The Rural Digital Opportunity Fund (RDOF) is a program created by the Federal Communication Commission (FCC) under former Chairmen Ajit Pai during the first Trump administration. The program was designed with two goals: 1) to extend broadband networks into unserved rural areas while 2) expending the fewest number of federal dollars possible. To accomplish this, RDOF used a “reverse auction” to select winning applicants (ISPs) that requested the least amount of federal funding to deploy broadband in eligible rural areas. This approach encouraged applicants to competitively lower their grant requests and, in theory, would close the digital divide at the lowest cost to taxpayers. However, recent data show that this theory may not have translated well into reality.

In late 2020, after the first (and only, to date) RDOF reverse auction, the FCC tentatively awarded $9.2 billion to bring internet service to over 5.2 million locations. However, by 2025, $3.3 billion of those RDOF awards are in default, and 1.9 million locations are no longer scheduled to receive service. Thus, in four years, more than one out of every three RDOF investments had failed. (And this does not include any defaults that may yet occur as a result of RDOF's required buildout milestones.)

The Data

The FCC recently released data breaking down these defaults by state and by ISP. The data, summarized in the table below, reveal how many locations in each state will not be connected and how much federal investment each state will lose as a result of RDOF defaults. For context, we include the percentage of total RDOF awards in the state that are in default (e.g. in Missouri, 51% of all RDOF funding is in default). Note: Some states show little to no defaults. For Alaska, this is because the state received support through a specialized “Alaska Plan” rather than through the RDOF program. In other cases, states had few eligible locations or saw few bids.

The underlying data, which is available on the FCC’s Auction 904 webpage,¹ was only recently released to the public. Below, we describe our initial observations, and we hope others will share their findings, too. If you’d like to discuss, please reach out to Janie Dunning at Janiedunning@hotmail.com. You can also download a spreadsheet with our full analysis of the FCC data. In addition to totals per state (i.e. the table above), we also include totals per ISP, as well as a similar analysis of the Connect America Fund Phase Two (CAF II) auction.

Competing Priorities

Winning an RDOF award did not necessarily mean that the winner received RDOF funding. After being declared a winner in the reverse auction, the ISP underwent a “long form” review of its financial information, technological capabilities, network plans, and various other information and certifications. If the winner passed the long form review, only then was it authorized to receive funding. If it did not pass review, it was considered a “pre-authorization default” and did not receive funding. (Those that received authorization but, for whatever reason, later were unable to meet RDOF commitments were considered a “post-authorization default.”)

This two-stage process—the reverse auction followed by the long form review—compelled applicants to primarily focus on minimizing their subsidy request and, only after “winning” the award, to prove the true viability of their projects. This strategy clearly helped achieve Chairman Pai’s goal of minimizing federal expenditures, as evidenced by the fact that RDOF Phase I offered $16 billion but only awarded $9 billion.

However, it is less clear that RDOF achieved the goal of bringing broadband to rural areas. In fact, wherever there were defaults, RDOF may have done the opposite. When RDOF selected a winning applicant, all other applicants for that area were effectively denied. If the winner then defaulted, there were no “backup” applications to take its place. Thus, every RDOF default prevented a different and potentially more viable project from moving forward. And, since one out of every three locations defaulted, defaults effectively locked huge swathes of the country into the digital divide. Fortunately, the Broadband Equity Access and Deployment (BEAD) program will bring service to many of these locations. But not all of them. Some RDOF defaults occurred after BEAD had finalized its list of eligible locations (which, to avoid duplicative spending, excluded RDOF locations that were not in default). Some of these RDOF locations have since defaulted, and, since they are ineligible for BEAD, it is unclear how, or even if, these locations will receive broadband service.

Thus, the FCC’s pursuit of cost-saving ultimately came at the expense of connecting rural households. The reverse auction incentivized cheaper, less-viable projects and allowed them to prevent other, potentially more viable projects from moving forward. While defaulted projects did not always cost taxpayers money (over 95% of defaults occurred before any funding was authorized), they did generate substantial opportunity costs from all the networks that were not built. Calculating that opportunity cost would be difficult but surely should be deducted from any cost savings attributed to RDOF.²

Penny Wise, Pound Foolish

We applaud the FCC for releasing this data. The agency’s transparency will help policymakers and state broadband offices make better decisions about how to achieve internet for all. And, for our part, we urge policymakers to remember that broadband policy is not just about saving taxpayers money. Rather, it is about getting fast, reliable, affordable, and sustainable internet service to every person in America. If a program does not achieve that, then we still have work to do.

As federal and state policymakers discuss how best to evaluate and reform public investment in broadband networks, we hope they consider RDOF’s performance in their states.

• Did RDOF’s reverse auction fail to direct funding to the best possible projects?
• Did RDOF ultimately keep rural communities from being connected with high-speed, reliable, affordable broadband?
• Did RDOF exacerbate the digital divide in some areas?

In too many cases, the answer, sadly, is “Yes.”

Notes:

1. The raw data is available in two spreadsheets on the “results” tab of the FCC’s Auction 904 website. The Pre-Authorization Default Summary (12/20/23) contains defaults that occurred before the long form review; the Post-Authorization Default Summary (01/14/2025) contains defaults that occurred after the long form review. Initial winnings per state can be found at Auction 904 Winning Bidders (12/07/2020).
2. Additionally, policymakers should consider the perverse incentives RDOF created for ISPs to use applications as a way to block competition. While we do not have data to demonstrate this at scale, we do have anecdotal reports that it happened. 

Janie Dunning has dedicated her career to delivering programs and increasing the vitality and vibrancy of rural Missouri. She served at USDA Rural Development for 49 years, with the last eight years  State Director for Missouri.  Afterwards, she became the Broadband Consultant for Missouri Farm Bureau and led the effort to ensure communities have fast, reliable and affordable broadband. Now, she serves as the leader of the Show Me Broadband Coalition, where she works on state and national broadband policies in partnership with the Benton Institute for Broadband & Society.

Drew Garner is the Director of Policy Engagement at the Benton Institute for Broadband & Society.

Reid Sharkey, Community Broadband Specialist and Research Associate at the Benton Institute, contributed to this article.

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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