More than $2 billion in rural broadband funding is being clawed back now that the Federal Communications Commission has rejected two of the highest winning bids in the Rural Digital Opportunity Fund because they “failed to demonstrate that the providers could deliver the promised service."

The FCC said it will not award $1.3 billion to LTD Broadband or more than $885 million to Space Exploration Technologies Corp. (Starlink) after reviewing the companies' long-form RDOF applications.

“Consumers deserve reliable and affordable high-speed broadband," said FCC Chairwoman Jessica Rosenworcel. “We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements."

NRECA welcomed the commissioners' Aug. 10 decision.

“Our focus is on making sure that every unserved American has access to reliable and robust broadband that will meet their needs today and into the future," said NRECA CEO Jim Matheson. “The RDOF auction exists to fund broadband deployment for rural Americans, not finance science experiments or underwrite risky bets.

“We thank the FCC for taking this important step to ensure that recipients of RDOF funding deliver on their promises to provide quality broadband services."

In a letter to the FCC and a related white paper, NRECA raised concerns about large RDOF awards to unproven or inferior internet technology that could sideline rural areas for years if those providers fail to deliver. Communities receiving RDOF aid are ineligible for many other forms of federal broadband assistance.

“In its unprecedented decision today, the FCC agreed with our argument that the RDOF is to support deployment of proven technologies. It's not an R&D fund," said Brian O'Hara, NRECA senior regulatory director for broadband and telecom.

More than 1.17 million unserved locations originally won by these companies will now be available for state and federal broadband funding through other programs.

In 2020, the FCC picked LTD Broadband as the winner of the largest single award of RDOF money and Starlink as the fourth-largest winner in the first round of bids to serve broadband to rural census blocks.

LTD Broadband, a small fixed-wireless provider, had won bids to connect 528,088 locations in 15 states. Starlink proposed to serve 642,925 locations in 35 states using a largely untested network of low orbit satellites.

But on Wednesday, the FCC's Rosenworcel said, “After careful legal, technical, and policy review, we are rejecting these applications. We must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks."