Rural Digital Opportunity Fund: Requirements and Selected Policy Issues

Rural Digital Opportunity Fund: Requirements and Selected Policy Issues

Rural Digital Opportunity Fund: Requirements August 28, 2020
and Selected Policy Issues
Colby Leigh Rachfal
Broadband internet has become increasingly important in the 21st century, as more and more
Analyst in
aspects of everyday life, such as job applications and homework assignments, require the use of
Telecommunications
digital technologies. Providing increased broadband access has been an ongoing challenge, as
Policy
some of the United States—particularly rural areas—have limited or no access to broadband. The

gap between those who have access to broadband and those who do not is referred to as the
digital divide. During the Coronavirus Disease 2019 (COVID-19) pandemic, many federal, local,

and state governments, in addition to large and small businesses, implemented remote working or
distance learning options to help abate the spread of the virus while allowing employees to continue to work. However,
COVID-19 mitigation efforts further revealed discrepancies in broadband availability and accessibility across the United
States.
The Universal Service Fund (USF) programs under the Federal Communications Commission (FCC) are a primary source of
funds for broadband infrastructure and adoption. According to the FCC’s 2020 Broadband Deployment Report, “we find for
the third consecutive year that advanced telecommunications capability is being deployed on a reasonable and timely basis.
Despite this finding, our work to close the digital divide is not complete. The Commission will continue its efforts to ensure
that all Americans have the ability to access broadband.”
One of the programs initiated by the FCC under the USF is the Rural Digital Opportunity Fund (RDOF), the FCC’s next step
in addressing the digital divide. Building upon the model used by the FCC in a previous auction related to broadband, the
FCC plans to commit $20.4 billion of these funds to bring high-speed fixed broadband service to rural homes and small
businesses in two phases. Phase I proposes to allocate up to $16 billion to areas that are completely unserved by broadband
with a minimum download rate of at least 25 megabits per second (Mbps) and an upload rate of 3 Mbps, as determined by the
FCC’s current broadband data. Phase II proposes to allocate an estimated $4.4 billion to areas partially served by broadband
with 25/3 Mbps speed. The FCC plans to identify the Phase II areas by using data from the FCC’s forthcoming Digital
Opportunity Data Collection, which is to collect more granular data to improve the FCC’s current broadband map, as
required under the Broadband Deployment Accuracy and Technological Availability Act (P.L. 116-130). The auction for
Phase I (Auction 904) is scheduled for October 29, 2020. There are a number of potential policy issues Congress may choose
to consider:
 acceleration of the RDOF timeline to get broadband infrastructure built and deployed more quickly,
 deceleration of the RDOF timeline due to COVID-19 pandemic,
 whether or not to wait for the creation of a broadband map with more accurate data before moving forward
with Phase I of RDOF,
 exclusion of areas from RDOF eligibility if a service provider is committed to building out 25/3 Mbps in a
census block using subsidies from similar state or federal broadband programs, and
 removal of Eligible Telecommunications Carrier status as a requirement to receive RDOF subsidies.

Congress may hold oversight hearings or enact additional legislation to help ensure the RDOF successfully targets and
deploys broadband to areas that would otherwise remain unserved. Bills addressing the Rural Digital Opportunity Fund have
been introduced in the 116th Congress, including the Health and Economic Recovery Omnibus Emergency Solutions Act
(H.R. 6800); Rural Broadband Acceleration Act (H.R. 7022); the Expanding Opportunities for Broadband Deployment Act
(H.R. 7160); and S. 4201, “a bill to direct the Federal Communications Commission to take certain actions to accelerate the
Rural Digital Opportunity Fund Phase I auction, and for other purposes.”

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Contents
Introduction ..................................................................................................................................... 1
Rural Digital Opportunity Fund ...................................................................................................... 1
Phase I: Timeline ....................................................................................................................... 2
Phase I: Eligible Areas and Providers ....................................................................................... 2
Phase I: Auction 904 Filing Requirements and Other Procedures ............................................ 3
Phase I: Deployment Milestones ............................................................................................... 4
Selected Policy Issues ..................................................................................................................... 4
Granularity of Broadband Mapping Data for Phase I ............................................................... 5
Acceleration of Auction Timeline ............................................................................................. 6
Deceleration of Auction Timeline ............................................................................................. 6
Nexus to State and Federal Broadband Subsidy Programs ....................................................... 7
Eligible Telecommunications Carrier (ETC) Status .................................................................. 8
Options for Congress ....................................................................................................................... 9
Conduct Oversight .................................................................................................................... 9
Enact Legislation ..................................................................................................................... 10
Concluding Observations .............................................................................................................. 10

Tables
Table 1. Rural Digital Opportunity Fund (RDOF) Phase I Timeline .............................................. 2

Contacts
Author Information ........................................................................................................................ 10

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Rural Digital Opportunity Fund: Requirements and Selected Policy Issues

Introduction
Broadband access is an issue of sustained congressional interest. The importance of broadband
availability and affordability for telework, telehealth, and remote learning has received increased
attention due to effects of the Coronavirus Disease 2019 (COVID-19) pandemic. Many
policymakers are concerned about the gap between those with and those without access to
information and telecommunication technologies—referred to by some as the digital divide.
Several factors contribute to the lack of broadband access, including difficult terrain, lack of
population density, socioeconomics, and market factors.1 Congress continues to make addressing
the digital divide a legislative priority, through avenues such as subsidies for federal broadband
programs and oversight of federal agencies to monitor progress of the programs.
Congress regularly conducts oversight of, and directs through legislation, the Federal
Communications Commission (FCC), seen by many as the key federal agency for addressing the
digital divide. The FCC gains its authority to address the digital divide through provisions
contained in the 1934 Telecommunications Act, as amended (P.L. 73-416). The FCC regulates
interstate and international communications by radio, television, wire, satellite, and cable.2 Many
federal broadband programs are housed within the FCC, including the Universal Service
Programs, which focus on increased access to high-speed internet for low-income consumers and
those in underserved areas, as well as underserved schools, libraries, and health care facilities.3 A
new FCC broadband program aimed at bridging the digital divide is the Rural Digital Opportunity
Fund (RDOF). This report discusses program requirements under the RDOF, as well as policy
considerations and options for the two phases of the program. The FCC’s current focus is on the
Phase I of RDOF; there is limited information on how the FCC plans to conduct Phase II.
Therefore, the focus of this report is on the first phase.
Rural Digital Opportunity Fund
On January 30, 2020, the FCC announced the launch of the RDOF. Through it, the FCC plans to
commit $20.4 billion to bring high-speed fixed broadband (i.e., non-mobile and delivered through
a stationary connection) service to rural homes and small businesses in two phases.4 During Phase
I, the FCC plans to allocate an estimated $16 billion through an auction (referred to as Auction
904) to internet service providers to deploy broadband in areas that are completely unserved by
broadband with a minimum download rate of at least 25 megabits per second (Mbps) and an
upload rate of 3 Mbps according to currently available data on service quality. Auction 904 is to
include competitive bidding in a multiple-round, reverse auction, in which the FCC plans to
weigh performance tiers and latency,5 and assign funding support in each round to the bidder with
the lowest weight. During Phase II, the FCC plans to allocate an estimated $4.4 billion to areas
partially served with 25/3 Mbps, as well as areas from Phase I that did not receive bids. The FCC

1 Monica Anderson, “About a Quarter of Rural Americans Say Access to High-Speed Internet Is a Major Problem,”
Pew Research Center, September 10, 2018, https://www.pewresearch.org/fact-tank/2018/09/10/about-a-quarter-of-
rural-americans-say-access-to-high-speed-internet-is-a-major-problem/.
2 Federal Communications Commission, “What We Do,” https://www.fcc.gov/about-fcc/what-we-do.
3 Federal Communications Commission, “Universal Service,” https://www.fcc.gov/general/universal-service.
4 Federal Communications Commission, Auction 904: Rural Digital Opportunity Fund, Summary,
https://www.fcc.gov/auction/904.
5 Latency refers to a delay between when an action is taken (e.g., a Google search) and when the result is shown—high
latency is when it takes longer to see the results.
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plans to use data from the FCC’s forthcoming Digital Opportunity Data Collection, which is to
collect more granular data to improve the FCC’s current broadband map, as required under the
Broadband Deployment Accuracy and Technological Availability Act (P.L. 116-130).6
Phase I: Timeline
The FCC has proposed the timeline shown in Table 1 for Phase I of the RDOF. As noted, some
dates for Phase I have yet to be announced by the FCC.
Table 1. Rural Digital Opportunity Fund (RDOF) Phase I Timeline
RDOF Action
Deadline
Adopt auction procedures
June 9, 2020 (completed)
Announce final eligible areas
No later than 3 weeks prior to October 29, 2020
Short-form applications due
July 15, 2020 (completed)
Auction bidding
October 29, 2020
Announce winning bidders
To be determined
Long-form applications due
To be determined
Authorize funding
To be determined
Source: CRS using Federal Communications Commission, Notice and Filing Requirements and Other Procedures for
Auction 904, June 11, 2020, pp. 5-6, https://docs.fcc.gov/public/attachments/FCC-20-77A1.pdf.
Phase I: Eligible Areas and Providers
Funding support will be provided in census blocks.7 Census blocks excluded from RDOF
eligibility include those with terrestrial providers that offer broadband service of at least 25/3
Mbps, and those that have received funding from the U.S. Department of Agriculture ReConnect
program8 or similar federal or state broadband subsidy programs to provide 25/3 Mbps or better
service.9 On March 17, 2020, the FCC released a summary of initial eligible areas by state.10 The
FCC established a challenge process whereby parties could identify areas that have received
service since submitting data through the most recent FCC Form 477, which collects information
about broadband connections to end-user locations; or identify areas that have been awarded
funding through federal or state broadband subsidy programs to provide 25/3 Mbps or better

6 The Broadband Data Act did not specify a certain date for when the new maps would be required to go into effect;
Section 802 of the law did require the FCC to issue a final rule, as well as reform the current Form 477 broadband
deployment service availability collection process by September 21, 2020.
7 Census blocks are “statistical areas bounded by visible features, such as streets, roads, streams, and
railroad tracks, and by nonvisible boundaries, such as selected property lines and city, township, school
district, and county limits and short line-of-sight extensions of streets and roads.” For more information, see United
States Census Bureau, 2010 Census Summary File 1 2010 Census of Population and Housing, Technical
Documentation, September 2012, p. 614, https://www.census.gov/prod/cen2010/doc/sf1.pdf.
8 For more on the ReConnect program, please see CRS In Focus IF11262, USDA’s ReConnect Broadband Pilot
Program, by Alyssa R. Casey.
9 Federal Communications Commission, In the Matter of Rural Digital Opportunity Fund, Report and Order, January
30, 2020, p. 7, https://docs.fcc.gov/public/attachments/FCC-20-5A1.pdf.
10 Federal Communications Commission, Auction 904: Rural Digital Opportunity Fund, Summary,
https://www.fcc.gov/auction/904.
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service.11 A limited challenge process was conducted by the FCC in April 2020 and on June 25,
2020, an updated list of census blocks and a map of areas12 deemed initially eligible for the
RDOF Phase I auction was released.13
Additionally, a provider must be deemed an eligible telecommunications carrier (ETC) in order to
receive funding support for RDOF. Section 214(e) of the Communications Act of 1934, as
amended, stipulates that ETCs shall be eligible to receive specific federal universal service
support. Section 214(e)(2) gives states the primary responsibility for ETC designation.14 Entities
can wait until after they are announced as winning bidders to obtain eligible telecommunication
carrier designations.15
Phase I: Auction 904 Filing Requirements and Other Procedures
The Phase I auction (referred to as Auction 904), is scheduled to begin on October 29, 2020. The
FCC plans to model Auction 904 after the Connect America Phase II auction (referred to as
Auction 903), which ran from July 24, 2018, to August 21, 2018. In Auction 903, 103 bidders
won $1.49 billion over 10 years to provide fixed broadband and voice services to over 700,000
locations (e.g., housing units and small businesses) in 45 states.16
Bids for Auction 904 are to be accepted for four performance tiers, each with varying speed and
usage allowances, and either high or low latency. The support amount that a winning bidder
receives is based on proposed performance tier and latency, which the FCC scores with multiple
weighted factors. For example, the FCC designated a “minimum” speed as 25/3 Mbps with a
weight of 50 and an “above baseline” speed as 100/20 Mbps with a weight of 20.17 The FCC
plans to prioritize bids with lower tier and latency weights.
Short-form applications are required by the FCC to ensure that potential bidders have the business
experience and financial means to participate, and intend to use a network technology that will
allow them to meet performance requirements. Post-auction, the FCC plans to require long-form
applications from winning bidders to demonstrate that they have the technical and financial
ability to deploy their planned broadband networks in areas where they win support. Once a long
form application is approved, and ETC designation is established, the applicant is to be
authorized to begin receiving support.

11 Federal Communications Commission, In the Matter of Rural Digital Opportunity Fund, Report and Order, January
30, 2020, p. 85, https://docs.fcc.gov/public/attachments/FCC-20-5A1.pdf.
12 Federal Communications Commission, Auction 904 Updated Eligible Areas, June 25, 2020, https://www.fcc.gov/
reports-research/maps/auction-904-updated-jun20-eligible-areas/.
13 Federal Communications Commission, Wireline Competition Bureau and Office of Economics and Analytics
Release Updated List and Map of Eligible Areas for the Rural Digital Opportunity Fund Phase I Auction, Public
Notice, June 25, 2020, https://docs.fcc.gov/public/attachments/DA-20-665A1.pdf.
14 47 U.S.C. §214.
15 Federal Communications Commission, Auction 904: Rural Digital Opportunity Fund, fact sheet,
https://www.fcc.gov/auction/904/factsheet.
16 Federal Communications Commission, Connect America Fund Phase II Auction (Auction 903), https://www.fcc.gov/
auction/903.
17 Federal Communications Commission, Auction 904: Rural Digital Opportunity Fund, fact sheet,
https://www.fcc.gov/auction/904/factsheet.
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Phase I: Deployment Milestones
After receiving support from the FCC, recipients must meet a number of deployment milestones
during the 10-year support term. Each support recipient must offer at least one voice and one
broadband service commercially18 that meets the relevant service requirements to the required
number of locations as determined by the FCC. Additionally, the FCC plans to require
compliance with the following timeframe for each recipient that is awarded support in a state:
 40% of the required number of locations in a state19 by the end of the third year
of support,
 60% of the required number of locations in a state the end of the fourth year of
support,
 80% of the required number of locations in a state by the end of the fifth year of
support, and
 by the end of the sixth year, revised location totals will be announced.
If there are fewer locations than originally estimated, support recipients must serve the revised
number of locations by end of year six. If there are more locations than originally estimated,
support recipients must serve the original number of locations by the end of year six and must
serve the remainder of locations by the end of year eight.20
Selected Policy Issues
As the FCC proceeds with implementation of RDOF, there are several unresolved policy issues.
One of these issues includes allocating $16 billion in Phase I before more granular broadband
mapping data becomes available. During the COVID-19 pandemic, there has also been discussion
in Congress around accelerating the auction date to help fast-track the build out of broadband
infrastructure,21 as well advocacy from stakeholders to decelerate the timeline to accommodate
COVID-19 disruptions.22
Additionally, there are eligibility requirements that exclude providers that have received other
support—such as through similar state or federal broadband subsidy programs—even though they
may be best positioned to successfully serve an area.23 There is also a debate among not-for-profit
and advocacy groups, federal agency officials, and Congress about requiring providers have an
ETC designation prior to being awarded RDOF funding.

18 All RDOF support recipients will be required to offer standalone voice service and offer voice and broadband
services at rates that are reasonably comparable to rates offered in urban areas.
19 Number of locations will vary per state.
20 Federal Communications Commission, Auction 904: Rural Digital Opportunity Fund, fact sheet,
https://www.fcc.gov/auction/904/factsheet.
21 See H.R. 6800, H.R. 7022, and S. 4201.
22 Letter from Colorado Broadband Office to The Honorable Ajit Pai, April 24, 2020, https://ecfsapi.fcc.gov/file/
10424151299086/Ex%20Parte%20Tribal%20Window%20%26%20904%20Auction%20Extension%20Request%20
(1).pdf.
23 If a service provider has state-based or federal funding and a commitment to deploy 25/3 Mbps or better service in
one area, it cannot receive FCC funding through RDOF to deliver similar service to that same area.
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Granularity of Broadband Mapping Data for Phase I
The Broadband Data Improvement Act (P.L. 110-385), enacted on October 10, 2008, directed the
Department of Commerce to establish a state broadband data and development grant
program.24 This data was used to establish the National Broadband Map, the first public,
searchable, nationwide map of broadband availability, which was launched in 2011. The National
Broadband Map was decommissioned on December 21, 2018, due to the age of the data.
Broadband mapping then shifted to the FCC.25 Some Members of the 116th Congress have
questioned the accuracy and completeness of the data which are the basis of the FCC’s map and
called for the FCC to improve its broadband data collection and reporting initiative.26 On August
1, 2019, the FCC adopted a Report and Order introducing a new process, called the Digital
Opportunity Data Collection (DODC), for collecting fixed broadband data.27
Multiple pieces of legislation related to broadband mapping legislation have been introduced in
the 116th Congress28 and on March 23, 2020, the Broadband Deployment Accuracy and
Technological Availability Act (Broadband DATA Act, P.L. 116-130) became law. The Broadband
DATA Act requires the FCC to create a common dataset of all locations in the United States
where fixed broadband internet access service can be installed, establishes a challenge process to
enable the submission of independent data challenging the accuracy of FCC broadband maps, and
requires the use of these new maps by the FCC, the Rural Utilities Service within the United
States Department of Agriculture, and the National Telecommunications and Information
Administration under the Department of Commerce, when making federal funding awards for
broadband.
For Phase II of RDOF, the FCC plans to use the new DODC when determining eligible census
blocks for partially served areas; for Phase I, the FCC plans to use its current, less granular
broadband map data to determine the wholly unserved areas eligible for auction. The FCC’s
January 30, 2020, Report and Order notes that the current tools and data are adequate to identify
census blocks that are wholly unserved and that delaying the Phase I auction until more granular
data is obtained would further disadvantage unserved citizens.29 Upon adoption of new rules for
the DODC on July 16, 2020, FCC Commissioner Brendan Carr stated:
On the bright side, our Form 477 data are good at identifying areas that are completely
unserved. And that’s why I am glad the FCC is moving ahead with Phase I of the Rural
Digital Opportunity Fund, which can ensure that Americans living in those unserved areas
need not wait any longer than necessary to receive high-speed service.30

24 Federal Communications Commission, In the Matter of Rural Digital Opportunity Fund, Report and Order, January
30, 2020, p. 7, https://docs.fcc.gov/public/attachments/FCC-20-5A1.pdf.
25 Rich Mansfield, “Decommissioning of the National Broadband Map and Its APIs,” FCC, December 7, 2018,
https://www.fcc.gov/news-events/blog/2018/12/07/decommissioning-national-broadband-map-and-its-apis.
26 Letter from Senators Shelley Moore Capito, Jerry Moran, Brian Schatz, and Jon Tester, to The Honorable Ajit Pai,
Federal Communications Commission Chairman, July 11, 2019, https://www.tester.senate.gov/files/Letters/
071019_Letter%20to%20FCC%20on%20Broadband%20Mapping%20and%20Shapefiles.pdf.
27 Federal Communications Commission, In the Matter of Establishing the Digital Opportunity Data Collection, Report
and Order and Second Further Notice of Proposed Rulemaking, August 1, 2019, https://docs.fcc.gov/public/
attachments/FCC-19-79A1.pdf.
28 For more on broadband data and mapping, please see CRS Report R45962, Broadband Data and Mapping:
Background and Issues for the 116th Congress, by Colby Leigh Rachfal.
29 Federal Communications Commission, In the Matter of Rural Digital Opportunity Fund, Report and Order, January
30, 2020, pp. 5-6, https://docs.fcc.gov/public/attachments/FCC-20-5A1.pdf.
30 Federal Communications Commission, Statement of Commissioner Brendan Carr, Re: Establishing the Digital
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Nevertheless, some policymakers assert that moving forward with RDOF without waiting for the
granular data to be gathered by the DODC is not the right approach. FCC Commissioner Jessica
Rosenworcel claimed upon adoption of new DODC rules:
But there is one thing we surely get wrong. We are going to gather all of this precise data
about where broadband is and is not, but we are not going to use any of it this fall when we
distribute $16 billion in funding for improved broadband service across the country.31
Although the Broadband DATA Act does not specify a certain date for when the new maps would
be required to go into effect, Section 802 of the law requires the FCC to issue a final rule,32 as
well as reform the current Form 477 broadband deployment service availability collection process
by September 21, 2020.33 In a July 16, 2020, statement, FCC Chairman Ajit Pai stated that
funding from Congress is needed to implement requirements in the Broadband DATA Act.34
Acceleration of Auction Timeline
The COVID-19 pandemic further reinforced the importance of broadband availability to all
communities, including rural communities. The Rural Broadband Acceleration Act (H.R. 7022),
introduced on May 27, 2020, contains provisions to partially speed up the deployment process for
RDOF for providers that are willing to deploy symmetrical gigabit fiber networks (i.e., 1,000
Mbps download/1,000 Mbps upload).
Section 2 of the H.R. 7022 describes how the FCC would separately evaluate these applicants,
and successful applicants would be awarded geographic areas by September 30, 2020, at 100% of
the reserve price.35 Those areas would then be removed from the October 2020 auction. In
addition to deploying high speed networks, these successful applicants would be required to begin
construction no later than six months following the award and make service available no later
than one year following the award.36
Deceleration of Auction Timeline
Some stakeholders have called for the RDOF auction timeline to be extended to accommodate the
disruption of the COVID-19 pandemic. For example, the Colorado Broadband Office, within the

Opportunity Data Collection, https://docs.fcc.gov/public/attachments/FCC-20-94A4.pdf.
31 Federal Communications Commission, Statement of Commissioner Jessica Rosenworcel, Re: Establishing the Digital
Opportunity Data Collection, https://docs.fcc.gov/public/attachments/FCC-20-94A5.pdf.
32 Federal Communications Commission, “Establishing the Digital Opportunity Data Collection; Modernizing the FCC
Form 477 Data Program Final Rule,” 85 Federal Register, August 18, 2020, https://www.govinfo.gov/content/pkg/FR-
2020-08-18/pdf/2020-17633.pdf.
33 Federal Communications Commission, “Establishing the Digital Opportunity Data Collection; Modernizing the FCC
Form 477 Data Program Proposed Rules,” 85 Federal Register, August 18, 2020, https://www.govinfo.gov/content/
pkg/FR-2020-08-18/pdf/2020-16356.pdf.
34 Federal Communications Commission, “Pai Statement: FCC Improves Broadband Data and Maps to Bridge the
Digital Divide,” press release, July 16, 2020, https://www.fcc.gov/document/fcc-improves-broadband-data-and-maps-
bridge-digital-divide/pai-statement.
35 The FCC’s Connect America Cost Model (CAM), which is being utilized for RDOF, contains two modules. The first
is a cost module that calculates costs for all areas of the country. The second is the support module, which calculates
the RDOF financial support for each area based on those costs, or, in this case, the reserve price allocation. See
footnote 66 in Federal Communications Commission, In the Matter of Rural Digital Opportunity Fund, Report and
Order, January 30, 2020, p. 12, https://docs.fcc.gov/public/attachments/FCC-20-5A1.pdf.
36 Congressman Fred Upton, Rural Broadband Acceleration Act—H.R. 7022, One Pager, p. 2, https://upton.house.gov/
uploadedfiles/h.r._7022_rural_broadband_acceleration_act_one-pager.pdf.
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governor’s Office of Information Technology, filed a letter with the FCC asking to extend the
then-established October 22, 2020, opening of the FCC’s RDOF Auction 904 by 180 days. As
stated in the letter:
The COVID-19 pandemic has demonstrated that the internet is critical infrastructure and
having the ability to virtually conduct business, video conferences with medical
professionals, and access online education has become essential for everyone, everywhere.
Understanding that the COVID-19 pandemic has affected all aspects of our lives, our rural
broadband providers and our tribal communities are exponentially impacted. Timelines
considered reasonable pre-COVID-19 are simply unworkable as our rural communities
attempt to respond to the pandemic.37
The FCC extended the Auction 904 date by one week, from October 22, 2020, to October 29,
2020, stating that the pandemic demonstrates how essential it is that all Americans have access as
soon as possible to high speed broadband to telework, attend online classes, communicate with
family and friends, and obtain healthcare remotely.38
Nexus to State and Federal Broadband Subsidy Programs
The FCC has adopted a policy that would identify and exclude from RDOF eligibility census
blocks that have been awarded funding through other similar federal and state broadband subsidy
programs. The FCC states the intent behind this policy is to ensure the auction does not award
duplicative or unnecessary support, and instead targets RDOF funding in areas that would
otherwise not be served by broadband.39
In recent years, many states have developed and implemented their own broadband programs to
help close the digital divide. According to the National Telecommunications and Information
Administration’s (NTIA) BroadbandUSA,40 more than half the states have their own broadband
subsidy program, which may lead many broadband service providers in those states to be
ineligible for RDOF. On March 9, 2020, a letter citing concerns and follow-up questions was sent
to FCC Chairman Pai from several Senators. Among the concerns raised was a belief that the
FCC should incentivize states to take action and create their own broadband programs, not deter
them by restricting eligibility for federal programs, such as RDOF.41 Chairman Pai responded
with a letter on March 27, 2020, stating:
With regard to state programs, the Commission continues to support state efforts to connect
more Americans to broadband and welcomes the opportunity to partner with states (as it
has with states like New York) to align their funding streams with ours so as to stretch our

37 Letter from Colorado Broadband Office to The Honorable Ajit Pai, April 24, 2020, https://ecfsapi.fcc.gov/file/
10424151299086/Ex%20Parte%20Tribal%20Window%20%26%20904%20Auction%20Extension%20Request%20
(1).pdf.
38 Federal Communications Commission, Notice and Filing Requirements and Other Procedures for Auction 904,
Public Notice, June 11, 2020, p. 6, https://docs.fcc.gov/public/attachments/FCC-20-77A1.pdf.
39 Federal Communications Commission, In the Matter of Rural Digital Opportunity Fund, Report and Order, January
30, 2020, p. 8, https://docs.fcc.gov/public/attachments/FCC-20-5A1.pdf.
40 National Telecommunications and Information Administration, BroadbandUSA, https://broadbandusa.ntia.doc.gov/.
41 Letter from Senators Charles E. Schumer, Tammy Duckworth, Tom Udall, Richard J. Durbin, Angus S. King, Jr.,
Mazie K. Hirono, Kirsten Gillibrand, Cory Gardner, Ron Wyden, Edward J. Markey, Amy Klobuchar, Chris Van
Hollen, Michael Bennet, Bernard Sanders, Brian Schatz, Robert P. Casey, Jr., Patrick Leahy, Cory A. Booker, Jeffrey
A. Merkley, Tammy Baldwin, Patty Murray, Mark R. Warner, Benjamin L. Cardin, and Elizabeth Warren to The
Honorable Ajit V. Pai, Federal Communications Commission Chairman, March 9, 2020,
https://www.gillibrand.senate.gov/imo/media/doc/3.9.2020_Gillibrand_Schumer_Letter_FCC_final.pdf.
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funding as far as possible. In response to your questions, if a state hasn’t already issued a
formal funding commitment, that area will not be excluded from the Rural Digital
Opportunities Fund Phase I Auction. In a similar vein, a “broadband subsidy program from
12 years ago” would have no bearing on our inquiry, nor would a future program that “ha[s]
not yet awarded funding.” I should also note that our goal is to not duplicate funding
targeted to a particular area. This means—consistent with the principle I outlined above—
if a service provider has state-based funding and a commitment to deploy 25/3 Mbps or
better service in one area, it cannot receive FCC funding to deliver similar service to that
same area. But it would still be eligible to participate in the Rural Digital Opportunity Fund
in other areas in the state that are unserved and not covered by a funding commitment.42
Additionally, the FCC plans to consult with the United States Department of Agriculture (USDA)
Rural Utilities Service to exclude any census blocks that substantially overlap with a ReConnect43
awardee from eligibility. As stated in FCC Chairman Pai’s March 27, 2020, letter, the intent
behind this provision is to limit the potential for overbuild of existing broadband infrastructure,
thereby allocating funding to areas wholly lacking broadband infrastructure.
Eligible Telecommunications Carrier (ETC) Status
Telecommunications companies that provide service in high-cost,44 typically rural, areas of the
country are often eligible for financial support through the FCC’s Universal Service Fund
(USF).45 One requirement for provider participation in the USF is designation as an eligible
telecommunications carrier, or ETC.
The ETC designation was created in Section 102 of the 1996 Telecommunications Act (P.L. 104-
104) when voice service was the dominant telecommunications technology in America. ETC
designation is typically conferred at the state level, unless the state declines or the provider
operates in tribal lands. In these cases this authority is delegated to the FCC.
RDOF is a program within the Universal Service Fund High Cost program and as such,
participants must be designated as ETCs to be eligible for RDOF support. Some believe that
requiring a provider to be an ETC is a barrier to participation in such programs, while others
believe that maintaining the ETC requirement and preserving the state’s role in the designation is
beneficial. For example, a National Association of Regulatory Utility Commissioners (NARUC)
letter to the FCC, stated:
Congress has always recognized that universal service is a shared obligation between states
and the federal government. That federal-state partnership is vital to assure efficient
expenditures of state and federal tax payer dollars to subsidize both carriers and consumers.
For many states, the state role in ETC designation process is the linchpin of that
partnership.46

42 Chairman Ajit Pai, Federal Communications Commission, March 27, 2020, p. 2, https://docs.fcc.gov/public/
attachments/DOC-363496A2.pdf.
43 The USDA’s ReConnect Loan and Grant Program furnishes loans and grants to provide funds for the costs of
construction, improvement, or acquisition of facilities and equipment needed to provide broadband service in eligible
rural areas. For more information, see CRS In Focus IF11262, USDA’s ReConnect Broadband Pilot Program, by
Alyssa R. Casey.
44 High-cost areas refer to locations that, due to various factors, require above-average costs to deploy broadband.
45 Washington Utilities and Transportation Commission, Eligible Telecommunications Carriers,
https://www.utc.wa.gov/regulatedIndustries/utilities/telcom/Pages/EligibleTelecommunicationsCarriers.aspx.
46 Letter from National Association of Regulatory Utility Commissioners to Honorable Roger Wicker, Honorable
Maria Cantwell, June 30, 2020, https://pubs.naruc.org/pub/3C6A4241-155D-0A36-3135-BE1D0CA0BED1.
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Legislation introduced on June 11, 2020, the Expanding Opportunities for Broadband
Deployment Act (H.R. 7160), would eliminate the requirement of an ETC designation for
broadband providers seeking Universal Service Fund money. In support of the bill, FCC
Commissioner Michael O’Rielly stated:
The new bill’s plan to eliminate the outdated and burdensome ETC requirement to
participate in USF auctions makes total sense. As I have already explained, funding for
the deployment of broadband—an interstate information service—should not function as a
backdoor way to expose providers to burdensome and unpredictable intrastate
regulations. In addition, I cannot think of any ongoing policy reason to maintain the
requirement: the Commission already imposes its own legal, technical, and financial
requirements on auction winners, not to mention extensive rules for interconnected VoIP
providers outside of the auction context on everything from rural call completion to 9-1-1
obligations, and ETC status doesn’t seem to confer any additional necessary
protections. Moreover, as we know from [the Connect America Fund Phase II], ETC status
certainly isn’t a guarantee of providers’ ability to meet service milestones. Finally, most
ironically, many states have run their own efficient and effective broadband funding
programs without requiring recipients to become ETCs, increasing participation without
any problematic consequences.47
Congress could consider whether ETC designation is beneficial and leads to necessary oversight
and consumer protection or is a burdensome requirement that is unnecessary and decreases
competitive entry into the marketplace for the provision of broadband.
Options for Congress
Some options Congress could take regarding RDOF Phase I and Phase II include conducting
oversight hearings and enacting legislation.
Conduct Oversight
Congress could allow the RDOF Phase I to proceed as the FCC has currently planned, while
providing oversight through public hearings. For example, the Senate Committee on Commerce,
Science, and Transportation held a hearing, “Oversight of the Federal Communications
Commission,” on June 24, 2020, which provided committee members an opportunity to examine
policy issues before the FCC and to review the agency’s ongoing activities and proceedings.48
During the oversight hearing, FCC Commissioner Jessica Rosenworcel and Chairman Ajit Pai
discussed, with differing viewpoints, whether to use the more accurate data the FCC plans to
collect and utilize for Phase II before dispersing $16 billion as part of the Phase I RDOF.49

47 Commissioner Michael O'Rielly, Removing Unnecessary Barriers and Maximizing Competition in USF Auctions,
Federal Communications Commission, June 18, 2020, https://www.fcc.gov/news-events/blog/2020/06/18/removing-
unnecessary-barriers-and-maximizing-competition-usf-auctions.
48 U.S. Congress, Senate Committee on Commerce, Science, and Transportation, Oversight of the Federal
Communications Commission, 116th Cong., June 24, 2020, https://www.commerce.senate.gov/2020/6/oversight-of-the-
federal-communications-commission.
49 U.S. Congress, Senate Committee on Commerce, Science, and Transportation, Oversight of the Federal
Communications Commission, Full Committee Hearing, 116th Cong., June 24, 2020,
https://www.commerce.senate.gov/2020/6/oversight-of-the-federal-communications-commission.
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Enact Legislation
Congress may enact legislation to amend and/or clarify the RDOF requirements and procedures.
At the date of this report, four bills have been introduced in the 116th Congress that would make
changes to RDOF:
 Title XIV of Division S (§191401) in the Heroes Act (H.R. 6800), introduced on
July 23, 2020, would direct the FCC to take certain actions to accelerate the
RDOF Phase I auction.
 The Rural Broadband Acceleration Act (H.R. 7022), introduced on May 27,
2020, would direct the FCC to take certain actions to accelerate the RDOF Phase
I auction.
 The Expanding Opportunities for Broadband Deployment Act (H.R. 7160),
introduced on June 11, 2020, would repeal ETC requirements.
 S. 4201, introduced on July 2, 2020, would direct the FCC to take certain actions
to accelerate the RDOF Phase I auction.50
Concluding Observations
Many of the RDOF requirements and procedures for Auction 904 were modeled51 after what the
FCC considered to be a successful but smaller Connect America Fund II reverse auction (Auction
903).52 However, as the RDOF Phase I progresses, there may be unforeseen challenges or lessons
that emerge. Congress may seek to monitor and assess how Phase I proceeds by conducting
hearings involving the FCC commissioners, service providers receiving subsidies to construct
broadband networks, and/or consumer groups. Congress may also choose to enact legislation to
mandate changes to Phase I or new requirements for Phase II.

Author Information

Colby Leigh Rachfal

Analyst in Telecommunications Policy

50Additionally, H.R. 6800, H.R. 7022, and S. 4201 would ensure the FCC creates accurate service maps, would
authorize appropriations to the FCC to carry out this title, and would implement a deadline for creation of maps.
51 See “Phase I: Auction 904 Filing Requirements and Other Procedures” section, above.
52 Federal Communications Commission, Notice and Filing Requirements and Other Procedures for Auction 904,
Public Notice, June 11, 2020, p. 3, https://docs.fcc.gov/public/attachments/FCC-20-77A1.pdf.
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Disclaimer
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under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
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