REGIONAL- The Minnesota Public Utilities Commission (PUC) last week ordered an investigation of embattled telecom company LTD Broadband over concerns the small company may not be able to deliver on its promise to deploy high-speed broadband fiber service to unserved Minnesotans, a move with major implications for the North Country.
LTD was the surprise top bidder in the Federal Communications Commission December 2020 auction, securing $1.3 billion of Rural Development Opportunity Fund (RDOF) money over ten years to provide fiber-based broadband to 528,000 locations in 13 states where no such service was available or currently planned.
That included $311 million for 102,00 sites in rural Minnesota, including all of the awards for northern St. Louis County that were candidates for development. (See accompanying map, page 9).
LTD’s winning bid gave them almost total exclusivity to develop broadband in those areas, as census tracts deemed eligible for RDOF funding were not eligible for any other federal or state funding efforts during the ten-year term of the project.
Winning bidders had two major tasks to complete before the dollars started to flow. First, they had secure designation as an Eligible Telecommunications Carrier (ETC), a designation LTD received from the PUC last year. They also had to complete a more extensive long-form application, far more detailed and extensive than the ones submitted to qualify for the auction, which the FCC must approve for companies to receive the funds they were awarded. More than 18 months have passed since the auction, and LTD and four others of the top 10 largest RDOF winners have yet to have their long-form applications approved.
Meanwhile, LTD was denied ETC designations in California, Kansas and Oklahoma because of late filings last summer, and the FCC denied their appeal and decertified their eligibility to serve those locations. The Iowa Utilities Board dealt LTD another blow when it denied granting the ETC status for procedural flaws and inconsistent and delinquent compliance for its obligations relative to other service it provides in the state.
LTD’s problems and the delay in the FCC’s long-form application process have some industry insiders questioning if LTD and several other top-bidders will ever get final FCC approval and the money that comes with it, according to the online telecom publication Telecompetitor.
In a July 8 article, Telecompetitor quoted New Street Research Policy Analyst Blair Levin, saying, “The FCC appears to have very significant questions. It’s not that they lied or misrepresented themselves. But the commission doesn’t appear to have confidence that those enterprises will do what they said they would do.” While working at the FCC, Levin led the team that wrote the National Broadband Plan.
Rather than reject LTD’s application outright, it’s possible the FCC could sit on it indefinitely, according to Fiber Broadband Association CEO Gary LTD’s winning bid gaveBolton, also quoted by Telecompetitor.
“The FCC has no statutory obligation to approve long-form applications,” Bolton said.
Minnesota action
Last week’s hearing of the PUC was prompted by a petition filed in May by Minnesota Telecom Alliance and the Minnesota Rural Electric Association that asserted LTD should lose its ETC designation because of numerous concerns that have come to light since that approval was granted last year. They contended that LTD would waste taxpayer time and money, as the company has little experience with fiber-based broadband, and that holding onto the ETC designation would block local governments and other telecom providers from obtaining funding for subsidized fiber projects.
“Our petition, and the other folks who have appeared here as well, have laid out a number of facts and information that have come to light since your decision a year ago, which we believe gives you cause to initiate a proceeding to look more deeply and determine whether in fact [LTD] can meet those commitments,” said Dan Lipschultz, an attorney representing the trade groups. Lipschultz is a former PUC commissioner, serving from 2014 to 2020.
But Andrew Carlson, an attorney representing LTD, was emphatic that the company’s performance relative to Minnesota has been problem-free, and that the company has already started building out its fiber optic network here despite having received no federal money yet.
“There is nothing about LTD’s performance as an ETC in Minnesota that has been called into question,” Carlson said. “Last year, the commission found that designating LTD as an ETC would be good public policy because it would allow $311 million in federal funding to come to Minnesota. He said rescinding the company’s ETC designation would jeopardize those federal funds.
Carlson also argued that the PUC would be setting a bad precedent if it decided to open a proceeding to review LTD’s designation as an ETC, as similar complaints against other companies could be filed by their competitors in an effort to reopen the broadband market for their benefit.
The Minnesota Association of Townships and four counties that would host LTD projects also filed written briefs in support of opening an investigation that could lead to the PUC revoking LTD’s ETC designation. A broadband consultant for LeSeuer County noted that the county has been passed over for funding through the state’s Border-to-Border Broadband funding because of LTD’s lock on some of the tracts they wanted to develop.
Assistant attorney general Kristin Berkland also supported moving ahead with an investigation.
“I don’t want Minnesota consumers to think they will get the benefit of $311.8 million and then not actually see the benefit of that money,” she said.
In the end, the decision of commissioners to move ahead with a contested case hearing before an administrative law judge was unanimous.
“It’s in the public interest to at least begin to consider and initiate a proceeding about whether we should revoke LTD Broadband’s expanded ETC designation,” said MPUC Chair Katie Sieben.
The process is expected to take at least until the end of the year.