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Arkansas Firms Divide $424M to Deploy Broadband

5 min read

The Federal Communications Commission announced in December that Arkansas providers won $424 million in its Rural Digital Opportunity Fund (RDOF) Phase I auction to expand broadband to 200,612 homes and businesses over the next 10 years. 

Those providers were bound by a quiet period until late last week. You can see a table of the auction here.

FCC Spokeswoman Anne Veigle told Arkansas Business by email that the state’s 15 winning bidders was more than many other states. Some of them are consortiums that will divide their winnings among their member companies.

Among the winners are Southwest Arkansas Electric Cooperative; Arkansas Valley Electric Cooperative’s subsidiary, Wave Rural Connect; and Aristotle Unified Communications LLC of Little Rock.

Aristotle won almost $62 million for projects in Arkansas and Mississippi. CEO Elizabeth Bowles, who also chairs the FCC’s Broadband Deployment Advisory Committee (BDAC), said that the RDOF’s $424 million Phase I fund will probably cover a third of the cost to deploy broadband in the areas providers won money to service. Last she checked, Arkansas still ranks at the bottom compared to other states when it comes to broadband access.

“If the goal post is to make broadband — not the 25/3 (speeds of 25-megabits-per-second download and 3 megabits-per-second upload) FCC definition, but actual broadband speeds of 50/100 Mbps, and even a gig — available everywhere, we’re getting a lot closer, and we’re nowhere near the finish line,” she said. “So, if we were on a football field starting at our own goalpost, we’re probably after all of this funding going to be at the 60-yard line.”

Bowles said that, for a long time, the regulatory regime hamstrung cities and the state in broadband deployment, leaving it entirely on broadband providers to do it.

“And there were certain providers that very much liked the status quo and were not looking for new entrants into the market,” she said. “And, if you do not have new entrants, then you do not have competition. And, without competition, you don’t have the constant drive to improve the networks.”

Said said the FCC auctions have created necessary competition to prompt providers to deploy broadband to underserved markets.

Other factors put Arkansas’ regulatory and deployment environment near the top among other states, she said. Gov. Asa Hutchinson has prioritized broadband deployment, and the ban on municipal ownership of broadband infrastructure has been lifted. Arkansas also used some of the money from the federal CARES Act for broadband infrastructure. 

“That’s what you do with one-time money, and that’s what the state did with this one-time money: It put it into permanent infrastructure,” she said. “And that infrastructure will enable the economic development, the farming innovations, the technology increases in rural America, the reverse urbanization. It’s all enabled by broadband.”

Making Rural A Priority

Bowles said the RDOF is similar to the FCC’s Connect America Fund (CAF) Phase II Auction, which took place in 2019. The program’s name was chosen to make it clear that its purpose is rural development of broadband services, Bowles said. Veigle said RDOF is different in that “it was the single biggest award of ongoing funding for rural broadband deployments to unserved areas and had far more competition than CAF-II/Auction 903.”

In this type of auction, funding goes to the providers that can deploy broadband to areas the FCC has identified as underserved with the least amount of money.

“What was significantly different in ARDOF was that they had an absolute preference for gigabit service. … You could bid a different service tier. You could bid 100 by 20, or 50 by 5 or even 25 by 3 (megabits per second). But you were going to lose to somebody who has been in the gigabit tier,” Bowles said.

“There’s a push-pull in policy considerations with that. On the one side, we want to get the best, most robust service as we can everywhere. So that rural America is not left behind,” she continued. “But, on the other hand — and this is true regardless of where you live, I would say — the vast, vast majority, like 90% of the people on the internet, do not need gigabit service. And most computers don’t work at gigabit speeds. So, to some extent, by choosing to favor gigabit, there’s less money to go around.”

Bowles explained that 1-gigabit-per-second speeds can only be delivered by fiber optic cable, which is more expensive to deploy than other methods, including fixed wireless equipment that transmits data from a tower to an antenna on a home or business. Her company installs fixed wireless where it makes sense to do so.

Bowles believes that speeds of 100 megabits per second for downloads and 20 megabits per second for uploads would have been a better standard to set.

However: “We can expect to see more gigabit tier, honestly, because the Democrats are very much in favor of this gigabit tier concept,” she said, noting the impact of that party taking control of the executive branch and Congress from the GOP.

Other Winners

Among the other auction winners, Southwest Arkansas Electric took home $53 million. 

President and CEO Dion Cooper told Arkansas Business its board of directors looked at bringing fiber to the home in 2017 “and it just did not make sense financially. We just couldn’t do it.”

He said the co-op didn’t go after money from the CAF II auction, because there wasn’t the opportunity to win as much from it.

The co-op is looking at a $220 million project, Cooper said. “The RDOF funding, unfortunately, is just a drop in the bucket,” he said. 

The co-op’s five-year plan is to install 5,000 miles of fiber for its electric service area in southwest Arkansas, northwest Louisiana, northeast Texas and east Oklahoma, as well as some surrounding areas. It expects that 30% to 40% of the area’s homes will buy broadband service when it becomes available.

Coopers said the co-op is in the planning phases now and is aiming for construction to begin as early as May, with first sign-ups around August.

Cooperatives are taking up broadband deployment, he said, because “big carriers just are not taking services outside the city. And we know that the electric cooperatives are the only ones that are willing to take risk, financial risk, to deliver this out to the rural areas. And it’s such a needed service. Even before the pandemic hit, there was a real need, but the pandemic, of course, has revealed just how bad it is.”

Wave Rural Connect walked away from the RDOF with $46 million. It also won $5 million in the 2019 CAF II auction. 

Barret Ewing, director of engineering and operations, said Wave Rural in the middle of a six-year build to reach 60,000 electric meters with about 6,500 miles of fiber. About a third of that work is completed, and it aims to finish deploying broadband by 2024. 

“It’s definitely a game changer,” he said of the RDOF award. “It immediately impacts our cash flow and helps us to be able to succeed in the project with less borrowing. And it’s allowed us to kind of have a little bit of freedom to look at the future of the project and make some decisions to try to help us reach those underserved members of ours quicker.”

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