Internet Providers That Won FCC Grants Try To Escape Broadband Commitments (arstechnica.com) 75
An anonymous reader quotes a report from Ars Technica: A group of Internet service providers that won government grants are asking the Federal Communication Commission for more money or an "amnesty window" in which they could give up grants without penalty. The ISPs were awarded grants to build broadband networks from the FCC's Rural Digital Opportunity Fund (RDOF), which selected funding recipients in December 2020. A group calling itself the "Coalition of RDOF Winners" has been meeting with FCC officials about their requests for more money or an amnesty window, according to several filings submitted to the commission.
The group says broadband construction costs have soared since the grants were announced. They asked for extra money, quicker payments, relief from letter of credit requirements, or an amnesty window "that allows RDOF winners to relinquish all or part of their RDOF winning areas without forfeitures or other penalties if the Commission chooses not to make supplemental funds available or if the amount of supplemental funds the Commission does make available does not cover an RDOF Winner's costs that exceed reasonable inflation," a July 31 filing said.
A different group of ISPs urged the FCC to reject the request, saying that telcos that win grants by pledging to build networks at a low cost are "gaming" the system by seeking more money afterward. So far, the FCC leadership seems reluctant to provide extra funding. The commission could issue fines to ISPs that default on grants -- the FCC recently proposed $8.8 million in fines against 22 RDOF applicants for defaults. The Coalition of RDOF Winners doesn't include every ISP that was granted money from the program. But exactly which and how many ISPs are in the coalition is a mystery.
The group says broadband construction costs have soared since the grants were announced. They asked for extra money, quicker payments, relief from letter of credit requirements, or an amnesty window "that allows RDOF winners to relinquish all or part of their RDOF winning areas without forfeitures or other penalties if the Commission chooses not to make supplemental funds available or if the amount of supplemental funds the Commission does make available does not cover an RDOF Winner's costs that exceed reasonable inflation," a July 31 filing said.
A different group of ISPs urged the FCC to reject the request, saying that telcos that win grants by pledging to build networks at a low cost are "gaming" the system by seeking more money afterward. So far, the FCC leadership seems reluctant to provide extra funding. The commission could issue fines to ISPs that default on grants -- the FCC recently proposed $8.8 million in fines against 22 RDOF applicants for defaults. The Coalition of RDOF Winners doesn't include every ISP that was granted money from the program. But exactly which and how many ISPs are in the coalition is a mystery.
Translation: (Score:5, Insightful)
"We spent all that grant money on executive bonuses and stock dividends because we actually never had any intent of investing in rural network infrastructure, and now that those chickens have come home to roost we expect the government to look the other way and give us even more money we'll use to enrich ourselves at the expense of the taxpayer."
Re:Translation: (Score:5, Informative)
perhaps you should revisit the "Optical Fiber infrastructure deal" of the 90s.
you know, the one where ISPs sucked in shitloads of money, insisted that once it became part of their finance stream they couldnt keep track of it, and then made basically no infrastructure with it?
https://www.huffpost.com/entry... [huffpost.com]
"But but but, that was over a decade ago!" I can hear you screaming. "I am talking right now!"
Well, again, that's what the FINE article is about, sir. The very same actors that did this shit once before, are at it again, once more insisting that they should get and keep the money, but not be made to deliver on the goods promised for it.
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perhaps you should revisit the "Optical Fiber infrastructure deal" of the 90s.
And copper before.
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Have these companies taken the money they were promised?
Yes?
No?
Have they delivered on the infrastructure they promised in return?
Yes?
No?
If the answer stream is Yes/No, then there's your proof.
Re:Translation: (Score:4, Insightful)
Their bonuses are in the SEC filings, right?
And RDOC awards were won by auction. Should I, the taxpayer, subsidize the fact that they didn't submit an accurate bid? No. I should not. As per usual, we only expect these companies to do what they promised they would do. That's not unreasonable.
Re:Translation: (Score:5, Insightful)
Even allowing them to give the money back is wrong. They have locked up these markets, preventing anyone else from building out the infrastructure - a standard anti-competitive trick. If they government lets them return the cash, they had better add some huge penalties as well.
If the government can show that the companies never intended to do the work, they could also file criminal fraud charges against specific corporate officers.
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How much allowance will you give them for inflation? even. 9% is wholly unrealistic. It's more like double that if not more.
Re:Translation: (Score:4)
Triple damages.
Re:Translation: (Score:4)
Look, our government will not prosecute obvious fraud and criminality, do we expect it to pursue these apparent but not yet de facto frauds? We cannot. But these companies should be prohibited from future participation.
And call it a fine is you wish, but money taken for these failed and denied projects must be paid back with punitive fines or interest, the terminology isn't important to me.
This is indeed a decades old scam, sadly. Since the 90s corporations have taken government money to expand service into underserved, usually rural, areas, and failed completely to even *try*. And they come back for more. Either our Federal government takes the hint and does it directly, or gives up and gets the heck out of the way for some entity to do it without government interference.
If it is profitable, they will build it. So far, it has been more profitable for them to *not* build it. Take the hint.
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"We spent all that grant money on executive bonuses and stock dividends because we actually never had any intent of investing in rural network infrastructure, and now that those chickens have come home to roost we expect the government to look the other way and give us even more money we'll use to enrich ourselves at the expense of the taxpayer."
Gee. If only someone could have predicted this would happen by looking at past history.
I think everybody in the entire universe save the United States Government knows that giving money to telcos on the promise of building out broadband infrastructure is absolutely always doomed to turn into exactly this fiasco. "Give us more we can give our executives and use for stock buybacks so we can do this dance again next year." It's been their game for decades.
There are real solutions. One would be treating it as a
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This is exactly how it's been done on all the (non-telco) government projects I've worked on. Plus clauses in the contract saying that the governmental entity can terminate the contract at any time, either for cause with nothing going to the contractor, or without cause, in which case the contractor will only get reasonable payments for the work
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Handing piles of taxpayer money to giant, for-profit corporations is getting to be a never-ending tail of failure. Why do we keep doing it? It never ends up going to good use. It's always executive bonuses and stock buybacks.
Why do we keep doing it? Because the telcos have a powerful lobby and have bought and paid for politicians.
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On the other hand, inflation to 'normal joes' is more like 30% in peoples' wallets, and I doubt it's much different to regional ISP's. Hold them accountable, but make them show the work with actual vendor quotes to back it up. No stock buybacks, no larger-than-usual pay spikes/bonuses.
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Only way to treat that would be to demand the ISPs to fulfill their commitment or the board of directors would be held personally responsible.
Payback (Score:3)
How about they either build what we paid them to build or they refund the taxpayer's money.
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They shouldn't return just the unspent money. They should return all the money except for the value of any work already completed, plus any costs the government might incur for stopping the work before completion, plus penalties.
Re:Payback (Score:5, Insightful)
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even that would not be sufficient, penalties should be enforced. As part of this deal, these ISPs were given exclusive access to develop broadband service in these areas, they accepted this funding AND prevented other ISPs (in a lot of cases, local municipal and co-op ISPs) from being able to develop these same areas for 3 years.
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It's a velvet parachute, to mix metaphors. A pass. Undeserved forgiveness.
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And let's pile on and use that (fraudulent) failure to perform to ben them from all government contracting.
That won't happen you know, virtually every national or regional ISP is mission-critical to government operations. But, but, perhaps if this were threatened, new players might come up to provide that scope of service, and the incumbents might actually have to compete for future business.
It does happen that contractors do get disqualified from government work due to bad behavior. Real consequences are o
Let's play a game. (Score:2)
Take the taxpayer money and run!
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Fuck Off!
Signed,
The American Taxpayer
Translation: I will always have 5M DSL (Score:5, Informative)
And before anybody says starlink, they also don't service my area.
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At this point, there's no excuse for anyone having less than 1 gbps connections.
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Sounds like perfectly normal business (Score:1)
The cell phone and cable companies have been playing this game for decades, win every time. I guess this is what we get for reelecting their lapdogs to congress for forty years
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This right here exemplifies the absolute corruption that goes on in government.
Re:Sounds like perfectly normal business (Score:5, Insightful)
Make sure we give credit to Biden then for appointing Jessica Rosenworcel, a 20 year public servant and Gigi Sohn who has worked with Mozilla and Public Knowledge and supports open standards, privacy rights and IP reform. Two decidedly non-telco-exec style picks.
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There's a Democrat in the Whitehouse (Score:4, Funny)
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You are correct, and polls are currently way too equal to make a call as to which way it's likely to go. My guess is that the election will go down to the wire and that SCOTUS will end up with the deciding vote. Given their loyalties, however, it's obvious as to which way they'll swing.
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No Chinese equipment means... (Score:5, Informative)
I'd have dumped Cisco (and I am a Cisco guy with dozens of certs), but they are in another management domain.
Chinese equipment saved me over a million bucks. And I have excellent contact and support from the Chinese companies.
When the US banned Chinese equipment from the infrastructure, Cisco and their peers immediately stopped competing. In fact, prices on all non-Chinese equipment sky rocketed. The didn't make it obvious, they just cut the discounts and made support slower and more expensive because they knew they didn't have to compete anymore.
Cisco TAC is creeping up on unusable now. Thanks to Cisco failing on a massive scale on DNA and ACI, and jacking entry level networking prices far too high to benefit from mass economy, and of course spreading themselves critically thin, TAC takes forever to solve problems and it appears they have no contact with development anymore.
I would imagine from my experiences (I am in a senior level advisory position for a national interchange) that if you can't threaten to use Huawei, Cisco must cost 2-3 times what it did before. Thankfully, we can still use that threat.
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I can easily believe that. This is an area where competition is inadequate and there are too many incentives to charge high. Due to Cisco and Juniper having well-established brand names, you've the added problem that rivals will need a superior product to start off with, before trying to compete. And even then, as Bay and Telebit have demonstrated, being good isn't good enough. You can still be flattened by name recognition and mindshare.
It'll change when alternatives become not merely credible in terms of
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I remember that work. Have you done the excruciating amount of investigation to determine if there are compromised devices, or data loss/intrusions attributable to manufactured back doors etc?
A zero-trust environment would, possibly, expose these flaws.
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Haha nice try comrade. You got your 50 cents. Gratz.
Been using the word "commitment" wrong for years (Score:2)
I thought it meant you have to do what you promised. Didn't realise it actually means "but only if you feel like it".
The tax-payers (Score:3)
While there is no penalty for lying about the cost and demanding the government pay cost 'over-runs', the tax-payers will never have reliable, available-everywhere infrastructure.
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They COULD. There's no physical reason why they couldn't. But it's going to be expensive, and the bidding system currently awards the cheapest bid not the best bid.
Just for once, hold them accountable (Score:3)
Please, please, please, for once would some government body hold these grifters to account! Force them to provide what they promised at the cost they promised, or make them pay big, nasty penalties. The only broadband costs that have soared since COVID is what these bastards are charging their customers. https://www.latimes.com/business/story/2021-02-02/column-cable-bills-going-up-again [latimes.com]
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To be fair, laying new fibre costs money in terms of fuel and material. Don't know how much material costs have changed (fibre, replacement equipment, tarmac/blacktop), but fuel costs have definitely gone up.
Still, yes, I absolutely agree that the ISPs should have allowed for the possibility of inflation going up but, as I've pointed out elsewhere here and in the article on Voyager, the current system incentivises companies to attempt to win the contract at below actual costs, resulting in corruption in the
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'Way back in the day, I took a commercial law course in school. One of the things specifically covered was that a contractor was responsible for cost overruns. As far as I know, that would still be the case if you and I entered into a contract. Once the big boys get into the game, though, it's expected that taxpayers will step in and cover extra costs. This has to stop. A contractor should have to deliver what they promised, at the price you promised, or pay a penalty to compensate the other party for
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Generally, labour costs have gone up 50% or more.
Costs for conduit have gone up significantly. Sch40 1-1/4inch PVC pipe has more than TRIPLED since 2018. 2018 for 10ft Cantex Sch40 5.50USD; now? 19.27USD
Costs for fiber have gone up too. I don't have good pricing data as I don't buy enough of it.
I don't think you can "allow for the possibility of inflation" when the YoY cost increase is 50% or more.
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To play with this idea a little bit more, yes vendors are responsible for cost overruns IFF due to negligence/errors, schedule slips due to normal weather incidents etc.
But there's still force majeure.
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Perhaps you lean that way, but I have never missed a vote I was entitled to cast since I was old enough to to so legally. My parents taught me, "If you can't be bothered to vote, you're not entitled to complain".
On the one hand... (Score:5, Interesting)
...I concur that ISPs who bid excessively low for the purpose of winning should be obligated to cover the remaining costs themselves, because, yes, they did game the system. It's not a terribly good system - when you go with the lowest bid, you're usually going to get the lowest quality - but it's the system that is in place. It relies on contract bidders being honest, fair, scrupulous, ethical, and sincere. When you're not, you should be expected to pay a penalty, and the standard penalty for this sort of situation is bid winner coughs up the remainder.
On the other hand, I doubt any of the ISPs were honest, fair, scrupulous, ethical, or sincere. Well, I suppose a few might have been, but most will have attempted to cheat somewhere, because that's what most businesses do. The concepts the bidding system needs simply don't exist in modern corporations. Because they don't exist, it would not be reasonable to put the contract winners in a position where they foot the bill and then promptly declare bankruptcy, allowing the unscrupulous losers to pick up the already-laid networks for cents on the dollar.
Other than putting an actual pox on both their houses (which would violate a whole different set of ethics), I'm honestly not sure what you can do in a situation like this. Really, the best thing is to never get INTO these sorts of situations by having a bidding system that DIDN'T go with the cheapest bid but the BEST bid. Going with cheap is always a false economy.
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Other than putting an actual pox on both their houses (which would violate a whole different set of ethics), I'm honestly not sure what you can do in a situation like this. Really, the best thing is to never get INTO these sorts of situations by having a bidding system that DIDN'T go with the cheapest bid but the BEST bid. Going with cheap is always a false economy.
The solution is to never allow for-profit corporations to own physical infrastructure that is a natural monopoly (last-mile wiring, electrical transmission, roads, etc.).
It should be owned by the city like the water/sewer, or co-ops in rural areas. Then any ISP can run service to the interconnection.
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Water companies get the resource nearly free that is resold at inflated prices from public unfractured initially funded by government money. The systems are very inexpensive
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...I concur that ISPs who bid excessively low for the purpose of winning should be obligated to [...]
Just FYI, this is why you're always supposed to take the second-lowest bid, and let everybody know that this is how you will award the contract.
In theory that drives everyone to bid closer to their actual cost, since there's no advantage to being the cheapest.
The new defense contractors (Score:2)
It's exactly the same fucking thing.
Should be penalized for taking it (Score:1)
Great play, drink up the grant money so would be competition couldnâ(TM)t use it. Then three years later, ask for more or the ability to repay now that the damage has been done.
Shocked, I say.... (Score:2)
Of course, another angle to take here is that maybe we shouldn't keep expecting our government to fix the broadband issue by throwing taxpayer money at these businesses and telling them to "build out your infrastructure". Time and time again, Federal (and to an extent, State government) proves that it's incapable or uninterested in insuring money it spends actually gets spent efficiently and for the intended purposes.
Look at the massive amount of fraud in those COVID relief programs. Money supposedly for sm
but but (Score:2)
If we the people are funding the buildout... (Score:2)
Punishment not needing a legal process fixes this. (Score:2)
Have the penalty be, put up a bunch of billboards saying exactly how company X screwed everyone out of $N in tax money, all over the major highways where it happened.
Then let them sue for defamation or whatever, but then the lawsuit onus is on them. And good luck claiming damages if the billboard shaming part is written into the original contract.
Yes I know there's little competition, but it's a start.