By Johnny Kampis

A group of nearly 70 internet providers, municipalities, nonprofits and government officials are asking the Federal Communications Commission (FCC) to grant amnesty to recipients of federal broadband funds who have not fulfilled their commitments. Granting such a waiver would set a bad precedent and potentially cost taxpayers billions of dollars.

The petitioners are seeking a short amnesty period of about a month during which the recipients of money from the Rural Digital Opportunity Fund (RDOF) and Connect America Fund II (CAF) can relinquish their awards without financial penalty.

The petitioners (in a letter to the FCC on February 28) say that economic issues such as inflation have resulted in the inability of many RDOF and CAF II fund recipients to complete the buildout of the promised broadband projects. The letter points out that many of the RDOF and CAF II awardees who cannot or will not deploy their networks are located in largely rural states with the greatest connectivity needs (like Missouri and Mississippi) and expressed concerns that those areas will now be ineligible for funds from the Broadband Equity, Access and Deployment (BEAD) program. That $42.5 billion program was part of the Infrastructure Investment and Jobs Act and its intended goal is to close what remains of the digital divide.

FCC Chairwoman Jessica Rosenworcel, in letters to various U.S. senators in response to the concerns of these providers, said the petitioners’ initial request for more Universal Service Fund (USF) support because of increased construction costs was not feasible because no additional USF funding for those projects exists. She noted, too, that not penalizing providers for relinquishing RDOF and CAF II locations would harm the integrity of USF program funding.

In comments filed with the FCC, the Taxpayers Protection Alliance (TPA) agreed that BEAD funds should be given to those area that most need it, but disagrees that bad actors should be allowed to escape their commitments without penalty. The better solution is to penalize the fund recipients as law allows, strip away the awards and ensure the unserved areas that were supposed to receive broadband under RDOF and CAF II will still be eligible for funding under BEAD. In addition, the FCC should preclude the derelict providers, as a condition of further CAF Phase II or RDOF resources, from seeking BEAD or other available taxpayer funding for the decommitted areas.

It is notable that many of the undersigned petitioners are cities in the process of building their own government-owned networks (GONs). As TPA has reported extensively, in such reports as, “GON with the Wind: The Failed Promise of Government Owned Networks Across the Country,” and “GON with the Wind II: Frankly Taxpayers Do Care,” these projects often fail and leave huge debts for taxpayers or electric ratepayers. The fact that several prospective GONs are among the petitioners only further hammers home that point.

In its filing to the FCC, NCTA – The Internet & Television Association, opined that rather than potentially granting waivers via a public notice in the future, the Commission should ensure proper procedures are followed to facilitate public review for such relief through a reasonable comment period.

“Indeed, in addition to permitting appropriate review and input by other stakeholders, such a process would be essential to allow states themselves – those that would administer potentially (re)awarding these locations through the BEAD program – to weigh in and raise any concerns regarding how adding these locations to their BEAD eligibility maps might enhance or undermine their ability to achieve ‘Internet for all,’” NCTA wrote.

The FCC risks harming the integrity of its USF programs by agreeing to blanket amnesty. This slippery slope would create incentives for providers to abuse the system by making low bids for projects in one program and jump to a different funding program to deliver the same service for more money when the opportunity arises. 

Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance