping is, because it says she has a choice of six providers at home. She has none. Despite all of this, we plow ahead today with a big spending plan that is not informed by better data. Remember that last year, the very day the FCC proposed this Rural Digital Opportunity Fund we also kicked off a series of policy changes to fix our maps. What happened to that? Where did it go? Why are we not doing that now before we spend billions? Because what we are doing today is going to leave people behind. Anyone who our maps erroneously suggest is served by broadband is out of luck for the next decade. Remember that in Annabel’s community the maps were wrong as much as half of the time. I get that in Washington organizations may flatter what we do here, because, let’s face it, there’s money on the table. But that doesn’t make this right. We are spending down three-quarters of our broadband funds for the next decade right here and now without doing any of the hard work necessary to figure out just where those dollars should go. To those who miss this election-year bonanza because our maps are wrong, we say good luck, we’ll deal with it later when our funds are already spent and too many communities in too many places have fallen further behind. Second: We fail to recognize that cost is a barrier to broadband availability. This proceeding is a missed opportunity to honestly acknowledge that there are more than deployment barriers to broadband—there are adoption barriers too. The FCC could have asked funding recipients to offer a low-cost service for consumers when they are receiving billions in support from the government. But if 100 Federal Communications Commission FCC 20-5
you comb through the text of this decision, you’ll find we took a pass. That’s unfortunate. When two in five of us Americans are unable to afford a $400 emergency, we need to recognize that price is a barrier for many people. We could have fixed this, but we declined. Third: This broadband fund is backward-looking with stale service speeds and data caps. It seems crazy that we are going to sit here today and pronounce what service speeds are adequate ten years hence. But we do just that with the baseline speed of 25 megabits per second that we propose. If you want a demonstration of just how ridiculous that is, know that a decade ago this agency called service at 200 kilobits per second broadband. Go ahead and stream a video over that and see how it goes. I don’t think we can know exactly how we will use broadband capacity ten years hence. But I do think that right here and now we need to be more ambitious. I think 100 megabits per second is table stakes and we are going to need more symmetrical upload and download speeds as we move from an internet that is about consumption to one that is about creation. This is especially true in rural areas, where we anticipate whole new economies developing based on mass amounts of data from precision agriculture. But we do not plan for this future here. Likewise, when it comes to data caps the agency’s decision misses the mark. This program will set in stone data caps for some services for the next ten years. That’s bonkers. Data consumption is growing fast. We should not limit our use cases and creativity by choosing a low-lying number at a fixed point in time. Fourth: Haste makes waste. This effort has been pushed out so fast I fear we are only starting to understand what is not workable in this framework. We are making so much up as we go along. Late on the night before our vote and then again after our vote, we saw major changes to this decision. As a result, this decision now penalizes states that have taken it upon themselves to do the hard work of expanding broadband on their own. We do so by adopting a policy of exclusion. Instead of partnering with these state efforts, we disqualify them and the areas where they have sought to extend the reach of broadband. But nowhere in this decision do we itemize where those areas are and what state efforts render communities ineligible. Plus, we have changed misguided policies involving letters of credit but made new ones up on the fly. We also are in such a rush that we didn’t even try to fix the holes in the FCC’s data with a meaningful challenge process. Instead of a robust challenge process where folks like Annabel could come forward and tell the agency we got it wrong, we have come up with one that shuts them out. The only challenges we will accept are from entities seeking to remove areas from the auction. To make matters worse, we are turning our back on working cooperatively with broadband efforts in the states. Just a few years ago the agency worked with the state of New York to come up with a new way to address broadband challenges in the state. For this effort, it appears that New York is going to pay an unfortunate price by being largely blocked out of participation here. This is disappointing because we could have explored working more closely with states by having them match the federal dollars here. In fact, the California Public Utilities Commission sought to do just that, but our action here will render that impossible. In the end, this is not the broadband plan we need. It is not guided by maps. It is not guided by data. It is guided by a desire to rush out the door, claim credit and pronounce our nation’s broadband problems solved. I think Americans deserve better. I think we solve problems by rolling up our sleeves, getting the facts we need, and then making things happen. That’s how we get audacious things done. I saw this in New York when I visited with Annabel. I’ve seen it all over the country with people, providers, and communities that are fighting to secure the connectivity they need for a fair shot at 21st century success. I believe my colleagues have seen it, too. It never fails to inspire. So I support the impulse behind this decision, but I believe in too many ways this effort falls short of what we need and therefore dissent in all other respects.
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STATEMENT OF COMMISSIONER GEOFFREY STARKS APPROVING IN PART AND DISSENTING IN PART
Re: Rural Digital Opportunity Fund, WC Docket No. 19-126; Connect America Fund, WC Docket No. 10-90. We have been talking about the “digital divide” for 25 years, but it is clear that we still have not finished the job of bringing quality affordable broadband access to all Americans. Across the United States, low-income people, people of color, and people in rural areas either are not getting online or are making great sacrifices to get connected. Solving the problem of internet inequality is a moral imperative, and it is essential to our country’s competitiveness. Other countries are making enormous investments to get their citizens connected to high-speed, quality broadband. China, for example, plans to deploy fiber-optic connections to 80 percent of the homes in that country. If we leave millions of our fellow Americans behind, our country will fall behind. The scale of this challenge is enormous and, at least for now, the resources available for meeting it are limited. In terms of just sheer magnitude, the $20 billion Rural Digital Opportunity Fund that we vote on here today is nearly ten times bigger than its predecessor, the Connect America Fund II, and will commit us to a certain course for more than a decade. There are no do-overs here with this money and precious time. We must, therefore, be good stewards of these funds and, perhaps more importantly, be clear-eyed and far-sighted about our connected future. When I talk to rural Americans—in the town library, the family farm, the community center—each has their own personal story, but if you listen closely, they often share a common theme: they need us to get this right. They are getting left behind. Over the last number of months, I have laid out a four-part plan for a data-driven and fiscally responsible approach to promoting rural broadband deployment. The FCC should: (1) provide funding based on accurate data and maps, (2) promote affordable broadband options, (3) incentivize providers to offer future-proof broadband, and (4) hold auction winners accountable. While there are parts of this item that are good advancements, today’s Report and Order falls short of satisfying my vision of how to best get broadband to our rural Americans. Accordingly, I will approve in part and dissent in part. First, as I laid out in my statement on the Notice of Proposed Rulemaking in this proceeding, I have zero tolerance for continuing to spend precious universal service funds based on bad data. There is bipartisan—and nearly universal—agreement that our existing broadband deployment data contains fundamental flaws. And yet today’s Report and Order presses ahead with funding decisions based on mapping data that doesn’t reflect reality, plowing the same mission-critical error into a newer, much larger program. We must do better. We know—from the tireless work of researchers, state agencies, and community activists— that our failure to get broadband mapping right has had serious consequences. The data generated from Form 477, on which we will double down today, fell so far short in Georgia that the state decided to stand up its own mapping initiative using a more rigorous approach. For each target county, state officials developed a database of all the premises in the county and then worked with providers to gather deployment information on a much more granular level than Form 477 provides. Last September, the Georgia Broadband Deployment Initiative released preliminary results for three counties. The results are striking.
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Source: Georgia Department of Community Affairs Exhibit A: Lumpkin County, which covers 283 square miles in the foothills of the Blue Ridge Mountains and looks mostly “served” by 25/3 Mbps broadband in our Form 477 data. Georgia’s analysis paints nearly the opposite picture: the vast majority of Lumpkin County is unserved. For the County’s 30,000 residents, that’s an enormous problem. This week, I spoke with Mayor Sam Norton of Dahlonega, a small city in Lumpkin County. He emphasized the real-world consequences of limited access to broadband. He told me that the lack of quality, affordable broadband is hurting the County’s ability to attract new businesses and address “the cycle of generational poverty.” For example, there’s a pharmacy in the community that doesn’t have high- speed broadband. That has meant they have a harder time getting doctors’ orders and using credit card machines. Mayors like Mr. Norton see these problems up close—even as our flawed maps and data obscure our vision here at the FCC. Make no mistake: without reservation, I fully support providing the resources needed to connect rural communities. And I understand the urgency of getting those resources into the field. But I remain seriously concerned that the Report and Order the FCC adopts today would make funding decisions for Phase I—which is budgeted at more than $16 billion—using data we all know is wrong. That is a “ready, fire, aim” approach that favors speed of funding over the lasting results that Americans really need. The Report and Order asserts that we’ll clean up our mapping problem on that as-yet unknown day when we get to Phase II. But I have not seen any evidence that convinces me that, having already spent 75 percent of our budget, we can feel confident that there will be sufficient money left at Phase II. The Report and Order does not even attempt to estimate how many more people will be unserved when we finally get our maps in order. So, we do not know how many communities will need to be covered by Phase II, and we are not allowing a robust challenge process that would give them an opportunity to identify themselves and participate in Phase I. Without that information, how can we reassure the communities we will knowingly leave out of Phase I that we will be able to meet their needs when we finally get to them? Simply put, we are making a promise to people like the residents of Lumpkin County that we cannot know we will be able to keep. Without having better data and maps in place, we can’t even estimate how many areas similarly deemed “served” like most of Lumpkin County will be left out of RDOF Phase I. What we do know is that Lumpkin County is not alone. In Georgia, Exhibit B from Georgia’s mapping program is Tift County, which is where my Special Advisor, Alisa Valentin, grew up and where her 1 Federal Communications Commission FCC 20-5
folks still live—and they are always complaining about their lack of broadband. Similarly, I met a number unserved New Yorkers in Hudson, New York—the eighth most rural district in the United States—when I attended a Rural Broadband Field Hearing titled “Closing the Digital Divide: Connecting Rural Americans to Reliable Internet Service” with Congressman Antonio Delgado late last year. Many other states and organizations have begun working to provide an accurate picture of broadband availability because we have failed to do so, including the USTelecom maps that reported that nearly 40 percent of the total locations in Virginia and Missouri that are “served” according to our Form 477 data are actually unserved. Second, we have not done enough to ensure that once broadband is available, families can actually afford it. I share the excitement of many stakeholders about getting high-speed, next generation networks into communities previously denied access. But there’s nothing in our decision today that addresses the needs of low-income families. I had hoped that the subscribership target considered in the Notice of Proposed Rulemaking would incentivize winners to provide a range of broadband packages, including some lower-cost options. But the final Report and Order does not require winners to meet any subscribership target. Going forward, I’m encouraging all stakeholders involved in universal service to recommit to ensuring that cost is not a barrier. Third, to ensure universal service funds are put to the best use, we must envision the connectivity needs of the future—and build toward them. For too long, the FCC has subsidized networks that are obsolete by the time they are built. Less than 10 years ago, we awarded Connect America Fund Phase I support to price-cap carriers to provide service to approximately 524,000 locations. The CAF I rules only required the carriers to provide “broadband” at download speeds of just 4 Mbps and even slower uploads. Under our current rules, quite correctly, that is no longer broadband. That experience raises a critical question: Could we not have reasonably foreseen in 2013 and 2013 that 4/1 Mbps networks, and even 10/1 Mbps networks, would not stand the test of even a decade? That lack of foresight reverberates into the Report and Order before us today. At least 108,000 of those locations, more than 20 percent of locations served through CAF I, will presumptively be eligible for RDOF support. We must learn from that experience. Universal Service Fund dollars are too scarce and too badly needed to be spent building the networks of the past. Has the Commission learned its lesson? We built to 4/1 Mbps in 2010, and it didn’t last. Do I think that the 25/3 Mbps baseline that we set out today will last 10 years from today? I do not. No new lessons are learned from the second mule kick. We need to be building future-proof connections with this money. In my conversations with rural electric co-ops, they tell me that customers overwhelmingly want at least 100/100 Mbps networks. In the coming years, faster upload and download speeds will become increasingly essential to rural life, opening up options to work from home, upload farm data, access medical care, and participate in educational experiences not available locally. For that reason, I support adopting changes to the clearing round rule endorsed by rural electric co-ops and many other potential auction participants that will help ensure that faster and more upgradeable networks are deployed wherever possible. Fourth, consistent with our obligation to spend universal service funds responsibly, we must create real accountability for companies that receive subsidies. Looking at our recent efforts, I see warning signs that we should not ignore. For example, I am extremely frustrated more than a dozen winners from our last universal service auction have already defaulted. And some providers have recently announced that they will not make their CAF II milestones, which is concerning. Communities that have already waited too long for broadband should not be delayed by providers unable to fulfill their obligations. Letters of credit are one way we promote responsibility and protect the fund. I understand that the Commission is trying to strike a careful balance here. We don’t want to over-insure and make the program unaffordable for providers, and I support the changes to the draft Report and Order’s Letter of Credit mechanism because I expect that they will promote more participation in the auction. Moving
2 Federal Communications Commission FCC 20-5
forward, we must continuously evaluate how well our enforcement mechanisms work. I will be watching closely to see how we handle the problems that have arisen with some CAF II winners. Finally, I want to underscore my commitment to working with the states to close the digital divide. Because I value those partnerships, I cannot support provisions of the Report and Order that penalize the many states that have made their own investments in rural broadband deployment. Here is what I said at the Open Meeting on January 30, 2020 when the Commission voted on this Order: The version of the Order now before us excludes from RDOF any area that the Commission ‘know[s] to be awarded funding through the U.S. Department of Agriculture’s ReConnect Program or other similar federal or state broadband subsidy programs, or those subject to enforceable broadband deployment obligations.’1 Based on my initial research, that means that the nearly 30 states that fund rural broadband through their own programs may find their eligibility reduced or eliminated. These provisions discourage badly needed state-federal partnerships, risk unequal application of the rules between states, and create an unnecessary risk of litigation. We should not be surprised when state officials are confused and concerned upon seeing this decision. The FCC has long encouraged states to work with us toward our shared universal service goals.2 Several members of Congress wrote to the Chairman just yesterday urging that we delay consideration of this Order until state and federal investments could be better coordinated.3 Instead of taking time to work with various states, we’re blindsiding them with an exclusion they were never given an opportunity to weigh in on. That is unfair, unwise, and inconsistent with our obligation under the Administrative Procedure Act to give parties fair notice and an opportunity to comment.4 I see no evidence in this Order that we have attempted to understand the variety of state programs our decision will impact. Had we given state officials notice of this rule and worked collaboratively with them, I have no doubt we would have a better record on which to base this decision. Nor do I see any standards against which those programs will be evaluated or a plan to ensure we have canvassed all relevant state programs, creating a risk that our rules will be applied arbitrarily and capriciously. As I said before, I understand the urgency of getting RDOF funds to places that need them. But failing to coordinate with states will, in my view, risk undermining the effectiveness of this important effort. We should have taken the time to get it right. Instead, we have damaged our working relationship with important state partners and created litigation risk that jeopardizes the laudable aspects of this decision. *** On February 3, 2020, I received notice that the Report and Order we had voted had been revised by the Chairman in response to the concerns I raised in my statement at the meeting. The majority subsequently approved a revised version of the Report and Order. I have retained my original language above because I want a clear record of the chaotic process by which the majority adopted a revised item, because I stand by the full strength of the legal and policy issues stated there, and because my fundamental concerns remain. In relevant part, the post-adoption revision approved by the majority was changed to read:
1 See Report & Order (January 30, 2020 version) ¶ 13 (emphasis added). 2 See, e.g., FCC, Universal Service, Federal-State Joint Board, https://www.fcc.gov/general/universal-service- federal-state-joint-board (last visited Jan. 30, 2020). 3 Letter from Rep. Anna G. Eshoo, et al., to Ajit Pai, Chairman, FCC (Jan. 29, 2020). 4 See 5 U.S.C. § 553.
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In addition, we will exclude those census blocks which have been identified as having been awarded funding through the U.S. Department of Agriculture’s ReConnect Program, or awarded funding through other similar federal or state broadband subsidy programs to provide 25/3 Mbps or better service. This is consistent with our overarching goal of ensuring that finite universal service support is awarded in an efficient and cost- effective manner and does not go toward overbuilding areas that already have service.5 The new version also adds, among other changes, a footnoted explanation that “[o]ur intent is to exclude areas where 25/3 Mbps or better service has been or will be deployed without Rural Digital Opportunity Fund support, not to prevent winning bidders from accessing other funding sources, including from states.”6 In light of my concerns that the Commission failed to satisfy our obligations under the Administrative Procedure Act, the majority attempted to establish in the revised Report and Order that states should have been on notice that we might exclude from RDOF the census blocks that have been awarded funding through state subsidy programs. They failed in my mind. On this point, the only limited language they can point to in the NPRM is language explaining that the Commission seeks to “ensure that [the Commission’s] limited universal service support is awarded in an efficient and cost-effective manner, without overbuilding to areas that already have service” and proposing that the Rural Digital Opportunity Fund framework be guided by, among other goals, “reducing waste and inefficiency in the high-cost program.”7 That is not sufficient notice. Notably, the only state explicitly and specifically mentioned in the NPRM as potentially being excluded based upon its state funded broadband program was New York.8 The comments now cited in footnote 32 do not convince me that we have met our responsibility to “adequately frame the subjects for discussion.”9 I have no doubt that, if we had provided adequate notice, we would have heard from many more affected states—and they would have articulated and illustrated why punishing states that have made broadband deployment investments and deterring future state efforts is counterproductive. Nor do the revisions to the Report and Order reassure me that we have gathered the necessary information to understand how the majority’s changes will impact RDOF’s overall success and structure. There is a lot at stake here. We failed to engage with the states, and, accordingly, the Report and Order contains no real analysis about how these state broadband deployment programs work. While much is unknown about how RDOF’s state-subsidy exclusion will impact our federal effort and those state funded broadband programs, we do know this: there are a lot of them, and they distribute significant funding.
5 Report & Order ¶ 13. 6 Report & Order ¶ 13 n.32. 7 Id. 8 Rural Digital Opportunity Fund; Connect America Fund, GN Docket Nos. 19-126, 10-90, Declaratory Ruling and Notice of Proposed Rule Making, 34 FCC Rcd 6778, 6795, ¶ 48 n.91 (2019). 9 Connecticut Light & Power Co. v. Nuclear Regulatory Comm’n, 673 F.2d 525, 533 (D.C. Cir. 1982). On the contrary, our framing of this issue in the NPRM and in the draft Report and Order as only excluding the state of New York may have misled commenters into believing that a nationwide exclusion was not on the table. For example, the Verizon comments cited in and relied upon by the majority in footnote 32 refer to “specified pre- existing federal or state broadband programs,” particularly the CAF auction and “matching CAF support for New York”—two programs actually named in the NPRM and the draft Report and Order. Verizon Comments 8-9. Indeed, we received significant engagement on the New York issue, including communications from numerous members of Congress. See Letter from Antonio Delgado et al., Members of Congress, New York State Congressional Delegation, to Ajit Pai, Chairman, FCC at 41 (Jan. 17, 2020) (signed by 22 members of Congress); Letter from Antonio Delgado, Member of Congress, New York State Congressional Delegation, to Ajit Pai, Chairman, FCC at 58 (Jan. 28, 2020); Letter from Charles E. Schumer & Kirsten Gillibrand, Senators, United States, to Ajit Pai, Chairman, FCC at 33 (Jan. 17, 2020).
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More than half the states have some kind of state broadband program, and together these programs distribute well over $1 billion in funding.10 It will take significant analysis to understand how these programs will interact with RDOF, but their sheer size and scope heightens my grave concern that we do not have even a reasonable estimate—let alone a precise understanding—of how many census blocks are being funded in full or in part by a state broadband subsidy program.11 As it stands, the households in these census blocks will be cut out of Phase I, and I don’t see any evidence or analysis that we have any idea how many will be impacted. We didn’t ask, and as a result, we don’t know. That deficit is not harmless.12 Without that information and analysis, this exercise can hardly be called “reasoned decision- making.”13 Even with the post-adoption changes, the Report and Order remains confusing and confused. The majority has attempted to clarify that, with respect to state programs, the Commission will only exclude “census blocks which have been identified as having been awarded funding . . . through similar state subsidy programs to provide 25/3 Mbps or better service.”14 On one level, that provides some clarity to states that subsidized slower speeds. But on another level, what about state programs that provided a shorter subsidy period or other terms different from those provided by RDOF, or state programs that plan to fund 25/3 Mbps deployment, but not on a timeline consistent with RDOF? Based on this text, the states will not know, and it is not clear how the FCC will proceed. Given the high stakes here—including a large commitment of our universal service funds, life-changing access to broadband for unserved Americans, and significant investments by the states—I agree with the D.C. Circuit that “elementary fairness compels clarity.”15 Additionally, I remain concerned that we have opened the door to arbitrary and capricious application of the state-subsidy exclusion among different states. The voluntary reporting process described in paragraph 14 does not allay my concerns.16 Rather than gathering information from state programs in advance to inform this Order, as I believe we should have, the Report and Order “direct[s] the Bureau to provide an opportunity to identify census blocks that have been awarded support by a
10 NTIA has given us a head start on this by cataloguing state programs on its BroadbandUSA website. See, e.g., State Broadband Programs, NTIA, https://broadbandusa.ntia.doc.gov/ (last visited Feb. 5, 2020). 11 It is possible, for example, that some states have spread their funding around scattered locations such that they have made small (perhaps even single-location) investments in many census blocks. Under the approach outlined in the Report and Order, census blocks where even one home has received a state subsidy for 25/3 Mbps deployment will be left out of Phase I. That could create a disproportionate exclusion from RDOF that has ramifications for our budget and auction mechanics. Notably, the post-adoption revision appears to attempt to address this issue with respect to the U.S. Department of Agriculture’s Rural Development Broadband Reconnect Program. The Report and Order now directs the Bureau to exclude only “portions of any census blocks” “that are substantially overlapped by a ReConnect awardee” rather than the entire census blocks. See Report & Order ¶ 13 n.31 (emphasis added). This inconsistency with the treatment of state programs is not explained. Had we proposed this idea in the NPRM, I am confident that we would have received informative and necessary information from states about how their subsidy programs work. 12 See Sprint Corp. v. FCC, 315 F.3d 369, 376 (D.C. Cir. 2003) (explaining that “an utter failure to comply with notice and comment cannot be considered harmless if there is any uncertainty at all as to the effect of that failure” (quoting Sugar Cane Growers Cooperative v. Veneman, 289 F.3d 89, 96 (D.C. Cir. 2002)). 13 Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983). 14 Report & Order ¶ 13. 15 Gen. Elec. Co. v. EPA, 53 F.3d 1324, 1329 (D.C. Cir. 1995), as corrected (June 19, 1995) (quoting Radio Athens, Inc. v. FCC, 401 F.2d 398, 404 (D.C. Cir. 1968)). 16 Report & Order ¶ 14.
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federal or state broadband subsidy program to provide 25/3 Mbps or better service.”17 This is a recipe for incomplete information and unfairness. Finally, I raise again that this state-subsidy exclusion utterly upends our long-standing policy to work with states to meet our universal service goals. In a confusing about-face, the majority’s action today effectively pits federal broadband dollars against state broadband dollars and penalizes states for their self-help in closing the digital divide. That is bad policy that should alarm our state partners. I outline the practical and legal problems with this aspect of the revised Report and Order here in some detail because I want parties to understand that these issues could have been handled thoughtfully. The RDOF program will distribute a tremendous amount of money and, if well managed, could do enormous good. We could have asked states to partner with us to achieve RDOF’s goals. For reasons unclear to me, we rushed this item and skipped important steps. The Commission could have taken the time to gather the necessary facts, hear from affected states and other parties, and incorporate that information into our decision. I regret that we did not. *** Here’s the final point: we must avoid waking up 10 years from now, with another $20 billion spent, still failing to understand with precision which communities remain unserved and how we can effectively and accurately finish the job. I thank the staff of the Wireline Competition Bureau for their work on this very important issue.
17 Id.
6 Exhibit D
January 8, 2021
Will Seuffert Executive Secretary Minnesota Public Utilities Commission 121 7th Place East, Suite 350 St. Paul, Minnesota 55101-2147
RE: Comments of the Minnesota Department of Commerce Docket No. P999/CI-20-747
Dear Mr. Seuffert:
Attached are the comments of the Minnesota Department of Commerce (Department) in the following matter:
In the Matter of a Commission Inquiry into the Advertising, Outreach, and Offering of Lifeline by High Cost ETCs
The notice was filed on October 7, 2020 by:
The Minnesota Public Utilities Commission
The Department recommends the following and is available to answer any questions the Commission may have: 1) the Commission may refer the issue of best practices to a working group for further consideration; and 2) the Commission may determine that while websites are not to be a sole means of advertising, websites are necessary. Therefore, all companies shall offer webpages that correctly show all income and other requirements and contain the correct rates. Information must be reachable within 3 clicks of the company’s home page and Lifeline information must be easily searchable.
Sincerely,
/s/ BRUCE L. LINSCHEID /s/ JOY GULLIKSON Financial Analyst Telecommunications Analyst
/s/ DIANE DIETZ Telecommunications Analyst
JG/DD/BLL/ja Attachment
85 7th Place East - Suite 280 - Saint Paul, MN 55101 | P: 651-539-1500 | F: 651-539-1547 mn.gov/commerce An equal opportunity employer
Before the Minnesota Public Utilities Commission
Comments of the Minnesota Department of Commerce
Docket No. P999/CI-20-747
I. INTRODUCTION
The following comments are offered by the Department of Commerce (Department) in response to the Minnesota Public Utilities Commission’s (Commission’s) Request for Comments, issued October 7, 2020. In that Request, the Commission asked questions of and requested filings from the High Cost Eligible Telecommunications Carriers (ETCs) regarding their Lifeline Offerings. The Commission’s October 7th notice also posed topics for Reply Comments.
This Commission annually certifies that Eligible Telecommunications Carriers (ETCs) that are federal high cost support recipients, have met certain obligations, including the provision of Lifeline service. Lifeline is a “non-transferable retail service offering available to qualifying low-income consumers.”1 Customers of voice service may receive a discount of $5.25 per month.2 Customers of qualifying broadband service receive a Lifeline discount of $9.25 per month. Customers residing on Tribal Lands may receive additional support of $25, for a total credit up to $34.25 per month.3 To effectively make Lifeline service available to its subscribers, ETCs are required to “[a]dvertise the availability of such services and the charges therefore using media of general distribution.”4
During the recertification of High Cost ETCs in Docket P999/PR-20-8 (Docket 20-8), the Commission opened this current Docket to further investigate the advertising, outreach, and offering of Lifeline by ETCs receiving federal high cost support.5 On October 7, 2020, the Commission issued a Notice of Comment Period in which it requested each ETC high cost recipient to:
A. Provide the number of Lifeline customers it is currently serving and identify any patterns or trends it has seen in Lifeline enrollment for its service area. B. Explain how it is advertising Lifeline services, with special explanation given to advertising and outreach to diverse populations. C. Submit a sample of Lifeline advertising materials and an explanation of the types of outreach and advertising ETCs use to most effectively reach eligible populations.
1 47 C.F.R. § 54.401 (a). 2 This amount of discount was effective as of December 1, 2020. Beginning December 1, 2021, no Lifeline discount will be offered to voice only customers (47 C.F.R. § 54.403 (a) (2). 3 47 C.F.R. § 54.403 (a) (3). 4 47 C.F.R. § 54.201 (d) (2). Also see 47 U.S.C. 214(e)(1)(B): [eligible telecommunications carriers shall ”advertise the availability of such services and the charges therefor using media of general distribution.” 5 The Commission addressed Lifeline offered by Wireless Lifeline Only ETCs in its most recent Order Establishing Customer Notice Requirement, in Docket No. P999/CI-17-509, November 20, 2020.
Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 2
D. Offer other observations or experience about Lifeline that is relevant to the Commission’s inquiry into advertising and outreach.
The Commission’s notice elicited 64 responses by the November 9, 2020 deadline.6 The Commission, in its October 7th Notice, asked that the following topics to be addressed in reply comments:
1. What are best practices in terms of advertising and outreach on the Lifeline program? 2. Are High Cost ETCs properly offering the Lifeline program? 3. Are there other issues or concerns related to this matter?
The Department examined the filings made in response to the Commission’s Request for Comments, as well as reviewing the websites of all carriers, including the carriers that did not respond. By and large, the responding providers submitted the number of lifeline customers and examples of outreach materials used in the provision of Lifeline service. However, only a few carriers provided detailed information on the methods of outreach used for diverse populations or made observations on the best outreach practices. While some carriers provide adequate advertising to customers and potential customers, other carriers do not even have an explanation of Lifeline on their websites, or the relevant website pages are difficult for a customer to reach. Some carriers require customers to know the relevant terminology in order to access Lifeline information though a “search” box on the home page. Other carriers provide access to Lifeline information through links that are difficult for customers to discern as being relevant to Lifeline.
II. COMMISSION AUTHORITY
All ETCs must offer service to low income consumers through a Lifeline offering. “Lifeline means a non- transferable retail service offering provided directly to qualifying low-income consumers.”7 Lifeline discounts may be applied to voice telephony prior to December 1, 2021, after which Lifeline will only be available for broadband service.8
The Commission’s role in determining whether ETCs are appropriately managing the federal funds provided to them through the High Cost and Lifeline programs is best summed up by the Federal Communications Commission (FCC): “Congress made states—not the Commission—primarily responsible for designating ETCs. And States have vigorously exercised their oversight authority to combat waste, fraud, and abuse in the Lifeline program. In some cases, states have been the first to identify waste, fraud, and abuse by ETCs—"9
6 The 64 responses represent 52 parent companies plus one response from the Minnesota Telephone Alliance (MTA). The difference between the 64 responses and the 51 parent companies and the MTA occurs because some parent companies filed responses for their operating companies individually. 7 47 C.F.R. § 401 (a). 8 Id. Subsection (b) (2). 9 In the Matter of Bridging the Digital Divide for Low-Income Consumers, Lifeline and Link-Up Reform and Modernization, Telecommunications Carriers Eligible for Universal Service Support, Fifth Report and Order, Memorandum Opinion and Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 3
The Congressional authority for state Commissions to designate ETCs is stated in 47 U.S.C 214 (e):
A State commission shall upon its own motion or upon request designate a common carrier that meets the requirements of paragraph (1) as an eligible telecommunications carrier for a service area designated by the State commission. Upon request and consistent with the public interest, convenience, and necessity, the State commission may, in the case of an area served by a rural telephone company, and shall, in the case of all other areas, designate more than one common carrier as an eligible telecommunications carrier for a service area designated by the State commission, so long as each additional requesting carrier meets the requirements of paragraph (1). Before designating an additional eligible telecommunications carrier for an area served by a rural telephone company, the State commission shall find that the designation is in the public interest.
United States Code in 47 U.S.C. 214 (e) (1) and 47 C.F.R. 54.405 require ETCs to offer appropriate advertising. 47 C.F.R. 54.405 states:
All eligible telecommunications carriers must: (a) Make available Lifeline service, as defined in §54.401, to qualifying low- income consumers. (b) Publicize the availability of Lifeline service in a manner reasonably designed to reach those likely to qualify for the service. (c) Indicate on all materials describing the service, using easily understood language, that it is a Lifeline service, that Lifeline is a government assistance program, the service is non-transferable, only eligible consumers may enroll in the program, and the program is limited to one discount per household. For the purposes of this section, the term “materials describing the service” includes all print, audio, video, and web materials used to describe or enroll in the Lifeline service offering, including application and certification forms. (d) Disclose the name of the eligible telecommunications carrier on all materials describing the service.
Both the FCC and Congress have clearly indicated that State Commissions have authority to oversee the types of advertising for Lifeline service and has authority to ensure Lifeline service is properly advertised.
Order and Order on Reconsideration, and Further Notice of Propose Rulemaking, WC 17-287, 11-42, 09-197. ¶28, November 14, 2019. Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 4
III. COMPANY RESPONSES
The Department’s analysis of the Company responses is largely reflected in two attachments to these comments. Attachment A is a high-level overview of the Department’s analysis, intended as an easy reference, of those companies that provided a response to the Commission’s notice. Companies that did not respond to the Commission are noted in this Attachment A and highlighted in blue. Column E in Attachment A identifies those companies that the Department believes to be properly offering the Lifeline program. Column D in Attachment A identifies issues found by the Department that merit attention by the companies, to properly offer Lifeline.
Attachment B to these comments contains the detailed analysis conducted by the Department of each responding company. Attachment B also shows, highlighted in blue, the companies that did not respond to the Commission’s Request for Comments. Both Attachments A and B contain observations of the Department about the efficacy of each company’s website.
Seven High Cost ETCs did not respond to the Commission’s notice,10 highlighted in blue on Attachments A and B. One of those companies, Jaguar Communications, had been previously ordered by the Commission to “make a compliance filing in a separate docket describing its Lifeline discount program, the number of recipients, and Jaguar’s methods, materials, website, and other means for making customers aware of the Lifeline program.”11 On January 4, 2021, the day that Jaguar’s filing was due, Jaguar requested the Commission grant a one month extension to respond to the Commission’s order.
A. MOST COMPANIES PROVIDED LIFELINE COUNTS AND A FEW COMPANIES MADE SOME OBSERVATIONS, BUT NO COMPANY PROVIDED INFORMATION ON PATTERNS OR TRENDS.
The Commission requested each High Cost ETC to list how many Lifeline customers it serves and identify any patterns or trends it has seen in Lifeline enrollment for its service area. Many High Cost ETCs responded with the number of Lifeline customers they serve. The counts, as reported by the responding companies in this Docket, are shown in column D in Attachment B. The Lifeline count information is also available each year at https://apps.usac.org/li/tools/disbursements/default.aspx, and was supplied in the Department’s comments in Docket 20-8. With respect to the Commission’s recent Request for Comments, most companies that responded did not distinguish between Lifeline applied to voice service and Lifeline applied to broadband service.12 In some instances, companies distinguished between Tribal and non-Tribal recipients.13
10 The following High Cost Companies did not file comments: Broadband Corporation, Consolidated Communications, Interstate Telecommunications, Jaguar Communications, LTD Broadband, Polar Mutual Aid, and Windstream Communications. 11 Commission Order in 20-8. November 25, 2020, p.5. 12 The Lifeline discount for voice only service is $5.25 as of December 1, 2020 and is scheduled to be eliminated on December 1, 2021 except for subscribers on Tribal lands whose discount remains at $34.25. 13 Paul Bunyan, and Garden Valley telephone companies identified the number of their respective tribal Lifeline customers. Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 5
In aggregate, the responding companies reported serving 8,761 Lifeline customers.
No Companies offered information about trends and patterns, but some companies made observations and suggestions concerning Lifeline: • County social services departments should be informed of Lifeline programs and how the client can apply through the National Verifier portal. —Halstad Telephone
• Members do advertising at their own expense. The Commission should explore other options than mandating additional advertising. —MN Telecom Alliance
• Ads in newspapers and customer newsletters generate the most Lifeline inquiries. —Paul Bunyan Telephone Cooperative
• How society receives information has evolved. Newspaper ads reach some, electronic media reaches others. There should be partnership with social services agencies. —TDS (Arvig, Bridgewater, Mid State, and Winsted).
• Customers find the National verification to be confusing, even with assistance. Notifications for renewal are often ignored. —City of Barnesville.
B. COMPANIES USE A VARIETY OF OUTREACH METHODS, BUT NO COMPANY ADDRESSED OUTREACH TO DIVERSE POPULATIONS.
Attachment B, columns G through N, list the different media identified by filing companies. Typical forms of outreach include: company websites, direct outreach, outreach via third parties, and social media.
Website: Almost all companies who responded use their website to make Lifeline information available to customers.14 Unfortunately, many of the Lifeline pages on these websites are hard to reach or contain outdated or incorrect information. Department analysis of the websites is included in part IV. B, below.
Company direct outreach: Many companies use bill inserts, posters in their business offices, newsletters, annual notices, letters and postcards to subscribers. Other forms of outreach include user guides, brochures, and welcome packets.
Outreach via third parties: Some companies reach out to social service agencies, placed posters in senior housing, grocery stores and gas stations. One company, Midcontinent Communications, is also a cable provider and placed advertising on its cable network.
14 Northern Telephone Company and Wilderness Valley Telephone Company have no websites) Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 6
Social Media: A few companies indicated that they reach out to customers using social media: Facebook, Instagram, and blogs were used to impart information concerning Lifeline.
C. OTHER OBSERVATIONS AND EXPERIENCES FROM COMPANIES
The Minnesota Telecom Alliance (MTA) stated in its comments that it represents “more than 70 telecommunications companies across Minnesota.”15 It urged the Commission not to mandate additional advertising because “MTA members undertake significant advertising of the Lifeline program at their own expense.”16
IV. DEPARTMENT ANALYSIS
A. BEST PRACTICES
The term “best practices” suggests more than one method is available to bring about an efficient and desired outcome. The Department understands the term, used in the provision of Lifeline, to include multiple avenues for reaching those who are potential Lifeline customers in order to educate and assist them in obtaining Lifeline service. In its Request for Comments, the Commission requested that respondents offer best practices concerning the advertising and outreach of the Lifeline program.
From the early days of Lifeline offerings, the FCC has encouraged a multi-pronged effort to reach customers. In 2004 the FCC offered guidelines for outreach17 that included:
• Regular mailings in the form of letters and brochures • Posters in places where low-income individuals are likely to visit • Develop outreach material that can be read or accessed by any sizeable non-English speaking population within the carrier’s service area • Coordination of efforts with governmental agencies that administer any of the relevant government programs • States should utilize USAC as a resource for outreach to states and carriers
The Department offers the following as a basis for Commission consideration of best practices for Lifeline outreach, either on its own volition, or for consultation with a work group:
1. Website: Accurate information on company’s website that can be accessed with three or fewer clicks. Easy access to Lifeline information through a search bar using key words. The Commission may wish to consult its Consumer Affairs Office to determine the most effective key words to use in the search function of a website.
15 MTA comments, P999/CI-20-747, filed November 9, 2020. 16 Ibid. 17 In the Matter of Lifeline and Link-Up . WCB 03-109 ¶46-50. April 29, 2004. Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 7
2. Social media: A presence on social media with prominently displayed information concerning Lifeline.
3. Reaching out to Social Service Agencies: In coordination with the Commission, regular contact with social service agencies who can offer information to their clients.
4. Lifeline Champion and Reaching out to the Community: For smaller companies, an employee well versed in Lifeline and TAP that can assist customers by providing accurate information. For large companies, an internal education program to ensure customer service representatives, that assist consumers with Lifeline and TAP issues, are well versed on the programs. Well versed employees may also be used to speak with community groups and put up flyers in senior housing and community centers. The Lifeline champions needs to be aware of diverse segments of the population, knowledge about Lifeline on tribal areas for those companies that serve tribal lands, and translation services for non-English speaking customers.
5. Regular outreach to customers through various formats: Beyond an annual notification, customers who receive information in various forms are, in the Department’s opinion, more likely to follow up to determine if they should apply for Lifeline service. Lifeline Awareness Week (the first week after Labor Day) is an opportunity to provide various forms of communications. Outreach by companies in the form of bill messages, letters, postcards, and website banners, may be supplemented by State and federal media initiatives.
Based on the Department’s review of the responding companies’ filings, it appears that Garden Valley, offers the closest to a series of best practices. In addition, some of the individual practices of other companies warrant note:
Garden Valley: Garden Valley Technologies offers complete information about Lifeline services, as well as the Telephone Assistance Plan, within two clicks from its home page. In addition, Garden Valley mails out brochures; includes information in its directory, bill messages, and welcome booklets; does an annual direct mail piece; sends information to the four social service offices in the area; provides information on social media; does additional advertising during Lifeline Awareness Week; and provides educational information to its employees who provide Lifeline outreach to Garden Valley customers.
TDS Telecom (Arvig, Bridgewater, Winsted, Mid State): Information about TDS’s Lifeline offering on its website can be reached within one click from its home or main page. In addition, TDS employs five types of outreach, including use of social media.
Mid Continent Communications (Midco): As a cable provider, Midco airs many Lifeline ads over cable.
CenturyLink: CenturyLink makes extensive use of newspaper advertising, placing at least 190 ads in Minnesota newspapers in 2020.
Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 8
B. THE FILINGS OF MOST COMPANIES HAVE ONE OR MORE ISSUES RELATING TO THEIR LIFELINE OFFERING NEEDING CORRECTION TO PROPERLY OFFER THE LIFELINE PROGRAM.
The Commission requested comments on whether High Cost ETCs were properly offering the Lifeline program. Attachment A to these comments shows that the Department considers only 15 of the 52 companies to be properly offering Lifeline. Problems found include: 1) difficulty in finding Lifeline information on the website, including non-operating links to Lifeline information and applications; 2) no information about Lifeline; 3) outdated Lifeline credit information for Lifeline; 4) outdated income limits for Lifeline eligibility.
The Department’s review of outreach and advertising practices of High Cost ETCs included a review of company websites because they are a prolific means of reaching customers. In its 2004 Order, the FCC noted:
States and carriers may post outreach material on the Internet to provide general information; however, the Internet should not be relied on as the sole or primary means of Lifeline/Link-Up outreach18
Thus, websites are considered by the FCC to be a necessary but not a sufficient means for communicating the Lifeline program to potential Lifeline customers. 47 C.F.R. 54.405 requires ETCs to publicize the availability of Lifeline service “in a manner reasonably designed to reach those likely to qualify for the service [and] indicate on all materials describing the service, [which] includes all print, audio, video, and web materials used to describe or enroll in the Lifeline service offering, including application and certification forms.”
The Department notes the following deficiencies in company Lifeline programs:
Difficulty in finding the appropriate page on the website. Some companies had appropriate information on their websites, but getting to the actual Lifeline page was not easily accomplished by Department staff and the Department believes that most of the potential customers of Lifeline service would experience similar difficulty.19 Some company websites included links that did not work.20
18 Ibid ¶46. 19 The Department staff had difficulty in getting to the Lifeline page on the websites of the following carriers: the CenturyLink affiliates (including Qwest, Embarq, CenturyTel of Chester, CenturyTel of Minnesota and CenturyTel of Northwest Wisconsin), the Frontier affiliates (including Frontier and Citizens), the Nuvera affiliates (including Hutchinson, Western, Sleepy Eye, Scott Rice – Integra, and New Ulm), and T-Mobile. 20 The Department staff found broken links on the websites of the following carriers: Ace Telephone Association, Kasson & Mantorville Telephone Company, Mabel Coop, and Winnebago Cooperative Telephone Association. Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 9
No information about Lifeline on Companies’ websites. Broadband, Inc., Jaguar, and LTD Broadband, all winners of the 903 auctions21 of 2017, have no information on their websites concerning Lifeline services. Each of these companies, as recipients of federal funds has an obligation to provide information on Lifeline services. In addition to being awarded over $1 million in the 903 auction, LTD Broadband was the largest recipient of Rural Digital Opportunity Fund (RDOF) funds in the recent Auction 904.22 For Minnesota alone, LTD Broadband received over $300 million to serve more than 100,000 locations. The Department urges the Commission to take note of the large number of customers that will be in LTD Broadband’s service area and require that LTD Broadband ensure that low income residents are aware of the opportunity to receive a discount on their service through information on the company’s website, at minimum.
In the case of two very small companies: Northern and Wilderness Valley, there is no website at all. Northern received over $390,000 in federal support from the FCC in 2019.23
Outdated information. Several companies had outdated information on their websites.24 Most commonly, a credit of $7.25 per month credit for voice-only service, rather than a $5.25 credit, was still on company websites. Companies may be in the process of updating their websites but should be encouraged to do so promptly.
Outdated income limits for Lifeline eligibility. With the poverty guideline being updated annually, some carriers neglect to revise their websites with the updated income limits. Among the carrier websites needing such updates are those of Bevcom’s affiliates (of which there are seven in Minnesota), Halstad Telephone Company, and the three affiliates of Park Region Mutual Telephone Company. In addition, some carriers, such as Paul Bunyan Rural Telephone Company have failed to update the income limits on one of their Lifeline brochures.
V. SUMMARY
The Universal Service Fee for the first quarter of 2021 will be 31.8% of interstate end user revenue.25 Subscribers are paying a significant percentage of their telecommunications bill to allow companies to receive subsidies to serve high cost areas and customers who are low-income.26 The law requires
21 https://auctiondata.fcc.gov/public/projects/auction903/reports/winning_bidders. 22 https://auctiondata.fcc.gov/public/projects/auction904/reports/winning_bidders. 23 https://apps.usac.org/hc/tools/disbursements/default.aspx 24 As of December 29, 2020, the Department found outdated information on the websites and in the documentation submitted by the following carriers as in filings made in the current docket: Bevcomm affiliates (including Easton, Eckles, Granada, Lonsdale, Blue Earth Valley, Cannon Valley, and Pine Island Telephone Companies), Dunnell, Farmers Mutual, Federated Coop, Halstad, Manchester – Hartland, Northern, Paul Bunyan Rural, and Wilderness Valley Telephone Companies and Winnebago Cooperative Telephone Association. 25 https://www.fcc.gov/general/contribution-factor-quarterly-filings-universal-service-fund-usf-management-support 26 See: Who Must Contribute - Universal Service Administrative Company (usac.org) for a list of the providers and services that must contribute. Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 10
these recipients of federal subsidies to advertise and make available Lifeline service. As of November 30, 2020, of the 52 parent companies that receive high cost support, the Department found that only 15 are offering Lifeline service with proper advertising, based primarily on a review of the websites. Seven companies did not file comments and 37 companies had one or more corrections needed with respect to references with their Lifeline offerings.27
Websites are a necessary and significant means to communicate about Lifeline service. In too many instances, websites are not updated for qualifying programs, credit amounts, and the distinction between broadband/Internet and voice services. The Department recognizes that keeping websites updated is a continuous challenge. Working together, companies and the regulatory agencies can make voice and Internet services more readily available to qualifying customers. Receptivity to new ideas for communicating and diligence in keeping informed of changes are essential in maximizing Lifeline benefits to customers.
The Department appreciates the opportunity to look at the offerings of the companies who responded to the Commission’s Request for Comments. As the offerings of telecommunications evolve and as new companies apply for ETC status, a listing of best practices will serve Minnesota well. Under P999/PR-21-8, the Commission will be asked to recertify high cost ETCs that appropriately use the money they received from the FCC. This proceeding will help the Commission in making that decision. As the FCC noted: “Congress made states—not the Commission—primarily responsible for designating ETCs. And States have vigorously exercised their oversight authority to combat waste, fraud, and abuse in the Lifeline program.”28
VI. COMMISSION OPTIONS
The Commission has a few paths it may choose to take. Under P999/PR-21-8, the Commission will be asked to recertify high cost ETCs that appropriately use the money they received from the FCC. This proceeding may assist the analysis at that time. In the meantime, the Department offers the following options for the Commission:
1. Best Practices. a. The Commission may decide best practices and notify companies that it will be looking for companies to follow all or substantially all the practices as it reviews the companies’ 481 filings in Docket No. P999/PR-21-8. b. Alternatively, the Commission may refer the issue of best practices to a working group for further consideration. c. The Commission may choose to make no order regarding best practices.
27 The seven non-filing companies are included in the 37 companies that need corrections to their offering. 28 In the Matter of Lifeline and Link Up Reform and Modernization, et.al., WC Dockets 17-287, 11-42, 09-197. Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration, and Further Notice of Proposed Rulemaking. November 14, 2019 ¶28. Docket No. P999/CI-20-747 Analyst assigned: Bruce L. Linscheid Page 11
2. Websites. a. The Commission may determine that while websites are not to be a sole means of advertising, websites are necessary. Therefore, all companies shall offer webpages that correctly show all income and other requirements and contain the correct rates. Information must be reachable within 3 clicks of the company’s home page and Lifeline information must be easily searchable. b. Alternatively, the Commission may refer the issue of requiring websites and the requirements concerning those websites to a working group for further consideration. c. The Commission may choose to make no order regarding websites.
VII. DEPARTMENT RECOMMENDATION
The Department recommends 1b and 2a.
/ja Properly Carrier suggestions on Outreach Issues Parent Company Local Carrier offering PUC Outreach found by DOC staff Lifeline program Link to PUC TAP page Ace ACE TEL ASSN-MN is broken. Albany ALBANY MUTUAL X ASSN SPLITROCK TELECOM Alliance COOPERATIVE INC., X HILLS TEL CO,INC. Can't easily find Arvig Enterprises Arvig affiliates listed in without using search notes below. box. No reference to LL on BB Corp.* Broadband Corp website. Benton BENTON COOP TEL CO X
EASTON, ECKLES, GRANADA, LONSDALE, Income levels on Bevcom BLUE EARTH, CANNON the TAP application VALLEY, PINE ISLAND need updating. TEL CO
QWEST MN, EMBARQ Can't easily get to LL with clicks from main CenturyLink MN, CENTURYTEL CHESTER, MN, NW page; must use WISC Search box.
Christensen CHRISTENSEN COMM X CO Customers find NV verification to be Newsletter and confusing even with Facebook refs $16.25 City of Barnesville CITY OF BARNESVILLE assistance. Notifications for LL (i.e. sum of LL for renewal are often and TAP). ignored
Consolidated Comm. Website ok, but no Consolidated Of MN Co, alternate advertising Communications* Consolidated Comm of to review. Mid-Comm. Co. Lifeline information is found through the Consolidated Assistance link on the Telecom- Consolidated Telephone homepage. Lifeline munications, Company application is found Company at the TAP information. Update LL credit to read $5.25 for voice Crosslake CROSSLAKE TEL CO only in newsletter and annual notice. Qualified programs are outdated, e.g. Head Start and Dunnell DUNNELL TEL CO Local Distribution Programs (Tribal only). LL credit is listed as $9.25. Outreach needs update to reference Emily Coop EMILY COOP TEL CO $5.25 for voice only LL. Phone directory refers to $3.50 for Farmers Mutual FARMERS MUTUAL TAP. Website has no TEL LL application form link. Phone directory refers to $3.50 for FEDERATED TEL TAP. Website has no Federated COOP, Federated LL application form Utilities link. Update website to say $5.25 for voice only LL.
Not obvious how to find LL on main page. Frontier CITIZENS-FRONTIER- Need to use Search MN box. Link on LL bill msg is broken.
Garden Valley GARDEN VALLEY TEL X CO Gardonville Coop GARDONVILLE COOP X TEL County social service dept should be informed of LL Lifeline income limits Halstad HALSTAD TEL CO program and how client on website needs can apply through NV update. portal.
CLARA CITY, SACRED Hanson Comm HEART, STARBUCK, X ZUMBROTA TELCO Revise website to Harmony HARMONY TEL. CO. reference $5.25 LL for voice only. Website ok, but no Interstate* INTERSTATE alternate advertising TELECOMM. to review. No reference to Jaguar* Jaguar Communication, Inc Lifeline on website. TAP credit needs JTC-Tel X JOHNSON TEL CO updating on website. Website link to LL app KMTelecom KASSON & MANTORVILLE is broken. Larsen Utilities MINNESOTA VALLEY, X WINTHROP TEL Update customer notice to say $5.25 Lismore LISMORE COOP TEL for voice only LL. No CO LL application on website. No reference to LL on LTD* LTD Broadband LLC website. Website should be revised to reference $5.25 LL for voice only. Link on website to LL app and HHW is Mabel MABEL COOP TEL - broken. Link to PUC MN website instructs customer to sent an email instead of providing an application Website and annual Manchester MANCHESTER- notice lists Hartland HARTLAND erroneously lists $9.25 as the LL credit.
Midco Midcontinent X Communications Members do advertising Minnesota at own expense. PUC Telephone MINNESOTA should explore other N/A TELEPHONE ALLIANCE Alliance options than mandating add'l adv.
Bill insert must be updated to state voice only LL is $5.25 Northern Tel NORTHERN TEL CO - MN for voice only & for updated poverty line data. No website. HUTCHINSON, WESTERN, SLEEPY Search box required to Need to go through Nuvera EYE TELCO, SCOTT find Lifeline information search box to find LL. RICE-INTEGRA, NEW ULM TELECOM
Website says $9.25 LL discount is available "on some landline service plans" so no update is needed. However, it would be clearer for website to PARK REGION state that LL discount Park Region MUTUAL, ROTHSAY, is $5.25 for voice VALLEY TELCO only. Update phone book ad and welcome packet to say $7 for TAP. Income levels on last page of webpage needs to be updated.
Carrier has found that ads in newspapers & One income chart on Paul Bunyan PAUL BUNYAN RURAL customer newsletter website doesn't generate the most LL match. inquiries. POLAR COMM MUT Website ok, but no Polar* AID, POLAR TELECOM, alternate advertising WOLVERTON to review.
Red River Red River Rural Tel X Assn LL not clearly marked Roseau Roseau Electric Cooperative, Inc. on home page Update LL to Runestone RUNESTONE TEL ASSN reference $5.25 on newsletter. Spring Grove SPRING GROVE COOP X
Annual notice needs SWMBS SOUTHWEST MN BB update to reference SERVICES $5.25 for voice only.
Sytek UPSALA COOP TEL X ASSN How society receives info has evolved. Newspaper ARVIG, ads reach some. TDS Telecom BRIDGEWATER, Electronic media reaches X WINSTED, MID-STATE others. There should be partnership with social service agencies.
Takes more than 3 T-Mobile T-Mobile Central LLC clicks to reach LL West Central WEST CENTRAL TEL X Update website to say $5.25 for voice Wikstrom WIKSTROM TEL CO, INC only LL. Couldn't find TAP info on website.
No website! LL changes to $5.25 for WILDERNESS voice only . Notice WILDERNESS VALLEY VALLEY needs update. Income requirements are outdated.
Website ok, but no Windstream* Windstream alternate advertising Communications, Inc. to review.
LL rate incorrect on website. Newspaper add says LL is $16.26 -- Winnebago WINNEBAGO COOP ASSN total of LL & TAP. Link to website does not work.
Update LL to $5.25 for voice only in direct mailing. Update LL to mention $5.25 for voice LLC on Woodstock WOODSTOCK TEL CO website. No application link on website, only email to consumer.puc@state. mn.us.
TOTAL LIFELINE COUNT 15
Notes: 1. Arvig affiliates and their Study Area Codes (SACs) are: Arrowhead Comm Clements Tel Co (361372), Eagle Valley Tel Co (361383), East Otter Tail Tel Co (361385), Felton Tel Co (361391),Home Tel Co (361408), Corp (361374), Callaway Tel Co (361365), Loretel Systems (361443), Melrose Tel Co (361430), Midwest Tel Co (361431), Osakis Tel Co (361448), Peoples Tel Co (361453), Redwood County Tel Co (361472), Tekstar Comm (369007), and Twin Valley-Ulen (361491). * Parent company that did not respond on behalf of its operating companies to the Commission's notice in this docket. ** Received Rural Digital Opportunity Fund (RDOF) funding (Broadband Corp. $311.9 Million, Windstream $6.5 Million), but did not file in this docket..
CERTIFICATE OF SERVICE
I, Sharon Ferguson, hereby certify that I have this day, served copies of the following document on the attached list of persons by electronic filing, certified mail, e-mail, or by depositing a true and correct copy thereof properly enveloped with postage paid in the United States Mail at St. Paul, Minnesota.
Minnesota Department of Commerce Comments
Docket No. P999/CI-20-747
Dated this 8th day of January 2021
/s/Sharon Ferguson
First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Kristine Anderson [email protected] Jaguar Communications, 213 S Oak Ave Ste 2000 Electronic Service No OFF_SL_20-747_Official Inc. Owatonna, MN 55060 Tracy Bandemer Tracy.Bandemer@itccoop. Interstate 312 4th St W Electronic Service No OFF_SL_20-747_Official com Telecommunications PO Box 920 Cooperative, Inc.. Clear Lake, SD 57226 Dianne Barthel [email protected] Centurylink 200 S 5th St Rm 2200 Electronic Service No OFF_SL_20-747_Official Communications, LLC Minneapolis, MN 55402 James Beattie [email protected] Rural Communications 123 W 7th Street Electronic Service No OFF_SL_20-747_Official Holding Corp. Blue Earth, MN 56013 Kevin Becker [email protected] Wikstrom Telephone 21307 220th St Electronic Service No OFF_SL_20-747_Official Company Greenbush, MN 56726 Kevin Beyer [email protected] Farmers Mutual Telephone 301 2nd St S Electronic Service No OFF_SL_20-747_Official Company Bellingham, MN 56212-1000 Kevin Beyer [email protected] Federated Telephone 405 2nd Street East Electronic Service No OFF_SL_20-747_Official Cooperative PO Box 156 Chokio, MN 56221
Kevin Beyer [email protected] Farmers Mutual Telephone 301 2nd St S Electronic Service No OFF_SL_20-747_Official Company Bellingham, MN 56221
David Bickett [email protected] Otter Tail Telcom PO Box 277 Electronic Service No OFF_SL_20-747_Official om 100 Main St Underwood, MN 56586
Mark Birkholz [email protected] Redwood County 150 2nd Ave SW Electronic Service No OFF_SL_20-747_Official Telephone Company Perham, MN 56573 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Karl Blake [email protected] Polar Communications PO Box 270 Electronic Service No OFF_SL_20-747_Official Mutual Aid Corp. 110 Fourth Street East Park River, ND 58270 Scott Bohler [email protected] Frontier Communications 2378 Wilshire Blvd Electronic Service No OFF_SL_20-747_Official Corporation Mound, MN 55364-1652 Jack Briggs [email protected] Jaguar Communications, 213 S Oak Ave Electronic Service No OFF_SL_20-747_Official Inc. Owatonna, MN 55060-2926 Tim Brinkman [email protected] Garden Valley Telephone 201 Ross Avenue Electronic Service No OFF_SL_20-747_Official Company - Coop PO Box 259 Erskine, MN 56535 Mary Buley [email protected] Olsen Thielen Co, LTD 2675 Long Lake Rd Electronic Service No OFF_SL_20-747_Official Roseville, Minnesota 55113 Chad Bullock [email protected] West Central Telephone 308 Frontage Road Electronic Service No OFF_SL_20-747_Official Association PO Box 304 Sebeka, MN 56477 Thomas Burns [email protected] OLSEN THIELEN & CO. 2675 Long Lake Rd Electronic Service No OFF_SL_20-747_Official LTD Saint Paul, MN 55113
Danny Busche [email protected] Winthrop Telephone 318 2nd Ave E Electronic Service No OFF_SL_20-747_Official Company PO Box 310 Franklin, MN 55333-0310
Thomas Campbell [email protected] Olsen Thielen 2675 Long Lake Road Electronic Service No OFF_SL_20-747_Official St. Paul, MN 55309
James B. Canaan [email protected] Interstate P.O. Box 920 Electronic Service No OFF_SL_20-747_Official Telecommunications 312 Fourth Street Cooperative, Inc. Clear Lake, SD 57226
2 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Andrew Carlson [email protected] Taft Stettinius & Hollister Suite 2200 IDS Center Electronic Service No OFF_SL_20-747_Official LLP 80 South 8th Street Minneapolis, MN 55402 Jim Carpenter [email protected] Telrite Corporation 1110 Alcovy Rd Electronic Service No OFF_SL_20-747_Official Covington, GA 30014 Brent Christensen [email protected] Minnesota Telecom 1000 Westgate Drive, Ste Electronic Service No OFF_SL_20-747_Official Alliance 252 St. Paul, MN 55117 Generic Notice Commerce Attorneys [email protected] Office of the Attorney 445 Minnesota Street Suite Electronic Service Yes OFF_SL_20-747_Official ate.mn.us General-DOC 1400 St. Paul, MN 55101 Teresa Crews [email protected] Paul Bunyan Rural Suite 100 Electronic Service No OFF_SL_20-747_Official Telephone Coop. 1831 Anne Street Bemidji, MN 56601 Angie Dickison [email protected] MN DEED 332 Minnesota St E200 Electronic Service No OFF_SL_20-747_Official s MN DEED St Paul, MN 55101
Ron Elwood [email protected] Mid-Minnesota Legal Aid 2324 University Ave Ste Electronic Service No OFF_SL_20-747_Official 101 Saint Paul, MN 55114
Donna Eul mnpucnotices@farmerstel. Farmers Mutual Telephone 301 2nd St S Electronic Service No OFF_SL_20-747_Official net Company Bellingham, MN 56212
Donna Eul [email protected] Federated Telephone 405 2nd Street East Electronic Service No OFF_SL_20-747_Official PO Box 156 Chokio, MN 56221
3 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Trent Fellers Trent.Fellers@windstream. Windstream 1440 M St Electronic Service No OFF_SL_20-747_Official com Lincoln, NE 68508 Steven Fenker sfenker1@earthlink.com Nexus Communications, 2631 Morse Rd Electronic Service No OFF_SL_20-747_Official Inc dba Nexus-TSI Columbus, OH 43231-5931 Kari Flanagan [email protected] Alliance Communications P.O. Box 349 Electronic Service No OFF_SL_20-747_Official Cooperative, Inc. 612 East 3rd Garretson, SD 57030 Shari Flanders [email protected] Polar Communications PO Box 270 Electronic Service No OFF_SL_20-747_Official Park River, ND 58270 Travis Floyd [email protected] West Central Telephone 308 Frontage Rd Electronic Service No OFF_SL_20-747_Official Assoc PO Box 304 Sebeka, MN 56477 Mark Forseth [email protected] Halstad Telephone Box 55 Electronic Service No OFF_SL_20-747_Official Company 345 2nd Ave West Halstad, MN 56548 Julie Geerdes [email protected] Paul Bunyan Rural 1831 Anne St. NW Electronic Service No OFF_SL_20-747_Official Telephone Coop Bemidji, MN 56601
Jennifer Grewe [email protected] West Central Telephone PO Box 304 Electronic Service No OFF_SL_20-747_Official Assoc 308 Frontage Rd Sebeka, MN 56477
Bill Haas [email protected] T-Mobile US P.O. Box 10076 Electronic Service No OFF_SL_20-747_Official Cedar Rapids, IA 52410
Roxi Hacker [email protected] Interstate Telcom 130 Birch Avenue West Electronic Service No OFF_SL_20-747_Official m Consulting Hector, Minnesota 55342
4 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Bruce Hanson [email protected] Sacred Heart Telephone 1104 19th Ave SW Ste B Electronic Service No OFF_SL_20-747_Official Co. Willmar, MN 56201 Corey Hauer [email protected] LTD Broadband LLC 69 Teahouse St Electronic Service No OFF_SL_20-747_Official Las Vegas, NV 89138 Kim Haugen [email protected] Lismore Coop Telephone 230 S. 3rd AvePO Box 127 Electronic Service No OFF_SL_20-747_Official Co. Lismore, MN 56155 Donna Heaston Donna.Heaston@Allstream Electric Lightwave, LLC dba Allstream Electronic Service No OFF_SL_20-747_Official .com (New) 2800 Campus Dr Ste 140 Plymouth, MN 55441 Kent Hedstrom [email protected] Runestone Telephone PO Box 336 Electronic Service No OFF_SL_20-747_Official Association 100 Runestone Dr Hoffman, MN 56339-0336 Bruce Hegge [email protected] Spring Grove PO Box 516 Electronic Service No OFF_SL_20-747_Official p Communications 166 W Main St Spring Grove, MN 55974 Pauleen Hinkley [email protected] Halstad Telephone 345 2nd Ave W Electronic Service No OFF_SL_20-747_Official Company PO Box 55 Halstad, MN 56548
Cory Hoerler [email protected] Manchester Heartland 204 Railroad St Electronic Service No OFF_SL_20-747_Official Manchester, MN 56007-5012
Richard Johnson [email protected] Moss & Barnett 150 S. 5th Street Electronic Service No OFF_SL_20-747_Official m Suite 1200 Minneapolis, MN 55402
Dwayne Johnson [email protected] Johnson Telephone Co. 205 1st Ave NE Electronic Service No OFF_SL_20-747_Official PO Box 39 Remer, MN 56672-0039
5 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Conrad Johnson [email protected] Johnson Telephone 205 1st Ave NE Electronic Service No OFF_SL_20-747_Official Company PO Box 39 Remer, MN 56672-0039 Gary Johnson [email protected] Paul Bunyan Rural P.O. Box 1596 Electronic Service No OFF_SL_20-747_Official Telephone Coop. 1831 Anne Street NW Bemidji, MN 56601 Bernadine Joselyn Blandin Foundation 100 North Pokegama Paper Service No OFF_SL_20-747_Official Avenue Grand Rapids, MN 55744 Steve Katka [email protected] Albany Mutual Telephone 131 6th St Electronic Service No OFF_SL_20-747_Official Association Albany, MN 56307-8322 Carrie Kern Taggart [email protected] Wikstrom Telephone 212 South Main Electronic Service No OFF_SL_20-747_Official Company Inc PO Box 217 Karlstad, MN 56732 Mark Klinkhammer [email protected] Garden Valley Telephone 201 Ross Avenue Electronic Service No OFF_SL_20-747_Official Company PO Box 259 Erskine, MN 56535 Kenneth Knuth [email protected] Woodstock Telephone 337 Aetna St Electronic Service No OFF_SL_20-747_Official Company Ruthton, MN 56170
Pat Knutson [email protected] Farmers Mutual Telephone PO Box 156 Electronic Service No OFF_SL_20-747_Official Company Chokio, MN 56221
Patricia Knutson in.another.account.Pat.Knu Federated Telephone 405 2nd Street East Paper Service No OFF_SL_20-747_Official [email protected] Cooperative PO Box 156 Chokio, MN 56221
Julie Kolka [email protected] Mabel Cooperative PO Box 368 Electronic Service No OFF_SL_20-747_Official Telephone Company 214 N Main St Mabel, MN 55954-0368
6 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name John Kroger [email protected] Winnebago Cooperative 704 E. Main Street Electronic Service No OFF_SL_20-747_Official Telecom Assn. Lake Mills, IA 50450 Tom Lorenz [email protected] Federated Telephone 405 2nd St. E. Electronic Service No OFF_SL_20-747_Official t Cooperative PO Box 156 Chokio, MN 56221 Kathy Lund [email protected] New Ulm Telecom, Inc. 27 North Minnesota Electronic Service No OFF_SL_20-747_Official d/b/a NU-Telecom P.O. Box 697 New Ulm, MN 56073 Al Lundeen [email protected] Wikstrom Telephone 212 S Main St Electronic Service No OFF_SL_20-747_Official Company Karlstad, MN 56732-0217 Patrick J Mastel [email protected] Midcontinent 3901 N Louise Ave Electronic Service No OFF_SL_20-747_Official Communications Sioux Falls, SD 57107 Ann Morrison [email protected] Consolidated 221 E Hickory St Electronic Service No OFF_SL_20-747_Official Communications Enterprise Services, Inc./Fairpoint Mankato, MN 56001-3610 Monty Morrow [email protected] Nuvera 235 Franklin St Electronic Service No OFF_SL_20-747_Official Hutchinson, MN 55350
Emily Murray [email protected] Association of Minnesota 125 Charles Avenue Electronic Service No OFF_SL_20-747_Official Counties St. Paul, MN 55103-2108
Melanie Nelson [email protected] Halstad Telephone PO Box 55 Electronic Service No OFF_SL_20-747_Official Company 345 2nd Ave W Halstad, MN 56548-0055
Josh Netland [email protected] Emily Cooperative PO Box 100 Electronic Service No OFF_SL_20-747_Official Telephone Company 40040 State Hwy 6 Emily, MN 564470100
7 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Chris Olson [email protected] West Central Telephone P.O. Box 304 Electronic Service No OFF_SL_20-747_Official Assoc. 308 Frontage Road Sebeka, MN 56477 Jeffrey J. Olson [email protected] Red River Rural Telephone 506 Broadway Electronic Service No OFF_SL_20-747_Official Association PO Box 136 Abercrombie, ND 58001-0136 Paul Paco Erickson [email protected] Midcontinent 3901 N Louise Ave Electronic Service No OFF_SL_20-747_Official Communications Sioux Falls, SD 57107 Jean Pauk [email protected] TDS Telecom 525 Junction Road Electronic Service No OFF_SL_20-747_Official m Madison, WI 53717 Jack D. Phillips [email protected] Frontier Communications 14450 Burnhaven Drive Electronic Service No OFF_SL_20-747_Official Of MN, Inc. Burnsville, MN 55306 Ren Preheim [email protected] Interstate 312 4th Street West Electronic Service No OFF_SL_20-747_Official Telecommunications Coop., Inc. Clear Lake, SD 57226 Kristi Putnam [email protected] Midcontinent 3901 N Louise Ave Electronic Service No OFF_SL_20-747_Official Communications Sioux Falls, SD 57107
Kris Rademacher [email protected] Farmers Mutual Telephone 301 2nd St S Electronic Service No OFF_SL_20-747_Official Co. Bellingham, MN 562120369
Brian Rathman [email protected] Telrite Corporation 2300 Windy Ridge Pkwy Electronic Service No OFF_SL_20-747_Official Ste 350S Atlanta, GA 30339
Generic Notice Residential Utilities Division [email protected] Office of the Attorney 1400 BRM Tower Electronic Service Yes OFF_SL_20-747_Official e.mn.us General-RUD 445 Minnesota St St. Paul, MN 551012131
8 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Mark Roach [email protected] Consolidated Telephone 1102 Madison Street Electronic Service No OFF_SL_20-747_Official Company PO Box 972 Brainerd, MN 56401 Cheryl Scapanski [email protected] Benton Cooperative 2220 125th St NW Electronic Service No OFF_SL_20-747_Official Telephone Company Rice, MN 56367 David Schornack [email protected] Tekstar Communications, 150 2nd St SW Electronic Service No OFF_SL_20-747_Official m Inc. Perham, MN 56573 Julie Serbus [email protected] Minnesota Valley PO Box 310 Electronic Service No OFF_SL_20-747_Official Telephone Company 340 2nd Ave E Franklin, MN 55333 Will Seuffert [email protected] Public Utilities Commission 121 7th Pl E Ste 350 Electronic Service Yes OFF_SL_20-747_Official Saint Paul, MN 55101 Ryan Severson rseverson@roseauelectric. Roseau Electric Coop., Inc. 1107 3rd St NE Electronic Service No OFF_SL_20-747_Official com PO Box 100 Roseau, MN 56751-1326 Bonnie Simon [email protected] Lonsdale Telephone PO Box 358 Electronic Service No OFF_SL_20-747_Official Company Lonsdale, MN 55046-0358
Greg Springer [email protected] Consolidated Telephone PO Box 972 Electronic Service No OFF_SL_20-747_Official Company 1102 Madison St Brainerd, MN 56401
Kimberly Starr [email protected] Dunnell Telephone PO Box 728 Electronic Service No OFF_SL_20-747_Official Company Judson, Texas 75660
Tracey Stoll [email protected] Roseau Electric 1107 3rd St NE Electronic Service No OFF_SL_20-747_Official Cooperative, Inc. PO Box 100 Roseau, MN 56751-1326
9 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Cynthia Sweet [email protected] Ace Telephone Association PO Box 360 Electronic Service No OFF_SL_20-747_Official 207 East Cedar Houston, MN 559430360 Guy Swenson [email protected] Barnesville Municipal PO Box 550 Electronic Service No OFF_SL_20-747_Official Telephone Company 101 Front St S Barnesville, MN 56514 Mark Thoma [email protected] Winnebago Coop. Telecom 704 E Main St Electronic Service No OFF_SL_20-747_Official Assoc. Lake Mills, IA 50450 Beth Tollefson [email protected] Kasson & Mantorville 18 2nd Avenue NW Electronic Service No OFF_SL_20-747_Official Kasson, MN 55944 Jason Topp [email protected] CenturyLink 200 S 5th St Ste 2200 Electronic Service No OFF_SL_20-747_Official Communications, LLC Minneapolis, MN 55402 Melissa Tschida [email protected] Upsala Cooperative PO Box 277 Electronic Service No OFF_SL_20-747_Official Telephone Upsala, MN 56384 Christie Turn [email protected] Paul Bunyan Rural 1831 Anne St NW Electronic Service No OFF_SL_20-747_Official Telephone Bemidji, MN 56601
Kalsie Vanasse [email protected] Paul Bunyan Rural 1831 Anne Street NW Electronic Service No OFF_SL_20-747_Official Telephone Coop Bemidji, MN 56601
Amy Vick [email protected] Interstate 312 4th St. W. Electronic Service No OFF_SL_20-747_Official Telecommunications PO Box 920 Coop., Inc. Clear Lake, SD 57226
Nancy A. Vogel [email protected] Midcontinent 3901 N Louise Ave Electronic Service No OFF_SL_20-747_Official Communications Sioux Falls, SD 57107
10 First Name Last Name Email Company Name Address Delivery Method View Trade Secret Service List Name Lyle Waughtal [email protected] Garden Valley Telephone 201 Ross Ave Electronic Service No OFF_SL_20-747_Official Company - Coop PO Box 259 Erskine, MN 56535 Mark Wegscheid markw@broadband- Broadband Corp. 1772 Steiger Lake Ln Electronic Service No OFF_SL_20-747_Official mn.com Victoria, MN 55386 Diane Wells [email protected] DEED 1st National Bank Bldg Electronic Service No OFF_SL_20-747_Official 322 Minnesota St #E200 St. Paul, MN 55101 Kristi Westbrock [email protected] Consolidated Telephone 1102 Madison St Electronic Service No OFF_SL_20-747_Official Company PO Box 972 Brainerd, MN 56401-0972 Curtiss Wikstrom [email protected] Wikstrom Telephone PO Box 217 Electronic Service No OFF_SL_20-747_Official Company 212 South Main St Karlstad, MN 56732-0217 Mike Wilker [email protected] Jaguar Communicatoins, 213 S Oak Ave Electronic Service No OFF_SL_20-747_Official Inc. Owatonna, MN 55060 Anthony Will anthonyw@broadband- Broadband Corp 585 Hwy 7 W Electronic Service No OFF_SL_20-747_Official mn.com Hutchinson, MN 55350
David Wolf [email protected] Gardonville Cooperative 800 Central Ave N Electronic Service No OFF_SL_20-747_Official Telephone Association Brandon, MN 56315
Shane Young [email protected] Northern Telephone 13448 County Road 25 Electronic Service No OFF_SL_20-747_Official Company Wawina, MN 55736
11 Exhibit E PUBLIC NOTICE
Federal Communications Commission News Media Information: 202-418-0500 45 L Street, NE Internet: www.fcc.gov Washington, DC 20554 TTY: 888-835-5322
DA 20-1422 December 7, 2020
RURAL DIGITAL OPPORTUNITY FUND PHASE I AUCTION (AUCTION 904) CLOSES
WINNING BIDDERS ANNOUNCED
FCC FORM 683 DUE JANUARY 29, 2021
AU Docket No. 20-34 WC Docket 19-126 WC Docket No. 10-90
1. By this Public Notice, the Rural Broadband Auctions Task Force, Office of Economics and Analytics (OEA), and Wireline Competition Bureau (WCB) announce that bidding in the Rural Digital Opportunity Fund Phase I auction (Auction 904) concluded on November 25, 2020. There were 180 winning bidders in the auction, with the 10-year support amount totaling $9.23 billion and covering 5,220,833 locations in 49 states and one territory. Of the 5,295,771 locations in the 61,766 eligible census block groups, approximately 99% of the locations are covered by winning bids. While winning bids are for a range of performance tiers, winning bids for downstream speeds of at least 100 megabits per second (Mbps) cover 99.7% of these locations, with over 85% of locations covered by winning bids for Gigabit speed service. 2. Winning bidders are required to submit a post-auction application for support (FCC Form 683) no later than January 29, 2021. Winning bidders that wish to assign some or all of their winning bids to related entities must do so by December 22, 2020, using the Divide Winning Bids process described below. I. WINNING BIDDERS 3. This Public Notice summarizes the results of the auction and provides winning bidders with important information, including FCC Form 683 filing requirements and support disbursement matters. Key information appears in the following attachments: Attachment A: “Winning Bidders Summary” lists for each bidder: the state, the 10-year assigned support amount, and the number of locations assigned in winning bids. Attachment B: “State Results Summary” lists for each state with eligible areas in Auction 904: the total 10-year assigned support, the number of locations assigned, and the number of bidders with winning bids. Attachment C: “FCC Form 683: Application for Rural Digital Opportunity Fund Phase I Support – Instructions.” 4. A copy of this Public Notice will be sent to each qualified bidder via overnight delivery to the contact person at the contact address listed in each qualified bidder’s short-form application (FCC Form 183). Federal Communications Commission DA 20-1422
II. AUCTION RESULTS 5. Concurrent with the release of this Public Notice, the Commission is making available the detailed auction results and bidding information described below. Online Map: An interactive visual representation of the auction results is available on the Auction 904 web page (www.fcc.gov/auction/904). On the interactive map available at this webpage, there are options for displaying all eligible areas and non-winning bids. Clicking on a state or winning bid listed on the right-hand side of the map will zoom the map to that area. Results Data: An online viewer of results data and downloadable files that include the identities of bidders and all their submitted bids are now available in the FCC Auctions Public Reporting System (auctiondata.fcc.gov), for which there is a link on the Results tab on the Auction 904 web page (www.fcc.gov/auction/904).1 6. Additionally, the Commission will soon make available certain, previously withheld information submitted in the applications to participate in the auction (FCC Forms 183). This information includes the state(s) and performance tier and latency combination(s) for which each applicant was found to be eligible.2 The applications are viewable through the application search feature, which can be accessed through the Application Search tab on the Auction 904 web page. III. POST-AUCTION PROCEDURES 7. Under the competitive bidding rules adopted in the Rural Digital Opportunity Fund Order, Auction 904 winning bidders must file a post-auction application for support, also referred to as FCC Form 683, consistent with all requirements of the long-form application process.3 FCC Form 683 has two discrete parts–the Divide Winning Bids portion and the long-form application portion. Each winning bidder is required to file an FCC Form 683 to become authorized to receive support. Prior to completing the long-form application portion, a winning bidder may divide its winning bids by assigning them to related entities, as described below.4 If a winning bidder assigns its winning bids to related
1 Because bids in Auction 904 implied annual support amounts, the bids and results data in the FCC Auctions Public Reporting System are on an annual basis, in contrast to the 10-year total support amounts reported in Attachments A and B. 2 We will continue to withhold from routine public inspection responses to the technical questions in Appendix A of the Auction 904 Procedures Public Notice and any supporting information; financial information for which confidential treatment was requested under the section 0.459(a)(4) abbreviated confidential treatment process; and any other information subject to a request for confidential treatment that has been granted or remains pending. See Rural Digital Opportunity Fund Phase I Auction Scheduled for October 29, 2020; Notice and Filing Requirements and Other Procedures for Auction 904, AU Docket No. 20-34 et al., Public Notice, 35 FCC Rcd 6077, 6129-30, para. 141 (2020) (Auction 904 Procedures Public Notice). Further, to prevent possible public dissemination of information related to bids or bidding strategies in Auction 107—an auction for flexible-use service licenses in the 3.7 GHz Band in which bidding is scheduled to commence on December 8—the data fields in which applicants identified specific spectrum bands that they proposed to use and spectrum access attachments will continue to be withheld from routine public inspection until the prohibition of certain communications in Auction 107 concludes. See 47 CFR 1.2105 (c); Auction of Flexible-Use Service Licenses in the 3.7–3.98 GHz Band for Next-Generation Wireless Services; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 107; Bidding in Auction 107 Scheduled to Begin December 8, 2020, AU Docket No. 20-25, Public Notice, 35 FCC Rcd 8404, 8418, para. 44 (2020). 3 47 CFR § 1.21004; Rural Digital Opportunity Fund et al., WC Docket No. 19-126 et al., Report and Order, 35 FCC Rcd 686, 696, para. 22 (2020) (Rural Digital Opportunity Fund Order). 4 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6164-65, paras. 288-93.
2 Federal Communications Commission DA 20-1422 entities, those entities will be required to file the long-form application portion of an FCC Form 683 for those winning bids, as described below. A winning bidder will be responsible for completing the long- form application portion of FCC Form 683 for any winning bids that it does not assign to a related entity. 8. Winning bidders that intend to file a long-form application covering all their winning bids are not required to participate in the Divide Winning Bids process. Any winning bidder that does not submit the Divide Winning Bids portion of FCC Form 683 prior to 6:00 p.m. ET on December 22, 2020, must file a long-form application that covers all its winning bids. In such circumstances, the winning bidder must file the long-form application in its own name, be designated as the eligible telecommunications carrier (ETC) to serve the relevant areas, be named in the requisite letter(s) of credit, and fulfill the public interest obligations associated with receiving Rural Digital Opportunity Fund Phase I support.5 A. Divide Winning Bids Portion of FCC Form 683 9. Any winning bidder that intends to assign some or all its winning bids to related entities must do so by submitting the Divide Winning Bids portion of the FCC Form 683 during the Divide Winning Bids filing window. The Divide Winning Bids filing window will open at 10:00 a.m. Eastern Time (ET) on Wednesday, December 9, 2020, and close at 6:00 p.m. ET on Tuesday, December 22, 2020. During this period, a winning bidder will be able to log into the Auction Application System using the FCC Registration Number (FRN) that it used to file its short-form application and complete the Divide Winning Bids portion of FCC Form 683. The instructions in Attachment C explain how a winning bidder can assign its winning bids to related entities. 10. A winning bidder may only assign its winning bids to a related entity that is named in its short-form application or that was formed after the short-form application deadline (i.e., July 15, 2020).6 The Auction Application System will not permit a winning bidder to assign its winning bids to another winning bidder. A related entity is an entity that is controlled by the winning bidder or is a member of (or an entity controlled by a member of) a consortium/joint venture of which the winning bidder is a member.7 Thus, if a holding company/parent company is a winning bidder in Auction 904, the winning bidder may designate one or more operating companies that it controls to complete the long-form application to receive Rural Digital Opportunity Fund support for some or all of the winning bids in a state. If a consortium/joint venture is a winning bidder in Auction 904, the entity may designate one or more members (or entities controlled by members of) the consortium/joint venture to complete the long- form application to Rural Digital Opportunity Fund support for some or all of the winning bids in a state. 11. A winning bidder may assign winning bids to more than one entity in a single state, but it cannot assign a single winning bid to more than one entity.8 Thus, a winning bidder may not split among multiple entities either: 1) eligible census blocks within a winning bid for an individual census block group, or 2) separate census block groups within a winning package bid.9
5 Subject to the limited exception described below for multiple operating companies operating in a state. 6 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6165, para. 291. 7 Id. at 6164, para. 289. 8 Id. at 6164, para. 290. 9 For example, assume a winning bidder has three winning bids—package bid A, package bid B, and single bid (i.e., one census block group) C. The winning bidder could assign package bid A to one related entity, package bid B to another related entity, and single bid C to a third entity. The winning bidder could not assign some census block groups from package bid A to one related entity and then the remaining census block groups from package bid A to another entity. The entire package bid must be assigned to one related entity. Similarly, the winning bidder could not assign some eligible census blocks from single bid C to one entity and then the remaining eligible census blocks from single bid C to another related entity. The entire census block group covered by the single winning bid must be assigned to one related entity.
3 Federal Communications Commission DA 20-1422
12. Each entity that is assigned a winning bid through the Divide Winning Bids process is the entity that must file the long-form application portion of FCC Form 683 in its own name. Except for one limited exception, that long-form applicant must be designated as the eligible telecommunications carrier to serve the relevant area(s), be named in the requisite letter(s) of credit, and fulfill the public interest obligations associated with receiving Rural Digital Opportunity Fund support.10 13. For administrative convenience, if a winning bidder is a holding/parent company that has multiple operating companies in a state and intends to assign its winning bids to multiple operating companies in a state, it may choose one of those entities to be the lead operating company.11 In such circumstances, the winning bids should be assigned to that lead operating company, the long-form application should be filed in the name of the lead operating company, the letter of credit should be in the name of the lead operating company, and payments will be made to the study area code associated with the lead operating company. However, the long-form application must identify which operating companies will meet the public interest obligations for which census block groups and documentation must be submitted that demonstrates that each of the operating companies has an ETC designation covering the relevant census block groups. As decided in the Rural Digital Opportunity Fund Order, compliance with the service milestones will be determined on a statewide basis across all the relevant operating companies.12 14. A winning bidder that assigns some or all its winning bids to a related entity must make several certifications in the Divide Winning Bids portion of FCC Form 683. In particular, it must certify and acknowledge that it: has assigned the winning bids to related entities that were named in the short-form application or are newly formed, will inform each entity of its filing obligation and cause each entity to submit a timely FCC Form 683 long-form application, will be at risk for default if any of the related entities do not submit a timely FCC Form 683 long- form application, and will submit a timely FCC Form 683 long-form application for any of the winning bids that it did not assign to another entity. B. Obligation to Apply for Support – Long-Form Application Portion of FCC Form 683 15. A winning bidder that retains any of its bids, as well as all entities that are assigned winning bids by a winning bidder, must electronically submit the long-form application portion of FCC Form 683 covering those bids prior to the close of the long-form application filing window. The long- form application filing window will open at 10:00 a.m. ET on Thursday, January 14, 2021, and will close at 6:00 p.m. ET on Friday, January 29, 2021. Certain additional information may be submitted to the Commission after this filing window closes, as described below. The Auction Application System will open a filing window at 10:00 a.m. ET on Thursday, January 14, 2021 to permit applicants to submit this additional information by the relevant deadlines. 1. Deadlines 16. Attachment C of this Public Notice provides instructions for completing the long-form application portion of FCC Form 683. These instructions are consistent with the Commission’s
10 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6165, para. 291. 11 Id. at 6165, para. 292. 12 Rural Digital Opportunity Fund Order, 35 FCC Rcd at 712, para. 54.
4 Federal Communications Commission DA 20-1422 requirements fully described in section 54.804(b) & (c) of the Commission’s rules and paragraphs 286 to 322 of the Auction 904 Procedures Public Notice.13 Below is a summary of the information that must be submitted by the applicable application deadlines:14 Information due prior to 6:00 p.m. ET on Friday, January 29, 2021: o Applicant information, including legal classification (e.g., corporation, general partnership, etc.), jurisdiction of formation, address, contact information, and responsible individual o Whether the applicant has already been designated as an eligible telecommunications carrier (ETC) for all the eligible census blocks in a winning bid(s)15 . If the applicant has already obtained a high-cost ETC designation that covers all the relevant areas in a state, it should submit the required ETC documentation and certification letter by this deadline so that Commission staff can expeditiously verify the applicant’s ETC status in the state . If the applicant has obtained a high-cost ETC designation for only some of the relevant areas in a state, Commission staff will not verify the applicant’s ETC status in a state until the applicant has submitted the required documentation and certification letter for all the relevant areas in the state o Whether the applicant is required to submit audited financial statements during the long-form application process and whether it seeks confidential treatment of those financial statements16 o Initial project overview(s) describing at a high-level the applicant’s intended technology and system design for each state with a winning bid.17 An applicant should not include any confidential trade secrets or commercial information in its overview(s), which will be made publicly available. o Project funding description(s) that explains how necessary construction will be funded in each state18 o Spectrum access description(s) demonstrating that the applicant has sufficient access to spectrum in each state, if applicable19
13 47 CFR § 54.804(b), (c); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6163-78, paras. 286-322; see also Rural Digital Opportunity Fund Order, 35 FCC Rcd at 725-735, paras. 86-113. 14 As discussed in Attachment C, certain applicant information may be automatically transferred from a winning bidder’s short-form application (FCC Form 183) to its long-form application (FCC Form 683). 15 By June 7, 2021, the long-form applicant must obtain from all the relevant states or the Commission a high-cost ETC designation(s) that cover its winning bid areas and upload the required documentation and a certification letter to its FCC Form 683. 47 CFR § 54.804(b)(5); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6176, para. 316; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 727-28, para. 92. 16 As noted below, the audited financial statements are due by June 7, 2021. 47 CFR § 54.804(b)(4); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6177, para. 318; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 722, para. 80. 17 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6167, para. 302. 18 47 CFR § 54.804(b)(2)(vi); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6174-75, para. 312; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 727, para. 91. 19 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6175, paras. 313-14.
5 Federal Communications Commission DA 20-1422
o Agreement information, including information regarding any agreements relating to the applicant’s participation in Auction 90420 o Ownership information, including information regarding entities that have an ownership or other interest in the applicant and associated Commission-regulated businesses21 o Various certifications, including certifications regarding the applicant’s compliance with statutory and regulatory requirements; financial and technical qualifications; available funds; compliance with the relevant public interest obligations and ETC requirements; and spectrum access, if applicable22 17. We adopt a deadline of 70 days from the release of this Public Notice for long-form applicants to submit letter of credit commitment letters, as well as detailed technology and system design descriptions.23 Information due prior to 6:00 p.m. ET on Monday, February 15, 2021: o Letter of credit commitment letter(s) for each applicable state from a qualified bank committing to issue an irrevocable stand-by letter of credit to the long-form applicant in the required form that covers the first year of support (at a minimum).24 A long-form applicant with winning bids in multiple states may submit a single commitment letter that covers all of the relevant states as long as it is clear that the letter is applicable to the relevant states. . At a minimum, the letter must provide the dollar amount of the letter of credit and the issuing bank’s agreement to follow the terms and conditions of the Commission’s model letter of credit in Appendix C of the Rural Digital Opportunity Fund Order. 25 . The bank eligibility requirements are described in detail in paragraph 107 of the Rural Digital Opportunity Fund Order and section 54.804(c) of the Commission’s rules.26 o Detailed technology and system design description(s) for the approved technology for each applicable state, including a network diagram certified by a professional engineer. . Paragraphs 301 to 311 of the Auction 904 Procedures Public Notice provide detailed guidance on how an applicant can successfully meet this requirement.27
20 Id. at 6138, para. 173. 21 47 CFR §§ 1.2112(a), 54.804(b)(2)(i); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6165, para. 295; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 726, para. 87. 22 See, e.g., 47 CFR § 54.804(b)(2)(ii), (iii), (v), (vii); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6165- 67, 6174-75, 6175-76, paras. 296-300, 312, 314. 23 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6167, 6176, paras. 303, 315 (stating that this information would be due “[w]ithin the specified number of days after the release of the Auction 904 closing public notice”). 24 47 CFR § 54.804(b)(3), (c)(2); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6176, para. 315; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 732, para. 106. 25 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6176, para. 315; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 732, para. 106. 26 47 CFR § 54.804(c)(2); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 732, para. 107. 27 47 CFR § 54.804(b)(2)(iv); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6167-74, paras. 301-11; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 726, para. 90
6 Federal Communications Commission DA 20-1422
Further educational materials regarding this requirement will also be made available on the Auction 904 website, www.fcc.gov/auction/904. . The professional engineer must certify that he or she has reviewed each state network diagram and that the network is capable of delivering, to at least 95% of the required number of locations in each relevant state, voice and broadband service that meets the requisite performance requirements.28 For purposes of this requirement, while it is not necessary that the professional engineer certifying the network diagram have a Professional Engineer license, the certification should describe the professional engineer’s qualifications such that the certifier’s network design and performance expertise is apparent. . Wireless coverage maps should be submitted in ESRI Shapefile format. The component files (including the .SHP, .SHX, .DBF, and .PRJ files) should be uploaded in a single compressed .ZIP archive. Recommended standards and data fields will be made available on the Auction 904 website, www.fcc.gov/auction/904. Long-form applicants will see an error message when they upload the .ZIP archive to the long-form application, but the error will not prevent long-form applicants from submitting their applications provided that the submission occurs prior to the deadline and Commission staff should still be able to access the file. Commission staff will contact a long-form applicant after the filing deadline if there are any issues with the file. The FCC Form 683 attachment size limit is 10 MB. Information due prior to 6:00 p.m. ET on Monday, June 7, 2021: o Documentation of high-cost ETC designation(s) in all areas where the applicant will receive support, as described in paragraphs 316-317 of the Auction 904 Procedures Public Notice.29 An applicant should also upload a .csv file of the census blocks that are covered by the ETC designation order. o ETC certification letter(s) from an officer of the applicant certifying that the long-form applicant’s ETC designation(s) covers all the areas where the applicant will receive support.30 o If not provided with the FCC Form 183 short-form application by the long-form applicant or a related entity,31 financial statements from the prior fiscal year (i.e., 2019) that have been audited by an independent certified public accountant, including the balance sheets, statements of net income and cash flow, along with an opinion letter from an independent certified public accountant and the accompanying notes.32 An applicant
28 47 CFR § 54.804(b)(2)(iv); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6167, para. 301; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 726, para. 90. Note that all performance requirements for broadband and voice services have to be met at peak periods. See Connect America Fund, WC Docket No. 10-90, Order, 33 FCC Rcd 6509, 6517-21, paras. 22-33 (WCB/WTB/OET 2018) (CAF Performance Measures Order); Connect America Fund, WC Docket No. 10-90, Order on Reconsideration, 34 FCC Rcd 10109, 10116-10118, paras. 20-23 (2019) (CAF Performance Measures Second Reconsideration Order). 29 47 CFR § 54.804(b)(5); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6176, paras. 316-17; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 727-28, para. 92. 30 47 CFR § 54.804(b)(5); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6176, para. 316; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 727-28, para. 92. 31 In this context, a related entity means the long-form applicant’s parent/holding company or, if the long-form applicant is a member of a consortium or joint venture, the member of the consortium or joint venture that submitted financial statements with the short-form application.
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can also submit fiscal year-end 2020 audited financial statements instead if they are available. . The applicant must submit the audited financial statements of the entity that submitted its unaudited financial statements in the relevant FCC Form 183 short- form application or its own audited financial statements.33 . Any applicant that fails to submit the audited financial statements as required by this deadline will be subject to a base forfeiture of $50,000, which will be subject to adjustment upward or downward as appropriate based on criteria set forth in the Commission’s forfeiture guidelines.34 18. Timely submitted applications will be reviewed by Commission staff for completeness and compliance with the Commission’s rules and to determine if the long-form applicant has demonstrated that it is technically and financially qualified to fulfill its Rural Digital Opportunity Fund public interest obligations if authorized to receive support. Commission staff will notify a long-form applicant if additional information is required. We expect long-form applicants to expeditiously complete their applications and respond in a timely manner to staff requests for additional or missing information.35 If the application and the information with respect to each winning bid in a particular state is complete and the long-form applicant has demonstrated that it is technically and financially qualified, WCB will release a public notice identifying the applicant and the winning bids for which the Commission is ready to authorize Rural Digital Opportunity Fund support.36 If a long-form applicant ultimately fails to provide all the required information or demonstrate that it is technically and financially qualified, WCB will release a public notice identifying the applicant and the winning bids that are considered in default.37 The applicant will have 10 business days from the release of the public notice indicating that the Commission is ready to authorize support to submit: o Irrevocable standby letter of credit for each state where the long-form applicant will be authorized to receive support. Long-form applicants should carefully review the letter of
(Continued from previous page) 32 47 CFR § 54.804(b)(4); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6177, para. 318; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 722, para. 80. 33 Accordingly, if the long-form applicant is a member of a consortium, it should submit the audited financial statements of the consortium member that submitted its unaudited financial statements in FCC Form 183. If the long-form applicant is an operating company of a holding company that filed an FCC Form 183 on behalf of the long-form applicant, the long-form applicant should submit the audited financial statements of the holding company. A long-form applicant also has the option of submitting its own audited financial statements instead. 34 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6177, para. 318; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 722, para. 80; 47 U.S.C. § 503(b)(2)(B); 47 CFR § 1.80(b)(8), note to paragraph (b)(8). 35 See 47 CFR § 1.21004(b) (“The Commission may dismiss a winning bidder’s application with prejudice for failure of the winning bidder to prosecute, failure of the winning bidder to respond substantially within the time period specified in official correspondence or requests for additional information, or failure of the winning bidder to comply with requirements for becoming authorized to receive support. A winning bidder whose application is dismissed for failure to prosecute pursuant to this paragraph has defaulted on its bid(s).”); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 696, para. 22 (noting “the Commission will apply as appropriate any modifications to [the general competitive bidding rules] that it may adopt”). 36 47 CFR § 54.804(b)(6)(v). 37 A long-form applicant that defaults on a winning bid in a state may still be authorized to receive support for its remaining winning bids in that state.
8 Federal Communications Commission DA 20-1422
credit requirements in section 54.804(c) of the Commission’s rules and in the Rural Digital Opportunity Fund Auction Order,38 which are summarized below: . The initial letter of credit must cover the first year of support for the state, at a minimum.39 . The letter(s) of credit must be issued in substantially the same form as set forth in the model letter of credit provided in Appendix C of the Rural Digital Opportunity Fund Order.40 . The long-form applicant must be the entity that is named in the letter(s) of credit.41 . The letter(s) of credit must be issued by a qualified bank. The issuing bank eligibility requirements are described in section 54.804(c)(2) of the Commission’s rules and in paragraph 107 of the Rural Digital Opportunity Fund Order.42 . Before a support recipient can receive its next year’s support and each year’s support thereafter, it must modify, renew, or obtain a new letter of credit to ensure that its value is consistent with the Commission’s rules. The value of the letter of credit must increase each year until it has been verified that the support recipient has met certain service milestones as described in more detail in section 54.804(c)(1) of the Commission’s rules.43 . The letter of credit must remain open until the support recipient has certified that it offers the required service to 100% of the Connect America Cost Model (CAM)-determined location total in the state by the end of year six (or WCB’s adjusted CAM location count if there are fewer locations) and the Universal Service Administrative Company (USAC) has verified that the build out obligation has been fulfilled.44 . A list of common letter of credit errors is available at https://www.fcc.gov/file/18256/download.
38 47 CFR § 54.804(c); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 729-35, 773-77, paras. 96-113, Appx. C. 39 47 CFR § 54.804(c)(1); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 732, para. 107. 40 Rural Digital Opportunity Fund Order, 35 FCC Rcd at 773-77, Appx. C. 41 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6164, para. 291. 42 47 CFR § 54.804(c)(2); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 732-33, para. 107. WCB also issued guidance announcing that a non-U.S. bank that has a branch office located in New York City and that will accept a letter of credit draw certificate from USAC via overnight courier, in addition to in-person presentations, will be considered qualified to issue letters of credit if the bank also meets the Commission’s other non-U.S. bank eligibility requirements. Wireline Competition Bureau Provides Guidance Regarding the Eligibility of Non-United States Banks Issuing Letters of Credit for Universal Service Competitive Bidding Mechanisms, WC Docket No. 19- 126 et al., Public Notice, 35 FCC Rcd 2804 (WCB 2020). 43 47 CFR § 54.804(c)(1)(i)-(vii); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 729-31, paras. 98-104. 44 47 CFR § 54.804(c)(1); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 731, para. 103. See also Rural Digital Opportunity Fund Order, 35 FCC Rcd at 709-12, paras. 45-55 (describing the service milestones and WCB’s recalculation of location totals). More information about USAC’s verification process is available at: https://www.usac.org/high-cost/resources/fund-verification-reviews/.
9 Federal Communications Commission DA 20-1422
o Letter of Credit Bankruptcy Opinion Letter(s) from outside legal counsel regarding the treatment of the letter(s) of credit or its proceeds in a bankruptcy proceeding.45 The letter must clearly state, subject only to customary assumptions, limitations, and qualifications, that, in a proceeding under the Bankruptcy Code, the bankruptcy court would not treat the letter of credit or proceeds of the letter of credit as property of the long-form applicant’s bankruptcy estate, or the bankruptcy estate of any other bidder- related entity requesting issuance of the letter of credit, under section 541 of the Bankruptcy Code.46 19. Once Commission staff has determined that a long-form application is complete and the long-form applicant is financially and technically qualified, and the letter(s) of credit and accompanying opinion letter(s) have been received and approved, WCB will issue a public notice announcing the authorization of support for the winning bid(s) and directing USAC to begin disbursing support.47 USAC will issue a new study area code to each long-form applicant for each state in which it is authorized to receive support. Long-form applicants will be notified of the new study area code prior to the authorization for support along with procedures for disbursing support. Monthly support disbursements will begin shortly after the authorization public notice has been released. 20. If an applicant is not authorized to receive support for a winning bid, it will be in default and subject to forfeiture for that winning bid as described below. 2. Forfeiture in the Event of Default 21. As described in the Rural Digital Opportunity Fund Order,48 winning bidders or long- form applicants that have been assigned winning bids during the Divide Winning Bids stage will be subject to a forfeiture in the event of a default. A winning bidder or long-form applicant will be considered in default and will be subject to forfeiture if it fails to timely file a long-form application, fails to meet the document submission deadlines, is found ineligible or unqualified to receive Rural Digital Opportunity Fund support, and/or otherwise defaults on its winning bids or is disqualified for any reason prior to the authorization of support. Any such determination shall be final, and a winning bidder or long- form applicant shall have no opportunity to cure through additional submissions, negotiations, or otherwise. 22. A winning bidder or long-form applicant that defaults will be subject to a base forfeiture per violation of $3,000.49 A violation is defined as any form of default with respect to the census block group. In other words, there shall be separate violations for each census block group assigned in a bid.50 So that this base forfeiture amount is not disproportionate to the amount of a winning bidder’s bid, the Commission has limited the total base forfeiture to 15% of the bidder’s total assigned support for the bid for the support term.51 Notwithstanding this limitation, the total base forfeiture will also be subject to
45 47 CFR § 54.804(c)(3); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6177-78, para. 320; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 735, para. 113. 46 11 U.S.C. § 541; 47 CFR § 54.804(c)(3); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 735, para. 113. 47 47 CFR § 54.804(b)(6)(vi). 48 Rural Digital Opportunity Fund Order, 35 FCC Rcd at 735-36, paras. 114-17; Auction 904 Procedures Public Notice, 35 FCC Rcd at 6178, paras. 321-22. 49 Rural Digital Opportunity Fund Order, 35 FCC Rcd at 735-36, para. 115; Auction 904 Procedures Public Notice, 35 FCC Rcd at 6178, para. 322. 50 Rural Digital Opportunity Fund Order, 35 FCC Rcd at 735, para. 115; Auction 904 Procedures Public Notice, 35 FCC Rcd at 6178, para. 322. 51 Rural Digital Opportunity Fund Order, 35 FCC Rcd at 736, para. 117; Auction 904 Procedures Public Notice, 35 FCC Rcd at 6178, para. 322. This would occur in situations where the dollar amount associated with the bid is low. For example, assume Bidder A bids to serve 100 census block groups for $100,000 over the support term. We (continued….) 10 Federal Communications Commission DA 20-1422 adjustment upward or downward based on the criteria set forth in the Commission’s forfeiture guidelines.52 C. General FCC Form 683 Information 23. For both the Divide Winning Bids and long-form application portions of FCC Form 683, the application may be filed at any time after the relevant filing window opens until the filing window closes. Applicants are strongly encouraged to file early and are responsible for allowing adequate time for filing their applications. Applications can be updated or amended multiple times until the relevant filing window closes. 24. A winning bidder and/or long-form applicant must always click on the CERTIFY & SUBMIT button on the “Certify & Submit” screen to successfully submit its FCC Form 683 and any modifications; otherwise, the application or changes to the application will not be received or reviewed by Commission staff. If a winning bidder or long-form applicant needs guidance or encounters technical difficulties in filing FCC Form 683, it may contact FCC Auctions Technical Support using the information in the Contact section, below. D. Maintaining Accuracy of Information 25. Each long-form applicant must make all changes to its information in the Auction Application System using FCC Form 683. With the release of this Public Notice, long-form applicants are no longer required to maintain the accuracy and completeness of information furnished in their FCC Form 183 applications. 26. A long-form applicant will be permitted to make minor modifications to its application after the deadline for submitting applications.53 Minor modifications include correcting typographical errors and supplying non-material information that was inadvertently omitted or not available at the time the application was submitted.54 If a long-form applicant makes a major modification to its application, the application will be denied.55 In such an event, the long-form applicant will be subject to forfeiture. Major modifications include, but are not limited to, any changes in the ownership of the long-form applicant that constitute an assignment or transfer of control, any changes in the identity of the long-form applicant, or any changes in the required certifications.56 E. Public Availability of FCC Form 683 Information 27. Information submitted in FCC Form 683 will generally be publicly available after Commission staff completes its review. Accordingly, a long-form applicant should take care not to include any unnecessary sensitive information, such as Taxpayer Identification Numbers or Social Security Numbers, in its application. However, consistent with the Commission’s limited information procedures in place for Auction 904, certain information will be withheld from routine public inspection even after support is authorized. To ensure that the information described below is afforded such
(Continued from previous page) would impose a base forfeiture of $15,000 (15% of $100,000) because otherwise the base forfeiture would be $300,000, three times the entire bid amount ($3,000 x 100 census block groups). In contrast, if Bidder B bids to serve 50 census block groups for $1,000,000 over the support term, we would impose a base forfeiture of $150,000 ($3,000 x 50 census block groups), which is 15% of the total bid. 52 See 47 U.S.C. § 503(b)(2)(B); 47 CFR § 1.80(b)(8), note to paragraph (b)(8); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 736, para. 115; Auction 904 Procedures Public Notice, 35 FCC Rcd at 6178, para. 322. 53 47 CFR § 54.804(b)(6)(iii). 54 Id. 55 Id. § 54.804(b)(6)(iv). 56 Id.
11 Federal Communications Commission DA 20-1422 confidential treatment, a long-form applicant must upload the information to FCC Form 683 using the appropriate attachment “type” as described in the instructions in Attachment C. 28. Information related to a long-form applicant’s detailed technology and system design description, its project funding description, and its letter of credit will be treated as confidential and will be withheld from public inspection.57 The Commission will treat long-form applicants that submit this information as having made a request to treat this information as confidential trade secrets and/or commercial information. As such, a long-form applicant need not submit a separate section 0.459 confidentiality request for this information with its FCC Form 683. 29. Moreover, a long-form applicant may request confidential treatment of its audited financial statements directly on FCC Form 683, using an abbreviated process under section 0.459(a)(4) of the Commission’s rules. The applicant need not submit a separate section 0.459 confidentiality request with its FCC Form 683.58 30. Nevertheless, if a request for public inspection under section 0.461 is made for the long- form applicant’s audited financial statements, detailed technology and system design description, project funding description, or letter of credit, the long-form applicant will be notified and then must justify the continued confidential treatment of the information if it objects to the disclosure.59 31. A long-form applicant may include with its FCC Form 683 a request that any other information submitted in its application not be made routinely available for public inspection following the procedures set forth in section 0.459 of the Commission’s rules.60 Requests for confidential treatment of information other than that discussed above will not be routinely granted. IV. OTHER IMPORTANT INFORMATION A. Maintaining Prohibition on Certain Communications 32. Section 1.21002 of the Commission’s rules provides that, subject to specified exceptions, after the deadline for filing a short-form application, an applicant “is prohibited from communicating with any other applicant in any manner the substance of its own, or one another’s, or any competing applicant’s bids or bidding strategies, until after the post-auction deadline for winning bidders to submit applications for support.”61 As explained more fully in the Auction 904 Procedures Public Notice, this prohibition took effect as of the short-form application filing deadline, i.e., July 15, 2020, at 6:00 p.m. ET, and extends until the deadline for filing the long-form application portion of FCC Form 683, i.e., January 29, 2021, at 6:00 p.m. ET.62
57 Id. § 0.459; Auction 904 Procedures Public Notice, 35 FCC Rcd at 6130, 6168, 6175, paras. 141 n.325, 303 n.516, & 314 n.542. A long-form applicant’s high-level initial project overview will be made publicly available. Auction 904 Procedures Public Notice, 35 FCC Rcd at 6167, para. 302. For the Connect America Phase II auction, a winning bidder’s letter of credit from a qualified bank was treated as confidential trade secrets and/or commercial information and thus withheld from routine public inspection. See Connect America Fund Phase II Auction Support for 962 Winning Bids Ready to Be Authorized; Listed Auction 903 Long-Form Applicants Must Submit Letters of Credit and Legal Counsel’s Opinion Letters by March 13, 2019, AU Docket No. 17-182 et al., Public Notice, 34 FCC Rcd 955, 956 (WCB/OEA 2019). For the same reasons, we will withhold an applicant’s letter of credit commitment letter, letter of credit, and bankruptcy opinion letter. 58 47 CFR § 0.459(a)(4). 59 Id. § 0.461 60 Id. § 0.459. 61 Id. § 1.21002(b). 62 See Auction 904 Procedures Public Notice, 35 FCC Rcd at 6132, para. 151.
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33. This prohibition applies to all short-form applicants regardless of whether such applicants became qualified bidders or actually bid.63 We also emphasize that, for purposes of this prohibition, an “applicant” includes the entity filing the application, each entity capable of controlling the applicant, and each entity that may be controlled by the applicant or by an entity capable of controlling the applicant.64 34. With the release of this Public Notice, the Commission has made public auction-related information which previously would have been subject to the prohibition on certain communications.65 Parties are reminded, however, that “bids or bidding strategies” encompasses more than information about bids submitted during the bidding portion of the auction. How an applicant participates in an auction is subject to the prohibition and includes, for example, a winning bidder filing a long-form application for support.66 As noted in the Auction 904 Procedures Public Notice, information within the scope of the prohibition includes “subject matters that could convey cost or geographic information related to bidding strategies. Such subject areas include, but are not limited to, management, sales, local marketing agreements, and other transactional agreements.”67 We note that proxy bid instructions, which may reflect such information, remain non-public. 35. Moreover, the prohibition of “communicating in any manner” includes public disclosures, private communications, and indirect or implicit communications, as well as express statements of bids and bidding strategies.68 Consequently, an applicant must take care to determine whether its auction-related communications may reach another applicant. B. High-Cost Eligible Telecommunications Carrier Designations 36. As noted above, by Monday, June 7, 2021, the long-form applicant must have obtained from either the relevant state authority or, where such authority lacks jurisdiction, from the Commission, a high-cost ETC designation(s) that covers its winning bid areas. The long-form applicant must submit for each state the required documentation and a certification letter from an officer.69 Long-form
63 An entity that submits an application becomes an “applicant” under the rule at the application filing deadline and that status does not change based on subsequent developments. See, e.g., Star Wireless, LLC v. FCC, 522 F.3d 469 (D.C. Cir. 2008) (section 1.2105(c) applies to applicants regardless of whether they are qualified to bid). Thus, an auction applicant that does not correct deficiencies in its application, or does not otherwise become qualified, remains an “applicant” for purposes of the rule and remains subject to the prohibition on certain communications until the long-form application filing deadline. 64 47 CFR § 1.21002(a). 65 In addition, the combination of publicly available short-form application information and bidding information made available today effectively makes public the information that can be derived from such sources, including the potential assignee(s) of each winning bid. Accordingly, we clarify that the prohibition does not apply to information about the selection of assignees for winning bids in the Divide Winning Bids process.
66 47 CFR § 1.21004; Auction 904 Procedures Public Notice, 35 FCC Rcd at 6133, para. 155 (“communicating, among other things, how an applicant will participate . . . would convey bids or bidding strategies and would thus be prohibited”).
67 Auction 904 Procedures Public Notice, 35 FCC Rcd at 6133, para. 156.
68 Id.; see generally Updating Part 1 Competitive Bidding Rules, WT Docket No. 14-170 et al., Report and Order et al., 30 FCC Rcd 7493, 7577, para. 199 (2015) (explaining that similar section 1.2105(c) language prohibiting communicating bids or bidding strategies “in any manner” bars “communicating bids or bidding information, either directly or indirectly”); Cascade Access, L.L.C., Forfeiture Order, 28 FCC Rcd 141, 144, para. 7 (EB 2013) (rejecting argument that the communication was not prohibited because it did not reveal the “substance” of Cascade’s bids or bidding strategies). 69 47 CFR § 54.804(b)(5); Auction 904 Procedures Public Notice, 35 FCC Rcd at 6176, para. 316.
13 Federal Communications Commission DA 20-1422 applicants subject to state jurisdiction must petition the relevant state commissions for ETC designation and should follow state rules and requirements to apply for designation(s).70 Long-form applicants not subject to state jurisdiction must petition the Commission for designation(s) as described in the ETC Public Notice.71 Petitioners for FCC designation do not need to include a list of census blocks with their ETC petition but should certify they will serve all blocks for which the long-form applicant has or will seek an award of support in that state.72 37. In the event a long-form applicant determines that it will be unable to obtain the necessary ETC designations within 180 days, it should upload a petition for waiver of the deadline to its FCC Form 683 and in AU Docket No. 20-34. The Commission has found that it would be appropriate to waive the 180-day timeframe if the long-form applicant is able to demonstrate that it has engaged in good faith efforts to obtain an ETC designation, but the proceeding is not yet complete.73 A waiver of the 180- day deadline would be appropriate if, for example, the applicant (or an associated entity) has an ETC application pending with a state and the state’s next scheduled meeting at which it would consider the ETC application will occur after the 180-day window. When considering waivers of the 180-day deadline for obtaining ETC designation, we will presume that an entity acted in good faith if the entity files its ETC application within 30 days of the release of this Public Notice.74 C. Public Interest Obligations and Annual Reporting Requirements 38. To ensure that Rural Digital Opportunity Fund support meets the Commission’s public interest objectives, a long-form applicant that has received notice from the Commission that it is authorized to receive Rural Digital Opportunity Fund support will be subject to a variety of obligations, including service requirements, service milestones, reporting, and record retention requirements.75 This includes the requirement that support recipients test and certify compliance with the relevant performance requirements in accordance with the uniform framework that has been adopted for measuring and reporting on the performance of high-cost support recipients’ service.76
70 47 U.S.C. § 214(e)(2). 71 Id. at § 214(e)(6); WCB Reminds Connect America Fund Phase II Auction Applicants of the Process for Obtaining a Federal Designation as an Eligible Telecommunications Carrier, Public Notice, WC Docket No. 09-197 et al., 33 FCC Rcd 6696 (WCB 2018) (ETC Public Notice). As described in this public notice, the Commission places the burden of proof upon the petitioner seeking a Commission ETC designation to demonstrate that the Commission has jurisdiction. Id. at 6696-97. We extend to Auction 904 winners the same waivers of section 54.202 of the Commission’s rules for the reasons described in the ETC Public Notice and the same presumption that designation will serve the public interest. See id. at. 6699-6700; 47 CFR § 54.202. 72 Petitioners may, in addition to seeking a high-cost designation in winning bid areas, seek a Lifeline-only ETC designation in areas not eligible for high-cost support for the limited purpose of becoming eligible to receive only Lifeline support in such areas. When doing so, they must submit with their ETC application a map or other information delineating these Lifeline-only areas, and other information specifically required by the Commission’s Lifeline rules. See, e.g., Telecommunications Carriers Eligible for Universal Service Support, Connect America Fund, WC Docket Nos. 09-197 & 10-90, Order, 34 FCC Rcd 10533 (WCB 2019); 47 CFR § 54.202(a)(4)-(6). 73 Rural Digital Opportunity Fund Order, 35 FCC Rcd at 723, para. 81. 74 Id. 75 See, e.g., 47 CFR §§ 54.313, 54.314, 54.316, 54.320, 54.802, 54.805, 54.806; Auction 904 Procedures Public Notice, 35 FCC Rcd at 6082-86, 6127-29, paras. 15-21, 135-39 (providing a high-level summary of the relevant public interest obligations and high-cost ETC obligations). 76 47 CFR § 54.313(a)(6). See also, CAF Performance Measures Order, 33 FCC Rcd 6509. Further modifications were made to the performance measures requirements in subsequent reconsideration orders. See Connect America Fund, WC Docket No. 10-90, Order on Reconsideration, 34 FCC Rcd 8081 (WCB/WTB/OET 2019) (CAF Performance Measures First Reconsideration Order); CAF Performance Measures Second Reconsideration Order, 34 FCC Rcd 10109.
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39. An Auction 904 support recipient will be subject to non-compliance measures if it fails or is unable to meet the service milestones or other service requirements, or fails to fulfill any other term or condition of Rural Digital Opportunity Fund support.77 As described in the Rural Digital Opportunity Fund Order and the CAF Performance Measures Order, these measures will scale with the extent of non- compliance, and include additional reporting, withholding of support, support recovery, and drawing on the support recipient’s letter of credit if the support recipient cannot pay back the relevant support by the applicable deadline.78 A support recipient may also be subject to other sanctions for non-compliance with the terms and conditions of Rural Digital Opportunity Fund support, including, but not limited to, the Commission’s existing enforcement procedures and penalties, reductions in support amounts, potential revocation of ETC designations, and suspension or debarment.79 40. We also remind applicants that all Auction 904 support recipients will be subject to the Commission’s National Security Supply Chain proceeding, including the rule that “no universal service support may be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by any company posing a national security threat to the integrity of communications networks or the communications supply chain.”80 The prohibition on using universal service funds applies “to upgrades and maintenance of existing equipment and services.”81 D. Access to the Bidding System 41. The bidding system will remain accessible to Auction 904 qualified bidders until 3:00 p.m. ET on Thursday, December 10, 2020. Bidders should download any files they wish to save from the bidding system before that time. E. Return of SecurID® Tokens 42. The SecurID® tokens distributed to qualified bidders are tailored to Auction 904 and will not function in future auctions. The Commission will send each bidder, along with the copy of this Public Notice, a pre-addressed, stamped envelope to return its SecurID® tokens. Each bidder should return its SecurID® token(s) to the Commission for recycling. F. Contact Information 43. For further information, contact: Technical Support FCC Auctions Technical Support Hotline Electronic Filing (877) 480-3201, option nine; or (202) 414-1250 Auction Application System and CAF II Bidding (202) 414-1255 (TTY) System (Hardware/Software Issues) Hours of service: 8:00 a.m. – 6:00 p.m. ET, Monday through Friday
Press Information Anne Veigle, (202) 418-0500
77 47 CFR §§ 54.804(c)(4), 54.320, 54.806. 78 Id. §§ 54.804(c)(4), 54.320, 54.806; CAF Performance Measures Order, 33 FCC Rcd at 6531-33, paras. 60-67; Rural Digital Opportunity Fund Order, 35 FCC Rcd at 713-16, paras. 58-64. 79 47 CFR § 54.320(c), 54.806(b); Rural Digital Opportunity Fund Order, 35 FCC Rcd at 716, para. 63. 80 47 CFR § 54.9(a). 81 Protecting Against National Security Threats to the Communication Supply Chain through FCC Programs et al., WC Docket No. 18-89 et al., Report and Order et al., 34 FCC Rcd 11423, 11453, para. 77 (2019).
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General Universal Service Information Wireline Competition Bureau, Telecommunications Access Policy Division Alex Minard Heidi Lankau Lauren Garry Ian Forbes (202) 418-7400
General Auction Information FCC Auctions Hotline General Auction Questions (888) 225-5322, option two; or Auction Process and Procedures (717) 338-2868
Auction 904 Information Rural Broadband Auctions Task Force Post-Auction Rules, Policies, and Regulations Michael Janson, (202) 418-0627 Kirk Burgee, (202) 418-1599 Jonathan McCormack, (202) 418-1065 Audra Hale-Maddox, (202) 418-0794
Office of Economics and Analytics Auctions Division Mark Montano Daniel Habif (202) 418-0660
Small Businesses Office of Communications Business Additional information for small and Opportunities disadvantaged businesses (202) 418-0990 www.fcc.gov/ocbo
Accessible Formats Consumer and Governmental Affairs Bureau Braille, large print, electronic files, or (202) 418-0530 or (202) 418-0432 (TTY) audio format for people with disabilities [email protected]
FCC Internet Sites www.fcc.gov www.fcc.gov/auction/904
- FCC -
16 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
4-Corners Consortium 0029719283 New Mexico $ 2,598,030.00 635
AB Indiana LLC 0021994686 Florida $ 668,304.10 261
ACT 0029754652 Mississippi $ 1,622,136.00 925
Albion Telephone Company, Inc. 0003714805 Utah $ 599,795.70 141
All West Communications, Inc. 0004924809 Wyoming $ 46,648.00 218
Allen's T.V. Cable Service, Inc. 0003746898 Louisiana $ 371,348.10 620
Altice USA, Inc. 0025637406 Arkansas $ 58,415.00 528
Altice USA, Inc. 0025637406 Idaho $ 10,556.00 140
Altice USA, Inc. 0025637406 Kentucky $ 351,065.00 1,734
Altice USA, Inc. 0025637406 Louisiana $ 303,952.00 2,267
Altice USA, Inc. 0025637406 Texas $ 364.00 15
Altice USA, Inc. 0025637406 West Virginia $ 125,528.00 536
American Heartland 0002594190 Iowa $ 1,821,520.00 1,549
AMG Technology Investment Group 0021701891 Illinois $ 193,098,839.90 68,921 LLC
AMG Technology Investment Group 0021701891 Indiana $ 18,947,203.50 11,803 LLC
AMG Technology Investment Group 0021701891 Iowa $ 112,637,885.70 36,228 LLC
Page 1 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
AMG Technology Investment Group 0021701891 Kansas $ 25,546,674.50 26,466 LLC
AMG Technology Investment Group 0021701891 Louisiana $ 6,901,822.70 1,916 LLC
AMG Technology Investment Group 0021701891 Minnesota $ 3,736,316.00 1,408 LLC
AMG Technology Investment Group 0021701891 Nebraska $ 25,350,146.70 13,919 LLC
AMG Technology Investment Group 0021701891 New Mexico $ 75,554.00 265 LLC
AMG Technology Investment Group 0021701891 Oklahoma $ 2,400,610.00 4,858 LLC
AMG Technology Investment Group 0021701891 Texas $ 24,510,588.90 38,003 LLC
AMG Technology Investment Group 0021701891 Wisconsin $ 1,084,045.00 346 LLC
AMG Technology Investment Group 0021701891 Wyoming $ 14,938,386.00 2,003 LLC
Aptitude Internet LLC 0021134119 Missouri $ 24,655,295.20 13,535
Armstrong Telephone Company - 0004311528 New York $ 21,570,556.90 9,719 Northern Division
Armstrong Telephone Company - 0004311528 Ohio $ 94,185.50 240 Northern Division
Page 2 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Armstrong Telephone Company - 0004311528 Pennsylvania $ 344,898.10 536 Northern Division
Arrowhead Electric Cooperative, Inc. 0007083470 Minnesota $ 18,462,273.10 4,879
Atlantic Broadband Finance, LLC 0015336449 Virginia $ 5,407,684.70 3,876
Baldwin Telecom, Inc. 0002723534 Wisconsin $ 11,370.00 15
Bandera Electric Cooperative, Inc. 0026644666 Texas $ 1,689,601.50 534
Baraga Telephone Company 0024157745 Michigan $ 444,490.80 164
Barry Technology Services, LLC 0024047409 Missouri $ 14,502.00 26
Bay Springs Telephone Company, Inc. 0003723640 Alabama $ 320,837.50 206
Bay Springs Telephone Company, Inc. 0003723640 Mississippi $ 41,265,320.50 21,061
Bay Springs Telephone Company, Inc. 0003723640 Tennessee $ 285,692.10 744
BEK Communications Cooperative 0002477636 North Dakota $ 2,157,719.00 337
Blackfoot Telephone Cooperative, Inc. 0001646165 Montana $ 12,703,077.60 2,687
Bloosurf, LLC 0019496462 Delaware $ 1,080.00 8
Bloosurf, LLC 0019496462 Maryland $ 780.50 9
Bruce Telephone Company, Inc. 0003773520 Wisconsin $ 113,745.00 32
Cal.net, Inc. 0020855656 California $ 29,169,982.60 44,153
California Internet, L.P. dba GeoLinks 0023707953 Arizona $ 79,169,580.00 32,474
California Internet, L.P. dba GeoLinks 0023707953 California $ 149,035,762.70 92,678
Page 3 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
California Internet, L.P. dba GeoLinks 0023707953 Nevada $ 6,684,323.00 3,145
Carolina West Wireless, Inc. 0001940022 North Carolina $ 460.00 28
CCO Holdings, LLC 0014939466 Alabama $ 51,287,535.00 56,451
CCO Holdings, LLC 0014939466 California $ 231,834.70 1,045
CCO Holdings, LLC 0014939466 Florida $ 22,577,363.90 17,869
CCO Holdings, LLC 0014939466 Georgia $ 29,965,114.40 23,854
CCO Holdings, LLC 0014939466 Illinois $ 1,029,666.00 501
CCO Holdings, LLC 0014939466 Indiana $ 59,927,209.10 54,541
CCO Holdings, LLC 0014939466 Kentucky $ 58,088,334.90 31,747
CCO Holdings, LLC 0014939466 Louisiana $ 29,508,812.00 25,389
CCO Holdings, LLC 0014939466 Massachusetts $ 21,639,762.70 14,344
CCO Holdings, LLC 0014939466 Michigan $ 21,663,643.40 35,944
CCO Holdings, LLC 0014939466 Missouri $ 48,392,327.90 61,524
CCO Holdings, LLC 0014939466 New Hampshire $ 2,140,554.00 1,044
CCO Holdings, LLC 0014939466 New Mexico $ 11,217.90 485
CCO Holdings, LLC 0014939466 North Carolina $ 142,076,655.00 128,509
CCO Holdings, LLC 0014939466 Ohio $ 106,576,629.80 112,777
CCO Holdings, LLC 0014939466 Oregon $ 33,534,210.20 15,139
Page 4 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
CCO Holdings, LLC 0014939466 Pennsylvania $ 3,479,199.00 5,328
CCO Holdings, LLC 0014939466 South Carolina $ 112,443,940.10 98,670
CCO Holdings, LLC 0014939466 Tennessee $ 92,855,626.70 79,193
CCO Holdings, LLC 0014939466 Texas $ 186,793,359.90 133,993
CCO Holdings, LLC 0014939466 Vermont $ 29,725.20 85
CCO Holdings, LLC 0014939466 Virginia $ 18,317,211.00 11,369
CCO Holdings, LLC 0014939466 Washington $ 11,643,447.20 4,625
CCO Holdings, LLC 0014939466 Wisconsin $ 168,400,490.10 143,269
Cellular Services LLC. 0007737950 Kentucky $ 3,294,968.60 2,142
Central Arkansas Telephone 0004268918 Arkansas $ 1,629,930.50 1,004 Cooperative, Inc.
Centre WISP Venture Company, LLC 0025132648 Pennsylvania $ 11,086,348.40 6,607
CenturyLink, Inc. 0018626853 Alabama $ 18,597,092.50 5,965
CenturyLink, Inc. 0018626853 Arkansas $ 9,378,743.10 2,958
CenturyLink, Inc. 0018626853 Colorado $ 7,482,178.00 1,509
CenturyLink, Inc. 0018626853 Florida $ 5,039,442.60 1,495
CenturyLink, Inc. 0018626853 Idaho $ 11,650,567.20 2,576
CenturyLink, Inc. 0018626853 Louisiana $ 18,742,492.20 7,616
CenturyLink, Inc. 0018626853 Michigan $ 9,905,380.00 2,556
Page 5 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
CenturyLink, Inc. 0018626853 Minnesota $ 15,646,093.10 3,265
CenturyLink, Inc. 0018626853 Missouri $ 275,208.00 38
CenturyLink, Inc. 0018626853 Montana $ 28,379,920.90 9,658
CenturyLink, Inc. 0018626853 Nebraska $ 326,802.00 69
CenturyLink, Inc. 0018626853 New Mexico $ 2,038,002.00 770
CenturyLink, Inc. 0018626853 North Carolina $ 530,376.00 169
CenturyLink, Inc. 0018626853 Oregon $ 41,423,187.80 8,982
CenturyLink, Inc. 0018626853 Pennsylvania $ 21,483,885.10 5,614
CenturyLink, Inc. 0018626853 South Dakota $ 121,060.00 10
CenturyLink, Inc. 0018626853 Virginia $ 12,518,109.10 6,832
CenturyLink, Inc. 0018626853 Washington $ 45,838,633.80 14,875
CenturyLink, Inc. 0018626853 Wisconsin $ 3,135,119.80 832
CenturyLink, Inc. 0018626853 Wyoming $ 9,855,321.00 1,468
Chariton Valley Communications 0008437147 Missouri $ 8,070,272.00 5,002 Corporation
Cherry Capital Connection, LLC 0017117037 Michigan $ 5,620,840.40 2,791
Cincinnati Bell Inc. 0003018033 Hawaii $ 24,313,582.00 8,049
Cincinnati Bell Inc. 0003018033 Indiana $ 56,802.00 68
Cincinnati Bell Inc. 0003018033 Kentucky $ 2,091,668.00 2,479
Page 6 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Cincinnati Bell Inc. 0003018033 Ohio $ 425,528.40 535
Citizens Vermont Acquisition 0029752581 New York $ 373,680.00 316 Corporation
City of Farmington 0001609163 New Mexico $ 3,179,884.50 1,106
Citynet West Virginia, LLC 0009725672 West Virginia $ 53,516,858.30 13,460
Co-op Connections Consortium 0029743770 Illinois $ 1,120,026.00 507
Co-op Connections Consortium 0029743770 Indiana $ 723,260.00 788
Co-op Connections Consortium 0029743770 Kentucky $ 3,290,415.80 1,478
Co-op Connections Consortium 0029743770 North Carolina $ 720,792.00 263
Co-op Connections Consortium 0029743770 Oklahoma $ 4,446,839.00 4,677
Co-op Connections Consortium 0029743770 Pennsylvania $ 42,622,762.00 12,440
Co-op Connections Consortium 0029743770 Tennessee $ 2,519,752.70 4,794
Co-op Connections Consortium 0029743770 Virginia $ 6,041,742.00 1,962
Coleman County Telephone 0001678044 Texas $ 3,142.80 11 Cooperative, Inc.
Comcell Inc. 0001649078 Texas $ 4,644.00 8
Commnet Wireless, LLC 0007116403 California $ 335,484.60 565
Commnet Wireless, LLC 0007116403 Colorado $ 3,368,990.50 785
Commnet Wireless, LLC 0007116403 Idaho $ 2,594,984.30 1,400
Page 7 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Commnet Wireless, LLC 0007116403 Louisiana $ 131,651.00 243
Commnet Wireless, LLC 0007116403 Mississippi $ 1,019,088.00 1,343
Commnet Wireless, LLC 0007116403 Montana $ 5,964,913.70 2,078
Commnet Wireless, LLC 0007116403 New Mexico $ 424,184.00 236
Commnet Wireless, LLC 0007116403 Pennsylvania $ 6,624,682.30 6,533
Commnet Wireless, LLC 0007116403 Washington $ 7,776,005.70 5,639
Commnet Wireless, LLC 0007116403 West Virginia $ 196,952.00 206
Computer 5, Inc. d/b/a LocalTel 0014511364 Washington $ 48,818,171.30 12,530 Communications
Computer Techniques, Inc. dba CTI 0017141102 Illinois $ 8,509.00 12 Fiber
Connect Everyone LLC 0029746260 Alabama $ 28,734,657.00 8,155
Connect Everyone LLC 0029746260 Arizona $ 61,819,443.30 22,472
Connect Everyone LLC 0029746260 Colorado $ 17,106,769.00 5,190
Connect Everyone LLC 0029746260 Illinois $ 19,233,356.00 9,534
Connect Everyone LLC 0029746260 Mississippi $ 18,130,649.90 4,256
Connect Everyone LLC 0029746260 Nevada $ 51,509,167.40 20,923
Connect Everyone LLC 0029746260 Ohio $ 38,273,659.90 18,280
Connect Everyone LLC 0029746260 Pennsylvania $ 24,513,988.00 13,792
Page 8 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Connect Everyone LLC 0029746260 Virginia $ 9,529,625.40 5,904
Connecting Rural America 0004339487 Alabama $ 10,395,132.20 3,792
Connecting Rural America 0004339487 Georgia $ 1,710,996.00 555
Connecting Rural America 0004339487 Illinois $ 2,040,864.80 708
Connecting Rural America 0004339487 North Carolina $ 33,606.00 21
Consolidated Communications, Inc. 0018633321 Florida $ 831,384.00 227
Consolidated Communications, Inc. 0018633321 Illinois $ 424,956.00 303
Consolidated Communications, Inc. 0018633321 Maine $ 31,067,177.00 11,513
Consolidated Communications, Inc. 0018633321 Minnesota $ 11,126.00 12
Consolidated Communications, Inc. 0018633321 New Hampshire $ 7,361,013.10 4,644
Consolidated Communications, Inc. 0018633321 Texas $ 140,964.00 199
Consolidated Communications, Inc. 0018633321 Vermont $ 19,036,717.40 10,123
Consortium 2020 0029754959 Arizona $ 19,787,039.50 15,636
Consortium 2020 0029754959 California $ 29,131,921.40 52,456
Consortium 904 0016085920 Oklahoma $ 40,470.00 120
Consortium of AEG and Heron 0029770831 Michigan $ 187,669,124.00 48,449 Broadband I
Consortium of AEG and Heron 0029770831 Minnesota $ 6,709,428.00 1,150 Broadband I
Page 9 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Continental Divide Electric Cooperative 0026618306 New Mexico $ 38,004,786.20 8,485
Corn Belt Telephone 0002592517 Iowa $ 42,237.00 38
Cox Communications, Inc. 0001834696 Arizona $ 175,042.20 1,387
Cox Communications, Inc. 0001834696 Arkansas $ 1,430,663.20 1,665
Cox Communications, Inc. 0001834696 California $ 2,386,243.70 3,118
Cox Communications, Inc. 0001834696 Kansas $ 14,314.50 102
Cox Communications, Inc. 0001834696 Louisiana $ 686,075.00 442
Cox Communications, Inc. 0001834696 Nebraska $ 643,867.00 185
Cox Communications, Inc. 0001834696 Nevada $ 286,903.30 812
Cox Communications, Inc. 0001834696 Oklahoma $ 93,852.00 142
Cox Communications, Inc. 0001834696 Virginia $ 919,559.60 359
Custer Telephone Cooperative, Inc. 0001623321 Idaho $ 1,954,488.00 313
Daktel Communications, LLC 0007266703 North Dakota $ 531,894.00 66
Daviess-Martin County Rural 0004328704 Indiana $ 3,565,039.40 1,371 Telephone Corporation
Digital Connections Inc. dba PRODIGI 0005848759 West Virginia $ 8,583,001.40 4,771
Direct Communications Rockland, Inc 0004321790 Idaho $ 15,745,252.70 2,120
DoCoMo Pacific, Inc. 0004242723 Northern Mariana Islands $ 3,706,235.00 530
DTC Cable, Inc. 0005015607 New York $ 834,597.00 481
Page 10 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Easton Utilities Commission 0003793726 Maryland $ 189,047.60 909
Emery Telephone dba Emery Telcom 0001607340 Utah $ 9,822,853.00 1,602
Enduring Internet 0018706002 New Mexico $ 11,880.00 83
Enduring Internet 0018706002 Wyoming $ 53,810.00 309
Etheric Communications LLC 0013358395 California $ 248,634,963.10 64,463
Farmers Mutual Cooperative 0004776464 Iowa $ 12,447.00 25 Telephone Company
Farmers Mutual Telephone Company 0003747722 Minnesota $ 759,822.00 332
Federated Telephone Cooperative 0003741576 Minnesota $ 537,399.00 248
FiberLight, LLC 0014117139 Georgia $ 458,892.20 687
FiberLight, LLC 0014117139 New Mexico $ 246,737.80 940
FiberLight, LLC 0014117139 Virginia $ 1,067,075.80 3,038
Fond du Lac Communications Inc 0029221694 Minnesota $ 1,046,123.00 728
Frontier Communications Corporation, 0029445723 California $ 33,379,752.20 14,943 DIP
Frontier Communications Corporation, 0029445723 Connecticut $ 320,106.00 80 DIP
Frontier Communications Corporation, 0029445723 Florida $ 492,732.00 838 DIP
Page 11 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Frontier Communications Corporation, 0029445723 Illinois $ 10,139,606.70 3,315 DIP
Frontier Communications Corporation, 0029445723 New York $ 37,291,314.60 12,226 DIP
Frontier Communications Corporation, 0029445723 Pennsylvania $ 40,977,864.00 15,782 DIP
Frontier Communications Corporation, 0029445723 Texas $ 673,062.00 613 DIP
Frontier Communications Corporation, 0029445723 West Virginia $ 247,626,395.30 79,391 DIP
Frontier Communications Northwest, 0029765211 Idaho $ 22,603,097.80 6,386 LLC
Frontier Communications Northwest, 0029765211 Montana $ 5,818,165.30 1,874 LLC
Frontier Communications Northwest, 0029765211 Oregon $ 8,715,378.00 3,706 LLC
Frontier Communications Northwest, 0029765211 Washington $ 20,066,009.70 9,370 LLC
Gardonville Cooperative Telephone 0004320164 Minnesota $ 63,903.00 24 Association
GigaBeam Networks, LLC 0018473223 Virginia $ 92.00 1
GigaBeam Networks, LLC 0018473223 West Virginia $ 28,067,789.20 9,071
Page 12 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Grain Communications Opportunity 0029662251 California $ 5,475,647.80 1,620 Fund II, L.P.
Grain Communications Opportunity 0029662251 Nebraska $ 19,816.40 116 Fund II, L.P.
Grain Communications Opportunity 0029662251 Oregon $ 13,677,209.40 4,151 Fund II, L.P.
Great Plains Consortium 0003741550 Minnesota $ 81,700.60 402
Great Plains Consortium 0003741550 North Dakota $ 15,582.00 3
Great Plains Consortium 0003741550 South Dakota $ 3,330,590.70 1,474
H&B Communication's, Inc. 0002331601 Kansas $ 11,301.60 47
Halstad Telephone Company 0003744224 Minnesota $ 3,118,056.40 603
Halstad Telephone Company 0003744224 North Dakota $ 9,023,062.00 1,217
Hamilton County Telephone Co-op 0004323499 Illinois $ 7,796,825.30 2,351
Hamilton Long Distance Company 0003708013 Nebraska $ 128,560.30 167
Hankins Information Technology 0027344498 California $ 2,171,844.50 3,727
Hawaii Dialogix Telecom LLC 0023933112 Illinois $ 5,687,249.00 1,364
Hawaii Dialogix Telecom LLC 0023933112 Michigan $ 219,918.00 15
Hawaii Dialogix Telecom LLC 0023933112 Ohio $ 102,786.00 16
Heart of the Catskills Comm. Inc., dba 0004984837 New York $ 398,574.00 188 MTC Cable
Page 13 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Home Communications, Inc. 0010627446 Kansas $ 15,540.00 54
HomeTown Broadband, Inc. 0029677846 Arkansas $ 1,424,229.00 1,295
Horizon Communications, Inc. 0016300493 Wyoming $ 2,033,292.00 609
Horry Telephone Cooperative, Inc. 0001886944 South Carolina $ 729,554.50 2,267
Hotwire Communications, Ltd 0009846494 Florida $ 5,150,040.00 3,233
Hughes Network Systems, LLC 0017434911 Rhode Island $ 1,273,784.00 3,678
IdeaTek Telcom, LLC 0015798648 Kansas $ 23,590.60 89
KanOkla Telephone Association 0004362364 Kansas $ 15,966.00 59
KanOkla Telephone Association 0004362364 Oklahoma $ 10,572.00 31
Lakeland Communications Group, LLC 0003744398 Wisconsin $ 408,952.00 550
LICT Corporation 0007759178 California $ 1,063,513.10 235
LICT Corporation 0007759178 Iowa $ 71,984.70 98
LICT Corporation 0007759178 Wisconsin $ 540,329.00 302
LigTel Communications, Inc. 0007770084 Indiana $ 385,924.00 416
LR Communications, Inc. 0014024640 Kansas $ 13,974.00 24
LTD Broadband LLC 0020926788 California $ 187,506,059.70 76,856
LTD Broadband LLC 0020926788 Colorado $ 69,016,527.10 11,518
LTD Broadband LLC 0020926788 Illinois $ 103,247,994.10 42,503
Page 14 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
LTD Broadband LLC 0020926788 Indiana $ 54,456,917.90 31,330
LTD Broadband LLC 0020926788 Iowa $ 23,184,786.30 12,916
LTD Broadband LLC 0020926788 Kansas $ 3,228,948.00 2,122
LTD Broadband LLC 0020926788 Minnesota $ 311,877,936.40 102,005
LTD Broadband LLC 0020926788 Missouri $ 158,793,688.30 52,812
LTD Broadband LLC 0020926788 Nebraska $ 33,228,644.40 28,729
LTD Broadband LLC 0020926788 North Dakota $ 8,574,318.00 831
LTD Broadband LLC 0020926788 Ohio $ 8,179,419.00 4,766
LTD Broadband LLC 0020926788 Oklahoma $ 81,098,352.90 39,889
LTD Broadband LLC 0020926788 South Dakota $ 46,588,453.80 7,481
LTD Broadband LLC 0020926788 Texas $ 42,668,488.60 26,260
LTD Broadband LLC 0020926788 Wisconsin $ 189,270,184.10 88,070
MARQUETTE-ADAMS TELEPHONE 0003774023 Wisconsin $ 55,378.00 66 COOPERATIVE, INC.
MCC Network Services, LLC 0025942202 Illinois $ 36,204.00 72
Mediacom Communications 0007282312 Alabama $ 1,449,630.10 5,700 Corporation
Mediacom Communications 0007282312 Florida $ 93,814.20 507 Corporation
Page 15 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Mediacom Communications 0007282312 Georgia $ 407,683.90 1,824 Corporation
Mediacom Communications 0007282312 North Carolina $ 303,526.80 1,721 Corporation
MEI Telecom, Inc. 0023107519 Michigan $ 479,789.10 175
Mercury Wireless, Inc. 0018603027 Illinois $ 5,109,552.80 9,633
Mercury Wireless, Inc. 0018603027 Indiana $ 9,746,150.00 20,961
Mercury Wireless, Inc. 0018603027 Kansas $ 147,073.60 765
Mercury Wireless, Inc. 0018603027 Michigan $ 37,598,649.40 77,925
Mercury Wireless, Inc. 0018603027 Missouri $ 4,254,918.50 14,094
Mercury Wireless, Inc. 0018603027 Ohio $ 11,454,497.70 44,306
Micrologic Inc. 0018675256 West Virginia $ 10,036,047.70 2,076
Midcontinent Communications 0002621951 Minnesota $ 4,453,803.70 6,058
Midcontinent Communications 0002621951 North Dakota $ 184,168.80 206
Midcontinent Communications 0002621951 South Dakota $ 322,500.50 242
Miles Communications LLC 0003734951 Iowa $ 316,641.00 106
Minnesota Connections c/o 0003742467 Minnesota $ 2,040,278.70 979 Consolidated Tel Company
Mountain View Telephone Company 0001730944 Arkansas $ 298,572.00 43
Page 16 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Mountain West Technologies 0015643182 Wyoming $ 141,801.20 690 Corporation
NBVDS Investment, L.L.C. 0017194986 Oklahoma $ 1,655,443.40 2,387
Net Ops Communications, LLC 0025394529 Texas $ 69,676.40 1,586
Newport Utilities 0027152438 Tennessee $ 159,492.00 59
NexTier Consortium 0029756582 Alabama $ 1,368,306.90 4,116
NexTier Consortium 0029756582 Arkansas $ 32,255,788.20 10,739
NexTier Consortium 0029756582 Georgia $ 161,124.00 281
NexTier Consortium 0029756582 Illinois $ 2,646,496.40 815
NexTier Consortium 0029756582 Louisiana $ 1,710,200.30 1,639
NexTier Consortium 0029756582 Michigan $ 627,072.00 537
NexTier Consortium 0029756582 Mississippi $ 45,169,908.90 11,693
NexTier Consortium 0029756582 Missouri $ 2,108,576.90 2,011
NexTier Consortium 0029756582 Ohio $ 1,081,309.10 7,568
NexTier Consortium 0029756582 Oregon $ 11,152,903.10 1,762
NexTier Consortium 0029756582 Pennsylvania $ 5,105,375.70 4,460
NexTier Consortium 0029756582 Tennessee $ 9,648,243.20 12,895
NexTier Consortium 0029756582 Texas $ 3,276,899.00 14,498
NexTier Consortium 0029756582 Virginia $ 9,975,489.60 7,595
Page 17 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
NMSURF, Inc. 0018795427 New Mexico $ 26,964.00 212
Northeast Missouri Rural Telephone 0004337044 Missouri $ 60,126.00 7 Company
Northern Arapaho Tribal Industries 0020993077 Wyoming $ 7,799,035.00 2,408
Nova Cablevision, Inc 0004962015 Illinois $ 785,400.00 155
NRTC Phase I RDOF Consortium 0018539916 Alabama $ 169,652.90 3,042
NRTC Phase I RDOF Consortium 0018539916 Georgia $ 9,925,188.20 7,420
NRTC Phase I RDOF Consortium 0018539916 Indiana $ 19,791,000.70 30,318
NRTC Phase I RDOF Consortium 0018539916 Iowa $ 356,440.10 305
NRTC Phase I RDOF Consortium 0018539916 Louisiana $ 1,283,546.30 652
NRTC Phase I RDOF Consortium 0018539916 Michigan $ 59,402,901.70 44,534
NRTC Phase I RDOF Consortium 0018539916 Mississippi $ 32,399,695.30 14,222
NRTC Phase I RDOF Consortium 0018539916 Missouri $ 1,682,687.60 644
NRTC Phase I RDOF Consortium 0018539916 New Hampshire $ 6,884,633.60 7,663
NRTC Phase I RDOF Consortium 0018539916 Oregon $ 2,210,256.20 1,720
NRTC Phase I RDOF Consortium 0018539916 South Carolina $ 45,666.00 34
NRTC Phase I RDOF Consortium 0018539916 Vermont $ 9,559,117.70 6,875
NRTC Phase I RDOF Consortium 0018539916 Virginia $ 11,878,740.80 7,670
NRTC Phase I RDOF Consortium 0018539916 Washington $ 1,125,151.10 236
Page 18 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
NTS Communications, LLC 0004266938 Texas $ 8,923.00 13
One Ring Networks, Inc 0027986132 California $ 68,385.00 1,170
One Ring Networks, Inc 0027986132 Georgia $ 60,102.50 810
One Ring Networks, Inc 0027986132 Maryland $ 9,227.50 81
Palmetto Telephone Communications, 0003741386 South Carolina $ 570,024.00 264 LLC
Paul Bunyan Rural Telephone 0002644953 Minnesota $ 16,307,892.10 5,088 Cooperative
Pembroke Telephone Company, Inc. 0003715885 Georgia $ 1,053,063.00 601
Peoples Communication, LLC. 0004943221 Texas $ 4,140.00 4
Peoples Telecom, LLC 0001792829 Kentucky $ 5,668,121.40 2,431
Pine Belt Communications, Inc. 0001754183 Alabama $ 11,126,003.10 4,220
Pine Cellular Phones, Inc. 0012882643 Oklahoma $ 2,303,742.10 2,459
Pinpoint Bidding Coalition 0001566983 Nebraska $ 31,254.00 32
Pioneer Long Distance, Inc. 0003728615 Oklahoma $ 50,994.00 1,346
Pioneer Wireless, Inc 0011283405 Maine $ 5,543,142.00 1,638
Plains Internet, LLC 0025360173 Kansas $ 9,834.00 3
Plains Internet, LLC 0025360173 Texas $ 4,074.00 4
Plains Internet, LLC 0025360173 Wyoming $ 331,716.00 243
Page 19 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Plateau Telecommunications, 0003800570 New Mexico $ 3,150.00 2 Incorporated
Point Broadband Fiber Holding, LLC 0028957306 Alabama $ 51,040,733.50 21,818
Point Broadband Fiber Holding, LLC 0028957306 Georgia $ 4,241,074.70 2,000
Point Broadband Fiber Holding, LLC 0028957306 Michigan $ 11,429,098.90 5,918
Point Broadband Fiber Holding, LLC 0028957306 New York $ 6,559,460.00 2,568
Point Broadband Fiber Holding, LLC 0028957306 Virginia $ 5,144,046.00 2,168
Prospero Broadband Consortium 0029700937 Arkansas $ 50,921,578.70 36,969
Prospero Broadband Consortium 0029700937 Mississippi $ 42,351,227.10 14,333
Prospero Broadband Consortium 0029700937 Tennessee $ 7,093,203.00 10,497
PVT NetWorks, Inc. 0001612555 New Mexico $ 12,039.00 38
QCOL, Inc. 0019663095 Pennsylvania $ 235,146.00 88
RC Technologies 0003728680 South Dakota $ 263,796.00 118
RDOF USA Consortium 0029740594 Alabama $ 73,217,003.70 36,248
RDOF USA Consortium 0029740594 California $ 819,773.20 1,552
RDOF USA Consortium 0029740594 Kentucky $ 57,041.00 60
RDOF USA Consortium 0029740594 Mississippi $ 32,487,629.80 15,341
RDOF USA Consortium 0029740594 Tennessee $ 5,462,575.00 10,629
Redzone Wireless, LLC 0026369231 Maine $ 507,752.00 755
Page 20 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Reedsburg Utility Commission 0005221866 Wisconsin $ 6,439,594.10 4,488
Reservation Telephone Cooperative 0002477743 North Dakota $ 337,080.00 73
Resound Networks, LLC 0024535437 Arizona $ 16,495,471.10 42,847
Resound Networks, LLC 0024535437 Arkansas $ 60,111,774.60 26,119
Resound Networks, LLC 0024535437 Colorado $ 29,530,678.10 11,797
Resound Networks, LLC 0024535437 Kansas $ 33,039,420.70 16,922
Resound Networks, LLC 0024535437 New Mexico $ 59,171,497.60 19,500
Resound Networks, LLC 0024535437 Oklahoma $ 17,889,694.40 19,109
Resound Networks, LLC 0024535437 Texas $ 94,443,072.40 82,945
RHMD, LLC 0021036439 Georgia $ 18,303,843.20 6,943
Rivers High Group 0002721157 Wisconsin $ 3,540,398.10 1,315
Roseau Electric Cooperative, Inc. 0009568379 Minnesota $ 1,228,494.00 266
Rural American Broadband Consortium 0002430510 Georgia $ 509,970.60 349
Rural American Broadband Consortium 0002430510 Indiana $ 1,186,542.80 565
Rural American Broadband Consortium 0002430510 Missouri $ 4,525,266.00 1,410
Rural American Broadband Consortium 0002430510 Montana $ 226,116.00 209
Rural American Broadband Consortium 0002430510 Ohio $ 364,846.70 412
Rural American Broadband Consortium 0002430510 South Dakota $ 1,659,116.00 726
Page 21 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Rural Electric Cooperative Consortium 0029719259 Arizona $ 18,384,651.20 14,574
Rural Electric Cooperative Consortium 0029719259 Arkansas $ 179,437,594.20 73,018
Rural Electric Cooperative Consortium 0029719259 Colorado $ 83,179,164.60 25,255
Rural Electric Cooperative Consortium 0029719259 Florida $ 82,504,050.40 62,480
Rural Electric Cooperative Consortium 0029719259 Georgia $ 82,638,074.00 60,184
Rural Electric Cooperative Consortium 0029719259 Illinois $ 16,621,874.50 6,487
Rural Electric Cooperative Consortium 0029719259 Indiana $ 593,915.10 822
Rural Electric Cooperative Consortium 0029719259 Kentucky $ 21,396,303.60 30,398
Rural Electric Cooperative Consortium 0029719259 Louisiana $ 113,667,025.30 53,245
Rural Electric Cooperative Consortium 0029719259 Michigan $ 18,072,102.90 22,176
Rural Electric Cooperative Consortium 0029719259 Mississippi $ 220,576,631.80 89,505
Rural Electric Cooperative Consortium 0029719259 Missouri $ 88,238,706.80 44,910
Rural Electric Cooperative Consortium 0029719259 New Mexico $ 18,102,076.90 6,292
Rural Electric Cooperative Consortium 0029719259 New York $ 8,672,225.90 3,012
Rural Electric Cooperative Consortium 0029719259 Ohio $ 1,980,535.00 1,336
Rural Electric Cooperative Consortium 0029719259 Oklahoma $ 42,248,692.80 47,552
Rural Electric Cooperative Consortium 0029719259 Oregon $ 41,613,794.00 9,928
Rural Electric Cooperative Consortium 0029719259 South Carolina $ 876,151.20 2,213
Page 22 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Rural Electric Cooperative Consortium 0029719259 Tennessee $ 16,032,342.90 19,777
Rural Electric Cooperative Consortium 0029719259 Texas $ 4,222,892.50 9,071
Rural Electric Cooperative Consortium 0029719259 Virginia $ 45,320,113.40 36,203
Rural Electric Cooperative Consortium 0029719259 Wisconsin $ 17,034.00 38
Safelink Internet LLC 0016179855 Nevada $ 1,197,661.50 2,728
Sandhill Telephone Cooperative, Inc. 0001886464 South Carolina $ 6,396.00 1
Savage Communications 0004069167 Minnesota $ 6,090,479.10 4,541
Scott County Telephone Cooperative, 0002069862 Tennessee $ 339,393.00 1,926 Inc.
Scott County Telephone Cooperative, 0002069862 Virginia $ 416,448.60 480 Inc.
Segnem Egere Consortium 0029760014 Arkansas $ 6,485,973.90 3,335
Segnem Egere Consortium 0029760014 Louisiana $ 142,323,296.80 52,430
Segnem Egere Consortium 0029760014 Mississippi $ 4,045,170.00 1,622
Shenandoah Cable Television, LLC 0021657853 Virginia $ 4,967,749.50 8,223
Shenandoah Cable Television, LLC 0021657853 West Virginia $ 91,867.00 419
Siuslaw Broadband, LLC dba Hyak 0020535944 Oregon $ 1,611,684.90 554 Technologies
Skywave Wireless, Inc. 0021644448 Nebraska $ 57,660.00 12
Page 23 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
SLIC Network Solutions, Inc. 0011412129 New York $ 978,722.00 3,660
Socket Telecom, LLC 0008515595 Missouri $ 232,768.80 393
Somerset Telephone Co., Inc. 0002720977 Wisconsin $ 669,564.00 1,208
South Arkansas Telephone Company 0001730142 Arkansas $ 11,387,245.50 5,093
Space Exploration Technologies Corp. 0026043968 Alabama $ 54,680,526.60 36,554
Space Exploration Technologies Corp. 0026043968 Arkansas $ 12,383,305.50 17,725
Space Exploration Technologies Corp. 0026043968 California $ 5,746,960.80 6,297
Space Exploration Technologies Corp. 0026043968 Colorado $ 39,752,936.50 19,176
Space Exploration Technologies Corp. 0026043968 Connecticut $ 3,890,305.00 2,819
Space Exploration Technologies Corp. 0026043968 Florida $ 33,630,822.60 34,757
Space Exploration Technologies Corp. 0026043968 Georgia $ 27,614,882.00 22,961
Space Exploration Technologies Corp. 0026043968 Hawaii $ 427,200.00 32
Space Exploration Technologies Corp. 0026043968 Idaho $ 54,543,468.90 26,717
Space Exploration Technologies Corp. 0026043968 Illinois $ 8,325,104.00 12,478
Space Exploration Technologies Corp. 0026043968 Kentucky $ 8,483,592.90 6,696
Space Exploration Technologies Corp. 0026043968 Louisiana $ 26,558,634.90 29,171
Space Exploration Technologies Corp. 0026043968 Maine $ 34,057,837.30 13,849
Space Exploration Technologies Corp. 0026043968 Maryland $ 4,060,771.30 5,413
Page 24 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Space Exploration Technologies Corp. 0026043968 Massachusetts $ 10,992,153.70 11,136
Space Exploration Technologies Corp. 0026043968 Michigan $ 9,852,045.00 8,079
Space Exploration Technologies Corp. 0026043968 Minnesota $ 8,424,807.60 7,529
Space Exploration Technologies Corp. 0026043968 Mississippi $ 44,019,661.30 38,956
Space Exploration Technologies Corp. 0026043968 Montana $ 72,723,246.20 29,478
Space Exploration Technologies Corp. 0026043968 Nevada $ 3,858,555.70 2,976
Space Exploration Technologies Corp. 0026043968 New Hampshire $ 8,871,460.00 4,389
Space Exploration Technologies Corp. 0026043968 New Jersey $ 10,739,474.00 8,686
Space Exploration Technologies Corp. 0026043968 New Mexico $ 25,635,954.90 19,721
Space Exploration Technologies Corp. 0026043968 New York $ 20,909,624.30 13,729
Space Exploration Technologies Corp. 0026043968 North Carolina $ 17,422,993.10 19,552
Space Exploration Technologies Corp. 0026043968 Oregon $ 57,897,559.60 35,653
Space Exploration Technologies Corp. 0026043968 Pennsylvania $ 63,065,275.00 59,200
Space Exploration Technologies Corp. 0026043968 South Carolina $ 6,163,912.70 4,287
Space Exploration Technologies Corp. 0026043968 Tennessee $ 12,361,515.80 11,306
Space Exploration Technologies Corp. 0026043968 Utah $ 20,961,877.00 8,630
Space Exploration Technologies Corp. 0026043968 Vermont $ 3,908,075.00 2,247
Space Exploration Technologies Corp. 0026043968 Virginia $ 62,390,792.80 53,640
Page 25 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Space Exploration Technologies Corp. 0026043968 Washington $ 80,379,119.90 52,086
Space Exploration Technologies Corp. 0026043968 West Virginia $ 13,822,221.30 9,337
Space Exploration Technologies Corp. 0026043968 Wyoming $ 16,952,965.20 7,663
St Paul Cooperative Telephone 0004979555 Oregon $ 190,908.00 39 Association
St. John Telco 0004528410 Washington $ 7,116,876.00 1,057
Talkie Communications, Inc. 0024272841 Delaware $ 13,300,968.00 7,749
Talkie Communications, Inc. 0024272841 Maryland $ 43,764,042.20 31,349
Taylor Telephone Coop., Inc. dba 0004924478 Texas $ 5,466.00 2 Taylor Telecom
Tennessee Cooperative Group 0029742053 Illinois $ 860,082.00 268 Consortium
Tennessee Cooperative Group 0029742053 Kentucky $ 3,253,445.10 3,957 Consortium
Tennessee Cooperative Group 0029742053 Tennessee $ 1,867,989.80 3,400 Consortium
Terral Telephone Company 0004320412 Oklahoma $ 716,381.20 2,299
TruVista Communications, Inc. 0003707775 Georgia $ 2,059,050.80 2,778
Unified Communications Inc. 0023896962 Texas $ 1,604.00 17
Union Telephone Company 0001630201 Wyoming $ 1,264,770.00 157
Page 26 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Visionary Communications, Inc. 0018092593 Colorado $ 396,465.80 986
Visionary Communications, Inc. 0018092593 Wyoming $ 4,053,798.60 3,198
W. T. Services, Inc. 0001655125 Texas $ 8,785.70 177
WC Fiber, LLC 0024824443 South Carolina $ 98,189.50 945
Wikstrom Telephone Company 0004319372 Minnesota $ 983,637.00 228
Wildstar 0029765443 Florida $ 1,790.00 21
Wilkes Telephone Membership 0003718426 North Carolina $ 1,304,889.80 2,715 Corporation
Wilkes Telephone Membership 0003718426 Virginia $ 44,750,453.60 37,155 Corporation
Windstream Services LLC, 0028299675 Alabama $ 28,417,716.50 10,193 Debtor-In-Possession
Windstream Services LLC, 0028299675 Arkansas $ 56,934,478.20 19,172 Debtor-In-Possession
Windstream Services LLC, 0028299675 Florida $ 40,763,866.10 19,937 Debtor-In-Possession
Windstream Services LLC, 0028299675 Georgia $ 147,345,052.70 48,208 Debtor-In-Possession
Windstream Services LLC, 0028299675 Iowa $ 5,355,920.50 2,472 Debtor-In-Possession
Page 27 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Windstream Services LLC, 0028299675 Kentucky $ 43,003,810.90 15,787 Debtor-In-Possession
Windstream Services LLC, 0028299675 Minnesota $ 6,548,964.10 2,899 Debtor-In-Possession
Windstream Services LLC, 0028299675 Mississippi $ 12,638,681.00 5,733 Debtor-In-Possession
Windstream Services LLC, 0028299675 Missouri $ 3,078,402.40 1,342 Debtor-In-Possession
Windstream Services LLC, 0028299675 Nebraska $ 579,530.00 195 Debtor-In-Possession
Windstream Services LLC, 0028299675 New Mexico $ 15,516,006.80 5,252 Debtor-In-Possession
Windstream Services LLC, 0028299675 New York $ 2,302,961.00 748 Debtor-In-Possession
Windstream Services LLC, 0028299675 North Carolina $ 4,187,143.00 2,159 Debtor-In-Possession
Windstream Services LLC, 0028299675 Ohio $ 1,504,808.00 857 Debtor-In-Possession
Windstream Services LLC, 0028299675 Oklahoma $ 1,600,807.00 1,284 Debtor-In-Possession
Windstream Services LLC, 0028299675 Pennsylvania $ 148,746,180.70 53,846 Debtor-In-Possession
Page 28 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Windstream Services LLC, 0028299675 South Carolina $ 312,153.00 152 Debtor-In-Possession
Windstream Services LLC, 0028299675 Texas $ 4,052,297.90 2,331 Debtor-In-Possession
Winnebago Cooperative Telecom 0002590057 Iowa $ 84,096.10 70 Association
Winnebago Cooperative Telecom 0002590057 Minnesota $ 20,541.70 178 Association
Wisper-CABO 904 Consortium 0029745213 Arizona $ 16,441.10 55
Wisper-CABO 904 Consortium 0029745213 Arkansas $ 104,926.00 949
Wisper-CABO 904 Consortium 0029745213 Idaho $ 3,387,413.00 1,054
Wisper-CABO 904 Consortium 0029745213 Illinois $ 97,504.20 40
Wisper-CABO 904 Consortium 0029745213 Iowa $ 8,586.00 12
Wisper-CABO 904 Consortium 0029745213 Louisiana $ 18,458.60 62
Wisper-CABO 904 Consortium 0029745213 Minnesota $ 1,671.00 19
Wisper-CABO 904 Consortium 0029745213 Missouri $ 1,159,205.80 857
Wisper-CABO 904 Consortium 0029745213 Nebraska $ 11,256.00 11
Wisper-CABO 904 Consortium 0029745213 New Mexico $ 125,532.00 129
Wisper-CABO 904 Consortium 0029745213 North Dakota $ 697.60 47
Wisper-CABO 904 Consortium 0029745213 Texas $ 37,633.00 214
Page 29 of 30 Attachment A FCC Rural Digital Opportunity Fund Phase I Auction Auction ID: 904 Winning Bidder Summary
(Sorted by Bidder Name) Date of Report: 12/07/2020 08:17 AM ET Assigned Number of Support over 10 Locations Bidder FRN State Years Assigned
Wisper-CABO 904 Consortium 0029745213 Washington $ 5,118.00 4
Wood County Telephone Company 0003744141 Wisconsin $ 28,848.00 15 d/b/a Solarus
Worldwide Technologies, Inc. 0018998831 Missouri $ 700,874.20 496
WTC Communications, Inc. 0003766680 Kansas $ 40,845.20 174
XIT Telecommunication & Technology 0001650233 Texas $ 43,254.50 464 yondoo Broadband LLC 0027576503 Missouri $ 54,833.80 110
Yucca Telecommunications Systems, 0004320362 New Mexico $ 26,221.00 19 Inc.
Zito West Holding, LLC 0027133545 Pennsylvania $ 457,596.00 279
TOTAL $ 9,230,688,714.90 5,220,833
Page 30 of 30