The FCC proposed a $100,000 fine against LTD Broadband LLC for apparently communicating with another bidder during the Rural Digital Opportunity Fund (RDOF) Phase I auction. Agency rules prohibit such communication during an auction because it could “detract from a fair and competitive auction process,” according to the Commission.
LTD Broadband LLC was the largest winner in Auction 904. In the reverse auction, the company was awarded $1.3 billion to provide high-speed broadband to unserved areas of 15 states. The Nevada-based company provides fiber and fixed wireless broadband service. It’s the fourth-largest Wireless Internet Service Provider in the country, according to the Commission.
In its Notice of Apparent Liability and Forfeiture, the Enforcement Bureau says the company repeatedly communicated with Cox Communications about bidding strategies and results via LTD’s investment agent, RJM & Company, LLC. Georgia-based Cox provides internet, television, phone, and other services in 18 U.S. states. The agency also says both Broadband and RJM didn’t report these communications within a five-day window as required.
Bidding in the reverse auction began on October 29, 2020, and concluded on November 25, 2020. Cox won a sizeable lot of bids spanning more than 8,000 locations.
In Auction 904, the prohibited communications period began on July 15, 2020, when the FCC’s Short-Form Application filing window closed, and ended on January 29, 2021, when the FCC’s Long-Form Application filing window closed. Applicants were reminded several times to comply with the prohibited communications rules until after the long-form submission deadline.
LTD and Cox each submitted Short-Form Applications by the July 15, 2020 deadline. They said on their forms they didn’t have any joint bidding agreements with any auction participants. LTD and Cox certified the content on their applications was “true and correct.”
RJM was LTD’s investment agent, hired to raise investment capital. LTD hired RJM during the quiet period. “According to LTD, Auction 904 was the perfect opportunity to ‘expand’ its fiber operations and designed its bidding strategy around targeting the most rural service areas of the Auction. RJM knew of LTD’s bidding strategy and also knew that LTD was winning in ‘many areas,’” said the FCC in its decision.
The Commission said “LTD was on notice that applicants must take ‘appropriate steps’ to keep agents from becoming ‘conduits’ for prohibited communications. The agency stressed that “firewalls to protect against prohibited communications should be created before the applicant communicates any auction-related information to its agents.”
According to the FCC, LTD warned RJM to be cautious when speaking with other bidders, but that was after LTD communicated auction-related information to RJM. The warning “was in tension with RJM’s contractual mandate to identify investors or lenders [and] to contact those investors,” notes the Enforcement Bureau.
The bureau notes there were numerous emails and calls between RJM and Cox about LTD Broadband during the quiet period. “Not only did LTD’s agent relay numerous messages about the scope and strategies of LTD’s bidding, it also made explicit requests for financial support relating to Auction 904,” according to the bureau.
The bureau says the facts don’t merit a reduction of the proposed $100,000 penalty. Nevertheless, LTD Broadband has 30 days to appeal or pay the fine.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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