In a draft Notice of Proposed Rulemaking (NPRM) released on July 11, 2019 (scheduled to be adopted at the FCC’s August 1, 2019 Open Meeting), the FCC proposes to make $20.4 billion available under the Rural Digital Opportunity Fund (RDOF) through two multi-round, descending clock auctions, largely following the bidding rules of the CAF II auction that was conducted in 2018.

Under the draft NPRM, Phase I of the RDOF would allocate support to wholly unserved census blocks not having broadband speeds at or above the 25/3 Mbps fixed broadband benchmark with a budget of at least $16 billion over ten years. Many of these wholly unserved census blocks were included in the state-wide offers the FCC extended to the price cap ILECs in 2015. The performance obligation in the statewide offers was set at the very low bar of 10/1 Mbps. The funding under these offers expires in 2021.

A large percentage of these statewide offers were accepted, though Verizon declined its offers except for areas in which it was selling assets to Frontier Communications. The areas in the accepted statewide offers are available here. Under the NPRM, the census blocks eligible for the Phase 1 auction will include principally those (i) “for which the price cap carriers currently receive…model-based support,” (ii) eligible in the CAF II auction but not part of winning bids, (iii) included in winning bids in the CAF II auction for which the bidder defaults, and (iv) not included in the state-wide offers or the CAF II auction because they were served with voice and 10/1 Mbps service. The final list of eligible areas will be released at a later date.

In parallel with finalizing procedures for the Phase I auction, the Commission has committed to address the widely acknowledged overstatement of broadband availability in rural areas. This overstatement is attributable to outdated mapping procedures that stem, in major part, from the longstanding, widely criticized Form 477 reporting instruction that requires if a single location in a census block is served at the fixed broadband benchmark, the entire census block is reported as “served” and therefore not eligible for inclusion in an auction.

After receiving a “voluminous amount” of recommendations and proposals for improving broadband reporting and mapping, the Commission released a draft Report and Order and Second Further Notice of Proposed Rulemaking on July 11, 2019 which is scheduled to be adopted at the FCC’s August 1 Open Meeting and will set out reforms and proposals to develop more granular and accurate maps of unserved locations. At a date to be determined, the Phase II reverse auction would make available $4.4 billion, plus the remaining support to unserved locations in (i) partially unserved census blocks, and (ii) areas not won during the Phase I auction.

Shifting the focus to unserved locations from census blocks is long overdue. In recent years, Congress, public interest groups, and state and local governments criticized the current broadband reporting methodology and the resulting chronic overstatement of broadband availability in the United States.

The FCC believes that a meaningful amount of the $16 billion of the Phase I auction will remain available for the Phase II auction as the bidding procedures and, presumably, the closing conditions that governed the 2018 CAF II auction will apply. Under the closing conditions for the 2018 CAF II auction, approximately 25% of the $1.98 billion budget distributed over 10 years was not assigned.

Based on ex parte filings recently submitted proposing changes to the two draft documents, the FCC will have a range of choices in finalizing the eligible areas for the Phase I auction and the new rules for reporting and mapping broadband availability in rural areas. Beyond Telecom Law Blog will highlight developments in these important proceedings as they arise.