The Challenge of Accepting Rural Digital Opportunity Funds

I’ve been wondering lately if some of the Rural Digital Opportunity Fund (RDOF) reverse auction winners are having second thoughts about accepting the RDOF awards. It’s amazing how much the broadband world has changed since the end of that auction in December 2020. It's gotten more expensive to build fiber projects over the last year. The cost of labor is an even bigger concern. New grants and new requirements, that did not exist at the time of the auction, also complicate the situation. Yet another issue to consider is that RDOF winners might have missed out on the opportunity for matching state grants. While some states might make matching grants to go along with RDOF awards, many will not. That means the RDOF funding is all such winners will see. Ultimately, these issues and many others mean it's not hard to imagine that some RDOF winners are having second thoughts. There are penalties for walking away from RDOF, but those penalties might be a lot smaller than the downside of being forced to build a rural network that will never generate enough revenue to cover the cost of construction. I was mystified by some of the winning RDOF bids in 2020 – and those bids make a lot less sense when viewed from 2022.

[Doug Dawson is President at CCG Consulting.]