Rural Digital Opportunity Fund
The Rural Digital Opportunity Fund (RDOF) will disburse up to $20.4 billion over 10 years to bring fixed broadband and voice service to millions of unserved homes and small businesses in rural America. Building on the success of the Connect America Fund Phase II Auction (CAF II Auction), RDOF uses a two-phase, competitive reverse auction (Auction 904) that prioritizes higher network speeds and lower latency to ensure the deployment of robust, sustainable high speed networks that meet the needs of consumers now and in the future. Learn more.
The RDOF Phase I Auction ended on Nov. 25, 2020 and awarded $9.2 billion in support to 180 winning bidders, including incumbent telephone companies, cable operators, electric cooperatives, satellite operators and fixed wireless providers. Winning bidders have committed to deploy broadband to more than 5.2 million homes and small businesses in census blocks that previously lacked broadband service with minimum speeds of 25 megabits per second downstream and 3 megabits per second upstream (25/3 Mbps) as determined by FCC Form 477 data.
Nearly all of these locations are expected to receive access to broadband speeds of at least 100 megabits per second downstream and 20 megabits per second upstream (100/20 Mbps), and more than 85 percent are in areas where the winning bidder has committed to provide gigabit-speed service. The RDOF Phase II Auction will award up to another $11.2 billion in support to bring broadband and voice to census blocks determined as partially served by the FCC’s new granular broadband mapping approach, Digital Opportunity Data Collection (DODC), and the remaining unserved areas not reached through RDOF Phase I.
How the Program Works
Every RDOF winning bidder (or its assignee) must file a long-form application (FCC Form 683) with the FCC. As part of this process, the long-form applicant must obtain an eligible telecommunications carrier (ETC) designation from the relevant states or FCC, submit detailed technology and system design descriptions, including a network diagram certified by a professional engineer, and provide a Project Funding Description detailing how it plans to fund its proposed buildout.
If the long-form applicant satisfies the application requirements, the FCC issues a “Ready to Authorize” public notice and the long-form applicant will have 10 business days to submit an irrevocable, stand-by Letter of Credit (LOC) from a qualified bank covering at least the first year of support for each state where it will receive support, as well as a Bankruptcy Opinion of Counsel (OOC) letter from outside legal counsel. (Please see below for more information about how to draft acceptable LOC and OOC documents)
Once all required information has been submitted and the application is complete, the FCC will issue a public notice announcing authorization of support for the winning bid and directing USAC to begin disbursing payments. USAC will then assign a study area code to the applicant for each state where it is authorized to receive support and begin issuing monthly payments shortly after the public notice has been released.
While RDOF support will be disbursed over a period of 10 years, carriers must complete deployment by the end of the eighth year to all locations in areas eligible for support and must meet interim deployment milestones along the way. A reassessment in year six of the program will revise location counts and deployment obligations (and adjust support in certain circumstances).
RDOF participants must file and certify deployment data annually in the HUBB (High Cost Universal Broadband) portal reporting all locations built out in the prior year, and should be prepared to provide documentation to the High Cost compliance team to substantiate build-out. The compliance team will conduct verification reviews of both interim and final milestones to confirm deployment to a sample of locations reported to the HUBB.
Letter of Credit
Every winning RDOF bidder must provide an irrevocable, stand-by Letter of Credit (LOC) from a qualified bank covering at least the first year of support for all winning bids within a single state for each state where it will receive support. LOC requirements will increase over the first three years of the program – to 18 months of total support in year two, two years of total support in year three and three years of total support in year four – until USAC verifies that the carrier has met the first interim deployment milestone, which applies at the end of year three. An RDOF participant will be able to reduce its LOC value as it meets deployment milestones and passes USAC verification.
Please refer to the following resources to ensure that a LOC and OOC letter contain all necessary information. USAC will reject documents that do not contain proper information.
- RDOF Sample Letter of Credit Evergreen
- RDOF Sample Letter of Credit Fixed End Date
- RDOF Letter of Credit Checklist
- RDOF Bankruptcy Opinion of Counsel Considerations
An RDOF participant may reduce its LOC value to one year of support upon verification by the USAC compliance team that it has met an optional 20 percent build-out milestone by end of the second year of the program. An RDOF participant may also request verification of a deployment milestone at any time, instead of waiting until the end of a particular support year, in order to reduce a LOC value.
RDOF participants should be familiar with USAC’s verification review process and procedures, and understand what documentation may be needed for the compliance team to verify buildout, before requesting a review.
An RDOF participant that continues to meet its deployment milestones may maintain a LOC value of one year of support assuming it passes USAC verification review. An RDOF participant that is fully deployed to all locations in eligible areas by the end of year six no longer needs to maintain an LOC if it passes verification review.
The FCC maintains larger LOC value requirements – up to three years of support – for carriers that fail to meet deployment milestones. Any carrier participating in RDOF may be subject to non-compliance measures if it fails to meet its build-out obligations and/or other service requirements. Non-compliance measures may include additional reporting requirements, reduction of support or a draw on the carrier’s LOC.
RDOF participants must offer stand-alone voice service and broadband service at speeds consistent with their winning bids (which must be at least 25 Mbps downstream and 3 Mbps upstream (25/3 Mbps)) at rates reasonably comparable to those available in urban areas to all locations within an awarded area over eight years of the 10-year program. Initial interim deployment milestones are based on those adopted for the CAF Phase II Auction program. Carriers must complete:
- 40 percent of deployments by the end of year 3 (the end of the third full calendar year following funding authorization )
- 60 percent of deployments by the end of year 4
- 80 percent of deployments by the end of year 5
- 100 percent of deployments by the end of year 6
The FCC will publish revised location counts by the end of year six, and winning bidders must serve 100 percent of revised location counts by the end of year eight. Carriers with new location counts that exceed the original location count by more than 35 percent will have the opportunity to seek additional support or relief from the FCC. Carriers with fewer locations must report this to the FCC no later than March 1 following the fifth year of deployment and must complete deployment by the end of year six. Carriers with new location counts that are less than 65 percent of the original location count will see support reduced on a pro-rata basis.
Annual Filing Requirements
Carriers receiving RDOF support must also complete the following filing and certification requirements each year:
- March 1:Submit geolocated broadband deployment data showing where the carrier built out broadband by latitude and longitude in the previous calendar year. Submit Locations in the HUBB. USAC will conduct verification reviews to confirm deployment to a random sample of locations reported in the HUBB following each deployment milestone. Carriers must notify the FCC and USAC, and relevant state, U.S. Territory or Tribal governments if applicable, within 10 business days after the applicable deadline if they have failed to meet a build-out milestone (see 47 CFR Section 54.316).
- July 1:File and certify FCC Form 481 (Carrier Data Annual Collection Form). File Online
- October 1:Certify that the carrier has used High Cost funding correctly per program rules. Most carriers are certified by their states. If not subject to state jurisdiction, the carrier must file directly with USAC and the FCC. Learn more.
- Rural Digital Opportunity Fund Notice of Proposed Rulemaking (FCC 19-77).
- Rural Digital Opportunity Fund (RDOF) Report and Order (FCC 20-5).
- FCC Proposes RDOF Auction (Auction 904) Procedures (FCC 20-21).
- FCC Adopts RDOF Auction Procedures (FCC 20-77).
- FCC Resolves Auction 904 Reconsideration Petitions (FCC 20-127).
- FCC Releases Auction 904 Technical Guide on Proposed Bidding Procedures (DA 20-210).
- FCC Releases Preliminary List and Map of RDOF Eligible Areas (DA 20-275).
- FCC Provides LOC Guidance for Eligibility of Non-U.S. Banks (DA 20-307).
- Technical Guide Available for Auction 904 Bidding Procedures (DA 20-611).
- Instructions Available for Auction 904 Short-Form Application (DA 20-626).
- FCC Releases Updated List and Map of RDOF Eligible Areas (DA 20-665)
- FCC Announces Opening of Filing Window for Entities to File Short-Form Applications to Participate in Auction 904 (DA 20-701).
- FCC Releases Final List and Map of RDOF Eligible Areas (DA 20-1173).
- FCC Identifies 386 Applicants Qualified to Bid in Auction 904 (DA 20-1187).
- FCC Addresses Requests for Waiver of Auction 904 Short-Form Application Requirements (DA 20-1194).
- FCC Announces Availability of Data for Census Block Groups to be Included in Auction 904 (DA 20-1242).
- FCC Announces Winning RDOF Bidders (DA 20-1422).
- Attachment A: Winning Bidders Summary lists for each bidder: the state, the 10-year assigned support amount, and the number of locations assigned in winning bids.
- Attachment B: State Results Summary lists for each state with eligible areas in Auction 904: the total 10-year assigned support, the number of locations assigned, and the number of bidders with winning bids.
- Attachment C: FCC Form 683: Application for Rural Digital Opportunity Fund Phase I Support – Instructions.
- Ready to Authorize PN for 1,460 Winning Bids (DA 21-909) – The Commission provides the deadline and direction on how to submit the required LOC and OOC for carriers that are now Ready to Be Authorized for RDOF.