Rural Digital Opportunity Fund Results Raise Concerns About Execution, Financial Risk

The first phase of the Rural Digital Opportunity Fund (RDOF) was for unserved markets, so given their high-cost nature it makes sense that affordable fixed wireless played such a large role. In the subsequent round, we expect fixed wireless to play a reduced role in underserved areas, which tend to be more densely populated. Technically speaking, with enough government support, unserved markets can be connected with gigabit speeds via fixed wireless, but execution risks and the ability to secure letters of credit (LOCs) could impede an operator’s ability to deliver on its bid. On the satellite front, awarding such a large amount of money to an unproven business model, and to SpaceX — a company that has plenty of access to capital — is a questionable decision. At the end of the day, it’s important to recognize that success is defined by the Federal Communications Commission effectively distributing Universal Service Funds that maximize the impact on bridging the digital divide. Time will tell if they pulled it off.