Virginia Counties Want FCC Probe Of ISP Late On Fiber Builds

Jan 29, 2024

Washington, D.C., Jan. 29, 2024 – A North Carolina broadband provider has fallen behind in deploying fiber-based Internet to thousands of rural Virginia households, causing three state counties to seek a federal probe that could result in fines and the provider losing out on millions in subsidies.

The controversy pits RiverStreet Communications against Virginia’s Halifax, Mecklenburg, and Brunswick counties that sit on the North Carolina border. The south central counties have asked the Federal Communications Commission to examine RiverStreet’s buildout performance to date. They also plan to oppose RiverStreet’s request for additional time to meet buildout milestones.

RiverStreet claims bad faith on the part of the counties, asserting they have been unwilling to provide support needed to move the broadband deployment projects along to completion – including assistance in obtaining additional state broadband funding, access to rights of ways, access to property to construct buildings for operations, and partnering to let the community know that RiverStreet is planning to build out in the counties.

“The last place we are going to build is Halifax and Mecklenburg because they are not supporting us like most of the other 11 counties we won [Connect America Fund] and [Rural Digital Opportunity Fund] funding in Virginia are,” RiverStreet President and Chief Executive Officer Eric Cramer said in an interview.

Walking away from the Halifax, Mecklenburg and related projects would be expensive, costing RiverStreet between $3 million and $5 million in federal penalties. 

“We don’t want to pay the penalty. We want to build. We are trying to avoid a default and serve the communities,” Cramer said.

RiverStreet won about $32.1 million in the FCC’s Connect America Fund II auction in 2018 to provide fiber broadband to 13,518 eligible locations in nine Virginia counties – including 1,772 in Brunswick, 1,327 in Halifax, and 2,396 in Mecklenburg. Top speeds promised were 1 Gig down and 500 Mbps up for broadband over fiber infrastructure.

Although RiverStreet was required by the FCC to reach certain buildout milestones, the counties say the company missed its first deadline, which is applied to the entire Commonwealth of Virginia, not individual counties.

“RiverStreet was required to serve 40% of its CAF II locations in Virginia – a total of 5,408 locations by December 31, 2022.  Yet, as of December 31, 2022, RiverStreet reported only serving 825 locations in Virginia,” the counties said in a Aug. 1 letter to FCC Chair Jessica Rosenworcel. 

“At the end of 2022, RiverStreet actually had reached 1,206 CAF II locations and then 2,908 or over 21% of the requirement at the end of 2023. In 2023, RiverStreet continued to add locations to close the gap now that supply chain and work force issues related to the COVID-19 pandemic have eased. By the end of 2024, RiverStreet expects to be in full compliance,” Cramer noted.

The counties claim the FCC is entitled to an explanation for RiverStreet’s delays.

“RiverStreet’s failure to meet its initial – and, arguably, easiest CAF II milestone obligation – harms rural communities in southern Virginia that should already have access to RiverStreet’s gigabit-tier, fiber broadband service, yet still remain either unserved or underserved,” the letter to Rosenworcel said.

Cramer said CAF II projects went well in King and Queen County because that Virginia county’s officials were supportive by doing such things as helping securing state broadband funding, acquiring land, gaining access to rights of way and providing matching funds for state grants.

“We have 11 [Virginia] counties already doing this,” Cramer said.

RiverStreet, based in Wilkesboro, N.C., is a for-profit subsidiary of Wilkes Communications, a non-profit cooperative in Wilkesboro, N.C.

RiverStreet insists that it could not meet its first buildout milestone because of supply chain disruptions caused by the COVID-19 pandemic, calling that a factor outside its control.

In a Jan. 12 filing with the FCC, RiverStreet asked the agency for waivers from the 40% deadline and potential penalties. It also wants a waiver from the deadline to reach 60% of locations by Dec. 31, 2023, acknowledging that it missed that milestone. The FCC has not issued a decision.

“The supply chain was completely disrupted. Just as consumers suddenly were confronted with lengthy waits for toilet paper and other previously readily available grocery store staples, broadband infrastructure providers were faced with extraordinary wait times for equipment and supplies as well as labor,” RiverStreet told the FCC.

Halifax County Administrator Scott Simpson said the three counties plan to oppose RiverStreet’s waiver requests. (Update: They did so last evening in this filing.) The counties want the FCC to find and fund a new broadband provider that can fill the gaps left by RiverStreet. Simpson said just 26 people in Halifax have RiverStreet’s FCC-funded service.

“We just want to see performance,” Simpson said, adding that he has not heard anything directly from the FCC since writing to the agency last August.

Simpson said his office has also sought assistance from staff with Virginia’s U.S. Senators Mark Warner (D) and Tim Kaine (D), who he believes are gathering information on the dispute with RiverStreet. 

Cramer said the counties are pressuring him to walk away from the CAF II projects and eat a big penalty. 

“We are looking at options,” he said.

In the FCC filing, RiverStreet stressed that small broadband providers were put on hold by vendors that prioritized larger customers during the pandemic. The company said it couldn’t get its tech gear orders accepted until September 2020 – 14 months after being authorized as a CAF II funding recipient. 

Citing “commercial information, proprietary business information, and/or trade secrets,” RiverStreet redacted from its publicly available FCC filing the new buildout deadlines it planned to meet. It also blacked out the names of vendors with whom it had placed orders that were put on the backburner.

“RiverStreet notes that the respective extensions of time requested to meet these milestones are much less than the time delays caused by the pandemic’s shut down of the global supply chain,” the company told the FCC. “There is good cause for the waiver relief sought by RiverStreet.”