Chairwoman Rosenworcel's Response to Members of Congress Regarding the Rural Digital Opportunity Fund

On June 12, 2023, Sens Roger Wicker (R-MS), Cindy Hyde-Smith (R-MS), and JD Vance (R-OH) wrote the Federal Communications Commission Chairwoman Jessica Rosenworcel seeking additional funding for Rural Digital Opportunity Fund (RDOF) Phase I auction winners. In a reply dated June 26, Chairwoman Rosenworcel said that it is important to understand that when the FCC establishes spending requirements or sets a budget for a particular model-based high-cost program, the total amount in the budget is not collected from contributors and then stored in reserve waiting for the moment of distribution. Instead, the contributions required are calculated quarterly based on the ratio of program demand to projected interstate telecommunications revenues. Thus, the contribution factor changes based on both projected revenues and the needs of the various Universal Service programs established by Congress in the Telecommunications Act of 1996. Therefore, under the law and consistent with the design of the auction, the FCC collects only enough funding through the USF contribution process to match the approximately $6 billion committed. Thus, the FCC does not have support in reserve readily available for reallocation to the extent that the total amount authorized for RDOF fell below the projected budget. As to the proposition that RDOF auction winners be permitted to default on their obligations without exposure to forfeitures in order to allow these areas be eligible for other funding programs, when the FCC set up this program, it set rules of the road to ensure that winning bidders would fulfill their promise to use this funding to build new broadband infrastructure. The FCC’s default rules are designed to impress upon recipients the importance of being prepared to meet all Commission requirements and be prepared to fulfill deployment obligations.