Unlikely Silicon Valley RDOF Winners

Updated 07/29/21 – FCC “Letters Sent” Potentially Previously Supported Blocks #

CNS continues to do great work by taking FCC data and putting it into easy-to-use interactive maps. The screen capture below from their map indicates that the FCC seems to have received and acted on the message that many of the Silicon Valley RDOF locations were in urban areas.

According to the letters the FCC sent to applicants, it looks like funding will be pulled from those locations unless the winners can make compelling arguments that these parcels are “wholly unserved by 25/3 Mbps” broadband service”.

It will be interesting to see if the FCC imposes the $3,000 penalty per violation. Based on the tone of the letter, it appears that the FCC will waive the $3,000 penalty for defaulting if the applicant shows that “the particular facts make strict compliance inconsistent with the public interest.”

Unlikely Silicon Valley RDOF Winners – Published 12/09/20 #

It appears that there are hundreds thousands of locations in the middle of Silicon Valley that are going to be subsidized by the Rural Digital Opportunity Fund (RDOF) Phase I Auction (Auction 904). Businesses within the footprints of some of these census blocks include Adobe, Apple, the future Google development in downtown San Jose, Northern California’s largest mall, and even Silicon Valley’s airport, SJC. [Added 12/14/20 To be clear, the locations that are shown probably are already served by fiber or have fiber within the reach of a short drop].

This doesn’t make sense, given the intent of RDOF is to help bring broadband to rural areas that otherwise would not be served. The aforementioned locations are in the middle of one of the most urban areas in the country with a population density of over 5,000 people per square mile. Additionally, the aforementioned companies and institutions easily justify fiber optic-based broadband to their facilities. It does not make sense why these locations are on the RDOF list.¹

Added 12/14/20, Revised 12/16/20 – Will There be Ghost Customers? Questions 

1. Can the awarded entities use the RDOF support to effectively subsidize their service and undercut existing broadband providers? In the case where there are already providers, the answer would seem to be yes. Of course, based on the answer to question number 2, it sounds like it is might be more profitable to have passings and no subscribers.
2. Does an entity receive funding for a passing (e.g. ability for someone to get the service) or for a subscriber (actually serving a paid customer)? Industry sources confirm that the provider gets paid regardless of whether they turn the passing into a subscriber as long as they can turn up the RDOF-specified service within 10-days.
3. What proof is required that an entity is providing service to a given location? Is it just filing of a 477 form?

Should Not be Part of RDOF #

Ironically, the winners of these awards do not even appear to be providing the benefits of fiber, as they are wireless providers (Space Exploration Technologies, Etheric Communications, LTD Broadband, and One Ring Technologies.)² The following represent a sampling of some of the many Silicon Valley census blocks that SHOULD NOT be part of RDOF.

• 060855008001 (Adobe) – Space Exploration Technologies
• 060855081021 (Apple) – LTD Broadband, LLC
• 060855043171 (Strip Mall) – One Ring Technologies
• 060855051002 (SJC) – Etheric Communications, LLC
• 060855058002 (Westfield Valley Fair) – Space Exploration Technologies

Thank you Cooperative Network Services (CNS) for porting the FCC data to an interactive map that makes it easy to visualize RDOF locations.

Added 12/13/20 

Added 12/14/20 – Santa Clara County Urban Locations to Receive More RDOF than the Rural Areas

The PDF at this link is a filtered version of the FCC listing of Santa Clara County (Silicon Valley) locations awarded RDOF funding.³ This was created through a visual examination of the CNS map. Although this author attempted to double-check his work, there may be clerical or judgment errors as to what constitutes rural. The locations identified as urban are mostly on the valley floor and not the surrounding mountains.

It is important to note that this is a conservative view of what is considered urban as broadband does extend into the Santa Cruz mountains and to some extent, the Diablo Range to the east of the Valley. Further, this is a unique area as the rural areas tend to be higher-income than the urban areas. Evidence of this is given in this article, which documents an FTTH project that received a $7,200 per passing subsidy for multi-million dollar Silicon Valley homes in a rural portion of the County.

Highlights of this analysis are given in this PDF and are summarized as follows:

• Of the $3.87M in Initial Reserve, approximately $1.735M was for urban locations, or about 45% of the total, while the remaining Initial Reserve for the rural areas was $1.947M.
• The majority (75%) of the locations (15,451) receiving Assigned Support are urban, as only 11% are in rural locations (2,304). Approximately 13% of the locations (2,719) were not found on the map.
• With that said, slightly more money ($766k) is assigned to urban, compared to rural ($759k), equating to approximately $50 and $330 of Assigned Support, respectively, for each urban and rural location.
• Of the 2,719 unidentified locations, only $187k was left from the Initial Reserve to serve those locations. These locations were most likely urban locations given that even if the per location Initial Reserve equals $69.
• The Assigned Support as compared to the Initial Reserved is 44% and 39% for the urban and rural locations, respectively.

It is clear that the FCC should not be awarding providers to serve the urban areas, which would save $766k. Of course, this translates into $7.6M over the 10-year life of the program.  This would seem trivial in the scheme of things, but, as identified by Free Press, the above misclassification due to poor mapping is happening in multiple large cities. If the awards to Santa Clara County locations are typical of the rest of the country, the RDOF Auction could be misallocating billions of dollars to urban areas. 

¹ The July 2nd, 2020 Viodi View pointed out that Apple’s headquarters was included as an RDOF eligible. site.

² [Added 12/14/20 – To clarify, the terrestrial wireless providers also use fiber and would most likely serve the urban locations with fiber. SpaceX would most likely provide a satellite-based, wireless connection.]

³ [Added 12/16/20 – Strictly speaking, Silicon Valley extends beyond the borders of Santa Clara County. Santa Clara County is home to notable cities such as Palo Alto, Mountain View, Cupertino, Sunnyvale, Santa Clara, and San Jose.