On Wednesday, the Federal Communications Commission stopped LTD Broadband’s use of federal grants to create high-speed internet infrastructure across Minnesota and the country. It said that the company was not capable delivering on its promises.
“We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements,” Jessica Rosenworcel, FCC Chairwoman, stated in a press release. We cannot afford to subsidise ventures that do not deliver the promised speeds, or are unlikely to meet program requirements span>
This is a shocking reversal by Nevada-based LTD Broadband. A relatively small company with Minnesota connections, LTD Broadband won a huge $1.32 Billion nationally and $311 MILLION in Minnesota to help develop lightning fast internet in rural areas.
LTD CEO Corey Hauer wrote to MinnPost that the company was “extremely disappointed” by the FCC staff’s decision.
Hauer stated that the FCC didn’t fully appreciate the benefits LTD Broadband would bring to the hundreds of thousands of rural Americans. We are still reviewing the letter and assessing our next steps.
Anne Veigle, FCC spokesperson, said that LTD can file a petition to reconsider or an “application of review to appeal.”
LTD received the largest amount of cash in the FCC’s 2019 grant round, which was $9.2 billion. This was a record-breaking amount of money spent on rural broadband in Minnesota. Local Democrats and Republicans have made it a top priority to connect all of Minnesota to high speed internet. This was especially important after remote education and the COVID-19 pandemic highlighted inequal access between urban and rural areas.
However, LTD Broadband was quickly criticized by broadband advocatesspan styling=”font-weight 400 ;”>,” who claimed they were too small to have the experience in building the fiber-optic cables that would be required to use the grant money. Hauer stated that the company had 100 employees when it won the initial cash. Most of them were located in Minnesota. Although the company was active in six states, it had received bids from 15 states.
LTD was founded in 2010. It has worked with fixed wireless technology for over a decade. This means that homes receive service from a signal high up on a structure like a water tower.
Local officials also complained about LTD’s delay experienced competitors from deploying the internet faster whereas the FCC weighed LTD’s capabilities.
LTD won the cash initially through a reverse auction. This is where companies compete to be the ones who deliver internet infrastructure to certain areas with the least federal subsidy. LTD won big and the map of Minnesota winning tracts included many of the most difficult-to-served areas. After LTD was approved by the FCC, they had a six year timeline to build most of the infrastructure. However, federal regulators required that a “long-form” application be submitted from the company to assess their technical expertise.
In between, many states rejected LTD on theirspan styling=”font-weight 400 ;”>, South Dakota. There were no regulators who sided with the technical expert who said that LTD’s method of determining costs was not comparable to actual construction costs. Several states rejected LTD on their own, including South Dakota.
“We don’t want to see them claim that they have the ability to build out, and then they go out there and find they can’t, scrambling to get more assets, and then it all just falls apart,” Commissioner John Tuma (a Republican) said following the PUC decision.
Hauer maintained that the complaints were nonsense or incoherent. He claimed that LTD could expand quickly and that he had developed a model for cheap broadband deployment that outperformed its disgruntled rivals. As an industry-disrupting innovator, he compared himself with Elon Musk.
However, the FCC stated that LTD could not gain regulatory support in many states.
span style=”font weight: 400 LTD Although LTD was a small fixed wireless provider prior to the auction, it was one of the biggest winning bidders in the auction and submitted winning bids in 15 different states,” the FCC stated in a news release that it had rejected LTD’s long-form application. “It failed to timely obtain eligible telecommunications carrier status for seven states, rendering it uneligible in support of those states.”
“Ultimately the FCC review determined that LTD was not reasonably able to deploy a network of the size, scope, and scale required by LTD’s extensive win bids.”
Starlink, a new satellite internet company that Musk’s rocket company SpaceX owns, was also rejected by the FCC. Starlink received $8.4 million in Minnesota. This is a small amount compared to LTD Broadband. It won $885 million in total nationwide. Starlink’s speed has been decreasing lately according to the FCC order. They were also found unable comply with FCC requirements.
Rosenworcel stated that “font-weight 400 Starlink’s technology has real potential.” “But, the question was whether we should publicly subside its still-developing technology for consumer broadband — which requires users to purchase a $600 dish — with almost $900 million in universal services funds until 2032 span>
The FCC is not yet clear on what it will do with the money that it pledged to Starlink or LTD. However, state regulators have stated that if LTD was rejected, the money would be distributed by the FCC in additional grants. However, it is not certain that the same amount would flow to Minnesota’s development.