Frontier Communications CEO: Rural Digital Opportunity Fund May Be “Less Favorable to Frontier” Than CAF Program Was

Frontier Communications CEO Dan McCarthy was not surprised by -- but is not enthusiastic --  about some aspects of the proposed Rural Digital Opportunity Fund (RDOF), which would essentially replace the Connect America broadband funding program for the nation’s larger price cap carriers. His concerns relate to the proposed reverse auction, which would be used to award program funding. In the Connect America Fund program, price cap carriers had a right of first refusal on Connect America Fund (CAF) support for their local service territories. The Federal Communications Commission proposed a specific level of support per state for every incumbent price cap carrier in that state based on a cost model and on an estimated number of locations lacking minimum-speed broadband. Price cap carriers, including Frontier, accepted most of the money they were offered. But funding that was rejected went into a reverse auction, known as the CAF II auction, with money going to the network operator that offered to deploy broadband for the lowest level of support. Importantly, no one was allowed to request a higher level of funding than what was offered to the incumbent.