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Rural Broadband Companies Face Fines

July 26, 2022 by Madeline Hughes
Rural Broadband Companies Face Fines
Seth Kern, with Lake States Construction, a sub-contractor of Lake Connections, readied telephone poles in Two Harbors, Minnesota, to string stainless steel strand cables from which fiber optic cable will be lashed to, July 31, 2012. By the time the communications project was done in 2014 around 2,000 miles of fiber optic cable was strung, connecting customers with broadband internet, video and telephone service. (Bruce Bisping/Minneapolis Star Tribune/MCT)

WASHINGTON — The Federal Communications Commission proposed $4.35 million in fines against 73 rural broadband companies that applied and received government funding to build their rural networks but never did.

The companies had all won bids in 2020 for areas in 36 states totaling nearly 130,000 different locations through the Rural Digital Opportunity Fund auction. The companies that applied for the funds were supposed to start using the money between ​​July 26, 2021, and March 10, 2022, but the companies either withdrew their applications or failed to meet critical deadlines, according to the FCC.

Overall 180 companies are set to receive $9.23 billion in support over a 10-year period through the program.

“The applicants agreed to follow the commission’s auction rules when they signed up to participate in the Rural Digital Opportunity Fund program,” said Loyaan Egal, acting FCC enforcement bureau chief, in a statement Friday. “These defaults have put at risk the timely deployment of broadband access for many and necessitate this strong enforcement action.”

Companies that defaulted on their bids were given a Notice of Apparent Liability, which informs them of the potential fine and the recourse to appeal. Those fined don’t include companies the FCC already allowed to withdraw from their applications because broadband had been auctioned off in some census blocks, according to the commission.

When the commission started to implement this program, awarding grants to these rural companies, Commissioner Geoffrey Starks gave a warning, saying there “​​are no do-overs with this money and precious time.” He wanted to ensure companies granted these funds put them to use, particularly as billions of dollars are going to similar programs across the country.

“I support the commission’s efforts to hold them accountable, to the amount of $4.3 million in fines,” Starks said in a statement. “I fervently hope that these service areas, and the households in these communities, get connected through the other currently available broadband deployment programs, including the Broadband Equity Access and Deployment Program.”

That program, funded through the American Rescue Plan, will distribute $42.5 billion to build out broadband infrastructure across the country. Every state and eligible territory has opted into the program to receive money for five-year plans to build broadband projects.

This isn’t the first time broadband companies have defaulted on their bids to use government funds to expand rural internet service. 

Recently Nebraska’s Public Service Commission implemented a reverse auction that looked to reallocate $13 million set aside for a broadband company that “declined to try and use” state money to expand broadband in rural areas, Cullen Robbins, director of the Telecom Division of Nebraska’s Public Service Commission, previously told The Well News.

When Nebraska’s reverse auction process began at the end of June, Robbins was questioning what the response would be. Since then, six broadband providers submitted applications, four of which were approved to participate in the August auction, Robbins said by email Tuesday.

Madeline can be reached at maddie@thewellnews.com and @MadelineHughes

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