Top executives from LTD Broadband zoomed to Washington last week with a simple message: We can do it.
"LTD looks forward to connecting rural Americans to its RDOF‐supported Gigabit fiber broadband network," the company wrote of its recent meeting with FCC officials. "LTD can meet the high standards expected of RDOF winners, to the benefit of those in rural America that desire Gigabit service."
The meeting, conducted virtually on Friday, was an important one. It featured LTD CEO Corey Hauer and Haley Tollefson, LTD's director of government relations, meeting with Ramesh Nagarajan, legal advisor to Acting FCC Chairwoman Jessica Rosenworcel. And it centered on the FCC's Rural Digital Opportunity Fund.
Crossing the digital divide
LTD was the top winner of the FCC's RDOF Phase 1 auction last year, walking away with $1.3 billion in promised federal payments. The FCC's RDOF program is a reverse auction where companies and entities that submit the lowest bid for covering a particular area win – however, then they're on the hook to cover that area with broadband services. Winning bidders will receive 10 years of subsidy payments from the FCC, disbursed in equal monthly installments, and have six years to deploy broadband to winning locations. The program is essentially a beefed-up version of the FCC's Connect America Fund Phase II (CAF II) auction held in 2018.
"Mr. Hauer explained that LTD currently has more than 150 employees and has built a reliable fixed broadband network using fixed wireless and fiber technologies," the company wrote of its FCC meeting. "He indicated that LTD has experienced 40% customer growth in each of the past seven years, with more than 500 towers activated since January 2020. Mr. Hauer also stated that LTD has deployed service to 70% of its Connect America Fund (CAF) locations and expects to complete its buildout well ahead of the required six‐year period."
LTD, for its part, has faced withering criticism that it will not be able to meet its RDOF obligations. Adversaries have suggested that small providers like LTD simply won't have the wherewithal to construct 1Gbit/s Internet connections to half a million rural locations.
"There is no indication that LTD [Broadband] has the technical, engineering, financial, operational, management, staff or other resources to meet RDOF build-out and service obligations," wrote the Minnesota Telecom Alliance and the Iowa Communications Alliance in a joint filing to the FCC.
But LTD's message is: Yes we can.
Indeed, LTD's Hauer told Light Reading earlier this year that the company plans to use fiber technology for the vast majority of its RDOF network buildout. That's noteworthy considering LTD operates a significant fixed wireless network that Hauer said now spans a total of 2,200 cell towers covering 50,000 square miles and 1.4 million customer locations.
"LTD has built one of the largest fixed-wireless coverage areas in rural areas in the US in a very short time. Our expertise is in creating teams to execute on repeatable construction processes. This will be key in executing rapid deployment of aerial and buried FTTH [fiber to the home]," the company told the FCC.
And how will LTD leverage its fiber and fixed wireless experiences to construct its RDOF network?
"LTD elected to bid in areas proximate to its existing CAF‐supported and non‐supported areas of its network, and other rural areas where it had local knowledge of terrain, demographic and other features," the company wrote of Hauer's meeting. "Rural areas do not present the same challenges of deploying fiber because of the lack of in‐ground infrastructure such as gas lines, electric lines and sewer lines that can complicate and add cost to fiber trenching. Mr. Hauer indicated that LTD would be hiring and training hundreds of construction workers to build a labor force capable of meeting LTD's RDOF buildout commitments, and would be supplementing RDOF support with significant capital investment."
LTD faces a significant challenge, based on figures from other analyst firms and companies in the market. For example, the Carmel Group recently estimated that it costs $4,500 to construct a fiber network to the average customer location – a figure that could rise significantly in sparsely populated rural areas. And Charter Communications – one of the other big RDOF winners – said it expects to spend a total of around $5 billion meeting its RDOF obligations. That's much more than the $1.2 billion the company actually won in the RDOF auction. Presumably, LTD will need to raise similar funding.
The FCC is currently reviewing RDOF winners' applications and may reject those it deems unable to meet its obligations.
— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano