UPDATE: FCC Rejects LTD Broadband’s Long-Form Application For Rural Digital Opportunity Fund Support

August 10, 2022 – The Federal Communications Commission (FCC) has announced it is rejecting LTD Broadband LLC’s long-form application to receive Rural Digital Opportunity Fund (RDOF) auction support. The announcement was made in an FCC News Release.

March 23, 2021 – The Minnesota Telecom Alliance (MTA) and the Iowa Communications Alliance (ICA) have filed a petition with the FCC seeking to deny LTD Broadband, LLC’s Rural Digital Opportunity Fund (RDOF) Phase I Auction long-form applications for support in Iowa and Minnesota.[1]

LTD Broadband won RDOF support to serve 102,005 locations in Minnesota ($311,877,936.40) and 12,916 locations in Iowa ($23,184,786.30).

In their Petition To Deny, MTA and ICA argue that LTD Broadband simply does not have the experience, resources, and general wherewithal to meet its RDOF broadband network deployment obligations.

Before we look at why MTA and ICA want to deny LTD Broadband’s applications, let’s take a look at procedure.

There Is No Official FCC Process For Opposing RDOF Long-Form Applications

On February 18, 2021, the FCC announced it received long-form applications from 417 RDOF winners, which included LTD’s application, but as MTA and ICA note, the FCC did not indicate “whether the LTD application has been determined to be acceptable or accepted for filing.”[2]

For starters, there is no official FCC process for opposing RDOF long-form applications. To provide a comparison, for FCC spectrum auctions, there is a specific procedural process for challenging a winner’s long-form. It’s set out in the FCC’s rules. The Wireless Bureau puts out a PN announcing a certain long-form application has been accepted for filing, and then petitions to deny the application are due in 10 days, and then there are replies, etc.[3]

For the RDOF, the FCC never created such a process. There’s nothing in the FCC’s rules. MTA and ICA correctly acknowledge this – “Subpart J (Rural Digital Opportunity Fund) of Part 54 of the Commission’s Rules does not explicitly mention petitions to deny RDOF Long Form Applications – neither establishing requirements and deadlines for their submission nor prohibiting them.”[4]

What did the FCC say about third-party stakeholders’ ability to review, and assumedly challenge, RDOF winners’ long-form applications? Again, the FCC didn’t mention a process for filing petitions to deny, but it did specifically address third-party review. In response to suggestions during the rulemaking proceeding that the FCC adopt a protective order to allow access to RDOF long-form applications, the FCC, in footnote 248 of the RDOF Report And Order, said this:

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. 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.

Long story short, outside parties have no right to review RDOF long-forms, and there will be no specific challenge process. The FCC doesn’t want help. RDOF winners have submitted their long-form applications. The FCC is now conducting what will likely be a lengthy review process, and when it decides it has everything it needs from an applicant, the FCC will release a PN saying it is ready to authorize support.

In light of all this, MTA and ICA, like many others, are attempting to open the black box. MTA and ICA have requested that their Petition To Deny “be considered as an Informal Request for Commission action pursuant to Section 1.41 of the Rules.”

OK, so what is the basis for filing the petition? What are they arguing?

LTD Broadband Does Not Have The Technical, Financial, Operational Resources To Meet RDOF Build-Out & Service Obligations

First off, MTA is a trade association comprised of more than 40 rural telecommunications companies across Minnesota, and ICA is a trade association comprised of more than 115 community-based broadband providers across Iowa. Many of their members participated in the RDOF Phase I Auction. In other words, they have standing to bring this challenge.

MTA and ICA claim LTD Broadband does not have the resources to meet its RDOF obligations:

Put simply, there is no indication that LTD has the technical, engineering, financial, operational, management, staff, or other resources to meet RDOF build-out and service obligations with respect to the 21,908 census blocks (114,921 locations) that it has won in Minnesota and Iowa – whether considered in isolation by themselves or whether considered in conjunction with the overall 92,092 census blocks (528,088 locations) that LTD won in the fifteen (15) states where it was the low RDOF I bidder in various areas.[6]

MTA and ICA then explain what’s at stake – Americans’ ability to get good broadband service. If LTD Broadband fails to meet its RDOF broadband deployment obligations, yeah it will be penalized by the FCC, but what’s of greater significance, it will hurt people in Minnesota and Iowa:

If LTD is not able to meet its build-out and service obligations for the RDOF I support that it has bid upon, over 100,000 rural Minnesota locations (102,005) and almost 13,000 rural Iowa locations (12,916) [not to mention over 400,000 locations (413,167) in thirteen other states] will be deprived of urgently needed high-speed broadband access for years while the degree and consequences of LTD’s non-compliance are litigated or otherwise determined, and while mechanisms are developed and implemented to encourage qualified alternative broadband service providers to serve these areas instead of LTD.[7]

In basic terms, MTA and ICA argue that LTD Broadband simply does not have the experience needed to deploy a $1.3 billion broadband network within the RDOF’s timeframe. Remember, LTD won a total of $1.3 billion in RDOF support to provide Gigabit broadband service in 15 states. These obligations, let alone the ones in Minnesota and Iowa, are a massive undertaking, and would be challenging for even the nation’s largest ISPs. Remember when Google Fiber was going to save the world?

To support the claim that LTD Broadband bit off more than it could chew, MTA and ICA assess LTD’s current business. LTD currently only offers broadband service plans of 6/1 Mbps; 10/2 Mbps; 25/3 Mbps; and 35/7 Mbps. Remember, LTD won a total of $1.3 billion in RDOF support to provide Gigabit broadband service in 15 states. MTA and ICA point out that LTD Broadband is a very small company, with very few employees and very limited resources. After taking stock of all the information, MTA and ICA do not believe LTD Broadband can pull off its RDOF network deployment obligations.

To drive this point home, MTA and ICA point out that LTD has in fact failed, repeatedly, to meet broadband service obligations attached to funding it received in the past. LTD Broadband defaulted on Connect America Fund Phase II auction support “for one Census Block Group in Nebraska and one Census Block Group in Nevada.”[8] Further, MTA and ICA note that “LTD also appears to have unsuccessfully sought Rural Broadband Experiment funding from the Commission.” LTD Broadband was provisionally selected to receive $20 million to serve 10,122 census blocks in Minnesota and Iowa, but it’s “not clear whether the Commission dismissed, denied or otherwise did not approve LTD’s proposed project, or whether LTD withdrew or failed to prosecute its Rural Broadband Experiment application.”

MTA and ICA then make a few other observations related to LTD’s poor customer service record, failure to advertise Lifeline services, general lack of technical and administrative expertise, and perceived weak financial position.

It’s important to note the argument made in the Petition To Deny – LTD does not have the wherewithal to meet its obligations. It’s one of two primary arguments being made against some RDOF winners by industry stakeholders: (1) the network technology does not work (Gigabit fixed wireless) or cannot scale (Starlink); and (2) the winner does not have the necessary experience and resources. The latter applies here. For what it’s worth, LTD’s RDOF awards initially fit into both of these, but at some point before filing its long-form, LTD announced a considerable amount of its buildout would consist of fiber. This changed the focus to first argument.

Unproven RDOF Applicants

Overall, really good petition from MTA and ICA. It’s a sharp articulation of a number of criticisms that have been raised against a handful of unproven RDOF applicants that won millions of dollars to provide Gigabit broadband services. There is now a considerable amount of pressure on the FCC to make the RDOF long-form review process more transparent. The arguments made by MTA and ICA are persuasive. As it stands now, if LTD Broadband’s RDOF long-form does get approved, the FCC will surely have to thoroughly explain why, in the face of such strong counter evidence, it ultimately decided to authorize the $1.3 billion in funding.  

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[1] LTD Broadband, LLC; Petition to Deny Long Form Applications) WC Docket No. 10-90(FCC Forms 683) for Rural Digital Opportunity) Fund (“RDOF”) Phase I Auction Support in the) States of Minnesota and Iowa, AU Docket No. 20-34, WC Docket No. 19-126, WC Docket No. 10-90, Petition To Deny (Mar. 22, 2021), https://ecfsapi.fcc.gov/file/1032227924686/MTA%20ICA%20petition%20LTD%20March%2020%202021.pdf.

[2] 417 Long-Form Applicants In The Rural Digital Opportunity Fund Phase I Auction (Auction 904), AU Docket No. 20-34, WC Docket No. 19-126, WC Docket No. 10-90, Public Notice, DA 21-170 (Feb. 18, 2021), https://docs.fcc.gov/public/attachments/DA-21-170A1.pdf. LTD Broadband filed 15 long-form applications – each state where it won RDOF support.

[3] See 47 C.F.R. §§ 1.2108; 1.939.

[4] Petition To Deny at 1. See also 47 C.F.R. §§ 54.801-54.806.

[5] Rural Digital Opportunity Fund, WC Docket No. 19-126, Connect America Fund, WC Docket No. 10-90, Report And Order, FCC 20-5, ¶ 86 (Feb. 7, 2020), https://docs.fcc.gov/public/attachments/FCC-20-5A1.pdf.

[6] Petition To Deny at 2.

[7] Petition To Deny at 3.

[8] Petition To Deny at 4.