FCC Allocates $9.2B in Reverse Auction For Rural Digital Opportunity Fund

On Monday the Federal Communications Commission (FCC) announced that it allocated $9.2 billion through the Phase I auction of the Rural Digital Opportunity Fund, helping to close the digital divide in 49 states and the Commonwealth of the Northern Mariana Islands and expand broadband to more than 10 million rural Americans; this will be distributed over the next 10 years.

The digital divide has become more apparent during the COVID-19 pandemic, with teleworking and remote learning taking place in lieu of meeting in person, thus greatly affecting those without adequate access to sufficient high-speed broadband networks.

As previously reported, the Rural Digital Opportunity Fund is a $20.4 billion fund attempting to close the digital divide by funding high-speed broadband network deployment in underserved rural areas in the United States. The FCC set aside $16 billion for Phase I of the auction of which $9.2 billion was allocated. The remaining $6.8 billion will roll over into the future Phase II auction, which can now have a budget of $11.2 billion to target those areas that did not receive funding in the first phase as well as partially-served areas. Moreover, the Rural Digital Opportunity Fund is part of a broad FCC effort to close the digital divide in Rural America, such as its 5G Fund for Rural America, which will distribute up to $9 billion over the next ten years to bring 5G wireless broadband connection to unserved rural areas in the United States.

The FCC stated that the auction results indicate that 180 bidders, including “cable operators, electric cooperatives, incumbent telephone companies, satellite companies, and fixed wireless providers,” “won auction funding to deploy high-speed broadband to over 5.2 million unserved homes and businesses, almost 99% of the locations available in the auction.

“Moreover, 99.7% of these locations will be receiving broadband with speeds of at least 100/20 Mbps, with an overwhelming majority (over 85%) getting gigabit-speed broadband.”

CCO Holdings, LLC (Charter Communications) was assigned the most locations, a little over 1.05 million.

“I’m thrilled with the incredible success of this auction, which brings welcome news to millions of unconnected rural Americans who for too long have been on the wrong side of the digital divide. They now stand to gain access to high-speed, high-quality broadband service,” FCC Chairman Ajit Pai said. “We structured this innovative and groundbreaking auction to be technologically neutral and to prioritize bids for high-speed, low-latency offerings. We aimed for maximum leverage of taxpayer dollars and for networks that would meet consumers’ increasing broadband needs, and the results show that our strategy worked.”

According to the press release, the 5,220,833 locations that have been assigned support via the Phase I auction initially were valued at more than $26 billion over the next ten years, which has been reduced to $9.2 billion through price competition. Providers must meet various periodic buildout requirements, which will require them to reach all assigned locations by the end of the sixth year. The FCC has also issued a public notice about the Phase I auction.