Many people have criticized the Federal Communications Commission (FCC) for its execution of the Rural Digital Opportunity Fund (RDOF) program, which awarded $6 billion in funding to bring broadband to 3.5 million locations across the country. But many fail to appreciate that state public utility commissions (PUCs) share some responsibility with the FCC in ensuring that these RDOF-funded projects are proceeding as planned.

The State Role in Ensuring Universal Service

Under long standing federal law, states are the ones who designate “eligible telecommunications carriers” (ETCs), the entities that receive universal service fund (USF) support to provide voice and broadband service in specific geographic areas, except in situations where the state lacks jurisdiction over a carrier.

ETCs must file an annual report by July 1st that provides certain information and certifications regarding their compliance with FCC requirements. Among other things, RDOF recipients are required to identify the amount of capex expended in the prior calendar year. The relevant state public utility commission, in turn, must annually certify by October 1st that the ETCs it has designated have been and will be using USF support for its intended purpose. If a state fails to issue that certification with respect to a particular ETC, the FCC will cut off funding.

When the FCC adopted this certification rule in 2011, it said “the states should play an integral role in assisting the [FCC] in monitoring compliance, consistent with an overarching uniform national framework.” The FCC expressly recognized that USF support should be used for “the provision, maintenance, and upgrading of facilities capable of delivering voice and broadband services to homes, businesses, and community anchor institutions.” The FCC expected states to undertake “a rigorous examination of the factual information” provided in the annual reports filed by ETCs prior to issuance of the annual certifications.

State Oversight: A Missed Opportunity

In practice, states vary significantly in how thoroughly they investigate the bona fides of prospective ETCs before granting an ETC designation and in how they monitor the activities of ETCs once designated. Some states, like Mississippi, require ETCs to file supplemental information, including examples of marketing materials for the supported services and Lifeline. But many state PUCs seem to have a laissez-faire attitude towards their ETCs, in part because they feel they don’t have authority over internet service providers.

In May 2024, the state auditor in Louisiana criticized the Louisiana Public Service Commission for not doing more to ensure that RDOF recipients in the state were on track to meet their requirements. The report noted that as of December 2023, only 10% of the RDOF locations had been built, and three out of the 12 RDOF recipients were still in the planning phase of their projects. The auditor recommended that the PSC should undertake a rigorous examination of all project status information submitted by RDOF providers prior to annually certifying them.

In its response to the audit report, the PSC said its jurisdiction over broadband providers is narrow, and while the PSC is required to make the annual certification, the process does not require a “rigorous examination.” Rather, the Louisiana PSC believes its role is merely to confirm each service provider has checked the requisite self-certification box in its annual report.

The Louisiana PSC did not think its job was to independently assess whether ETCs in fact were undertaking the necessary activities to meet their RDOF deployment obligations. The PSC asserted, “the FCC is only seeking state Commission confirmation of the telecommunications/broadband provider’s annual certification affidavit, and not whether the state Commission’s rules are adhered to.”

This response misses the point. The FCC’s annual certification requirement is not focused on whether state PSC rules are being followed. Rather, as part of the cooperative federalism framework for universal service, the FCC made clear back in 2011 its expectation that state PUCs would play a significant role in ensuring that the federal requirements are being adhered to. The FCC has imposed a requirement that recipients use their support to build and maintain networks that provide broadband service. The Louisiana PSC apparently is unaware that the FCC expressly said that state commissions should undertake “a rigorous examination of the factual information” provided in each ETC’s annual report.

The auditor also found that the Louisiana PSC had certified certain RDOF recipients in prior years, even though those companies had failed to file with the PSC the quarterly status reports that were required as a condition of the grant of ETC designation. In response, the PSC explained that the staffers responsible for the ETC designations had left shortly after the order was adopted. Essentially, even though the PSC had adopted additional monitoring requirements, it failed to follow through due to personnel turnover. The PSC’s response was that it was reassigning responsibilities for ongoing oversight — essentially promising to do a better job in the future.

A Call to Action

State public utility commissions have three months to examine the information provided to the FCC in each ETC’s annual report before they provide the annual certification on October 1st. If a RDOF recipient reports no capex expenditures in its annual report and has not reported any deployed locations in a given state, that should be a warning flag for the relevant state PUC. Even though the first mandatory milestone for RDOF is not until December 2024 for some companies, and December 2025 for many others, RDOF recipients should be actively undertaking the necessary tasks that precede construction by now. Moreover, all ETCs are required to advertise the availability of Lifeline service in areas where they are authorized. Any state public utility commission that engages in a rubberstamp certification process for its ETCs is missing the opportunity to shed light on which ETCs are collecting a USF check month after month with nothing to show for it. If and when some of those ETCs subsequently default, we will be asking, “What warning signs did the state PUC ignore?”

Looking Ahead to BEAD

When Congress enacted the landmark legislation that established the $42.5 billion Broadband Equity Access and Deployment (BEAD) program to bring internet to all, it established a framework in which states would be responsible for awarding funding to sub-recipients and monitoring compliance, subject to an overarching national framework. After BEAD awards are announced, it’s inevitable that some key personnel at state broadband offices will move on to new professional opportunities. Let’s hope that states embrace their responsibilities for post-award oversight and maintain the resources necessary to perform that critical role in BEAD.

This article originally appeared on Medium; it is reprinted here with permission of the author.

Carol Mattey is a former senior official from the Federal Communications Commission, where she led teams working on initiatives to modernize the FCC’s $9 billion Universal Service Fund to support broadband. She currently is the principal of Mattey Consulting LLC, which provides strategic and public policy advisory services to broadband providers and other entities seeking funding for broadband. She is partnering with Irby Utilities to help achieve the vision of bringing sustainable, reliable internet to everyone in rural America. Irby Utilities offers a full suite of turnkey solutions to utilities, including feasibility studies, network engineering, construction management, materials and logistics support, subscriber management, and more.

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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