The Trump FCC Wasted Millions In Broadband Subsidies In A Giant Mess Government Is Still Trying To Clean Up

Broadband

from the whoops-a-daisy dept

So a few weeks ago Trump FCC boss Ajit Pai came out of hiding to issue a dumb blog post about how killing net neutrality must not have been a bad idea because the internet still works. In his post, he prattles on about how secretly wonderful the U.S. broadband industry is, proving that his Trump-era decisions to lobotomize the FCC’s consumer protection authority must have been correct.

But Pai failed to mention a few things. One, that the US broadband industry is still a corrupt, monopolized mess, resulting in spotty service, slow speeds, and some of the highest prices in the world (thanks in part to many of his “deregulatory” decisions). He also failed to mention that big ISPs haven’t behaved worse on net neutrality because many states stepped in to pass laws big telecoms are afraid of violating.

But he also forgot to mention something else: that a landmark broadband subsidy program he oversaw at the FCC wound up being such a corrupt mess that not only is the FCC still trying to clean things up years after the fact, it has had its authority over any subsequent subsidy programs severely curtailed because the federal government no longer trusted the agency to do the job.

In 2019, the Pai FCC created the $20.4 billion Rural Digital Opportunity Fund (RDOF) to presumably shore up broadband access in traditionally unserved rural U.S. markets. The money was to be doled out via reverse auction in several phases, with winners declared based on having the maximum impact for minimum projected cost.

But the program was a poorly managed mess, and the FCC failed completely to really screen applicants or what they claimed they could deliver, resulting in a ton of waste and bullshit. Because of Pai’s desire to maintain a pathetic definition of what constitutes “future proof broadband,” a lot of half-assed wireless and satellite providers made out like bandits.

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 satellite service to places like airport parking lots and traffic medians. Other wireless ISPs, like Starry went bankrupt before they could get close to delivering what they promised.

Of the $9.2 billion in auction winners, over $2.8 billion has gone into default, meaning the bidder couldn’t actually deliver on promised projects. While the FCC has been trying to claw some of that money back (much to the chagrin of Elon Musk who apparently hates subsidies — until he doesn’t), the damage was done, and the program is now widely considered one of the biggest boondoggles in agency history.

Things were such a mess, the FCC never proceeded to additional phases of the auction, the Biden FCC has had to waste a lot of time fining companies that failed to deliver, and there’s growing concerns that the remaining funds (that could have done a lot of good for rural America if the program had been competently run) will simply be wasted:

“The most unfortunate outcome . . . is the delay in getting better service to millions of people who really need it,” he said. “The providers are ready and willing to construct networks, and citizens are eager to get connected, but unfortunately, many rural Americans continue to play the waiting-game.”

Consumer groups and the government don’t much want to acknowledge what a mess this program is, for fear it would cast a pall over other efforts to subsidize the digital divide. Ajit Pai doesn’t much want to mention this because it would dismantle his narrative that his captured tenure at the Trump FCC was an ingenious success. And his fellow Republican commissioners, like Brendan Carr, spend more time on cable TV hyperventilating over TikTok (a company they don’t regulate) than taking any accountability.

So it just kind of got swept under the rug in the hopes that nobody would notice.

But all told, only about $6 billion of the $20 billion program ever actually made it into the hands of ISPs that needed it before program dysfunction ground everything to a halt.

All of this has since been overshadowed by newer and much bigger broadband subsidy programs, including COVID relief (The American Rescue Plan Act) and the $42 billion in looming BEAD grants included in the infrastructure bill. But the Trump FCC screwed up the RDOF so badly, a huge chunk of the management of these programs was taken from the FCC and doled out to other agencies like the NTIA.

It’s an open question whether these newer programs will be run more competently, but most of them are off to a much better start than the RDOF.

All told, it’s kind of odd that Ajit Pai would pop up recently to give himself a pat on the back on net neutrality and his track record, without mentioning the was at the helm of one of the most disastrous telecom subsidy programs in recent memory. Must have simply slipped his mind.

Filed Under: ajit pai, broadband, deregulation, high speed internet, jessica rosenworcel, net neutrality, rdof, subsidies, telecom