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.

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

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17 Comments
harris33w says:

easy solution

(" paid into via Universal Service Fund (USF) contributions affixed to your broadband and phone bills. ")

…just abolish this stupid and unjust USF tax levied on almost every American.

USF is not filled by "contributions" — it’s mandatory, regressive tax.
And the Feds have no constitutional authority to levy this type of tax.
Anyway, billions are obviously wasted by a corrupt Federal bureaucrats and indifferent Congressmen and Preidents.

This comment has been deemed insightful by the community.
BudTugglie (profile) says:

Bad coverage mapping is at fault

Grants were done at the census block level, which is a major cause of the crazy coverage. It is well known that FCC coverage maps are badly inaccurate, due to them considering an entire census block having broadband, if even 1 address in the block does. Conversely, odd census blocks with few households and no broadband are eligible for grants, explaining the crazy grant areas.

Fixing the maps will prevent this problem in the future. Use address level granularity, not census blocks. Pretty simple. Carriers lobby against this, as it will expose their spotty coverage. FCC stalls, as accurate data will expose a larger problem than currently claimed.

This comment has been deemed funny by the community.
That One Guy (profile) says:

Typo

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.

Just a head’s up, ‘openly corrupt and grossly dishonest’ seems to have been misspelled.

Anonymous Coward says:

All of the above notwithstanding...

The failure to mention that SpaceX won a healthy slice of this auction (some $980 million over ten years, if I recall correctly) is a serious oversight. SpaceX absolutely does not have a history of fraud in this area. It incontrovertibly has not abused a market dominance in internet provision or cynically failed to meet promises made to receive previous grants. This is absolutely and incontrovertibly true because SpaceX has not been providing internet services for even a year.

In future, they may prove to be just as corrupt in this domain as the incumbents, but so far they have done nothing to deserve a tarring with this brush. I doubt they will come to be as corrupt, though, as their economic incentives are widely different from the incumbents. Isolated, remote consumers are more valuable to SpaceX than those in more densely populated areas because the cost of service is the same for all but there is much less competition for those customers. so they will most likely be delighted with the service offered at the current price point (one at which SpaceX can realize a 25-50% profit by my calculations, even if forced to stick with the Falcon 9 as the delivery vehicle rather than the possibly much cheaper Starship).

Karl’s failure to mention this disposition of some 10% of the funds strikes me as seriously flawed reporting.

stine says:

Re: All of the above notwithstanding...

Your comment is spot on. SpaceX hasn’t been a broadband provider before. Technically, SpaceX could have asked for funding for EVERY census block between 37 degrees north and the US-Canada border, but they didn’t because they don’t have the infrastructure, or plans for infrastructure, to support high-density populations (cities.)

BudTugglie (profile) says:

Re: Re: All of the above notwithstanding...

Not Every census block – only un-served census blocks could be bid on. FCC considers a census block completely served if only even one address in that block has available broadband. Congress told the FCC to fix the mapping, but the FCC has done nothing, saying that they have no money to make the fix.

The result is that many residents of the US are not eligible for federal help, despite having no broadband options.

Large telcos opposing accurate mapping, as the current process both hides their lack of service and preserves areas without service, should they ever feel the need to expand without competition.

Anonymous Coward says:

Re: All of the above notwithstanding...

To be very clear: some of this money will absolutely help shore up access in underserved communities.

… seems that Karl agrees with you, which is why SpaceX was not mentioned in this article about corruption in the grant winners.

Reading can be hard I know, but at least try to make it to the second paragraph.

That One Guy (profile) says:

Re: All of the above notwithstanding...

The failure to mention that SpaceX won a healthy slice of this auction (some $980 million over ten years, if I recall correctly) is a serious oversight. SpaceX absolutely does not have a history of fraud in this area.

The article’s primary focus is on how large chunks of the money are being wasted on already served areas or areas that don’t need coverage so it would be somewhat off topic to spend a notable amount covering a use of the money that might actually be worthwhile, but just for clarity and to really nail the ‘flawed reporting’ idea dead there is in fact an upcoming article about SpaceX’s ‘share’ in the queue, likely coming out in the next few days unless something bigger comes along.

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