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FCC has approved $6 billion in broadband grants despite rejecting Starlink

An Ethernet cable

Several US government agencies are having a busy week for doling out broadband deployment funding to ISPs and state governments. Today, the FCC announced $791.6 million for six broadband providers, covering network expansions to over 350,000 homes and businesses in 19 states. The ISPs will receive the money over 10 years.

“This round of funding supports projects using a range of network technologies, including gigabit service hybrid fiber/fixed wireless deployments that will provide end-user locations with either fiber or fixed wireless network service using licensed spectrum,” the FCC said. Funded ISPs include Nextlink Internet and Starry.

Separately, the Treasury Department and National Telecommunications and Information Administration (NTIA) this week announced new grants for states and Tribal entities (more on that later in this article).

The FCC actions are final approvals for Rural Digital Opportunity Fund (RDOF) grants, which were tentatively awarded in December 2020 through a reverse auction in which ISPs bid on grants organized by census blocks. The auction was mismanaged under then-Chairman Ajit Pai’s leadership, causing Chairwoman Jessica Rosenworcel to announce a major cleanup in July 2021 amid “complaints that the program was poised to fund broadband to parking lots and well-served urban areas.”

$6 billion approved despite Starlink rejection

The FCC a few weeks ago rejected SpaceX Starlink’s final application to receive $885.51 million tentatively awarded in the Pai auction. While the Pai FCC was criticized for giving Starlink money for locations at or adjacent to major airports, the Rosenworcel FCC also doubted whether Starlink’s technology can meet the funding program’s speed and latency requirements when deployed to hundreds of thousands of customers.

The FCC also rejected fixed wireless provider LTD Broadband’s tentative funding of over $1.3 billion. Before finalizing funding, the FCC says it reviews each application “to determine whether they met all legal, financial, and technical requirements.”

Despite the high-profile rejections, the FCC today said the RDOF is now set to provide more than $6 billion to applicants in 47 states. The Pai FCC originally awarded $9.2 billion to 180 bidders.

The new round of funding will go to NextLink Internet (aka AMG Technology Investment Group) in Illinois, Indiana, Iowa, Kansas, Louisiana, Minnesota, Nebraska, Oklahoma, Texas, Wisconsin, and Wyoming; GeoLinks in Arizona and Nevada; Starry (aka Connect Everyone) in Alabama, Arizona, Colorado, Illinois, Nevada, Ohio, Pennsylvania, and Virginia; GigaBeam Networks in West Virginia; Safelink Internet in Nevada; and Shenandoah Cable Television in Virginia.

To confirm the funding, the ISPs are required to submit letters of credit and Bankruptcy Code opinion letter by September 15. GeoLinks, Starry, and Shenandoah Cable Television aren’t getting everything they originally won in the reverse auction, as the FCC today also announced a list of census blocks where those ISPs defaulted on bids. Monster Broadband also defaulted on bids.

Treasury and NTIA funding

The FCC’s RDOF relies on the Universal Service Fund, which is paid for by Americans through fees on phone bills. By contrast, the NTIA funding announced this week was allocated by Congress and President Biden in the November 2021 Infrastructure Investment and Jobs Act.

The NTIA, which is part of the Commerce Department, yesterday announced $105.8 million in broadband deployment grants to five Tribal entities in Arizona that will connect more than 33,300 homes. Combined with other projects approved earlier in August, the NTIA has awarded $634.7 million to 25 Tribal entities.

The Treasury Department yesterday announced five newly approved broadband projects to be paid for by the American Rescue Plan’s Coronavirus Capital Projects Fund. That includes $47.5 million to connect 5,500 homes and businesses in Arkansas; $40.8 million to connect 10,000 homes and businesses in Connecticut; $187 million for 50,349 homes and businesses in Indiana; $87.7 million for 21,000 homes and businesses in Nebraska; and $45 million for 3,965 homes and businesses in North Dakota. Four of the states plan competitive grant programs to distribute the money while North Dakota “plans to collaborate with tribal organizations to identify solutions to address specific connectivity needs.”

The Treasury Department previously approved broadband projects from the same fund in eight other states. All providers who get the money will be required to participate in the FCC’s Affordable Connectivity Program, which provides households that meet income eligibility requirements up to $30 per month (or up to $75 on Tribal lands). That will result in free Internet for many people.

$42.45 billion fund coming later

The biggest broadband fund of all is the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) program from the Infrastructure Investment and Jobs Act, but it’s on a longer timeline. That money is being distributed by the NTIA but it won’t released until after the FCC finishes a large project to upgrade the map of where providers do and don’t offer broadband. Rosenworcel has said the new map will be ready this fall.

To help states get ready, the NTIA is distributing planning grants. All 50 states and six territories applied for them, and Louisiana became the first to receive one, according to an NTIA announcement today. Louisiana’s $2.9 million grant will, among other things, help it identify unserved and underserved locations, conduct community outreach, train employees, conduct surveys “to better understand barriers to adoption,” and develop a Statewide Digital Equity Plan.

“Over the coming weeks, every state and territory will have funding in hand as they begin to build grant-making capacity, assess their unique needs, and engage with diverse stakeholders to make sure that no one is left behind,” Secretary of Commerce Gina Raimondo said.

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