This is an ongoing saga that many of us are watching closely and some might want a little recap…
The Minnesota PUC decided to continue to move forward looking at revoking LTD Broadband’s ETC designation. (Background: LTD was awarded an opportunity to apply for$311 million in federal RDOF funding. They needed the ETC designation from the MN PUC to qualify; industry folks asked the MN PUC to rethink their designation because there were concerns about LTD being able to fulfill the contract. Last month, their application for RDOF was rejected.) I have been tracking new documents posted to the PUC site. The latest is a letter from Taft Law supporting LTD’s request to wait until after the conclusion of LTD’s appeal of the FCC’s denial of its RDOF long-form application to address their ETC status. They do this by recapping what has happened in PUC offices in other states. The PUC has received some reactions to that request…
The Office of the Attorney General—Residential Utilities Division (“OAG”) files this supplemental letter pursuant to Ms. Severson’s October 14, 2022 email stating that all parties may file additional responses or supplemental information by 4:30 today. This letter responds to the letter submitted earlier today by LTD Broadband LLC (“LTD” or “Company”).
LTD claims that the OAG’s concerns that the Company could receive support before it is thoroughly vetted, that Rural Digital Opportunity Fund (“RDOF”) support could flow prematurely to the Company, and that it could be three years before the Federal Communications Commission (“FCC”) or the Minnesota Public Utilities Commission (“Commission”) could act if that occurred are unfounded. LTD claims are inaccurate and warrant a further response.
First, it is the Commission, not the FCC that is responsible for determining whether LTD should receive an eligible telecommunications carrier (“ETC”) designation, or in this case have its designation revoked. If the Commission determines that LTD is not able to meet its RDOF commitments in Minnesota and revokes LTD’s expanded ETC designation, any decision by the FCC is moot; LTD would no longer be eligible to receive RDOF support even if the FCC Bureaulevel decision is overturned.
Second, even if the OAG has six-to-eight weeks’ notice before LTD’s long-form application is approved and the “ready to authorize” Public Notice issues, once an ETC receives “ready to authorize” status, there is no delay in disbursement of support. Rather, the Public Notice states that, upon its issuance, “the Universal Service Administrative Company (USAC) is authorized and directed to take the steps necessary to disburse from the Universal Service Fund the amounts identified in” the Public Notice and to disburse the support in “120 monthly payments, which will begin at the end of [the] month.” It defies logic for LTD to suggest that six-to-eight weeks would be sufficient time to take the appropriate next steps to determine whether the Company’s expanded ETC designation should be revoked prior to “LTD actually receiv[ing] RDOF support.” Once RDOF support is disbursed, it is very difficult to recover. Thus, it is vital that discovery commence and the contested case be conducted “expeditiously,” as requested by the Commission in its referral order.
Third, it is entirely accurate to say that it could be three years before the Commission or the FCC could act to stop the flow of RDOF support to LTD. This is because the FCC’s rules do not require LTD to provide the Commission with any information about whether the Company is meeting its FCC-mandated network buildout requirements until the third year that LTD receives RDOF support. And consumers, to the extent they have concerns about LTD’s performance, will not raise their concerns with the FCC or USAC, nor would the FCC or USAC likely be the ones to address them. As the entity tasked with designating and certifying ETCs, that task falls to the Commission. Indeed, the instructions to the annual certification form for RDOF recipients states that “[i]f USAC believes there may be a violation or potential violation of a statute or a Commission regulation, rule, or order, [the ETC’s] form may be referred to the Federal, state, or local agency responsible for investigating, prosecuting, enforcing, or implementing the statute, rule, regulation, or order.”
The MTA and MREA say (in part)…
This letter is submitted in response to the letter filed on behalf of by LTD Broadband, LCC (“LTD”) on October 13, 2022.
Petitioners agree with the Department of Commerce (“Department”) and Office of Attorney General (“OAG”)1 that LTD’s request for stay should be denied and this proceeding be conducted expeditiously as the Commission has ordered. 2 As the Department and OAG stated, the Nebraska and South Dakota decisions actually “highlight why the Minnesota proceeding should continue.” Those two decisions preserved a status quo in which LTD is currently not eligible for Rural Digital Opportunity Fund (“RDOF”) support. As a result, the Nebraska and South Dakota decisions protect the public interest in those states from the negative consequences of a possible reversal of the FCC’s decision to deny LTD’s long form.
The opposite is true in Minnesota. In Minnesota, a stay would allow LTD to obtain RDOF funding in the event of an FCC reversal before the Commission would have an opportunity to determine whether it should revoke the Eligible Telecommunications Carrier (“ETC”) designation LTD needs to qualify for this RDOF funding.
The Commission initiated this proceeding out of concern (based on information presented by Petitioners and other commentors) that LTD would not be capable of delivering on its RDOF commitments to provide broadband to over 102,000 unserved locations in Minnesota. The purpose of the proceeding was to reexamine whether LTD qualifies for the ETC designation which is a precondition to receiving RDOF funding. Given the importance of the decision and its potential effects, the Commission wanted the proceeding completed “expeditiously.” 3
Staying this proceeding would frustrate the Commission’s intent and could lead to severe and irreversible harm to the public interest that this proceeding was initiated to protect. Approval of RDOF support for LTD in Minnesota would significantly reduce Minnesota’s share of approximately $41.5 billion in new federal broadband funding under the Broadband Equity, Access, and Deployment (“BEAD”) program. 4 Each state’s share of this BEAD funding will be “distributed primarily based on the relative number of “unserved” locations … in each State and Territory.”5 If the FCC were to reverse its decision as to LTD in Minnesota, LTD’s 102,000 Minnesota locations would no longer be considered unserved.6 These locations are a very substantial share of Minnesota’s unserved locations. As a result, Minnesota’s BEAD funding would be proportionately and substantially reduced.7
Taft Law (LTD Broadband) says…
Pursuant to Ms. Severson’s October 14, 2022 email stating that all parties may file additional responses or supplemental information by 4:30 today, I write to provide a brief response to statements made in the October 14, 2022 letter jointly submitted by the Department of Commerce and the OAG (“Department/OAG Letter”).
The Department/OAG Letter expresses concern that LTD could receive RDOF support before it is “thoroughly vetted,” that RDOF support could “flow prematurely” to LTD, and that it “could be three years” before the Commission or FCC could act if that occurred. Those concerns are unfounded.
First, RDOF support cannot flow to LTD until and unless LTD is successful in challenging the FCC staff decision denying LTD’s long-form application. If LTD is successful in doing so, and the FCC grants LTD’s long-form application, that will mean that LTD has been “thoroughly vetted” by the FCC and that RDOF support is not “flowing prematurely” to LTD.
Second, it is important to understand the chronology of the process. If and when LTD successfully challenges the FCC staff decision, and assuming the FCC’s process that has been consistently applied, then the FCC will issue a “Public Notice” saying it is “ready to authorize” support, subject to LTD submitting a letter of credit and bankruptcy opinion letter within a few weeks thereafter. Once LTD submits these documents, the FCC will issue another Public Notice stating that LTD is “authorized” to receive RDOF funding. That generally happens the second week of each month. The soonest any support would be wired from the FCC to LTD would be the last business day of the month. So if and when LTD’s appeal is successful, there would still be plenty of time—around six to eight weeks—for the parties in this proceeding to regroup and determine next steps before LTD actually receives any RDOF support. The Department and OAG have repeatedly suggested that there would be a risk of imminent harm if the FCC staff decision is reversed—the chronology above demonstrates why that concern is significantly overstated. As I stated at our previous conferences, LTD would agree to provide periodic updates to you and the parties regarding the status of LTD’s application for review. Third, it is an exaggeration to say that it could be three years before the Commission or FCC could act to stop the flow of RDOF support to LTD. Each year, the Commission will have the opportunity to review LTD’s compliance with ETC requirements—the 2022 review is just concluding. See Commission Docket No. P999/PR-22-8. In addition, if the FCC, USAC, Commission, a party to this proceeding, or even an LTD customer identified a truly urgent concern relating to LTD’s compliance with the RDOF and ETC requirements, the FCC and USAC could act to temporarily suspend the flow of support. Indeed, USAC and the FCC have done so where, for example, a letter of credit lapses.