A lot of questions sprang up when the U.S. government passed legislation last year which included $65 billion for broadband. Many of these related to just how exactly the Department of Commerce planned to administer the funds. But for many operators, there was one other key question: what about RDOF?

Back in 2020, the Federal Communications Commission (FCC) held its Rural Digital Opportunity Fund (RDOF) Phase I auction, doling out more than $9 billion to support broadband deployments in unserved areas. Notably, the FCC controversially allowed satellite and fixed wireless access (FWA) operators to participate in the auction. After all, the goal was to reach the unreachable by any means necessary. When all was said and done, five of the top 10 RDOF winners were satellite or FWA providers.

New Street Research analyst Blair Levin told Fierce that when the RDOF auction was held, there was no way the FCC could have known that Congress would invest heavily in achieving universal broadband coverage a few years later. But once Congress passed the Infrastructure Investment and Jobs Act (IIJA), it was clear there would be tension between the two efforts, he said.

One of the major questions that sprang up was whether the Commerce Department would count the thousands of satellite and FWA locations supposedly covered under RDOF as served when determining where IIJA funding should be applied. That question was top of mind for many given earlier concerns about the ability of RDOF’s satellite and FWA winners to deliver on their commitments and the growing possibility that some such RDOF winners might not receive expected funding in some areas.

Nearly a year and a half after the close of the RDOF auction, the satellite and FWA players remain the only providers out of the top 10 which have not yet been approved to receive any of the funding they won. The auction’s overall winner, FWA operator LTD Broadband, has had a notoriously tough time securing the state-level approvals needed for the FCC to release its winnings and earlier this month was actually fined by the regulator for violating auction rules.

The whole situation could have left state governors, who will largely oversee distribution of the funding from the Commerce Department, in a pickle, Levin said. If they chose to develop a broadband plan for the IIJA funding that left out areas covered by RDOF satellite and FWA players and the FCC ultimately decided to not to give the money to those winners, then certain areas of their state might end up with no funding whatsoever, he explained.

But the rules the Commerce Department issued last week for the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) program and several other broadband funding initiatives make two things clear: that the priority for funding is on covering unserved locations and that areas connected only with satellite or FWA services based on unlicensed spectrum will be considered unserved. According to Levin, this puts the power in the hands of the states to push fiber to wherever they think it’s needed.

“This was the Secretary [of Commerce] trying to address a really in the weeds problem in a way that fundamentally gave leverage to the states,” Levin said. “What it’s really doing is giving the governors more authority to negotiate with those [satellite and FWA] providers and say ‘you better give us better evidence that you’re actually going to do what you say, because if not we’re just going to put in BEAD money.’”

“This is not a once in a decade thing. This isn’t even a once in a lifetime thing. This is a once thing,” he continued. “So, it’s understandable that from a Congressional and a Commerce Department perspective satellite is not the solution you want unless there really is no other alternative.”

In terms of what the rules mean for cable, Levin said in a note to investors over the weekend that they provide “significant” protection for incumbents. That’s because cable and DSL are defined as “reliable broadband service” and so long as those offer speeds of 100 Mbps downstream and 20 Mbps upstream it will be hard to apply BEAD funds to cover those areas with fiber.