Auction 904: Rural Digital Opportunity Fund

Rural Digital Opportunity Fund Auction Information

• Budget
• Support Term
• Deployment
• Technology-Neutral Service Tiers
• Eligible Areas
• Two-Stage Application Process
• Timeline
• Related Links

Budget

A total of $20.4 billion to be awarded over 10 years. Up to $16 billion made available for Phase I of the Rural Digital Opportunity Fund auction, and the remaining Phase I budget, along with $4.4 billion, will be awarded for Phase II of the auction.

Support Term

10 years of support; support disbursed in equal monthly installments. Disbursements to winning bidders begin after the winning bidder submits a long-form application and becomes authorized to receive support.

Deployment

Rural Digital Opportunity Fund support recipients must:

• Offer commercially at least one voice and one broadband service meeting the relevant service requirements to all locations within the awarded area in the following timeframe:
  • 40% of the required number of locations in a state by the end of third year of support and an additional 20% by the end of the fourth and fifth years of support
  • By the end of year six, revised location totals will be announced:
    • If there are fewer locations than originally estimated by the cost model, support recipients must serve the revised number of locations by end of year six. If there are more locations than originally estimated by the cost model, support recipients must serve the cost model-estimated number of locations by the end of year six and must serve the remainder of locations by the end of year eight
  • All support recipients must serve locations newly built after the revised location total but before the end of year eight upon reasonable request
• The exact deployment schedule is determined by the carriers themselves, not the FCC.  
• File with USAC annual reports and build-out milestone certifications, as well as data on the locations where service is available.  Failure to meet the terms and conditions of support can result in increased reporting obligations and possible withholding and/or recovery of support.
• Offer at least one broadband and voice service at rates that are reasonably comparable to the rates for similar service in urban areas.  The FCC uses its annual Urban Rate Survey to determine the range of rates that are reasonably comparable.

Technology-Neutral Service Tiers

Bids were accepted for four performance tiers, each with varying speed and usage allowances, and either high or low latency. Winning bidders must offer the service associated with their winning bid.

Bids were considered simultaneously, so that bidders proposing to meet one set of performance standards competed directly against bidders that proposed to meet other performance standards.  Bids were placed as a percentage of the reserve price for the area subject to the bid in a descending clock auction, with lower bids selected first, with a preference for higher speeds and lower latency.  The support amount that a winning bidder received accounted for any weights associated with the performance tier and latency.

Eligible Areas

The Commission made eligible for the Rural Digital Opportunity Fund auction census blocks where no provider is offering, or has committed to offering, either via the CAF II auction, the USDA ReConnect program, or state-specific programs, service of at least 25/3 Mbps (based on Form 477 data). 

The FCC published an initial list of eligible census blocks, and, after a challenge process, the FCC published a final list of eligible areas.  

Two-Stage Application Process

Short-Form Application — Entities seeking to participate in the auction had to establish baseline financial and technical capabilities in order to be found eligible to bid. There were two pathways for establishing eligibility:

• Demonstrate two years of experience providing a voice, broadband, and/or electric distribution or transmission service and submit one year of audited financials (if an applicant with at least two years of experience is not audited in the ordinary course of business, it can instead submit one year of audited financials within 180 days after being announced as a winning bidder but has to submit one year of unaudited financials with its short-form application), or
• Submit three years of audited financials with the short-form application and a letter of interest from an eligible bank willing to issue a letter of credit for a specified amount

Entities were also be required to provide high-level technical information to demonstrate they had the technical qualifications to meet the applicable performance tier and latency requirements.

Entities could wait until after they were announced as winning bidders to obtain eligible telecommunication carrier designations from the relevant states or the Commission, if applicable.

Long-Form Application — Winning bidders or their designees were required to:

• Provide in their long-form applications additional information about qualifications, funding, and the network that they intend to use to meet their obligations
• Within a specified number of days, submit a letter from an eligible bank committing to issue a letter of credit; upon notification that the entity is ready to be authorized, must obtain a letter of credit from an eligible bank that remains open and covers disbursements until compliance with certain service milestones is complete and verified
• Within 180 days of being announced as winning bidders, certify they are eligible telecommunications carriers in any areas for which they seek support and submit relevant documentation.

Once a long form application was approved, the long-form applicant was authorized to begin receiving support. 

Any entity that filed a short-form application or any long-form applicant was subject to a forfeiture in the event it defaulted prior to becoming authorized to receive support.  Defaults include, but are not limited to, failing to meet submission deadlines, defaulting on a bid, or otherwise being disqualified for any reason. 

Timeline & Deadlines

Related Links

• Rural Broadband Auctions
• Reasonable comparability benchmarks for fixed voice and broadband rates
• Connect America Cost Model Resources
• Performance Testing for Carriers Receiving High-Cost Universal Service Fund Support
• Connect America Fund (CAF)
• Universal Service
• Universal Service Administrative Company (USAC)