FCC Makes Rural Digital Opportunity Fund Official

Contact CFC for RDOF Letters of Credit, Term Loans

The U.S. Federal Communications Commission (FCC) adopted an order on January 30 to make more than $20 billion in funding available to facilitate the deployment of high-speed Internet access to rural communities—and CFC stands ready to support members who may require letters of credit or construction financing for their applications.

Awards from the Rural Digital Opportunity Fund (RDOF) will be granted in what the FCC calls a “two-phase reverse auction” and will be delivered to winning bidders annually over a 10-year period. The FCC noted that the first phase, which will include $16 billion in opportunity, is expected to launch later this year.

“CFC is currently financing more than 60 electric cooperative broadband endeavors around the country, and we’re ready to help our members take advantage of the latest FCC options,” relates CFC Senior Vice President of Member Services Joel Allen. “This is a great opportunity for electric cooperatives seeking grant funding. In some cases, it could make marginal projects now feasible.”

Electric Co-ops Did Well in Similar CAF II Auctions

The process is expected to be similar to the FCC’s Connect America Fund Phase II (CAF II) auction that took place in the summer of 2018. Similar to the CAF II auction, RDOF requires a letter of credit to be posted, although the FCC has reduced the commitment amount required for the letters.

Thirty-four electric cooperatives were CAF II auction winners, collectively receiving $225 million. CFC committed more than $75 million in the form of letters of credit to support members who were successful in the CAF II process and is prepared to be similarly supportive for members interested in the RDOF program.

CFC Is Ready to Help Members Be Successful Participants

“While we are pleased to see the federal funds being made available to help close the gap in high-speed Internet availability, recipients will probably need to supplement that capital to cover the cost of building or upgrading infrastructure,” Allen says. “CFC can provide long-term, bridge and line-of-credit financing.”

He adds: “It’s always best to start discussions early with your CFC regional or associate vice president to determine the time frame needed to obtain the letter of credit and revolving or term loan financing your co-op needs to be a successful RDOF participant.”