Iowa Utilities Board sued over $23 million decision on broadband provider

A lawsuit filed by a major provider of broadband services alleges that a recent decision by the Iowa Utilities Board has prevented it from participating in the rollout of a $23 million expansion of broadband service for rural Iowans.

LTD Broadband, a Las Vegas-based company with roughly 150 employees, owns and operates more than 2,500 communications towers in Iowa and six other states, and is suing the Iowa Utilities Board over the alleged delays.

In 2019, the board designated the company as an “eligible telecommunications carrier,” or ETC, that could receive federal funds to support the development of rural and high-cost telecommunications services. That designation was based on the finding that LTD had the requisite “technical, managerial, and financial” capabilities to do the work, and that the designation would be in the public interest.

In 2020, the Federal Communications Commission implemented a new program, called the Rural Digital Opportunity Fund, designed to improve rural broadband availability throughout the nation. The FCC later announced that LTD was the winning bidder for more than $23 million in federal funding to help bring new broadband service to a substantial portion of Iowa.

Nationally, LTD Broadband was the single largest beneficiary of the RDOF award, and was in line to collect $1.3 billion to expand service in 528,000 locations in 15 states.

LTD had promised to provide broadband in 15 states at download speeds of up to 1 gigabyte per second, a claim that was met with skepticism by some in the industry, given the high cost associated with the infrastructure for such service and LTD’s relatively small size.

As part of the bidding process, the FCC had specified that the funding could not be provided until LTD received state approval for the expansion of LTD’s existing ETC designation, which would cover the specific service territory for areas covered by the new federal program.

On May 7 of this year, LTD filed an application to expand its ETC designation and then provided the Iowa Utilities Board with additional information that was requested by the by the board staff.

The FCC deadline for obtaining state approval was June 7, and so, with no action taken yet by the Iowa Utilities Board on its application, LTD sought a deadline waiver from the FCC that would give it more time to win the Iowa board’s approval.

The utilities board also didn’t approve LTD’s request at meetings in July, August, September and October, and on Oct. 20, the FCC denied LTD’s request for a waiver of the June 7 deadline.

At the time, the FCC noted that LTD had waited five months after the December 2020 bid award to file its applications in Iowa and two other states, believing approval tale no more than 30 days. “LTD offers no explanation for why it did not file in these states sooner, or why waiting until the last possible moment to file (even if its assumptions about a 30 day approval process were correct) was a choice warranting waiver,” the FCC stated.

LTD then sought reconsideration of the FCC order and, at the same time, it filed a request with the Iowa board seeking an expedited ruling on its expansion request.

In November, the board issued a ruling denying the expansion request, citing the company’s alleged failure to comply with the “minimal” regulations Iowa had already imposed upon it.

The board pointed out that the company had yet to comply with a February 2019 order to file a registration as a telecommunications service provider, was past due on the payment of certain assessments, and had not yet filed the required annual reports for 2019 and 2020.  The board also accused LTD of routinely submitting regulatory filings with “obvious errors.”

The lawsuit filed by LTD does not directly address the concerns raised by the board in its November ruling, but alleges the company has been held to a higher standard than other broadband service providers.

“The delay and denial of ETC expansion means more than $23,000,000 in federal funding that LTD would have used to deploy broadband service to rural Iowans cannot be authorized to LTD by the FCC,” the lawsuit claims.

LTD is now asking for judicial review and reversal of the board’s decision.

Under federal law, administering the development of broadband in rural, high-cost areas is delegated to state commissions such as the Iowa Utilities Board, particularly when it comes to deciding which companies are qualified to do the work.

“The board did not, and could not, deny that the request was made 30 days prior to the proposed effective date, compliant with the administrative rule,” the lawsuit claims.

The board’s actions “failed to take into account the magnitude of the loss of potential investment in Iowa’s underserved communities and the public policy interests in timely action to facilitate the implementation” of expanded broadband service, the lawsuit claims.

The Iowa Utilities Board has yet to respond to the lawsuit, but in its November decision the panel stated that LTD’s history did not “merit the expansion of a credential that signals to the public that LTD has evidenced the technical and financial capabilities required to carry out the public interest obligations of those entrusted with federal funds. LTD’s responses and actions lack the candor that the board would expect from a carrier.”

The board also stated that “LTD significantly misunderstands its regulatory requirements or is attempting to mislead the agencies charged with evaluating eligibility” for service providers.