WASHINGTON—The federal government launched a major initiative to provide high-speed internet service to rural Americans in 2020, dedicating $9.2 billion to entice companies to extend their networks to places previously deemed too costly to reach.
More than 18 months later, many of those rural communities are still waiting for broadband. That is because a little-known Las Vegas company that won a bid to implement the program missed filing deadlines and failed to secure regulatory approvals needed to receive the money.
The situation serves as a cautionary tale as the federal government rolls out yet another costly program—this one with a price tag of $42.5 billion—to deploy broadband to rural areas.
“It’s frustrating to see that there were dollars available and that every step wasn’t taken to secure them and get the investments made,” said Brandy Wreath, a senior public utilities official in Oklahoma, one of the states where the company promised to extend service with public funds but was later disqualified.
The top-dollar winner was LTD Broadband LLC of Las Vegas, which won rights to $1.3 billion to extend the fiber-optic cable to rural communities scattered over 15 states, in some cases beating out local competitors.
LTD has since missed deadlines to be certified by local regulators in six of the 15 states, prompting the FCC to block the company’s access to broadband funds there. At least 275,000 people live in affected areas of those states, census and FCC data show.
LTD asked the FCC for more time to be certified, but the agency denied that request. LTD is appealing the FCC’s decision in four of the six states.
In nine other states, FCC officials are still reviewing LTD’s ability to do the job, even though the agency has authorized more than 300 other bidders to move forward.
Corey Hauer, LTD’s chief executive officer, blamed the missed deadlines on bad advice and actions by an outside lawyer. He said LTD has begun building fiber networks even without the federal funds and expressed optimism that officials will reconsider.
“The government clearly wants to get fiber service in these areas, and so do we,” Mr. Hauer said. “Our history as a company has been building in rural areas, so we’re very familiar with the costs and the challenges.”
The FCC program, called the Rural Digital Opportunity Fund, was essentially a nationwide contest that picked the company offering the fastest service at the lowest price in each unserved spot.
LTD, which Mr. Hauer said currently has 197 employees, was the low bidder in areas with a combined population of at least 860,000. Getting the $1.3 billion was contingent on the company demonstrating it had certifications from state telecom regulators, as well as the financial and technical wherewithal to complete the work.
LTD was required to show the FCC its “eligible telecommunications carrier” certifications by June 7, 2021. The company petitioned the FCC for more time in eight of 15 states.
Mr. Hauer said the company, acting on the advice of outside counsel, intentionally held off submitting some of the applications because it expected them to be opposed by competing internet providers and wanted to minimize the time opponents had to mount an attack.
The FCC denied LTD’s petition in six of those eight states where it sought more time—California, Nebraska, North Dakota, Oklahoma, Iowa, and Kansas. It said LTD hadn’t offered a compelling reason to waive a deadline established “to expedite the provision of needed broadband service to these rural communities.”
The six states subsequently didn’t certify LTD. Several cited errors and missteps by the company heightened their concerns about its ability to execute a huge project.
The California Public Service Commission said LTD had filed its application days before the June deadline—and not in April, as LTD had said in its deadline-extension request to the FCC.
When state officials asked LTD about the discrepancy, a company representative sent back an application receipt dated April 26, a date which had been altered, according to a declaration to the FCC signed later by Kristopher Twomey, an outside lawyer for LTD.
In emails and an interview, Mr. Twomey acknowledged signing the declaration. He said he never intended the altered receipt to be sent to regulators. He said he created it to record the date he mailed LTD’s paperwork, before realizing in June that the state wasn’t accepting mail applications.
“I deny that I have ever intentionally misled a federal or state regulator,” he said, adding that LTD’s failed applications were the result of decisions by state and federal officials, not his actions.
LTD says it is no longer working with Mr. Twomey, which he didn’t dispute.
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