FCC rejects LTD Broadband, Starlink RDOF bids

LTD Broadband and SpaceX subsidiary Starlink emerged as two of the top ten winners in the $9.2 billion Rural Digital Opportunity Fund (RDOF) broadband subsidy auction, but the Federal Communications Commission (FCC) announced today they won’t be taking home any winnings. In a decision issued a year and a half after the auction’s close, the FCC concluded neither would be able to provide the services they promised when bidding in the proceeding.

Cory Hauer, LTD Broadband’s CEO, told Fierce it is “extremely disappointed in the FCC staff decision” and is evaluating next steps. He added “I don’t believe the FCC fully appreciated the benefits LTD Broadband would bring to hundreds of thousands of rural Americans.”

LTD Broadband originally won a total of $1.3 billion in the RDOF auction to deliver gigabit broadband to 528,000 locations across 15 states. Starlink bagged $885.5 million to provide 100/20 Mbps service to 642,925 locations across 35 states. But upon the auction’s close in December 2020, critics immediately questioned whether a hitherto small provider like LTD Broadband and an emerging service like Starlink would be able to deliver the goods.

After a lengthy review of the companies’ long-form auction applications, the FCC determined they would not.

In Starlink’s case, it seems the decision was based on factors indicating its technology is not yet ready for prime time. In a public notice, the FCC cited recent Ookla data which showed Starlink speeds declined between Q4 2021 and Q2 2022. It specifically pointed to results which showed Starlink’s uplink speeds came in well below the promised 20 Mbps.

“Starlink’s technology has real promise. But the question before us was whether to publicly subsidize its still developing technology for consumer broadband,” FCC Chairwoman Jessica Rosenworcel said in a statement.

The Commission was less specific about its reasons for denying LTD Broadband’s application, but indicated its initial default on winning bids in seven states didn’t help its case. Ultimately the agency concluded it would not be able to deploy a network of the scope and scale required by its RDOF commitments.

“We must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks,” Rosenworcel stated. “We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”

An FCC spokesperson told Fierce the $2.18 billion forfeited by LTD and Starlink will remain in the Universal Service Fund and be eligible for other state and federal funding programs.

To date, the FCC has approved around $5 billion in winning RDOF bids. Accounting for the rejection of LTD and Starlink’s winnings, that means it has about $2 billion worth of bids left to process. The FCC representative said it expects to complete its review of pending applications “soon.”