Viasat Gets Scrutiny at NARUC Over USF Auction; Panelists Look Ahead to RDOF

Viasat got about 8 percent of a Connect America Fund total award amount for agreeing to serve about 22 percent of locations, noted USF consultant Joe Gillan following the panel discussion (see 10:45 a.m. event.) "They make a dent on how you evaluate the results ... that's why they're focused on it," he said of stakeholder scrutiny and the firm. Viasat's "trying to put a square peg in a round hole" by potentially offering voice service through a reseller because it may not be able to provide service at sufficiently high quality to meet customer expectations, Gillan added.

USF consultant Carol Mattey interjected, telling us "I don't want to be the one to tell grandma in rural America" her Viasat phone service won't be up to par. Gillan said the company's broadband service is fine, but "this is really only about voice" quality. Mattey's "impression of the situation was that Viasat was hoping to persuade the FCC "it could meet performance requirements without needing a resale agreement to use a carrier's network: "They have put two concrete suggestions in the record for how to modify performance testing."

The company asks the FCC not to treat satellite firms differently and so not make them hire others to do performance testing, and to clarify how it can meet some standards. Viasat is listed as a winning bidder in CAF II: "103 bidders won $1.49 billion over 10 years to provide fixed broadband and voice services to over 700,000 locations in 45 states." Panelists said the company would get about $12 million a year for 10 years. See also pages 9 and 10.

CAF II success "was a little overstated because of the participation of Viasat," Gillan said on the panel; removing that company could mean about half, not 75 percent, of locations would be served. He wants to "talk about whether it makes sense to proceed in future auctions with them given what we’re learning." The company told the FCC it would meet terms through a hybrid involving satellite and terrestrial networks, he recalled. "On paper, when you look at that, that actually is not a problem. The latency for broadband isn’t going to" be too bad. "By and large, for most applications, you have some delay … but it's an acceptable consumer application," the consultant said. Voice "latency is too long," so Viasat might use a terrestrial reseller arrangement, he added. "I don’t actually think they misled anyone."

Viasat didn't respond to an offer to appear on a panel Monday (see 1907220046) with other providers (see 10:45 a.m. event), confirmed NARUC board member Chris Nelson.

Pending Petition

Viasat’s petition for reconsideration of a performance measures order remains pending.

"They’re banking on the fact that the FCC will issue an order resolving outstanding issues about the performance testing," which may be the last step needed, Mattey said Tuesday. "The FCC is loathe to say we will treat one technology different than another." Mattey said she doesn't consult for any parties that lobbied the FCC on Viasat's request. Gillan said he, too, wasn't involved on this matter.

"Viasat is required to serve all the locations for which it successfully bid, at the speeds and latency on which its bids were based," an FCC spokesperson emailed. “99.75% of the auction winners, including Viasat, will provide speeds that meet or exceed the FCC’s current 25/3 [Mbps] standard, at a cost that that was less than 30% of the reserve price.” Panelists noted similar. The satellite company was a top CAF II auction winner, the agency spokesperson confirmed.

It's a "proud satellite broadband" company among the CAF-II auction winners, said Viasat Associate General Counsel-Regulatory Affairs Chris Murphy. "Satellite is an ideal connectivity solution to enable" anyone in the U.S. to get online, said his statement. "The FCC affirmatively determined that satellite services are suitable for CAF-II support provided that satellite service providers meet the stringent service quality and availability criteria." Such providers "have committed to offer high-quality broadband to the hardest-to-reach places in the U.S.," Murphy noted. Incumbents had "declined to take support from the FCC, leaving too many Americans in existing telco service areas unconnected," he said.

Gillan suggested the FCC look to hold a series of auctions for the rural digital opportunities fund (RDOF), as commissioners are poised to vote on an NPRM at their Aug. 1 meeting. The draft NPRM proposed a two-step RDOF reverse auction (see 1907110031), panelists noted.

"If you give it out over a series of auctions, you create a dynamic auction structure" rather than once for 10 years, Gillan said of what he estimates will be some $1.5 billion annually over 10 years. It lets participating providers "incrementally expand" areas that they serve and "take advantage of new technologies," he continued. But "when you read the notice, there’s no real sense the FCC thinks it did anything wrong in CAF II. I’m just going to call this CAF III," Gillan said of the draft NPRM. "They don’t seem to recognize, 'Wow, what did we learn from this?’" He wants the FCC to realize it may "need to break this up to have a series of auctions" as "pretending that 2019 is pivotal for rural broadband technology and for rural broadband providers is quite absurd" -- "a decade is a really long time."

Mattey countered that multiple auctions would impose high administrative burdens on the FCC, could let sophisticated parties "figure out how to game the system" and could lead entities "to bid on areas, not win on some of them, and build potentially more fragmented networks." Noting it takes a while, perhaps a year, to authorize all winning bidders for each auction, she said holding RDOF/CAF III once every two years "would be like being continuously pregnant." Under a possible timeline for FCC Chairman Ajit Pai, bidding could start in in Q1 2021, Mattey said, cautioning that "ambitious goals could get knocked off schedule, based on past experience."