FCC Blocks Elon Musk From Getting Millions In Subsidies For Delivering Broadband To Traffic Medians

from the actually-paying-attention dept

Late last year consumer group Free Press released a report showing how numerous broadband providers had been gaming the FCC's RDOF (Rural Digital Opportunity Fund) subsidy program to get money they didn't really deserve. The program doles out roughly $9.2 billion in subsidies paid for by money paid by consumers into the Universal Service Fund (USF). The study clearly showed that during the last RDOF auction a long list of ISPs gamed the system to gain millions in subsidies to deliver broadband to areas that didn't make any coherent sense.

This ISP, for example, nabbed millions of dollars to deploy service to places that already had it -- like five feet outside of Apple's $5 billion new campus. Elon Musk's Starlink also managed to nab $886 million in subsidies to deploy broadband service to places like airport parking lots and traffic medians.

The whole mess was just completely ignored by previous FCC Boss Ajit "what broadband competition problem" Pai. After months of withering criticism from numerous fronts, the FCC under interim boss Jessica Rosenworcel has stepped up and fired off letters to several of the worst offenders, giving them a second chance to apply for funding with proposals that actually serve the public interest:

"The Federal Communications Commission told SpaceX and other companies on Monday that the billions in rural broadband subsidies it doled out last year can’t be used in already connected areas like “parking lots and well-served urban areas,” citing complaints. The commission, in an effort to “clean up” its subsidy auction program, offered the companies a chance to rescind their funding requests from areas that already have service."

Granted the problems with the RDOF subsidy process is just one small part of a much bigger problem. For years the government has doled out billions of dollars to telecom giants for fiber networks they then routinely half deploy. Inaccurate maps and availability data then mar the process further, obscuring not only the lack of access (up to 42 million Americans still can't access broadband) but the way a lack of overall competition harms consumers and raises rates (83 million Americans live under a broadband monopoly).

Thanks to the immense political influence giant telecom providers have over Congress and regulators, efforts to improve the entire mess comes glacially, when they come at all. That's not to ignore the huge benefit subsidies can have on less affluent and disconnected areas of the country when applied correctly, but, for decades now, regional monopolies have dictated US telecom policy. And the result has generally what you'd expect: namely billions in pointless tax breaks and subsidies thrown at companies like AT&T in exchange for layoffs, pipe dreams, and perpetually half completed networks.

Filed Under: ajit pai, broadband, competition, elon musk, fcc, jessica rosenworcel, rdof, rural digital opportunity fund, starlink, subsidies, usf
Companies: spacex, starlink

FCC Gives ISP $8,000 To Deliver Broadband Five Feet From Apple's $5 Billion Campus

from the wasted dept

We've noted repeatedly that there are two major reasons US broadband is slow, spotty, and expensive: regional monopolization (a lack of competition), and the state and federal regulatory capture (corruption) that protects it. On the latter front, there's been an absolute army of telecom industry aligned folks, who, for decades, have relied on dodgy broadband availability maps and dubious data to not only pretend there's no real problem that needs fixing, but also to slather companies with subsidies without ensuring that money actually goes toward fixing the problem.

Last fall, the FCC held a reverse auction doling out nearly $9 billion from the FCC's Rural Digital Opportunity Fund (RDOF), paid into via Universal Service Fund (USF) contributions affixed to your broadband and phone bills. To be very clear: some of this money will absolutely help shore up access in underserved communities. But after digging into the FCC maps of the winning bidders, consumer groups found a long list of examples where we were throwing billions of dollars at companies for deployments that make no sense.

For example, Free Press noted that Elon Musk, the second wealthiest man on the planet, managed to game the FCC system and nab $886 million in ratepayer subsidies for his Starlink system. And he did it by promising the FCC that his company would bring broadband to essential US areas like... already connected airports and highway traffic medians:

"As we have documented in our previous two posts, however, this effort to close the rural-broadband digital divide looks more and more like one of the most wasteful projects in FCC history."

While some of this grift will be cleaned up in a second round of FCC application review, you can't blame this on "we didn't know," or "the system just needs tweaking." We've thrown countless billions of dollars at telecom incumbents for fiber networks routinely only half completed. It's a policy choice. Now we're giving billionaires who don't need the money, even more money to deliver service that's inferior to the fiber networks most of you already paid for.

The problem is pervasive. Light Reading, for example, noticed this week that a small wireless ISP by the name of LTD Broadband is poised to get $8,000 from the FCC to deploy 1 Gbps service five feet outside of Apple's $5 billion new headquarters:

"RDOF funds will go to serve areas adjacent to the brand-new Apple Campus in Cupertino," complained the Competitive Carriers Association (CCA) to the FCC in a recent filing. "Far from 'unserved,' the Apple Campus is one of the most connected places in the entire world."

LTD nabbed $1.3 billion in promised federal payments to build broadband across 13 states. But the company is one of several that's getting FCC funds that don't make sense, for service it's not clear they can even successfully deploy:

"LTD is one of several major RDOF winners that has faced withering criticism that it will not be able to meet its RDOF obligations. "There is no indication that LTD [Broadband] has the technical, engineering, financial, operational, management, staff or other resources to meet RDOF build-out and service obligations," wrote the Minnesota Telecom Alliance and the Iowa Communications Alliance in a recent joint filing to the FCC."

And while there have been spotty efforts to improve both mapping and subsidization, they always seem just around the next corner or a few years down the road. So when you see guys like the FCC's Brendan Carr whine about how "big tech" needs to give billions of dollars to "big telecom" for no coherent reason, notice how he excludes the fact that fixing the money trough that is US telecom subsidization should probably be tackled first. As Ajit Pai showed, pretending you care about the "digital divide," while simultaneously making the corruption and monopolization that created it worse, remains very fashionable.

Again, many subsidies have certainly gone to very promising projects that provide direct and immediate aid to underserved areas neglected by regional giants. But at the same time, federal and state US taxpayers have likely paid enough in subsidies over the last few decades to deliver fiber to every home in America several times over (not that we'd ever bother to do a comprehensive audit). Instead of getting that fiber, Americans get a very expensive hamster wheel that's about 40% incompetence and grift.

Filed Under: broadband, corruption, covid, digital divide, fcc, oversight, rdof, rural digital opportunity fund, subsidies, universal service fund, usf

Consumer Groups Say The FCC Just Blew $9 Billion To Deliver Broadband To Already Served Rich People

from the fluff-and-nonsense dept

The FCC last week held a reverse auction to dole out $9 billion to, purportedly, improve patchy U.S. broadband. But consumer groups say the auction did nothing of the sort, instead delivering $9 billion to a dodgy roster of companies with existing histories of fraud that will be using much of the funds to expand broadband to affluent areas where broadband is often already available.

The reverse auction involved doling out billions from the FCC's Rural Digital Opportunity Fund (RDOF), paid into via Universal Service Fund (USF) contributions affixed to your broadband and phone bills. To be very clear: some of this money will absolutely help shore up access in underserved communities. But after digging into the FCC maps of the winning bidders, consumer groups like Free Press say something ugly is afoot. The group found a long list of examples where companies got millions of dollars to dole out broadband to a handful of wealthy homes in affluent areas, many of which already have service:

There are plenty of examples of this in the data. Like this affluent section of LA:

Or here at LAX, where a company is getting ratepayer money to deploy broadband to a whopping two already-served locations near the airport:

Ajit Pai and friends are, you'll recall, the same folks who like to hyperventilate over community broadband as an inevitable taxpayer boondoggle (it isn't, but that doesn't stop them). There's an absolute ocean of telecom-linked consultants, lobbyists, policy wonks, academics, and think tankers who'll be happy to go on at great lengths about how localized community broadband networks are some kind of socialistic hellscape of taxpayer fraud. But bring up how we throw way, way more money at AT&T in exchange for reduced investments, empty promises, and layoffs and...crickets.

Enter this new auction data, which indicates your money is being thrown at ISPs that already have long histories of dodgy behavior and being misleading about how subsidies are spent. That includes Frontier Communications, which has faced repeated accusations of subsidy fraud in places like West Virginia. And Charter Communications (Spectrum), which almost got kicked out of New York State recently for repeatedly lying to regulators about broadband deployment efforts. These are companies with pretty long histories of extremely dodgy behavior, being given millions to do something they've already failed to do, repeatedly.

Of course there are some new players getting money for dubious reasons too. Like Starlink, which is owned by one of the wealthiest men in the history of the planet, getting a billion dollars so it can deploy broadband to, according to the FCC's own logic and data, parking lots near the Pentagon:

Why does one of the wealthiest men in America need ratepayer subsidization to deploy broadband to areas his project was already targeted to serve? Good question! The company wouldn't respond to reporter inquiries asking why the money was needed or what it plans to do with it, which is always a good sign.

There's a good early breakdown of the results and how this auction was supposed to work by Christopher Mitchell at the Institute for Local Self Reliance. Telecom consultant Doug Dawson also does a good job breaking down what went wrong, noting that because the FCC let fixed wireless providers pretend fixed wireless is the equivalent of fiber (it's most certainly not), a lot of genuine fiber expansion efforts got the short end of the stick:

"By allowing WISPS to claim gigabit capabilities, the FCC cheated huge numbers of people out of getting fiber. There were numerous electric cooperatives, small telcos, CLECs, fiber overbuilders, and public/private partnerships in the auction hoping to bring fiber to entire rural counties. In looking at the footprints won due to this fiction, I’m guessing the FCC’s decision to allow fixed wireless to falsely bid as gigabit technology killed fiber construction to at least a few hundred rural counties."

I don’t understand why the FCC couldn’t get this right. The FCC could have talked to any one of a hundred telecom engineers I know who would have laughed at the idea that fixed wireless can deliver gigabit speeds across big tracts of extremely rural America. A huge portion of this auction was based upon this lie, and that never bodes well for the long run.

There's this thing deregulatory telecom zealots do where they overhype emerging telecom tech, pretending it's some kind of deus ex machina that will magically fix everything. This lets them pretend that magic new tech will bring competition to market, thereby justifying mindless deregulation and napping regulators. Ex-FCC boss turned top cable lobbyist Mike Powell did this with broadband over powerline (BPL), which wound up being an interference-prone dud. You're seeing it happen again with 5G, despite U.S. 5G being too patchy, underwhelming, and expensive to fix America's affordable broadband problem.

This is all pretty well in line for an Ajit Pai FCC that talks endlessly about its "dedication for the digital divide," but has such little respect for accurate data it can't actually tell you where broadband is or isn't available (but pretends to). And because folks like Pai are so ideologically rigid, they can't even acknowledge that the biggest problem in U.S. broadband is monopolistic domination by a handful of giants resulting in massive swaths of the country where competition is virtually nonexistent. As such it's not surprising the end policies are often fluff and nonsense untethered from the reality on the ground.

A serious, functioning FCC would make accurate data the priority. It would then focus on the best, smartest, and most creative ways to drive new technology and competition to those markets, whether you ideologically agree with the solution or not. Instead, we have an FCC that literally pretends America's broadband competition problems don't exist, misidentifies the real problem out of ideological and partisan hubris, then applies solutions that largely involve throwing billions at companies with a twenty year track record of taking subsidies in exchange for empty promises.

Filed Under: broadband, digital divide, fcc, rdof, reverse auction, rural digital opportunity fund, usf