The Ins and Outs of the FCC’s Biggest Rural Broadband Auction

[Music] i'm jenny matson from great river energy in maple grove minnesota welcome to along those lines nreca's along those lines podcast is supported by power and tell a company that specializes in the procurement sales and material management of communications products power intel's supply chain expertise provides electrical co-ops and contractors with a cost-effective and reliable way to get the material they need for their network construction and maintenance we're still at the point where a lot of rural america doesn't have broadband so i think for all the billions of federal dollars have been spent it's been failure and we've been the voice to say you got to change this and the big pot of money is with the federal communications commission where we've had the third auction known as the ardoff which is for remote areas we stand up for the 42 million people we serve and they should have the same broadband as everybody else in america and we're going to argue for public policy that encourages that to happen it may be provided by electric cooperatives it may be provided by someone else but let's make sure the technology and the economic model behind these proposals and these bids is accurate and we don't think it is that is nreca ceo jim matheson talking about how the federal communications commission has allowed vendors with unproven technologies to win billions of dollars in federal funding through the recent rural digital opportunity fund or ardoff auction that program 20 billion dollars overall is part of massive federal and state efforts to permanently close the digital divide that impacts primarily rural areas in america to talk about this we have nreca's regulatory point person on broadband brian o'hara and greg santora from nrtc which led a large consortium of electric cooperatives in the ardoff auction later we'll hear from rachel hauser at tri-county rural electric in pennsylvania that's a co-op that has been very aggressively trying to bring broadband to its region and they won nearly 11 million dollars in the ardoff auction brian and greg welcome to the podcast thanks for coming on good to be here all right so brian why don't you get us up to speed what is the art off how did it come about how does it work well thank you scott it's great to be back with you so the rural digital opportunity fund or ardoff is the federal communications commission's latest initiative to bring broadband to unserved areas of the country it is part of a larger program the federal universal service program also called the usf so for the last several years the fcc has been updating this program it used to just support voice services and it's been migrating that to supporting broadband because obviously broadband these days is what's on everyone's mind and really what's needed so historically this funding has only gone to incumbent telcos so uh there's been a big change in this program in the last couple of years and i'll flashback to 2018 the first big change was the connect america fund and that was the first time that the fcc did a few things so first it's the first time that they opened up eligibility beyond the existing incumbent telephone providers and also it's the first time they did this reverse auction so the art office reverse auction as well what that means is that you bid for the highest speed possible and they want to get the highest be possible for the lowest amount of money right so uh and i'll get a little more they had bidding tiers right that they set up that companies could bid and they would choose what tier that they would bid in and there was a little bit of a waiting system that would provide preference to the higher speed networks so back in 2018 the first time this happened and we had some members that participated in the end about a third of all winning bidders in the caf 2 were electric co-ops so we were pretty pleased with how that one went so let's flash forward to uh when the rdof was set up and there were some things we really liked about the art off we got a couple changes to the rules that we really liked one change was that after the clearing round which means we get under the budget that additional priority would be given to the gigabit speed or highest tier network so really thought that that would set up our members for being a good position to win since most of the time the electric co-ops are deploying fiber networks and using fiber networks to gigabit speed also the fcc set what the bidding area was they were census block groups which is about 30 or 35 census blocks you know in an urban area those census blocks can be really small like a block but in rural areas they can be quite large that was a bit of concern for some of our members because census blocks don't line up well with electric service territory all the time so you know some of our guys really wanted to serve their own members so that was a consideration for them so the art off was 20.4 billion over two phases and they just wrapped up phase one the budget for phase one was 16 billion and about 9 billion was awarded deploy to about 5.2 million unserved homes and businesses and that funding will be given out over 10 years that's great that really gets us up to speed on where exactly we are greg i want to turn to you and ask you assembled a consortium which there were several of these that bit into the auction what made you guys get involved how many members or how many co-ops did you have in your consortium and how did that sort of come together i'm sure so we're a cooperative or we're formed by our members and we've been at the broadband business for gosh going on 10 years or so and we've developed over 200 feasibility studies for members to assess what it would take to build out broadband in their areas so we had a good feel that there was a lot of desire and what we ended up doing was asking them whether or not they wanted to participate in art off this was over a year ago and there was really an overwhelming number of cooperatives who wanted to get involved so we ended up with 56 members in our cooperative of which about 37 actually ended up bidding in the auction and we helped them through the entire process okay and they announced the winners in december right how did all your folks do did they all kind of find out individually how they did or did the consortium get notified and what was the final outcome yeah so we ended up winning about 156 million dollars of support over 10 years for 29 of the 37 bidders actually won a support 14 different states and was the 14th highest amount of money available out of the total of 180 bidders who actually won support in the auction so we think it was a pretty good outcome for them obviously we'd like to seen a higher amount of the 16 billion actually be awarded instead of just 9 billion the rest of that money will go into the next phase that's a great lead-in because i want to bring brian bring you back in we let in the whole podcast with a quote from jim matheson about what's a potentially serious issue with how the rdof was administered with also some serious implications for the rural areas that are impacted if certain technologies don't pan out so brian walk us through what's going on there and what exactly is sort of the issue at hand with the way that the auction was run happy to scott so nreca worked very closely with nrtc on this issue and we've raised concerns with uh several subsets of initial winners in the ardoff and we're really concerned whether they have the financial technological and operational expertise to meet the obligations of their specific speed tiers all right as it was kind of talked about so first and foremost the most problematic from our perspective is the many fixed wireless providers that were allowed to bid in and win in the gigabit tier and this is despite really scant evidence of the ability of a fixed wireless to provide gigabit level service in rural areas obviously that's used much more in an urban setting for that kind of speed tier or when it can even happen even there but out in rural areas we have a lot of trees hills long distances right it's much harder for that technology to meet that level of speed and so the big problem arose out of the fcc's rules so let's flash back again to the caf2 in that auction the fcc set a bright line that said fixed wireless you cannot bid the gigabit tier you could bid in the next tier down to 100 20 and they were very successful and did well and then come up the yard off the fcc had that same rule proposed in its standards for the art off but then changed them so um i guess the fixed wireless industry went in the wisps as the other name form wireless isps went in and convinced the fcc that they should be allowed to bid in the gigabit tier and we were concerned about that we opposed that but the sec decided to go forward with it so when we even heard the fcc was going to move forward and allow these fixed wireless routers to bid into the gigabit tier which they were going to do a what they said is a case-by-case evaluation of the applications that wanted to have the special circumstance we said well what criteria are you going to use to evaluate these right how are you going to make this determination at this point we said we think you should set some very transparent standards so that we all know we're starting from the same place however the fcc decided not to do that in their rule they basically said we set a high bar i'm using air quotes here and that they believe that very few fixed wireless would meet that high bar and be able to bid into the gigabit tier so flash forward to what happened we now have the results not only were a lot of these fixed wireless providers allowed to bid in the gigabit tier but they won a lot of money i think it's over three billion so what happened right how did that happen and the biggest concern we have is that we don't know right so the fcc said it did this special evaluation but we don't know how they did it and you know even there it seems like their beliefs didn't even pan out right they didn't think this would be the outcome second uh area of concern we've had is with the low earth orbit satellite or mainly starlink right so this is a new technology the low earth orbit i mean satellite technology is not new but this has some advantages but it's still in beta test phase right starlink even says that we're testing it now and they do i think they say have about you know 10 000 customers right now but in the grand scheme of these satellites that could reach you know millions that's not a lot also they currently do not have a voice offering which is a requirement of the art off so we have a lot of concerns and even if this technology can work what happens when you do get millions of people on it will it bog down right so there's a lot of questions and as jim matheson has said you know the art off and the whole universal service program is not an r d program right it is a deployment program for uh tested and proven technologies and we think that the fcc kind of strayed with by allowing the low earth orbit to uh to participate here and let me just bring up an overarching concern we have with several providers that one including a lot of these wisps that bid in the gigabit tiers that many of these bidders bid at a very low amount we touched upon the reserve price right so the fcc has what it calculates as to what it should cost to deploy a fiber network out to these areas and that was kind of the floor of the bidding or what the reserve price was a lot of these bidders went down to 10 of that reserve price or below in some cases one percent right so the fact that some of these providers say that they can provide this high level this gigabit level service for such little money in these very rural areas across wide swaths of uh whole state or even you know multiple states it seems a bit problematic to us yeah as far as next steps are i know we've written a letter to the fcc we're sort of drumming up this interest in challenging mana but what are the actual next steps that could happen how do we get satisfaction on these issues what we're really asking the fcc to do is what should be required of every federal agency right before they distribute the people's money we want them to exercise all due diligence and make sure that the money that's going out isn't wasted that these people that are receiving it can deliver and mainly when it comes down to it this is all about the communities that are supposed to get the broadband right we do not want to see these rural communities left behind again they've been left behind too many times before so what's going on is the fcc back january 29th was a deadline for the long forms right so that's the more in-depth financial and technological business plan that these bidders had to file so the fcc is in the evaluation phase of that so we want them to be extremely thorough now this took about eight months in the caf two right for evaluation of forms so we're kind of concerned that this may take a while so another concern i want to bring up is not just the ardoff but congress late last year passed another stimulus bill and there's about 5 billion in additional broadband funding there so what we're concerned about is usually the federal government doesn't like to give duplicative support to one area so if the fcc or if it's determined that these initial winners those areas are pushed off the table for consideration in these other programs and it takes the fcc eight months or a year to evaluate this and then come back and say oh sorry ardoff bidder we found that you're ineligible you can't meet this obligation they could have lost out on both programs right that would be a double jeopardy kind of situation for these unserved areas yes brian mentioned i mean we're in actually still in the longhorn process today there's a fair amount of technical detail that you have to provide in the long port process and we're really hoping the fcc scrutinizes the actual designs the technology being used and how they're going to be using it not just sort of listing out what they're going to do but being much more specific about it yeah and like brian said this isn't the only pot of money that's going toward this i sort of want to get both of your ideas philosophically why is it important for the federal government to get involved at this level this deeply in this big a scale on this particular issue what is it about this issue that's so important well it is a national issue in my mind right this is not economic development it's about the competitiveness of the country and i think if you look at the pandemic right let's just take education as an example right all our kids are saying nope can't go to school you got to go remote from home well if you don't have internet right then how are these children supposed to learn same thing for you and i if you know trying to work a lot of jobs can't telecommute right then you can't work during the pandemic so this really underpins everything and now you can't have access to a lot of government services you have to fill out the applications online it's just very far reaching the impacts of not having broadband yeah and it's not just a rural issue i think we understand a few years ago the foundation for rural service sponsored a study that showed that 66 of the economic activity that's generated in rural areas actually benefits urban areas whether it be you know precision farming or other types of benefits that accrue to the entire country and we think that that's you know just super important and why good quality reliable broadband everywhere is so important that's great i want to thank you both for being on the podcast really good information and best of luck to both you in this fight going forward thank you scott thanks scott next we'll have rachel hauser she's director of regulatory affairs and economic development at tri-county rural electric cooperative in mansfield pennsylvania but first let's pause for a message from our sponsor support for along those lines comes from power and tell presenting this message whether you're maintaining fiber networks or exploring deployment power intel has the products that members need when and where they need them power intel believes they go the extra mile to match the right product and solution to your specific needs let power intel's value-added services simplify your network deployments visit ptsupply.com to learn more i'm steven broussard from coastal electric power association in kill mississippi you're listening to along those lines welcome back rachel welcome to the podcast thanks so much for being here thank you so much for having me it's a pleasure to be here okay set the stage for us a little bit tell us about tri county tell us about the territory you serve sure tri-county rural electric cooperative is located in northern pennsylvania we serve approximately five thousand square miles of area portions of seven counties in northern pennsylvania we have over 16 000 members and almost 20 000 meters okay and you all bid into the ardoff end of last year tell us a little bit about that process did you bid on your own as a standalone co-op or were you part of a consortium so for ardoff we actually did participate as part of a consortium that was a little bit of a split from what we did in caf2 so we had participated in caf2 a few years ago independently but for ardoth we determined that we would participate as part of a consortium so we worked with several other companies that were also part of the consortium but really our focus was on our own bidding strategy and we utilized a third party vantage point solutions to help us submit those bids so we developed the bid strategy on our own but we utilized the third party to submit those bids okay and you already you have an existing broadband subsidiary trico connections talk a little bit about how the process in terms of coming up with that bid is trico connections already kind of operating outside of your electric service territory or is this part of an expansion that takes you beyond what your normal goals would have been tricho connections is a wholly owned subsidiary of tri county rural electric cooperative and trico connections was created about three years ago as a result or in preparation for the caf option for ardoff we were already serving customers in our territory predominantly they are existing tri-county electric members as a result of some of the funding that we received in the past we do have a commitment to build to additional locations outside of our service territory to meet funding obligations but it's predominantly our membership and ardoff is much the same as that so it will help us build to additional locations within our existing electric service territory but there is a small additional build to abide by those funding regulations okay and is the ultimate goal of trico connections to have 100 coverage of your electric service members as well as kind of the surrounding region yes our ultimate goal is to meet the needs of our members and one of those most significant needs that's been communicated to us is the need for reliable high-speed internet and we want to make sure that our entire membership has access to that high-speed internet so whether that means we provide it or there's another solution out there to provide it we just want to make sure that our members are served and were you yourself personally involved in the bidding process was it chaotic did you have to go back and forth multiple times talk a little bit about how that went sure so i would say it was probably a little bit less stressful than calf only because we had done it before so we went into art off with a little bit more experience than we had previously and so that was very very helpful but we worked internally with our management team to develop a bidding strategy that would help us determine what areas we could bid on you know while our primary goal is to serve our members needs our secondary goal is that we also want to be cognizant of the financial costs and make sure that we are being completely transparent to our members so because of that we developed a really robust bidding strategy through determining what it would cost to build out that area whether it could be constructed on our existing pole line or if it would actually involve a new build off of our electric system and some things like that our chief operations officer for trico connection so the fiber company was instrumental in helping us determine some of those costs again we had real life costs at this point because we've been building out to other portions of our territory so we were able to really understand our cost to build very well and we also worked really closely with our director of engineering and operations on the cooperative side you know the electric cooperative nobody knows their territory better than the electric cooperative so it's really critical to have everybody working together to develop that bidding strategy and i worked with both of those groups you know i was here when we did the caf2 option and so then of course with ardoff kind of coordinating that process to get those bids ready but we relied very heavily on that technical expertise that we had in-house that's great and so one of the things that you look after as part of your capacity at the co-op is economic development efforts talk a little bit about how broadband is so important nowadays to feed into that particular mission sure the mission of the cooperative has always been to meet our members needs and what we've determined is we've talked to our membership and we've conducted feasibility analysis and also through my previous work is that the digital divide in rural america is one of the greatest barriers to economic development and you know we learned this with rural electrification in the 1930s you will hit a point in rural america where your development is really stunted until you develop that new technology and you give that access to rural residents and businesses and in the 20th century that is rural broadband in our area a significant portion of our demographic is made up of senior citizens and we have a lot of aging individuals that live in our area and they need flexible health care options they need options to improve their quality of life access to amenities and we see and we hear about those needs every day being an electric cooperative allows us or it means that we live and we work in the areas that we serve so we see these needs we hear about these needs you know the aging population has a huge need for reliable high-speed internet but it's not just them it's our youth you know youth out-migration is a consistent issue any economic developer will tell you that no matter if they're in pennsylvania or california that youth out-migration in rural areas is significant so we want to make sure that our youth know that they can come back to tri-county rural electric territory they can enjoy the countryside they can enjoy the benefits of small town living and they can still compete in the global market and get an education and earn family sustaining wages and reliable high-speed internet is a piece to that we also have heard from many of our businesses that it's difficult for them to compete locally as well as globally when they don't have high-speed internet when they don't have a reliable connection so we know that us providing that reliable connection is going to keep more of our small businesses here it's going to help them grow it's going to help them develop and it's even going to help them bridge into new markets and so we understand how high-speed internet can affect our residents and businesses we've seen it there's examples of it across the country and we're excited to see those things come to life at tri county that's great and that's a nice segue into a really cool initiative that you all started called senior to senior this is a kind of an internet mentorship program that's actually gotten some national attention tell us about that sure you know again as trico connections was talking with our membership and understanding their needs we realized again that you know that aging demographic and that lack of education of that lack of understanding of what high-speed internet can do for you was really prevalent in our area and and we would venture to guess it's prevalent across the country so we sought to build some relationships to help educate our seniors on everything that they can use high-speed internet for and kind of bring them into that 21st century and help them understand all of the benefits and so trico connections partnered with some local groups the potter county education council several local banks that provided some additional funding career and technical centers and we worked with these group to develop a program that would teach basic computer skills digital literacy and cyber security senior citizens so that we would enable them to have the knowledge of the benefits of high-speed internet and utilize it to benefit their quality of life we wanted to keep our senior citizens home we wanted to enable them to stay safe especially in light of coved to stay safe and have access to telehealth and online banking and online shopping you know we're all very familiar with that but our senior citizens by and large are not and so the senior to senior program has been really critical for us to bridge that education gap and we believe that it will help people better understand all of those benefits the other piece of senior to senior that we think is significant is that it actually not only works with senior citizens but it actually brings in high school seniors so local high school seniors will come and help train the senior citizens on how to use a computer so it really brings that younger age group in with that older age group which we think is very important for many many reasons you know ironically in light of covid we have realized that so many of our senior citizens want nothing more than to learn how to use the internet because you know before they had the option to do telehealth now they're forced to because their doctors cannot see them in person because of it so whereas before it was truly a choice of how they wanted to handle something like their health care now they will be left behind if they don't understand and have the capability to utilize telehealth so that's just one example but it's allowed our senior citizens to stay safe because they can do so much more from home yeah and you all have been very generous with other co-ops i believe as well reaching out to you about how they can start their own programs like that so i would certainly encourage any co-ops out there to read up on what you guys are doing and see if they can replicate it because it's a great program that's all i have for you thanks so much for being on the program and best of luck with the rollout of your expanded broadband and keep us posted yes thank you very much i appreciate the opportunity to chat with you about our project thanks rachel thank you thanks as well to you our listeners and to our sponsor power and tell for more on this and other podcasts visit us at electric.coop until next time i'm scott hoffman i'm kelly crawford from blue ridge mountain emc in young harris georgia thanks for listening to along those lines subscribe and rate us on your favorite podcast staff

2021-03-08 12:04

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