Why the FCC Rejected Starlink, LTD Requests for RDOF Subsidies

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Since Jessica Rosenworcel became FCC Chairwoman in January, the agency has been working to root out applicants provisionally awarded financial support through its Rural Digital Opportunity Fund (RDOF) program that allegedly can’t prove they can deliver the broadband services they claimed. The agency rejected two big initial winners on Wednesday — Starlink and LTD Broadband. Doubters had long questioned whether the two companies could actually deploy what they promised in RDOF applications, Inside Towers reported.  

The initial auction results were announced December 7, 2020. LTD Broadband, the largest awardee, provisionally won more than $1.3 billion. Starlink, the orbital satellite division of SpaceX, took second place with an initial award of more than $885 million. 

RDOF provides $9.23 billion in subsidies to be distributed over a decade to support broadband deployment. Initial awards were made as a result of a “reverse” auction in which service providers bid for projects using the least amount of federal dollars.  

The Commission said after legal, technical, and policy reviews, these applications failed to demonstrate that the providers could deliver the promised service. Funding their proposed networks would not be the best use of limited Universal Service Fund dollars to bring broadband to unserved areas, according to the agency.

“Consumers deserve reliable and affordable high-speed broadband,” said Rosenworcel. “We must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks. We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”

Rosenworcel acknowledged that Starlink’s technology “has real promise.” But she questioned its methodology and the $600 upfront cost customers must pay for hardware. “The question before us was whether to publicly subsidize its still developing technology for consumer broadband—which requires that users purchase a $600 dish—with nearly $900 million in universal service funds until 2032.”

LTD was a relatively small fixed wireless provider before the auction. However, it submitted winning bids in 15 states. It failed to timely receive eligible telecommunications carrier status in seven states, rendering it ineligible in those states for support, according to the FCC. Ultimately, the FCC review concluded that LTD was not reasonably capable of deploying a network of the scope, scale, and size required by LTD’s extensive winning bids.

The FCC called Starlink a “nascent LEO satellite technology” with “recognized capacity constraints,” according to Ars Technica. The Commission questioned Starlink’s ability to consistently provide low-latency service with the required 100 Mbps/20 Mbps speeds. The Wireline Competition Bureau said it received “inadequate responses” from Starlink and LTD to follow-up questions. As a result of the ruling, both ISPs are now “in default on all winning bids not already announced as defaulted,” the FCC said. 

By Leslie Stimson, Inside Towers Washington Bureau Chief

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