Windstream CEO Optimistic on USF Revamp; It Eyes Stimulus Round Two
The FCC National Broadband Plan can act as the starting point for a number of new rulemaking proceedings, most likely including universal service and intercarrier compensation, Windstream CEO Jeff Gardner said on a conference call Thursday. Meanwhile, the operator is evaluating stimulus round two rules, particularly the RUS program, Senior Vice President Mike Rhoda told us.
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It’s likely the FCC will address the comprehensive Universal Service Fund and a compensation revamp within the context of the broadband plan, Gardner said, saying the agency has been very thorough in its analysis. The FCC “reasonably understands the complex issues” confronting Windstream and other mid-size carriers, he said. Revamp recommendations, which would be implemented over time, would strike a fair balance between the various components compared to previous revamp ideas and proposals, he said.
There have been some positive developments in stimulus round two rules versus round one, Rhoda said, citing the removal of the “remote” distinction which enables entities to receive 75 percent grants, versus 50 percent. Rhoda also praised the separation of NTIA and RUS programs. These are significant changes, he said. The open network principles in round two seemed consistent with the FCC’s existing principles, he said. Applicants in round one were signing up for something completely different, which might put them in challenging positions, he said. Windstream didn’t participate in round one due to potential “competitive disadvantages,” he said. Rhoda also questioned some projects awarded in the first round, citing emphasis on middle-mile projects. Funding overbuilt middle-mile infrastructure is inconsistent with the intent of the stimulus program, he said. But some believed round one money was reasonably distributed (CD Feb 8 p1).
“Consolidation makes sense in this industry,” Gardner said. The company, which snapped up Lexcom, NuVox and Iowa Telecom, is very focused on integration, he said. Integration of D&E Communications, acquired in 2009, was completed. The acquisitions “will help us sustain revenue and cash flow over time,” Gardner said. The company is focusing on operations while open to transactions in the future, he said. Any consolidations would likely happen in the rural markets: “We like rural properties,” Gardner said.
Q4 profit fell 7 percent year-over-year on higher costs and a landline sales decline, though Internet and pay-TV additions were up year-over-year. Windstream added 27,500 broadband users for a total of 1.1 million, a 10 percent rise year-over-year. The company signed up 9,900 new video customers on a net basis, for a total of 269,400. Total access lines declined 4.8 percent to 3 million.